CENTER FOR NONPROFIT DEVELOPMENT
Under most circumstances, we would never list a "competitor" under this scam page for conflict-of-interest reasons. The case of Center For Nonprofit Development, Inc. (CNPD) is another matter, however.
This company, based in Alexandria, Virginia, prepares 501(c)(3) applications for new nonprofit organizations at a deeply discounted price. This organization also received its own IRS recognition as a 501(c)(3) charity sometime in 2003.
We first became concerned about CNPD based on their extremely low price point for 501(c)(3) application work. Further investigation seemed to indicate that CNPD was not preparing these applications from information supplied by the client, but rather was "making up" the application contents, if not in-whole, certainly in-part. That was later confirmed by former CNPD clients.
UPDATE: CNPD is no more. After quickly establishing an unsatisfactory record with the Better Business Bureau for countless unresolved complaints, CNPD folded their tents and disappeared. Unfortunately, many clients who prepaid for services were left high and dry. Our attempts to reach CNPD by telephone were unsuccessful, as were those of the BBB. As of March 2005, at least two look-alike companies have taken their place and are even using nearly identical marketing tactics.
LESSON: Professionals do not "coupon" their expertise at low-ball prices. Too-good-to-be-true pricing is usually a cover for a lack of expertise. How comfortable would you be with a doctor who promotes himself as the cheapest in town? Today's Special: Bypass Surgery For Only $49.95!
CORPORATION SOLE
This tax-avoidance scam is growing by leaps and bounds. New "tax consultant" firms are popping up all over that promote the incredible benefits of the little-known entity, Corporation Sole. Formerly the exclusive domain of Kings and Sovereigns, Corporations Sole can be set up by anyone, are automatically tax-exempt and are virtually untouchable by the IRS. Centuries-old histories of the entity are recited, including references to the Catholic Church, and even the assertion that the office of the Governor of Tennessee is set up as a Corporation Sole. The interesting thing is that you will not see licensed professionals hawking these setups. Supposedly, CPA's and attorneys are too beholden to the system or just ignorant of the law.
Our advice? Don't even think about it! In most US states, no such entity is even recognized in law. In the handful that do, it isn't what these vendors are selling it to be...not even close. In fact, a less appropriate business structure for a nonprofit organization would be difficult to find. The IRS automatically assumes a Corporation Sole to be a scam.
DOLLARS FROM NIGERIA??
Don't bet on it!! They're not pennies from heaven, that's for sure.
The scam goes something like this...You get an email from a Nigerian pastor, Emmissary, Christian brother or similar. They or someone they are associated with wants to donate a large sum of money to you or your organization. A variation is that they need assistance with an international money transfer and, in exchange, you will receive a large commission. Inevitably, just before things are about to happen, a snag arises, e.g., someone needs to be bribed, a Nigerian transfer tax needs to be paid or something similar. In any case, it is you or your organization that will need to send $1,000, 2,500, 10,000, etc. in order to break the logjam. Considering you're about to be given a few hundred thousand or several million dollars, what's a couple thousand, right? Wrong!! Don't ever expect to see your money, or hear from your new Nigerian buddies, ever again.
This scam has been around for at least 20 years. The culprits graduated from air-mail letters to email about 5 years ago. This is NEVER legitimate. Don't even be tempted by the idea. In fact, you should notify the FBI if you receive such a communication. Recently, we have had a rash of clients contacted by these con artists. We're even getting their crazy emails! Remember, if it sounds to good to be true...
FAITH-BASED INITIATIVE CONFERENCE
A popular ministry seminar group out of Chattanooga, TN is conducting "Faith-Based Initiative" Funding conferences. In one promotional mailer, the group claims that the featured presenter is a "Certified" Faith-Based Initiative Coordinator. DON'T BELIEVE IT! Neither the White House, nor ANY other federal government agency is providing "certification" for anybody. It is a total fabrication. Based on our research, this individual holds no actual, professionally earned credentials...Not CPA, not EA, not J.D., not Ph.D...though he is self-proclaimed as "The Authority."
Worse yet, one promotional piece provides a list of organizations who successfully applied for and received funding under the 2002 Compassion Capital Fund grant cycle, which is a part of the White House Faith-Based Initiative. The promo overtly implies that this group assisted the recipient organizations in their application efforts. Truth is, it is the complete list of CCF recipients...absolutely NONE of which was assisted by this group.
It is a shameless attempt to deceive you. Don't waste your money!
CHURCH & CLERGY SEMINARS...Is The IRS Out To Get Pastors?
Is the IRS out to get pastors or churches? Yes, if you were to believe promotional mailers advertising a certain, well-known "Church and Clergy Seminar". One slick, four-color glossy that we've seen has a cover photo of a minister in handcuffs!
Simply put, these are unacceptable marketing tactics, by the same Chattanooga-based group as above, designed to take advantage of the relative fiscal inexperience of the clergy. Sadly, much of the information contained in this seminar is inaccurate at best, and intentionally misleading at worst. It seems that most of it is designed to confuse and subsequently drive attendees to the book table. We've talked with numerous clients who have attended these conferences and we have been astounded at the distortions and misinformation being taught. These presenters are self-proclaimed "experts" who have no professionally earned credentials. Additionally, they claim a divine "anointing" rests on their teachings. This is simply reckless, irresponsible...and inexcusable. They are no friend of the Church.
The IRS is not, and we repeat, IS NOT, putting ministers in jail. In fact, they are not even specifically targeting clergy members for audit. While it is true that the IRS is placing nonprofit organizations under increased scrutiny, the same is not true for individual ministers. Likewise, there is no truth to the notion that the IRS is looking to bully churches around. Truth be told, the IRS prefers to not get snagged into church issues.
According to the IRS's own figures, the average individual's odds of a tax audit are 1 in 500. That's less than 0.2% !! And the odds for ministers (?)...exactly the same, 0.2%. And, just for laughs, the odds of oing to prison are 1 in 122,439*. You are more likely to go to jail for not paying a speeding ticket.
So, does this mean that ministers can get sloppy in their record-keeping or hyper-aggressive with their tax deductions? In a word, no. Due diligence is still the operative phrase. With due diligence, you'll stay in the 0.2% category.
And about seminars...don't get us wrong. There is nothing wrong with legitimate seminars aimed at educating and assisting the clergy. The Foundation Group conducts church and ministry seminars, as well as participating as session speakers at various ministry conferences. We fully intend to conduct considerably more in the coming year. We just believe it is unethical to profit by generating fear and confusion among our seminar attendants.
*Thanks to Christian Ministry Resources, Inc. for this calculation.
NEW!! - CALIFORNIA COMPLIANCE FORMS IN THE MAIL
Make sure it's real! If you are a newly incorporated California nonprofit, be prepared to receive official-looking correspondence from either the Board of Minutes and Resolutions or the Corporate Compliance Center. Both companies (if, in fact, it isn't the same company) are targeting new corporate entities with a scam intended to make you believe it is a government agency contacting you. The enclosed form, complete with what looks like a government document number, requests information such as board of directors, salaries and other data for the purpose of officially recording such. You are given a due date, fee payable (varies...$150-$250), and are told you will receive documentation in return. Though probably legal (both provide small-print, non-government disclaimers), it is completely worthless and totally deceitful. Not only is it not required, there is absolutely no purpose for it beyond taking your money. Most of these scams are eventually shut down by the Attorney General's office, but not before they take a lot of money from people just trying to stay in compliance with California's tangle of red tape.
From time to time, The Foundation Group becomes aware of a situation that, in our opinion, takes unfair advantage of nonprofit organizations and/or churches. We will never publicly condemn or criticize businesses providing a legitimate service. We will, however, keep our clients and others abreast of those businesses and situations that we believe they should avoid. All opinions are those of The Foundation Group, unless other sources are specifically referenced, e.g., Better Business Bureau, IRS or others.
This page will be updated periodically as we become aware of situations that need to be addressed. If you are aware of scams or schemes targeting nonprofits, churches and ministries, let us know.
