Multiple Charity Scammer Caught Taking $100 million

by Gary Snyder

Richard Olive represented his TN phony charity group, National Foundation of America, as a legitimate 501(c)(3) nonprofit organization. During that time, he solicited elderly investors for $30 million in annuities and real estate. He told the investors that they would receive an “installment bargain contract” from National Foundation of America that would give them a guaranteed payout within a certain period and a tax deduction.

When clients turned over existing annuities to Mr. Olive's group, he would surrender most of these contracts so the organization would obtain the funds, triggering surrender penalties, according to the indictment.

In the end, less than half of 1% of the $23.6 million the group received went to charity, prosecutors said. 

Mr. Olive's brush with the law in Tennessee is only the latest development in his legal history. The Securities and Exchange Commission last month filed charges against him, his wife Susan and a Tallahassee, Fla.-based organization they controlled called We the People Inc. of the United States.

The SEC claims that from June 2008 through April 2012, the group allegedly raised some $75 million from 400 elderly investors in more than 30 states using bogus charitable gift annuities.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Is the Charitable Deduction Death or Growth to the Sector

by Gary Snyder

I am very confused as to the effects of a change in the charitable deduction…no matter what form it takes. Here are three arguments that further cloud the outcomes and my judgment.

The Independent Sector, a national coalition that suggest that it represents the charitable sector, advocates that the changes in the charitable deduction’s impact could range from decreasing the value of the charitable deduction to effectively eliminating it entirely for many taxpayers. One proposal would likely cause a more drastic decline in giving. 

In her February (2013) testimony, Diana Aviv, CEO and President of IS notes  “this effectively would have eliminated the charitable deduction for millions of taxpayers, and regardless of where an aggregate cap is set, even at $50,000 as has since been suggested, the result would force taxpayers to choose between the charitable deduction and those itemized deductions from which they directly benefit. For those taxpayers whose mortgage interest, local tax, and other similar deductions meet or exceed the cap, the charitable deduction will simply not be available to them altogether. And according to a 2012 Indiana University survey, more than two-thirds of high-net-worth donors said they would decrease their giving if they did not receive a deduction for donations. In fact, it has been estimated that with no charitable deduction at all, giving would decline by 36 percent. This would have resulted in a $78 billion decline in individual charitable giving in 2011.” She portrays a pretty dire prognosis.

David Wheeler Newman, Mitchell, Silberberg  & Knupp (Los Angeles) has a different take. In his article “the phaseout of itemized deductions under the American Taxpayer Relief Act of 2012 will not reduce the value of charitable contribution deductions for most taxpayers. It is critically important for gift planners to educate donors on this point, and to demonstrate that charitable contribution deductions will in most cases be unaffected by the new tax act.”

In the article “Pease” Provision in Fiscal Cliff Deal Does Not Discourage Charitable Giving and Leaves More Room for More Tax Expenditure Reform” Chye-Ching Huang points to a new paper from the Urban Institute and Tax Policy Center (TPC) that shows that tax changes will increase charitable giving, not reduce it. The authors estimate that a change may boost charitable giving by $3.3 billion or 1.3 percent. The increase results mainly from the rise in the top marginal rate income tax to 39.6, which raises the value of the tax deduction.

Are these mutually exclusive analyses? Where should we put our money on the Independent Sectors’ assessment or that of the other two?

It is a very interesting and topical issue and one that may have profound impact. I’d love to hear from you on your perspective.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Avoid Charity Fraud With These Tips From The AZ. AG

by Gary Snyder

The Arizona Attorney General gives advise: Be Careful!
Consider the following precautions to help ensure that your donation dollars benefit the people or organization you are interested in helping.

• Be wary of charities that spring up over night in connection with current events or a natural disaster. As much as some of these pitches pull at your heartstrings, many of these so-called charities probably do not have the means to get the donations to the affected people or areas. 
• Be especially cautious about getting a charity donation request by email. More and more charities are using email and text messaging to communicate with potential or past donors. It is important to research these solicitations just as if they came through the mail or in person.
• Check with local recipients. If giving to local organizations or charities is important to you, make sure they receive the benefit of your generosity. If a charity tells you that your money will support a local organization, such as a fire department, police station, or  hospital, call the organization to verify the claim. 
• Put telemarketers on hold. It may seem convenient to give over the phone, but it is a risky proposition. Some telemarketers will attempt to obtain your credit card number over the telephone. Others will try to convince you that you have given in the past. As with all other solicitations, do your homework before you give.
• Never give cash. Cash can be lost or stolen. For security and tax record purposes, it is best to pay by check made payable to the charity, not the solicitor. If you decide to donate online, make sure that the website is secure (look for a URL that begins “https” or has a lock icon on the browser’s status bar).
• Make sure you have a record of your donation. Always get a receipt with the name of the charity on it and the amount of your donation.
• Trust your gut. Solicitors may try to trick you by thanking you for a pledge you did not make. If you do not remember making the donation, resist the pressure to give. It is always a good idea to keep a record of your donations. 


Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Nonprofit Fraud: Governors Association Did Not Monitor Its Own Money

by Gary Snyder

The Nicholasville (KY) Police Department have arrested and are investigating a Lexington man it says stole $274,000 in campaign-contribution checks intended for the Democratic Governors Association. 

According to a criminal complaint filed by police that the perpetrator “worked at a check processing company in Lexington (KY) where he received and recorded” campaign contributions. 

The complaint the offender allegedly “used his position to steal checks over a two-year period” (July 2010 to September 2012) and deposit them into his personal account at a Nicholasville bank. The complaint further read that an audit of the account discovered that the total sum of stolen campaign checks deposited into his account was in excess of $250,000.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Pro Fundraisers Sticking It To Charities, again

by Gary Snyder

Michigan Attorney General Bill Schuette said that most charities that solicit in Michigan only give out an average of 35 cents for every dollar raised through fundraising.

"Michigan citizens have generous hearts and deserve to know how much of their donation actually makes it to their intended charity, especially in these times when every dollar makes a difference," Schuette said in a release. "Donors might be surprised to know that, on average, only thirty-five cents of each dollar collected through professional fundraisers are passed on to the charity."

Schuette cited a Better Business Bureau's Standards for Charity Accountability account that said charities should spend no more than 35 percent of related contributions on fund raising.

"This new report will hold professional fundraisers accountable and make charities more transparent, so donors can do as much good as possible," he said.

This study results has been replicated in New York and California. Should be no surprise.

In part taken from The Detroit News: 

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

CONTAINING NONPROFIT FRAUD: Protecting Hard Won Assets

by Gary Snyder

The cost of fraud can be damaging to an organization both financially and to its reputation.

Upon its publication Nonprofit Imperative highlights the 2012 Report to the Nations from the Association of Certified Fraud Examiners. Although the survey basically applies to the outcomes of the for-profit sector, there are many lessons that can be learned from its key findings and highlights for the charity sector

There are some flags for the nonprofit sector. While the median loss has gone down significantly in private and public companies as well as government, the nonprofit sector has seen a increase. The nonprofit sector increased by 10% while private companies saw a 13.4% drop off, public companies a huge 36.5% decline and government showed a 19% decrease    

Here are some suggestions on how to alleviate such misdeeds:

·       Make sure that there are strong anti-fraud controls in place

·      Provide anti-fraud training to all employees of the organization

·      Institute an effective reporting mechanism

·      Encourage proactive measures and publicize them

·      Since the climate/tone is set from the top of the organization, make sure it is one

    of honesty and truth

·      If there is internal audit department, have the resources and authority to operate  

    effectively

In the hiring policies and practices include the following (as law permits)

❑ Past employment verification

❑ Criminal and civil background checks

❑ Credit checks

❑ Drug screening

❑ Education verification

❑ References check

·      To the degree possible, utilize employee support programs for those with addictions, mental/emotional health, family or financial problems

·      Maintain an open-door practice to address pressures

·      Gain feedback by surveys or assessments

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

'Is the Livestrong Foundation bigger than its founder? Will it survive?’

by Gary Snyder


An update from Chronicle of Philanthropy

1. Livestrong set about charting an independent course (from Lance Armstrong) forward by: • Refashioning its logo to include “Foundation” underneath the Livestrong name. Mr. Miller said the thousands of cancer survivors form the “foundation” beneath Livestrong: • Moving Livestrong Day, which calls attention to the organization’s work globally, from October 2, the anniversary of Mr. Armstrong’s original cancer diagnosis, to May 17, the month and date of the launch of the Livestrong wristbands nine years ago; • Training its top volunteers in how to handle the controversy. At a session in Chicago, volunteer fundraisers were given talking points for responding to inquires about Mr. Armstrong’s involvement with the organization. Replies could include: “The Livestrong Foundation’s mission is bigger than its founder” and “It was never about one person.” 
2. Livestrong conceded that fewer people are giving, however, and that the total amount donated didn't drop sharply because the average sum each donor gives has been higher. The bigger average gifts have resulted from an aggressive push to donors at the height of the Armstrong scandal.
3. Livestrong is at a pivotal moment in its history. Now in its 16th year, the charity says the number of donors has dropped in recent months, so it wants to be clear that its work has nothing to do with the performance-enhancing drug scandal involving Mr. Armstrong.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

This Nonprofit Fraud Victory Took Over 3 Years

by Gary Snyder

The founders of Angel Food Ministries, the now defunct $140 million faith-nonprofit ministry have pleaded guilty. A 71-page indictment alleged that Pastors Joe and Linda Wingo used the charity bank accounts for their own use. According to the Atlantic Journal-Constitution they got kickbacks from food vendors, used a personal jet, used ministry credit cards for personal purchases and personal trips, to name a few misdeeds.

The staff of AJC deserves much credit for this outcome by investigating this fraud, particularly Christopher Quinn. I played a small role by contributing an editorial and adding some expertise. AJC shouldered the large part by evidencing an exemplary team approach.

Nonprofit Imperative has followed the incremental outcomes for more than three years and keeping its readers apprised at each step.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)