Crackdown on Fraudulent Charities
Thursday, June 25th, 2009 at 9:12 am
Federal Trade Commission (FTC) recently announced their campaign on “Operation False Charity.” This effort will crack down fraudulent charities, which actually lies in the hands of FTC’s partners in this effort - 61 law enforcers, Secretaries of State, and Attorney Generals in 49 states and Columbia district.
“The problem of having fraudulent charities is very real,” said Tony Martignetti, managing director of a New York-based consultancy group called Martignetti Planned Giving Advisors, LLC. “However, it’s harder to spot these fraudulent charities when 90% of them fund-raising in Florida, New York, California, or other major states are not even registered there,” he added.
Non-profits are controlling about $1.5 trillion (or 10%) of the U.S. economy. “It will only be a matter of time before state and federal agencies catch up to non-profit sector and combat fraud. Charity licensing and registration throughout 50 states has been a regulatory morass most non-profits have avoided. Enforcement by states is nearly non-existent. In fact, many states don’t even have penalties for noncompliance.” Martignetti noted.
The new IRS Form 990, which is signed by the non-profit’s officer under a penalty of perjury, makes it illegal for nonprofits to avoid state registrations since it calls for a record of states where it’s required to file a copy of Form 990.
Tags: attorney generals, charities, charity, FTC, non-profits, Planned Giving, Tony Martignetti