Charities and Nonprofits:
Complaints and Enforcement

The Office of the Attorney General represents the public interest in charity and acts to protect that interest. Texas has more than 50,000 active charitable organizations and countless trust entities over which the Attorney General has oversight authority.

The Attorney General's responsibilities include:

• investigating and initiating legal action against charitable organizations, their directors and/or their professional fundraisers to ensure that charitable donations and assets are lawfully raised and expended;
• reviewing transactions involving the sale or conversion of non-profit, charitable corporations to for-profit entities or status; and
• reviewing all legal proceedings involving charities pursuant to Texas Property Code §123.002. Chapter 123 provides the Attorney General with standing to intervene in any proceeding involving a charity on behalf of the interest of the general public of this state.

Problems that the Attorney General frequently investigates include:

• illegal use of charitable funds;
• diversion of charitable trust funds from their intended purpose;
• sale of a charity or conversion of a non-profit corporation to "for profit" status at a price that is unfair to the charity;
• excessive amounts paid by a non-profit corporation or charitable trust for salaries, benefits, travel and entertainment; and
• self-dealing transactions either between a director and/or trustees and the non-profit corporation.

The Attorney General does not generally investigate:

• homeowners' associations and other non-profit membership benefit corporations;
• matters involving internal labor disputes, contested elections and disagreements between directors and/or members over policy and procedures;
• claimed violations of religious laws or doctrine by churches or religious corporations.

Filing a Complaint

The Charitable Trusts Section receives many inquiries and complaints from the general public, news reporters, and other interested parties regarding possible mismanagement or diversion of charitable assets. All complaints about charities are reviewed by the Attorney General's Charitable Trusts section staff.

Due to the limited time and resources available to assist in our varied enforcement efforts and ongoing duties, the Charitable Trusts Section is unable to conduct full investigations of every matter referred to us. We generally conduct investigations in those cases in which there is reliable evidence of a diversion of assets or gross mismanagement resulting in a significant financial loss or other substantial harm to the public.

The Charitable Trusts complaint form is now available online. We ask that you read this section before you file your complaint. If you file a complaint with our office, please understand the following:

We May Refer You to Another Agency. Often a state, federal or local agency will have more expertise than our office to handle a particular consumer problem. In such a case, we refer the complaint to the agency best able to help.

We Cannot Act As Your Private Attorney. State law prohibits our office from giving individual citizens legal advice or opinions or acting as their private attorney. If you feel that you need legal advice, you will have to turn to another source such as a private attorney, legal aid society or other organization.

We Can Only File Suit To Protect The Public Interest. State law prohibits our office from filing a lawsuit whose only purpose is to recover money or property for a single person. In those instances, it is appropriate for the citizen to seek legal advice from a private attorney, legal aid society or other organization.

Texans make generous donations to charities each year by volunteering time or contributing money. Resources you may want to consult when researching a charity include:

• The BBB Wise Giving Alliance: The Alliance reports on nationally soliciting charitable organizations that are the subject of donor inquiries. These reports include an evaluation of the subject charity in relation to voluntary BBB charity standards.
• The American Institute of Philanthropy: The AIP is a charity watchdog service whose purpose is to help donors make informed giving decisions.
• Guidestar: A national database of U.S. charitable organizations which gathers and distributes data on more than 850,000 IRS-recognized non-profits.