Charities Beware: Does It Look Too Good To Be True?

The Case

Are you in a position to accept charitable donations, sit on the Board of Directors of a charity, or donate to charities? What would the organization(s) you are affiliated with do if an insurance company offered them a stock certificate for 226,112.55 shares of insurance company stock and a check for $20,000? Would they accept the stock certificate and check? Would they agree to write a receipt and have their picture taken with the stock certificate? That is exactly what 20 charitable organizations did and they are now left with 5% ownership in Walshire and unforeseen potential financial liabilities. More detail is in the court opinion located here. It is noted that these transactions were for the purpose of having the charitable organizations accept the detritus (debris). When you look at the list of organizations involved in this case, you find names of prominent organizations which many of you may have dealt with.

The Solution

What should an organization do to avoid becoming a victim of donation schemes? The following are several steps organizations should take.