The Second Circuit Court of Appeals has affirmed the dismissal of a citizen’s federal court complaint seeking to force the Attorney General of New York to take action against a charitable foundation under New York law. (Carvel v. Cuomo, No. 08-3703, 12/21/09.)
We regularly feature answers to questions from readers in our “To the Point” column. The full list can be viewed here. Here are a few questions recently received from readers.
May unrecognized church accept donations?
May an incorporated church, which does not have 501(c)(3) status, receive tithes and offerings from its members? --From the Website.
When a charity or other organization sues its auditors for producing false financial statements, the auditor can often avoid liability if the officers of the organization provided false information for the audit. The auditors can be protected by the in pari delicto defense, which provides that in the case of mutual or equal fault, the case of the defender is stronger.
The efforts of the unsecured creditors of the Allegheny Health Education and Research Foundation, which in 1998 filed the largest nonprofit bankruptcy up to that time, took on new life recently when the Pennsylvania Supreme Court disagreed with a federal District Court decision that had denied them the right to sue AHERF’s auditors for false financial statements. The Supreme Court has held that the in pari delicto defense will not apply when the auditors have conspired with the officers to produce the false statements.
An appellate court in Texas has upheld the action of a nonprofit homeowners’ association whose members removed a director for “cause” after she complained about the approval of a building variance and had her lawyer ask the board to have the Association’s lawyer to review the matter. (Matzel v. Stonecrest Ranch Property Owners’ Association, Ct. of App., TX, Fourteenth Dist, Houston, No. 14-08-00326, 1/29/10.)
A member of the Association distributed to the rest of the Association’s members a copy of the director’s letter saying she was “prepared to seek all remedies” if the board did not change its way of operation. The members petitioned for a special meeting to consider her removal. After both sides had an opportunity to address the membership, the director was removed by a vote of 45-9.
May a 501(c)(3) organization devoted to strengthening African-American communities fire its executive director after she has endorsed a white Jew for mayor without violating antidiscrimination laws?
That’s the question facing a trial court in New York City in a suit brought by Joyce Johnson, the CEO of Black Equity Alliance, who was fired after she endorsed Mayor Michael Bloomberg for a third term as mayor. She sued both the organization and its individual directors for damages.
A trial court in New York has ruled that voting privileges of members of a nonprofit corporation cannot be suspended automatically for failure to pay required dues, despite a bylaw provision it interpreted as providing suspension without notice. It said the state’s Not-for-Profit Corporation Law required “reasonable notice” to enforce collection efforts. (Abraham v. Diamond Dealers Club, Supreme Court of NY, NY County, No. 10263/2009, 3/1/10.)
