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House Bill 431 — Attorney general oversight of charitable assets

House Bill 431 — Attorney general oversight of charitable assets

Wayne Hoffman
February 13, 2020

Bill description: House Bill 431 would give the attorney general authority to make decisions regarding the disposal of a charity’s assets. 

Rating: -2

Does it create, expand, or enlarge any agency, board, program, function, or activity of government?

Ordinarily, the role of the state attorney general serves as the state’s chief legal counsel. State law gives this office the additional authority to oversee nonprofit charities. In this particular bill, the attorney general is given new powers to regulate charities and dispose of their assets.

The bill’s lead sponsor contends that this legislation applies only to charities that are contemplating dissolution. Parts of the legislation conflict with each other, however (See 48-1902 and 48-1907(4)). The lack of clarity could render some charities out of compliance or make them over-report. 


Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market? 

HB 431 would restrict a charity from disposing of its assets, requiring it to adhere to a timeline established in statute. The charity would have to notify the attorney general its intent to dispose of the asset and then wait for a specific amount of time before disposing of it. The bill gives the attorney general several options: approve the disposal;  remain silent on the matter; allow the disposal to proceed; write a letter objecting to the disposal; and/or sue to stop the disposal. 


Analyst’s Note:
Under existing nonprofit law, a charity is governed by a board of directors consisting of at least  three members, and they determine and how to dispose of its assets. Additionally, existing law requires a nonprofit board to decide ahead of time  what would happen to assets should the organization dissolve. (Typically, this decision is reported in public documents available to anyone). Donors give to charities based on how well they spend the money given to them, how well they adhere to a mission, and other factors, some of which are unique to each donor. This bill does not identify any standards, conditions, or requirements under which the attorney general would approve or disallow a charity to dispose of an asset, making it virtually impossible for a charity to comply in any meaningful way.

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