A Summary of the Proposed Legislation Prepared by: Stephanie Guyon - - PowerPoint PPT Presentation

A Summary of the Proposed Legislation

Prepared by:

Stephanie Guyon Deputy Attorney General Idaho Attorney General’s Office

“CHARITABLE ORGANIZATION” A person who holds charitable assets for a charitable purpose, regardless of the legal form of such organization.

“Person”

An individual, corporation, LLC, governmental subdivision, trust, estate, partnership, or other entity. Excludes: Banks, credit unions, & trust companies

“Charitable Assets”

Any interest in any type of property that a charitable organization holds for a charitable purpose.

“Charitable Purpose”

Any purpose described in I.R.C. 501(c)(3); or Any humane, patriotic, social welfare, public health, environmental, veteran, or other philanthropic purpose.

ICAPSA Applies to: Charitable Organizations

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• It helps prevent misleading

charitable solicitations.

• It helps protect the public’s interest

in charitable assets.

• It clarifies the Attorney General’s

duties and authorities as to charitable assets.

ICAPSA Serves Three Purposes

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PURPOSE NO. 1 ICAPSA Helps Prevent Misleading Charitable Solicitations

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Section 48-12-201 Misleading Charitable Solicitations

• Not a new law (codified as Idaho Code 48-1202 since 1993).
• People who solicit contributions (money, clothes, cars, etc.) can’t mislead the public.

Examples:

• Can’t ask for money to support cancer research and then use that money to buy a boat.
• Can’t advertise that donations are tax deductible when they aren’t.

Section 48-12-202 Private Right of Action

• Not a new law (codified as Idaho Code 48-1204 since 1993)
• Donors can sue for damages.
• Have 2 years to sue from date of damage (i.e., statute of limitations).
• Relief provided under Idaho Consumer Protection Act – Idaho Code 48-608.

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PURPOSE NO. 2 ICAPSA Helps Protect the Public’s Interest in Charitable Assets

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Section 48-12-301 Knowing Misuse of Charitable Assets

• This is a new law.
• Covers only “accountable persons” and “charitable organizations.”
• “Accountable persons” includes: directors, officers, trustees, executives, employees, or

fiduciaries.

• Applies only if a person or organization knowingly misuses charitable assets.
• In other words—the person or organization must deliberately use charitable assets for a reason

that is:

• contrary to the law
• Example: a director deliberately uses charitable assets to fund terrorist activities.
• contrary to donor intent
• Example: a person dies and, in her trust, gives her estate to the city library, and the trustee
• f trust instead deliberately gives the estate to the deceased’s kids.
• contrary to the organization’s charitable purpose
• Example: the charitable organization’s articles of incorporation specify the organization’s

charitable purpose is cancer research, but its charitable assets are deliberately used to feed the homeless

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Section 48-12-301 Accountable Persons – Defenses to Liability

• An accountable person is NOT responsible for any wrongdoing under this section if that

person:

• Obeyed the standards of conduct outlined in Idaho Code 30-30-618 or 30-30-623

(located in the Idaho Nonprofit Corporation Act).

• These sections outline a director’s or officer’s fiduciary duties to the nonprofit

corporation.

• If an accountable person complies with these standards, that person does NOT

violate 48-12-301.

• If an accountable person acts according to the advice of a licensed professional

advisor (lawyer, accountant), that person does NOT violate 48-12-301.

• Complied with the applicable trust instrument and that instrument complies with

Idaho law.

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Section 48-12-302 Written Notice (Dissolution, Liquidation, Closure)

• A new notice law.
• Only covers charitable organizations that hold charitable assets with a FMV of $100,000 or more.
• Requires written notice to Attorney General at least 30 days before the charitable organization:
• Sells or disposes of all of substantially all of its charitable assets in a transaction not in the regular

course of business.

• This means the organization is dissolving, shutting down, going out of business, liquidating, or
• therwise closing.
• NO NOTICE REQUIRED IF:
• Organization’s charitable assets have FMV of less than $100,000.
• Organization is transferring all or substantially all of its assets to a charitable organization with a

similar charitable purpose.

• The transaction is in the regular course of business (i.e., the organization is NOT shutting down).

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Section 48-12-302 Contents of Written Notice

• Written notice to Attorney General must include (if available):
• Legal names and mailing addresses of parties involved in the

transaction.

• Description of the transaction.
• Copy of the purchase and sale agreement.
• Copy of the appraisal or property valuation.
• Attorney General has 30 days to object (in writing) to the transaction.

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PURPOSE NO. 3

ICAPSA Clarifies the Attorney General’s Duties and Authorities as to Charitable Assets

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Idaho Code 67-1401(5) The Attorney General CURRENTLY has a duty to:

• Supervise persons holding property subject to any charitable trust. BUT . . .
• Supervise how?
• Are there any limitations to that supervisory authority?
• Enforce any noncompliance or departure from the general purpose a charitable trust. BUT . . .
• Enforce how?
• Can the Attorney General enter into a pre-litigation settlement agreement?
• Examine persons holding such charitable trust property and ascertain the condition of trust property. BUT . . .
• Examine and ascertain how?
• Can the Attorney General require a person to turn over documents? Can he subpoena documents?
• Institute in the name of the state any proceeding necessary to enforce compliance with the charitable trust. BUT . . .
• Who may the Attorney General name in his lawsuit?
• May the Attorney General recover restitution for charitable organizations ?

The Attorney General’s Current Authority over Charitable Assets is Vague

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Applies Only to Two Sections of ICAPSA:

• 48-12-201 (misleading charitable solicitations)
• 48-12-301 (misuse of charitable assets)

Clarifies the Attorney General’s Authority to:

• Investigate Alleged Violations of the above Sections (48-12-401)

(Allows Investigative Demands, Subpoenas, and Depositions)

• Resolve Problems through Court-Approved Settlements (48-12-402)

(Allows Assurances of Voluntary Compliance and Consent Decrees)

• Recover Penalties, Restitution, and Reasonable Fees and Expenses (48-12-406 & 407)

(Penalties and Attorney’s Fees and Costs Go to the Consumer Protection Fund) (Restitution Goes to Damaged Organizations or Other Organizations)

48-12-401 – 48-12-408

CLARIFIES THE ATTORNEY GENERAL’S AUTHORITY

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REQUIRED CHANGES TO CURRENT STATUTES

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Repeals Title 48, Chapter 12, Idaho Code (Idaho Charitable Solicitation Act)

• ICAPSA replaces Title 48, Chapter 12, Idaho Code.
• This is for convenience purposes only—otherwise

we would need to repeal chapter 12 and add an additional chapter to Title 48.

Amends Idaho Code 67-1401(5) (Attorney General’s Duties)

• ICAPSA now contains the Attorney General’s

specific duties and authorities.

• That makes most of Idaho Code 67-1401(5)

unnecessary.

• We amended Idaho Code 67-1401(5) so that it

references ICAPSA and deletes the unnecessary language.

ICAPSA Changes Two Current Laws

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Who to Contact If You Have Questions:

Brett DeLange Deputy Attorney General Attorney General’s Office Consumer Protection Division 208.334.4114 brett.delange@ag.idaho.gov Stephanie Guyon Deputy Attorney General Attorney General’s Office Consumer Protection Division 208.334.4135 stephanie.guyon@ag.idaho.gov

Idaho Attorney General ICAPSA Presentation-V.31-Jan-17

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