A lawsuit seeking $2.8 million in restitution plus additional penalties was filed against the Donald J. Trump Foundation and its directors by the New York Attorney General’s office today. The foundation’s directors refer to President Donald J. Trump and three of his children: Donald J. Trump, Jr., Ivanka Trump, and Eric Trump. The lawsuit also seeks to dissolve the foundation under special court supervision.
A Trump spokesperson described the filing as “politics at its very worst.”
The lawsuit was filed in the Supreme Court of the State of New York in New York County which, unlike supreme courts in many states, is not the state’s high court. It alleges that the foundation raised more than $2.8 million in a manner that sought to influence the 2016 presidential election. The dollars were fundraised during a televised event Trump held in January of 2016 in lieu of participating in a debate prior to the Iowa Caucuses.
The timing, amounts, and recipients of grants were allegedly dictated by campaign staff, including Corey Lewandowski, then-campaign manager, in violation of state and federal law. At least five grants of $100,000 were reportedly made to Iowa organizations in the days leading up to the caucuses.
President Trump has made all decisions related to the foundation, according to the suit, with no approval of policies or grants by the board of directors. An investigation has shown that the board of directors has not met since 1999. A 2016 report by CNN revealed that, per tax records, then-candidate Trump had not made a personal donation to the foundation since 2008.
The foundation allegedly made at least five transactions that were illegal, however, because they benefited the president’s business or personal interests. These include a $158,000 payment to settle claims against Trump National Golf Club and $100,000 to settle legal claims against his Mar-A-Lago resort. Funds were restored to the foundation for all alleged self-dealings following the beginning of the investigation, but excise taxes reportedly remain unpaid for the two expenditures made to settle legal claims.
“As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality,” said Attorney General Barbara Underwood in a statement. “This is not how private foundations should function and my office intends to hold the Foundation and its directors accountable for its misuse of charitable assets.”
A request for comment relating to proceeding steps and whether the lawsuit marks the conclusion of Underwood’s investigation into the foundation was not returned prior to publication.
The suit further seeks a court order finding that the foundation’s directors breached their fiduciary duties and must reimburse the foundation for self-dealings and pay penalties of up to double the benefit received. It further seeks to enjoin President Trump from serving as a director, officer, or trustee of a nonprofit incorporated or conducting business in New York for 10 years and each of the other directors for one year or until he or she receives training on fiduciary service. The office has also sent referral letters to the Federal Election Commission and Internal Revenue Service that detail why Underwood believes further investigation and potential legal action is warranted by the two authorities.
In a statement, the Trump Organization attributed the timing of the announcement to coincide with today’s Inspector General’s report on the Hillary Clinton email investigation and President Trump’s recent diplomatic meeting with North Korean leader Kim Jong-un. It notes that the foundation has sought to dissolve and distribute $1.7 million in remaining dollars for the past 18 months, but has been unable to due to the investigation.
The statement particularly focuses on the political leaning and aspirations of former New York Attorney General Eric Schneiderman, alleging that he had focused on the Donald J. Trump Foundation as opposed to potential misconduct by the Clinton Foundation. It points to Schneiderman’s announcement of the investigation less than two months prior to the 2016 presidential election while, at the same time, serving on Clinton’s New York leadership council. The statement repeatedly refers to Schneiderman, who resigned last month following allegations that he abused romantic partners, as “disgraced.”
Thu, 16 Nov 2017 22:58:40 +0000
NYAG Files Suit Sues Trump Family And Foundation
The House of Representatives passed the Tax Cuts and Jobs Act on Thursday by a 227 to 205 vote. The bill, roundly criticized by leaders in the nonprofit sector, marks a significant step in what has been an accelerated process for the most significant tax reform in more than three decades.
The House Bill includes a doubling of the standard deduction — up to $24,400 for joint filers and $12,200 for individuals, no universal charitable deduction, a repeal of the estate tax, and repeal of the Johnson Amendment — which prohibits 501(c)(3) organizations from engaging in partisan politics. The doubling of the standard deduction, alone, will cost the sector some $13 billion per year, according to the Lilly Family School of Philanthropy.
The Senate Finance Committee’s version of the bill, released last week, features some stark contrasts, including no repeal of the Johnson Amendment and an expanded exemption within the estate tax, but no complete repeal.
Hadar Susskind, senior vice president of government relations for the Council on Foundations (CoF), said that the council has realized that the House bill is essentially set and has turned attentions to the Senate. Maintaining the Johnson Amendment and inserting some sort of universal charitable deduction are among current efforts. CoF leadership has also supported Sen. John Thune’s (R-SD) Charity Act, which would bring a flat 1-percent excise tax on private foundations, as opposed to 1.4 percent in both the House and Senate.
The comprehensive reform has put nonprofits in a unique position. Advocates are used to fighting off one provision at a time. Now, everything is on the table, according to Vikki Spruill, president and CEO of CoF. In some respects the charitable sector has been left alone in that the charitable deduction remains. The practical effect of provisions such as the doubled standard deduction, however, have great impacts, including the potential loss of millions of itemizers.
“First off, we are very disappointed with how this is happening,” Spruill said. “Sadly, the impacts of this bill are going to be felt for a really long time.”
Not unlike foundations, private higher-education institutions face a 1.4 percent annual excise tax on endowment income in both the House and Senate bills. The Senate bill limits the provision to institutions with assets of $250,000 per full-time student or greater as compared to the House’s $100,000 demarcation. Jessica Sebeok, associate vice president and counsel for policy for the Association of American Universities (AAU), noted that the proposed tax has caught some members by surprise.
The drafting process for both bills has been unique in its secrecy, Sebeok added. AAU and related organizations have been thrust into a position of reacting on the fly to express concerns all while universities communicate with elected representatives who might be on the same plane of confusion as they are.
“Certainly, a lot of the initial drafting was done in some secrecy,” Sebeok said. “This was done behind many closed doors, it was not inclusive. There was not a lot of input allowed or welcomed even from other members of the majority.”
Sebeok believes that Congressional Republicans, eager to seize momentum, will try to push forward to get something on President Donald Trump’s desk by the end of the year with the 2018 midterm election cycle looming.
Laura Kalick, tax consulting director for BDO USA’s National Healthcare and Nonprofit & Education practices, on the other hand, expects some scaling back of provisions before anything is set in stone. The Houses’ repeal of the estate tax, for instance, might end up looking more like the Senate’s expanded exemption. The current estate-tax exemptions of $5.49 million for individuals and $10.98 million for couples, as they are, affect only about two out of every 1,000 estates in the U.S., according to Aaron Dorfman, president and CEO of the National Committee for Responsive Philanthropy (NCRP).
The Joint Committee on Taxation (JCT) estimated that after 2023, most taxpayers would see a tax increase. Donors of all income levels give a little more when they have a little more money but the proposed tax cuts championed by most Republicans will have “miniscule effects,” Dorfman said, and aren’t “significant enough to make up for bad tax policy.”
Both bills enable individuals to deduct up to 60 percent of their adjusted gross income for charitable contributions, up from 50 percent. In practice, however, Kalick noted the limited scope of such a provision with few donors willing or able to give 50 percent of their earnings to charity, let alone 60 percent.
“If anybody thinks that that’s a great bone to charity, that’s absurd,” Kalick said.
The Senate has also moved to eliminate the Affordable Care Act’s individual mandate, likely to sweeten the legislation for more conservative senators, as it would reportedly save about $318 billion over 10 years. The consequence is that it also conflates tax reform with unsuccessful attempts to reform healthcare, Kalick said, potentially leading to some roadblocks on the way to consensus.
Kalick believes that extending the process into 2018 with a more nuanced bill is more palatable for many representatives than voting in favor of something that might be unpopular coming into an election year.
“I don’t think it’s going to happen,” said Kalick of tax reform in 2017. “People are looking at it and saying ‘This doesn’t make sense.’”
Donors are human. They have likes and dislikes. They are creatures of habit and thus have behaviors, that when known, can be worked with to entice giving. This six-part series on neurofundraising is state of the moment behavioral marketing information that fundraisers can immediately put to use.[ + ]
Leadership at the Data & Marketing Association (DMA) is rolling out the organization’s Data Standards 2.0, a streamlined version of guidelines not updated since 2014. Features of the new set of standards include clarifications on rules relating to connected devices and notice and choice.
The DMA, formerly known as the Direct Marketing Association, is seeking feedback on the new standards before adopting them, with potential changes, in the coming months, according to Emmett O’Keefe, senior vice president of advocacy.
O’Keefe described the updated guidelines as a “wholesale review” of their predecessors that consisted first of an evaluation of existing guidelines by a group of a few dozen members and then, in the past year, a more critical view of areas of focus. When it comes to donor and constituent choice, for instance, organizations should provide notice of their ability to opt-out of the sharing of their personally identifiable data with non-affiliated third parties, according to the guidelines, and requests to opt out should be honored promptly.
If an organization has promised to honor an opt-out for a specific time period, the organization should provide a new notice and opportunity to opt-out at the expiration of the initial period.
Connected devices, defined as any device connected to the Internet, are another area of the guidelines that wasn’t dramatically changed, but clarified, according to O’Keefe. The new standards state that any organization that offers a choice with respect to the collection of marketing data should not collect such data from connected devices or transfer data for marketing use if the donor has opted out.
“Again, it always goes back to notice and choice,” O’Keefe said. “As the guidelines lay out, the responsible marketer provides full notice. They tell the consumer what data is being collected and how it will be used and give the consumer the opportunity to opt out of future marketing activities and the sharing of data with third parties.”
Meeting current best practices and public expectations are driving forces behind the new guidelines, he said. The European Union has recently established new regulations, albeit with a different level of force behind them, also recognizing evolving donor expectations and data protection. The hope is that, by being transparent upfront, organizations can develop trust and relationships with donors and constituents, O’Keefe said.
To review the new guidelines, visit www.thedma.org. Feedback can be sent to email@example.com.[ + ]
Growing harassment and threats directed toward leadership and staff have led watchdog database GuideStar to remove its flagging of 46 suspected hate groups as defined by the Southern Poverty Law Center (SPLC) — at least for the time being. The removals will take place this week.
A GuideStar spokesperson declined to comment specifically on the instances of harassment or whether GuideStar has sought out law enforcement, citing the sensitive nature of the situation.
The decision to flag the groups started at the beginning of the year when clients expressed concern regarding potentially facilitating donations to hate groups, the spokesperson said via an email. GuideStar leadership responded by exploring potential data sources to include in GuideStar Nonprofit Profiles and identified SPLC as a reputable source some institutions were already using to protect themselves from contributing to suspected hate groups. Annotations were put in place in February.
SPLC defines hate groups as having “beliefs or practices that attack or malign an entire class of people, typically for their immutable characteristics.” In total, 46 of the 1,676,746 nonprofits tracked by GuideStar were flagged.
In the months since the flagging, GuideStar has fielded positive and negative feedback relating to the designations. Honest people can have honest disagreements over whether certain organizations should be on the list, the spokesperson added.
“We do believe, however, that we have an opportunity to improve both the way we designated hateful organizations and the context surrounding those designations,” the spokesperson said. “It is also our assessment that removing these flags — at least temporarily — will give us the opportunity to engage with the nonprofit community to better present information about organizations using the nonprofit form to advance hateful agendas.”
In a blog post on GuideStar’s website, Jacob Harold, president and CEO, noted that while some individuals do use nonprofit status to spread hateful rhetoric, the number of such instances are rare. The 46 organizations represent just 0.0027 percent of the organizations in GuideStar’s database. Harold recognized that the concept of “hate” is difficult to pin down and that the challenge increases when referring to a multi-person entity such as an organization. While finding SPLC’s analyses to be thorough, Harold revealed that he did not personally agree with every single designation made, adding that different interpretations should begin a greater conversation.
“My interactions with individuals at the 46 flagged organizations have been largely professional,” Harold wrote. “At times they have been sobering: I will not soon forget being shown the bullet holes from a past hate-driven shooting during my visit to the Family Research Council. No one — whatever their identity or their politics — deserves to be targeted that way.
“I deeply regret that we had to consider staff safety when deciding what to do in this case. That does not speak well for the state of civil discourse in our country right now. We must do better,” he wrote.
GuideStar’s future treatment of the information will be determined following the engagement of the larger nonprofit community. Constructive suggestions on how best to provide information about nonprofits with hateful agendas are being collected in GuideStar’s online community. In the meantime, users can request the list of 46 organizations by emailing firstname.lastname@example.org[ + ]
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