FTC's Crackdown on Fraudulent Charities Made More Complex by States' Lack of Action in Registering Non-Profits

NEW YORK, NY--(Marketwire - June 1, 2009) - Success in the recently announced campaign by the Federal Trade Commission (FTC Announces "Operation False Charity") to crack down on fraudulent charities may actually lie in the hands of the FTC's partners in the effort -- 61 Attorneys General, Secretaries of State and other law enforcers in 49 states and the District of Columbia -- according to Martignetti Planned Giving Advisors, LLC.

"The problem of fraudulent charities is real," said Tony Martignetti, Esq., Managing Director of Martignetti Planned Giving Advisors, a New York-based consultancy group that advises non-profits. "But it's harder to spot fraudulent charities when up to 90% of non-profits fund-raising in major states like California, New York and Florida aren't even registered there."

With non-profits controlling about 10% of the U.S. economy, or approximately $1.5 trillion, it was only a matter of time that federal and state agencies would catch up to the non-profit sector in combating fraud, noted Martignetti.

"Charity registration and licensing throughout the 50 states have long been a regulatory morass that most non-profits avoided," he added. "Enforcement by the states has been nearly non-existent and many states don't have penalties for noncompliance." Martignetti noted that the IRS' new Form 990 -- signed under penalty of perjury by an officer of the non-profit -- makes it illegal to avoid state registrations because it calls for a list of the states in which a copy of the Form 990 is required to be filed.

"A non-profit can only answer that, however, after it researches every state, figures out where to register, then searches out whether those states require its 990," Martignetti said. "A question on Schedule G asks where 'the organization is registered or licensed to solicit funds or has been notified it is exempt from registration or licensing.' Again, a substantial amount of research is required to confidently answer."

Martignetti Planned Giving Advisors has addressed those issues with its newly published e-manual Charity Registration: State-by-State Guidelines for Compliance. Organized by state, the e-book is fully clickable and searchable. This is the only state-by-state manual available for the entire registration and licensing process, including filing forms.

"The sector is now too big to be left largely unregulated, especially in the current environment of enhanced enforcement in the for-profit sector," said Martignetti. "I have long been concerned that the trend of increased regulation will hit the non-profit sector at both the national and state levels. The FTC's crackdown is just the tip of the iceberg."

About Martignetti Planned Giving Advisors

Based in New York, Martignetti Planned Giving Advisors, LLC is a Planned Giving consultancy that works with a wide range of educational, cultural, social service, religious and healthcare institutions to create donor opportunities by building planned gift programs. For more information about Martignetti Planned Giving Advisors, go to www.mpgadv.com.

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