SACRAMENTO – California Attorney General Xavier Becerra today announced three final decisions that upheld cease and desist orders issued against Catholic Medical Mission Board, Inc., Food for the Poor, Inc., and MAP International for their deceptive solicitation tactics. These charitable organizations solicited donations by deceptively implying to donors that up to 99 percent of their cash donations went to charitable programs, when in reality up to 40 percent of cash donations were used for administrative and fundraising costs. These organizations vastly inflated their revenue by valuing gift-in-kind drug donations at high U.S. market prices even though they knew they were shipping these donated drugs to overseas locations where their value was far lower. An administrative law judge ordered all three charities to cease and desist using deceptive statements when soliciting donations and ordered them to pay penalties totaling $1,490,175.
Attorney General Becerra continues to honor his commitment to protecting charitable donors and honest charities. Earlier this year, Attorney General Becerra sponsored Assembly Bill 1181, a bill introduced by Assemblymember Monique Limón to tackle the lack of transparency in the valuation and reporting of non-cash, gift-in-kind donations. Charities that shamefully inflate the value of gift-in-kind donations, and thus the true value of the total contributions they receive and the value of the services they perform, severely disadvantage honest charities competing for donations.
“Today’s announcement should serve as a reminder: charities that mislead generous donors will face serious consequences,” said Attorney General Becerra. “Assembly Bill 1181 is a promising first step in the right direction to protect donors, ensure transparency, and level the playing field among charities operating in California. My office will not tolerate accounting gimmicks, and we will hold accountable charities that engage in deceptive solicitations.”
The decisions announced today assert that all three charities must cease their solicitations that imply that high levels of cash donations were used for charitable program services when, in truth, much lower levels were used. If signed into law by Governor Newsom, Assembly Bill 1181 would require charities operating in California to consider the restrictions pharmaceutical companies place on donated drugs in assessing their value. For example, if a pharmaceutical company restricts donated drugs so that the recipient charity cannot distribute them in the U.S., then the charity should not value these donated drugs using U.S. prices for the purposes of reporting them as revenue and program services on their financial reports.
In addition to today’s announced enforcement actions, recent successful actions by the Attorney General against other charities that inflated the value of donations demonstrate the need for Assembly Bill 1181:
More information on Assembly Bill 1181 can be found here.