Washington Attorney General – Charity Enforcement

The Washington Attorney General’s charity enforcement efforts are critical in ensuring that charitable organizations within Washington state operate with transparency, accountability, and alignment with their stated charitable purposes. Through investigations, legal actions, and regulatory oversight, the Washington Attorney General’s office enforces charity laws to safeguard the public’s trust and ensure that charitable assets are used appropriately. One of the most essential functions of the Washington Attorney General (“AG”) is investigating fraud and the misuse of charitable funds. This blog post explores Washington AG’s efforts to enforce charity law, highlighting critical cases and initiatives.

Why Charity Enforcement Matters

Charities rely on the trust and goodwill of donors and the public. When charities fail to follow the law or misuse their funds, it harms those they aim to serve and erodes public confidence in the entire sector. The Washington AG’s Charitable Trusts and Nonprofit Organizations Division focuses on:

• Protecting charitable assets from fraud or mismanagement.
• Ensuring organizations fulfill their charitable purposes.
• Enforcing compliance with state laws governing nonprofit organizations and charitable trusts.
• Investigating fraud and the misuse of charitable funds to ensure donor contributions are used appropriately.

The Washington AG’s office uses several tools, including legal action, outreach programs, and collaboration with other states and federal agencies, to enforce charity regulations and prevent misuse of charitable funds.

The Noble Foundation Fraud Case: A Major Charity Enforcement Example

One of the most notable recent charity enforcement actions by the Washington AG is the case against The Noble Foundation. This case exemplifies the WashingtonAG’s dedication to cracking down on charity fraud and misuse of funds.

The Noble Foundation, founded to help BIPOC communities in Southwest Washington access government services, misappropriated over $1 million in charitable assets. The foundation’s founder and board members—mainly family and friends—are accused of using these funds for personal expenses, including purchasing a house and a car and paying lump sums disguised as “back pay.”

The WashingtonAG’s investigation revealed significant governance failures, where the board failed in its fiduciary duties and allowed the misuse of charitable funds. The case alleges multiple violations of Washington’s Nonprofit Corporation Act, and the litigation continues, with a trial scheduled for February 2025. This case highlights the WashingtonAG’s commitment to investigating fraud and financial misconduct within the charitable sector.

Investigating Fraud and Misuse of Charitable Funds

The Washington AG routinely investigates fraud and misuse of charitable funds, ensuring donor contributions are not diverted for personal gain. Through these investigations, the Washington AG’s office:

• Examines financial records to detect irregularities in how charitable funds are used.
• Holds charity leaders accountable for any misappropriation or fraudulent behavior.
• Enforces restitution or settlements to recover misused charitable assets.

For example, in another case, the Washington AG’s office investigated a nonprofit that falsely claimed to use donated funds to support child welfare programs. Upon investigation, it was discovered that a significant portion of donations went to administrative expenses and personal benefits for the organization’s leadership. The Washington AG enforced penalties and required the nonprofit to repay misused funds and improve governance practices.

Other Charity Enforcement Activities

In addition to high-profile cases like The Noble Foundation, the Washington AG’s office frequently pursues enforcement against charitable organizations for:

• Failure to properly register and comply with reporting requirements.
• Deceptive solicitations that mislead donors about how their contributions will be used.
• Governance violations, such as self-dealing or conflicts of interest among board members.

In September 2023, the Washington AG took enforcement action against several charities that failed to comply with Washington’s registration laws, imposing fines and requiring corrective actions to ensure compliance.

Educational Outreach and Collaboration

To prevent violations and promote best practices, the Washington AG’s office also engages in educational outreach to help charities understand their legal obligations. By offering webinars, guidance on financial management, and training for nonprofit leaders, the Washington AG helps organizations avoid compliance issues and the risk of fraud or fund misuse.

Moreover, the Washington AG collaborates with other state and federal agencies to address cross-border charity fraud. This collaboration helps detect fraud schemes that span multiple jurisdictions and ensures that charitable assets are protected across state lines.

Looking Ahead: What Washington Charities Should Know

Charitable organizations in or doing business in Washington must prioritize strong governance, transparency, and compliance with state laws to avoid enforcement action. The Washington AG’s office is committed to holding charities accountable when they misuse funds or engage in fraudulent behavior. Recent cases like The Noble Foundation demonstrate the severe consequences of failing to uphold legal and fiduciary responsibilities.

Washington nonprofits can protect themselves by:

• Training board members on their fiduciary duties and legal responsibilities.
• Maintaining clear financial records and ensuring funds are used strictly for charitable purposes.
• Implementing conflict-of-interest policies to prevent governance issues or self-dealing.

For more information about Washington charity laws and enforcement actions, visit the Washington Attorney General’s website or consult with legal counsel to ensure your organization complies.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.