The California Department of Justice consummated an Assurance of Voluntary Compliance to remedy fundraising problems. Specifically the organization used an accounting gimmick involving gifts-in-kind (GIK) to manipulate its books and, thus, hide poor “program service” percentages (i.e. how much of a donation goes to charitable program as opposed to fundraising and salaries). It is a primer on the problems of GIK and ensures that the directors and accountant responsible resign and/or not perform services of charities going forward.
SACRAMENTO – California Attorney General Xavier Becerra today announced a settlement with charitable organization Giving Children Hope (GCH) for filing misleading documents to increase the charity’s ranking and generate more donations. The settlement comes after an investigation by the Attorney General’s office found the charity engaged in a misleading reporting scheme to purposefully increase its Gift-in-Kind donations to mislead the public. Gift-in-Kind donations are noncash donations made to charities, such as clothing, pharmaceutical drugs, food, and medical supplies. As part of the settlement, the charity will pay $400,000 and stop providing misleading reports. The directors and officers of GCH – John Ditty, Sean Lawrence, V. William Barta and accountant Suzanne Bryant – will pay an additional $10,000. The additional money will be used for charitable law enforcement investigations.
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