The Arkansas Secretary of State is supposed to play a pivotal role in ensuring the transparency and accountability of charitable organizations operating within the state.
While this may sound good in principle, Today in Fort Smith has documented numerous cases in which charities in all quadrants of the state have been allowed to register, conduct business, and actively solicit donations without adhering to the rules and regulations set forth by the state.
The oversight of charities by the Arkansas Secretary of State is supposed to be critical function that promotes transparency, accountability, and trust in the charitable sector. While the measures are in place to ensure that charitable organizations operate with integrity and transparency, little is done through the SOS office to double-check the backgrounds of those applying for registration.
Therefore, felons applying for non-profit status, some convicted of crimes ranging from forgery to theft, can and have set up organizations whose single goal was to put money in their own pockets.
Since January 1, 2018, all charities soliciting donations in Arkansas are required to register and file annual informational returns with the Secretary of State’s office. This mandate aims to protect donors and ensure that charitable funds are used appropriately.
The registration process involves submitting detailed information about the charity, including its mission, financial statements, and the names of its officers and directors.
Through that portal, the public can access the name of the charity and some of the paperwork filed at the time it applied for registration. However, the only information issued by the SOS office on their website is whether or not the charity is in "compliance" or in "good standing".
This information is then made publicly available through the Secretary of State’s online database, allowing potential donors to verify the legitimacy of organizations before making contributions1. This transparency is crucial in preventing fraud and ensuring that donations are used for their intended purposes.
In addition to initial registration, charities must file annual informational returns. These returns provide updated financial information and details about the charity’s activities over the past year. This ongoing reporting requirement helps maintain accountability and allows the Secretary of State’s office to monitor the financial health and operational integrity of registered charities.
However, numerous non-profits across the state have maintained their 'good standing" status while being out of compliance with the regulations for months, and sometimes years, at a time. The main sticking point, according to a spokesman for the SOS office, is the failure to file tax return information in a timely manner. the non- filing of "annual" reports" and other "paperwork issues".
Fpr example, one Fo0rt Smith-based non-proft that has been registered with the state since 2019 has failed to file an income-tax return with the state for five years running. Yet, as of 9/19/2024 the entity, that now exists in name only, is listed nas "current" with their state paperwork obligations.
Another example is one of the largest organizations in the state whose mission statement says their goal is ''implementing programs designed to increase access to food and teach low-income Arkansans the skills they need to make healthy food choices"
For a number of years, the Little Rock-based non-profit, that work as a feeder program for six regional-based food banks in the state was listed as "out of compliance" on the Secretary of State's website.
There have been several notable cases of fraud and non-compliance involving non-profits in Arkansas.
Some non-profits have been involved in schemes where they paid excessive management fees to companies owned by conspirators, generating significant income for those involved1. and there have been reports of unethical and illegal conduct within non-profits, including misuse of assets for personal gain and violations of federal tax laws.
The Secretary of State’s office also is supposed to serve as a valuable resource for both charities and donors, offering guidance on compliance with state regulations and best practices for charitable organizations. For donors, the office should provide tips on how to make informed giving decisions, such as verifying a charity’s registration status and understanding how donations will be used.
When you contact the SOS office with queries, complaints and to point out specific organizations and their specific violations, you can almost hear the shoulder-shrugs emanating from the capital city. At the most, you'll get told to call the Attoirney General's office, which is really just the punchline of another joke.
To ensure compliance, the Secretary of State’s office has the authority to investigate complaints and take enforcement actions against charities that fail to adhere to state regulations, although they seldom do.
This could include fines, revocation of registration, and other penalties. These enforcement measures are essential in maintaining the integrity of the charitable sector in Arkansas.
Now, if we coud just get someone to do their damn job.
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