Charities Turned Away by Banks

Friday, July 24th, 2009

Planned giving programs are steadily gaining popularity with donors and their charities.  However, banks that service them are slowly turning away.  In fact, there are already key banks that retreated from this financial management area.  They refuse to take charities that have less that $5 million (some even $1 million) in assets.  And there are some that are dropping clients who do not make the cut.

This move is squeezing the smaller organizations, wherein many of them are dependent on banks to manage complex programs and they rely on planned giving vehicles to get donations.  Today, over 50 charities scramble to find new banks since BNY Mellon Wealth Management gave clients a deadline (until Sept. 1) to select another manager.  BNY Mellon is one of the biggest bank players in the investment arena of planned giving.  Likewise, other banks like Wachovia and Merryll Lynch that have longtime philanthropic practices are now folded into merged operations.

A few charities try to join forces in order to gain back clout with banks.  A New York attorney serving on the professional advisory committee of Charities Support Foundation, Andrew Grumet said, “These days, you need to have real money to gain a financial institution’s attention.  That’s just the harsh reality.”

Tags: Andrew Grumet, attorney, banks, BNY Mellon Wealth Management, charities, Charities Support Foundation, donors, Merryll Lynch, New York, Planned Giving, Wachovia
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Crackdown on Fraudulent Charities

Thursday, June 25th, 2009

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
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