BP Oil Spill Washes Into the Nonprofit Sector

The devastating Gulf of Mexico oil spill continues to have collateral effects, including in the nonprofit sector.  Here are a couple of highlights:

• Tainted Money:  BP gave money to many environmental charities that now have to consider whether the only problem with “tainted” donations is there ‘taint enough of them.  For example, the Washington Post reports that the Nature Conservancy faces a potential backlash because of the nearly $10 million of support it has received from BP and affiliated corporations over a number of years (see also the Conservancy’s description of its work with BP).  The article also reports that Conservation International has received significant financial support from BP, and that a number of other prominent environmental groups, including the Environmental Defense Fund and the Sierra Club, have worked with BP on various projects.  Professor Paul Dunn (Brock University, Canada) has published a Globe and Mail opinion piece discussing this issue.

• When There is Disaster, There Will be New Charities (and Paperwork):  The St. Petersburg Times reports what experienced EO attorneys know but most people do not – forming a new charity involves a lot of paperwork.  Citing the newly created Friends of Florida, an organization specifically created to help combat the effects of the spill on Florida’s shores and wildlife, the article notes the need not only for incorporation and an IRS exemption application, but also in Florida to register with the state Department of Agriculture and Consumer Services to solicit charitable contributions.  The article also raises some yellow flags regarding the credentials of the group’s founder.  Regardless of the merit of this particular group, disasters are also breeding grounds for fraud, including through fraudulent charities, as the article notes.

UPDATE:  Additional coverage of this issue is available in The Economist (Business and NGOs: Reaaching for a Longer Spoon”).

LHM