1. Charities Bureau Presentation Rotary Club of New York January 25, 2018
Michele L. Abeles
Assistant Attorney General, Charities Bureau
Office of the Attorney General

2. New York State Attorney General
Our Commitment
“OUR JOB AS A REGULATOR ISN’T JUST TO GO OUT AND CATCH BAD GUYS, IT’S ALSO TO HELP THE GOOD GUYS CONDUCT THEIR BUSINESS EFFICIENTLY AND EFFECTIVELY.”
New York State Attorney General
Eric T. Schneiderman

3. Who Are You? Board Members? Executive Directors?
Chief Financial Officers?
Other Employees?
Volunteers?
Attorneys?
Accountants?
Anyone else?

4. Who Are You? 1.25 million employees
18 per cent of total private work force in 2010, (Johns Hopkins study)
more than $57 billion in wages (2010)
74,000 NY Charities in IRS records (does not include houses of worship)
80,000 registered charities (includes non-NY)

5. What do Supporters Look For?
Programs that further an organization’s mission
Financial information
Reports filed with the Attorney General and the IRS and posted on the web
Compliance with filing requirements
Funders regularly contact the Charities Bureau
Our webmaster reports that the Charities Bureau’s web page gets the most hits
Reports by “watchdog” organizations
BBB Wise Giving Alliance
Charity Navigator
Charity Watch

6. Who Are We? Charities Bureau Lawyers Accountants Legal Assistants
Registry –
Charities – New York City
Fundraisers – Albany
Regional Offices – 13 in the State
NYC: 4 sections

7. HOW WE HELP CHARITIES Laws and Regulations
Searchable Public Registry of Charities
Guides for Governance, Fundraising and Transactions
Forms and Instructions for Registration
Links to Helpful Websites
Announcements and Press Releases

9. Our Responsibilities Four statutory responsibilities:
Protect the charitable purpose and mission
Prevent misuse of charities’ assets for private benefit
Collect and publish useful information about charitable organizations )
Protect vulnerable victims of charitable solicitation (Pennies for Charity)

10. DUTIES OF BOARD MEMBERS
Define mission and assure that it is promoted
Select and support executive director and review performance
Assure organizational planning and adequate resources
Approve annual budget
Assure that organization has systems/controls to manage assets properly and comply with the law

11. Protecting Charities’ Assets and Endowments
Investing wisely-New York Prudent Management of Institutional Funds Act (NYPMFA) - written investment policy, delegation (
Reviewing wisely-IRS 990 filings, independent auditor reports, management letters
Responding to crises and bad acts
Sunrises (new projects) and sunsets (time to discontinue or merge old activities)
Protecting restricted endowments

12. Responding to Embezzlement
Investigation of events
Notice, engagement of board
Communication strategy-internal, donors, external
Referral for consideration of prosecution
Insurance coverage and notice/claim to insurer
Recovery from perpetrator
Address risks going forward, needed policies and procedures with auditor
Tell the Attorney General
If AG writes your organization, please respond

13. Duties of Board Members
Follow the Governance Provisions of New York Law which require:
Formal conflict of interest policy consistent with statutory requirements
Formal whistleblower policy consistent with statutory requirements (over 20 employees and $1 million in revenue)
Independent Audit Committee if the organization is required to file an audit with the Charities Bureau (no member is employee of organization)

14. Conflict of Interest Policy
Conflict of interest policy must include:
Definition of circumstances constituting a conflict
Procedures for disclosing a conflict
Requirement that person with a conflict cannot vote or deliberate on the matter resulting in the conflict
Prohibition against attempts by conflicted individual to influence the deliberation or vote

15. Conflict of Interest Policy (cont.)
Requirement that existence and resolution of the conflict be documented
Procedures for disclosing and documenting related party transactions in compliance with law
Requirement that board members sign a conflicts statement before serving on board and annually

16. Related Party (conflicts) Transactions
Person who will benefit from transaction may not be present at or participate in board or committee deliberation or vote
But - board or committee may request information, background or response to questions before deliberations or voting
Covers compensation to directors, officers, employees
IRS-990 Asks - Did the process for determining compensation include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?

17. Whistleblower Policy Policy must include procedures for:
Reporting violations of law and other wrongdoing
Maintaining confidentiality of the reporting individual
Ensuring that there is no retaliation against the reporting individual
The policy must be distributed to all officers, directors, employees and volunteers
NOTE - though required for organizations with revenue over $1 million and 20 or more employees, smaller organizations may want to consider adopting a whistleblower policy

18. Audit Committees
Organizations required to file an audit with the Attorney General must have an audit committee made up of independent members of the board
Or the board must fulfill the audit oversight responsibilities with only independent members of the board participating

19. Audit Threshold Raised
Many smaller organizations no longer have to file a CPA’s audit report
New audit thresholds:
Effective July 1, 2014
Review - $250,000 - $500,000
Audit – over $500,000
Effective July 1, 2017
Review - $250,000 - $750,000
Audit – over $750,000
Effective July 1, 2021
Review - $750,000 - $1,000,000
Audit – over $1,000,000

20. Audit Committees
The audit committee or independent members of the board must
Retain or renew the retention of the CPA to conduct the annual financial statement audit,
Review the completed audit with the CPA, and
Review with the CPA the communications to those charged with governance (including the management letter) resulting from the audit.

21. Audit Committee
If the organization has (or had in the prior year) over $1 million, the audit committee or independent members of the board must also:
 Before the audit, review with the CPA its scope and planning;
 When the audit has been completed, review and discuss with the CPA:
Material risks and weaknesses in internal controls identified ;
Any restrictions on the scope of the CPA’s activities or access to requested information;
Any significant disagreements between the CPA and management; and
The adequacy of accounting and financial reporting processes of the organization; and
 Annually review the performance and independence of the CPA

22. Duties of Board Members
NOTE – IRS 990 questions about governance include:
Number of voting board members & differences in voting rights
Number of independent voting members of the board
Family relationships of officers, directors & key employees
Delegation of management duties to a management company
Changes to governing documents since the last 990 was filed
Significant diversion of the organization’s assets?
Contemporaneous documentation of board/committee meetings

23. Duties of Boards of Directors
NOTE – IRS 990 questions about governance include:
Was the 990 given to all board members before filing?
Did the organization have a conflicts policy?
Did the organization have a whistleblower policy
Was compensation of the top management person reviewed and approve by independent people using comparability data and is there documentation of the review?

24. Duties of Board Members
Most important – Make a commitment
Understand your mission and know the bylaws and what they mean
Communicate – with each other and the organization’s management
Evaluate the organization’s programs – Are changes needed? Is funding sufficient?
Make sure organization and its fundraisers are registered with the Charities Bureau
Remember – you don’t have to do this alone – take advantage of available resources

25. Registration With the Charities Bureau
Who must register and file annual financial reports:
Organizations holding assets in NY for charitable purposes
Organizations that solicit contributions in NY, including from individuals, government agencies and foundations
Fundraising professionals hired by charities
How to register – forms and instructions posted at

26. Registration of Fundraisers
Fundraisers must register with the Charities Bureau
Fundraising contacts must be filed
Accurate reporting on each fundraising campaign – report signed by the charity and fundraiser
Disclosures to persons being solicited
See our guidance:

27. WANT TO CONTACT US? General Questions About Charities
Questions About Fundraising Professionals
Questions About Transactions
Complaints form
Complaints -