(Boise) – Attorney General Lawrence Wasden reminds charitable organizations, their attorneys, and the public that the Idaho Charitable Assets Protection Act (ICAPA) becomes effective on July 1, 2020. The Idaho Legislature enacted the new law to help the Office of the Attorney General better protect the state’s charitable assets and preserve donor intent.
“Over the past five years, my office has worked closely with stakeholders to draft a comprehensive law that better protects charitable assets in our state,” Wasden said. “ICAPA is the result of that hard work. I want to thank legislators for recognizing the need for the new law.”
Since 1963, the attorney general has had a duty under Idaho law to protect charitable assets. However, the law was unclear as to the attorney general’s investigative and enforcement authorities. The law allowed the attorney general to sue a charitable organization if its board allowed the misuse of charitable assets, but the attorney general had no authority over individual bad actors.
For example, the attorney general could not sue a nonprofit hospital’s CEO who used hospital assets to set up a private business overseas. Similarly, a board member who bought a car with the charity’s money and left the state did not fall under the attorney general’s authority. Once the new law takes effect, the attorney general will be able to investigate and sue a person who knowingly uses charitable assets for personal purposes or in a way that contradicts the organization’s charitable purpose or the donor’s intent.
The new law also requires charitable organizations to give written notice to the attorney general at least 30 days before the organization dissolves, converts to a noncharitable entity, or terminates and distributes its charitable assets. The attorney general may sue to stop the charitable organization from dissolving or converting if it plans to sell its assets for less than fair market value, give its charitable assets to a charity with a different charitable purpose, or otherwise unlawfully distribute charitable assets.
“This situation comes up fairly regularly with my office,” Wasden said. “We’ll find out through the grapevine that a charity went out of business and gave its charitable assets to an organization with an unrelated charitable purpose.”
The Office of the Attorney General also has faced situations in which an Idaho organization wanted to dissolve and sell its charitable assets to a for-profit entity for substantially less than fair market value.
With ICAPA, the office can address these situations before they occur, as opposed to years after-the-fact. Wasden emphasizes that his office wants to work cooperatively with organizations and their boards before problems arise.
The attorney general has posted detailed FAQs regarding ICAPA on his website. The site also includes a notice form that a charitable organization may use to notify the attorney general about the organization’s plan to dissolve, convert to a noncharitable entity, or terminate and distribute its charitable assets. Instructions for completing the form also are posted. A recent episode of the office’s podcast “Counsel for the State” also discusses the new law.
Anyone with questions about ICAPA and its requirements may contact the Office of the Attorney General’s Consumer Protection Division at 1-800-432-3545, 208-334-2424 or at firstname.lastname@example.org.