Charity Navigator Eases Pressure on Nonprofits to Show Minimal Overhead

starsA back-end change to the rating system metrics used by a watchdog organization for nonprofits may not sound like a big deal, or make for snazzy headlines. But the recent announcement by Charity Navigator that it is “upgrading” the way it evaluates charities and ultimately decides how many “stars” each one merits (one a one to four scale) represents a huge change in attitude, and one that will hopefully trickle down through the entire philanthropic community.

The main change to which I’m referring is in the way Charity Navigator will evaluate a nonprofit’s so-called “administrative expenses” going forward.

Currently, only charities that can claim to have no overhead expenses at all can earn Charity Navigator’s top score for that particular measurement, or ten points. Unless yours is an entirely volunteer-run organization, or never has to actually ask donors for financial support or hire people to handle accounting, development, or other management, that’s almost impossible to achieve.

Under Charity Navigator’s newly announced system, a nonprofit can score ten points if it comes within a given range of overhead expenses, taking into account the type of organization.

It’s a change that seems infinitely more realistic. For years, commentators have noted that, while excessive overhead may mean that someone is lining his or her pockets, some level of overhead is a necessary part of simply running an organization. (What for-profit corporation exists without management?!)

A quote in The York Times sums it up nicely: Elizabeth A.M. Searing, assistant professor at the Rockefeller College of Public Affairs & Policy at the University of Albany and a member of the Charity Navigator task force, explains that the change will make it easier for charities to avoid having to “starve themselves” so as not to appear as if they are spending excessively on overhead.

Yes, Even Charitable Organizations Must Abide By U.S. Trademark Law

pillowfightPlanning a fun theme for a special charity event is an opportunity to exercise one’s creativity, attract a new audience, and . . . receive future nasty letters from lawyers.

Just ask Newmindspace, a Toronto-based nonprofit dedicated to organizing free, fun, all-ages events in places like subway cars and city streets. The organization had to change the theme of its popular lightsaber battles to the “Cats in Space Tour” after receiving a cease-and-desist letter from the attorneys at Lucasfilm (owner of the Star Wars brand).

At least the nonprofit seems to have come to an agreement without going to court or suffering direct financial losses (other than the costs of hiring its own lawyers and rebranding). A worse fate appears to have been a possibility: Newmindspace co-founder Kevin Bracken reportedly said that, after receiving the letter, the threat of a multimillion-dollar lawsuit kept him up at night.

Still, it’s a cautionary tale for any nonprofit. How do you make sure not to step on any toes?

First, understand that simply being a nonprofit is not a defense. It might help in certain situations (particularly if you’re such small potatoes that it’s not worth the larger entity’s time to go after you), but you can’t count on that. In fact, giant, unfeeling corporations aren’t even the only ones to go after trademark violators: Remember the reports of the Susan G. Komen foundation sending its lawyers after smaller charities that try to use the phrase “For the cure?”

Fortunately, simply developing some awareness of the existence of trademark and copyright laws, and how they work, will go a long way toward protecting your nonprofit from missteps.

Briefly summarized, trademark infringement occurs when someone uses the trademark or service mark of another when selling competing or related goods and services; particularly if the use might cause confusion for the average consumer. (See Nolo’s articles on Is It Trademark Infringement? for more on this.) If you’re hoping to piggyback on the success of a theme, character, or design that someone else came up with an is actively using, better think twice.

Relatedly, a copyright violation occurs when someone reproduces, distributes, adapts, or performs a work (art, literature, theatre, music, and so on) whose creator still owns the rights to it. As Nolo author Rich Stim explains, “Some people incorrectly believe that if the purpose of the infringement is not for profit, there is no infringement. For example, if a nonprofit charity uses a copyrighted character in its donation drive and mailings, the charity may be liable for infringement.”

Thankfully for Newmindspace, no one seems to have claimed trademark protection for its most popular event: International Pillow Fight Day.

Wonder How Much This U.S. Citizen Would Have Been Awarded If He’d Been Deported, Not Just Detained?

American flag background - shot and lit in studio

Jhon Erik Ocampo, a U.S. citizen, was recently awarded $20,000 in damages to compensate him for his 2012 arrest by U.S. Immigration and Customs Enforcement (ICE) and subsequent seven-day detention. Yes, he attempted to explain to the ICE officers who arrested him that he was a U.S. citizen–but he couldn’t show proof.

This lack of proof is a common situation for people who “derive” U.S. citizenship. That’s a legal term meaning that, although the person him- or herself was not born in the U.S., a U.S. citizen parent was a citizen or became a naturalized citizen while the child held a green card and lived in the U.S., so that the child became a citizen automatically, by operation of law. (See Nolo’s articles on Acquiring or Deriving Citizenship Through Parents; the exact rules vary depending on the year in which the child was born.)

One way to obtain such proof is to apply for a U.S. passport; but the State Department isn’t always attentive to the rules of derivation, and may deny it.

Another way is to apply to USCIS using Form N-600, Application for Certificate of Citizenship (available from the Forms page of the USCIS website). Mr. Ocampo apparently sent in this form multiple times, with no results. (Normal USCIS processing times for Forms N-600 are several months, but it’s an application that often slips to the bottom of USCIS’s priority list.)

So, for lack of proof, Mr. Ocampo endured a week in custody, and was shuttled between two county jails in Illinois before finally someone at ICE took a closer look at his records, confirmed his U.S. citizenship, and let him go.

Is $20,000 enough to compensate for the loss of a week out of Mr. Ocampo’s life, not to mention the fear that no one would confirm his citizenship and he might be sent out of the country that had been his rightful home for years?

Impossible to say–though there may be some basis for comparison, because ICE has made similar mistakes in literally thousands of cases over the years, according to a 2011 Virginia Journal of Social Policy and the Law study conducted by Jacqueline Stevens, professor of political science at Northwestern University.

Let’s just say that Ocampo would likely have been awarded much more if he’d been among the many documented cases where ICE failed to discover its mistake until after having deported the person. (If deported is the right word at all. You can’t legally “deport” a U.S. citizen; commentators have suggested “kidnapped” or “banished.”)

Take the case of Andres Robles Gonzalez, also a U.S. citizen by virtue of derivation. He was reportedly arrested for allegedly violating U.S. immigration laws. ICE ignored his assertions that he was a U.S. citizen, and placed him in deportation proceedings, after which it removed him to Mexico, in December 2008. He wasn’t allowed back into the U.S. until 2011. His damage award? $350,000.

Then there’s Mark Lyttle, who was born in North Carolina, didn’t speak any Spanish, and yet was deported to Mexico. It took him approximately a year to find a sympathetic consular officer to help him make contact with his family (who had thought he might be dead). He received $175,000.

I wish I could find out what, if any damage award was made to Mario Guerrero Cruz. Born a U.S. citizen, he was mistakenly deported in 1995. When he tried to reenter the U.S., he was reportedly arrested and then convicted of illegal reentry and impersonating a U.S. citizen, and sentenced to over seven years in federal prison.

One thing is clear, however. U.S. authorities could save a lot of money if they’d stop pursuing people who never should have been in immigration custody in the first place–and then have to pay them for their trouble later.

San Francisco Becomes First City to Provide Fully Paid Parental Leave

Earlier this weeFamily Leavek, San Francisco became the first city to require private employers to provide paid parental leave to their employees. The law is the first of its kind; no other federal, state, or local law requires employers to fund time off for parents to care for a new child.

California is one of a few states that already provides some paid leave to parents taking leave after the birth or adoption of a child. However, the pay is partial and funded by employee payroll withholdings. California parents can receive 55% of their usual wages (subject to a maximum set by California law) for up to six weeks from the state.

San Francisco’s new law would require private employers in the city with 20 or more employees to make up the 45% difference in wages, so that eligible employees can collect 100% of their wages for six weeks of parental leave.

Employees must meet the following eligibility requirements to qualify for fully paid leave:

The law also includes an anti-retaliation provision, which prohibits employers from taking negative action against employees who exercise their right to paid leave.

The law, which San Francisco Mayor Ed Lee is expected to sign, would be phased-in starting next year. Business with 50 or more employees would need to comply by January 1, 2017, businesses with 35 to 49 employees would need to comply by July 1, 2017, and businesses with 20 to 34 employees would need to comply by January 1, 2018.

Beware the Downside Risks of Tidying Up Your Finances in Preparation for Getting a Mortgage Loan

city illusIf you’re hoping to buy a home and finance it with a mortgage (as do 86% of homebuyers, according to the National Association of Realtors’ 2015 Profile of Buyers and Sellers), getting your finances in order is a good start. You’ll want to understand how much debt, income, and assets you really have, pay off minor debts at high interest that might be harming your ability to take on more credit, and be able to show that you’re a good risk for the hefty loan you’re about to apply for.

But don’t go too far! You can, according to mortgage banker Ken McCoy of Petaluma Home Loans, actually oversimplify your finances to the point that it hurts your credit rating and your ability to qualify for a mortgage at the lowest interest rate and on the most advantageous terms.

Let’s start with your job. If the pay isn’t great, you might be inclined to look for something better before buying a home. But, warns McCoy, “Changing your job can be a bad thing if it’s in a different line of work. The lender wants to see at least two years’ history in the same occupation, basically as a sign that you’re going to stay in that job for the long haul.”

Next, there’s the matter of your assets. Like many people, you may have a checking account at one bank, a savings account at another, and a CD somewhere else. Consolidation would certainly make it easier to know what you’ve got; but, says Ken, “You’ll be creating more, not less paperwork. Lenders want to be able to trace where all the money you’re using to buy a home came from, and you’ll end up having to supply statements from the accounts you closed, just to show the paper trail.”

Finally, there’s the all-important matter of your existing debt, including credit cards. McCoy says, “Prospective homebuyers tend to think about paying off their credit cards or getting rid of debt altogether. But realize that you may qualify for a mortgage with some existing debt; and if you pay it all off, you’ve just taken valuable money you needed for the home purchase transaction. What’s more, you can actually hurt your credit score by having no existing credit, or by closing credit cards you’ve had for years.”

Of course, nothing is cut and dried in this arena. There are certainly circumstances in which, for instance, taking a new job that pays much more would make sense. But how are you to know for sure? “Six months before you want to start looking for a home, sitting down with a mortgage professional would be smart,” says McCoy. And for more tips, check out the Affording a House section of Nolo’s website.