The Law of Fundraising. Bruce R. Hopkins

Id.

      42 42. Id. at A16. Deep into the article is this statement: “Part of the problem, according to the foundation, is that it is very expensive to initiate a direct-mail campaign” (id.).

      43 43. Kane, “Where Are Your Charity Dollars Going?,” CNBC.com, December 9, 2010.

      44 44. Id.

      45 45. Fitzpatrick and Griffin, “Little of Charity's Money Going to Help Animals,” CNN.com, June 15, 2012.

      46 46. Id.

      47 47. Id.

      48 48. Evans, “Charities Deceive Donors Unaware Money Goes to a Telemarketer,” Bloomberg.com, Sept. 11, 2012.

      49 49. Id.

      50 50. Winter, “N.Y. Woman Arrested over Newtown Massacre Scam,” USA Today, December 29, 2012.

      51 51. Id.

      52 52. “Idaho Couple Arrested for Cancer Fundraiser Fraud,” The Seattle Times, August 29, 2012.

      53 53. Id.

      54 54. Sheeran, “John Donald Cody, Harvard Law Grad, Suspected of Running $100 Million Cross-Country Scam,” Huffington Post, October 2, 2012.

      55 55. Also, “Charity Fund-Raiser, Client Target of Md. Grand Jury Probe,” Wash. Post, Dec. 12, 1991, at D1; “Solicitors Cash In on Budget Pinch Felt by Nonprofit Groups,” Wash. Post, Oct. 18, 1982 (Washington Business), at 19; “Many Charity Shows Benefit Mostly the Fundraiser,” Charlotte Observer, Mar. 22, 1981, at 1.

      56 56. “Radix Malorum Est Cupiditas?” Time, Jan. 23, 1978, at 75.

      57 57. “Wrist Tap,” Time, May 22, 1978, at 64.

      58 58. In this matter, the Circuit Court of Cook County, Illinois, ordered fundraisers to pay $528,231.52 (including $150,000 in punitive damages) into a trust fund for widows and children of slain law enforcement officers, as the result of a fundraising effort that generated $785,731, of which the fundraisers received $622,000 for costs and compensation. One contract allowed up to 75 percent of total contributions to be consumed in fundraising expenses; the court characterized this and other contracts as authorizing “illegitimate commissions and expenses and were outrageous, unconscionable and an assault upon the public conscience in violation of public policy and Illinois law relating to charitable solicitations.” People of the State of Illinois v. Police Hall of Fame, Inc., No. 74 CH 5015 (order dated Oct. 19, 1976).

      59 59. In one instance, the Attorney General of the State of New York charged the Foundation with raising $1,508,256 and expending only $95,674 (6.3 percent) for charitable purposes, and characterized the Foundation as “perpetrating a fraud upon the contributing public” (news release dated Feb. 16, 1977).

      60 60. For a litany of fundraising “abuses,” see Hearing on Children's Charities Before the Subcommittee on Children and Youth of the Senate Committee on Labor and Public Welfare, 93d Cong., 2d Sess. (1974), chaired by then-Senator Walter F. Mondale. Also Hearings on Fund Raising By or in Behalf of Veterans Before the House Committee on Veterans' Affairs, 85th Cong., 2d Sess. (1958); Hearings on Federal Agencies and Philanthropies Before a Subcommittee of the House Committee on Government Operations, 85th Cong., 2d Sess. (1958).

      61 61. E.g., Baldwin, “Ideology by Mail,” New Republic, July 7 and 14, 1979, at 19.

      62 62. These developments have spawned articles in the popular media, such as Smith, “New Guidelines for Giving” (subtitled “Our 10 commandments help you separate top charities from wastrels”), Money, Dec. 1989, at 141.

      63 63. Bogert, “Proposed Legislation Regarding State Supervision of Charities,” 52 Mich. L. Rev. 633 (1954).

      64 64. Karst, “The Efficiency of the Charitable Dollar: An Unfulfilled State Responsibility,” 73 Harv. L. Rev. 433–434 (1960).

      65 65. Quandt, supra note 33, at 1187.

      66 66. “For Many, There Are Big Profits in ‘Nonprofits,’” U.S. News & World Rep., Nov. 6, 1978, at 45.

      67 67. E.g., Gose, “The Trust Crisis,” 32 Chron. of Phil. (No. 3) 12 (Jan. 2020) (stating that the “public's declining regard for nonprofits may hurt fundraising”).

      68 68. See Chapter 7.

      69 69. See Tax-Exempt Organizations § 28.11.

      70 70. See § 5.7.

      71 71. See § 6.4.

      72 72. See § 10.14.

      73 73. IRC ch. 42.

      74 74. In early 1989, a task force at the IRS recommended that many of the federal tax rules that are presently applicable only to private foundations be extended to apply to some or all public charities (Report of the IRS Commissioner's Executive Task Force on Civil Penalties).

      75 75. Harris, Holley, and McCaffrey, Fundraising into the 1990's: State Regulation of Charitable Solicitation after Riley, 90 (New York: NYU School of Law, 1989).

CHAPTER TWO Anatomy of Charitable Fundraising

        § 2.1 Scope of Term Charitable Organization