State Charity Regulation: Insights for Nonprofits From the 2026 NASCO Conference and Annual Report

NASCO held its annual conference on October 6–8, 2026, in Portland, Oregon. Its members include state attorneys general, secretaries of state and other offices that oversee charitable assets, organizations and solicitations. Attorneys from Loeb & Loeb’s Nonprofits & Tax-Exempt Organizations group attended the October 6 public sessions, which offered an opportunity to meet with and hear from state charity regulators.

Released in connection with the conference, NASCO’s Annual Report on State Enforcement and Regulation covers cases and trends from September 2025 through September 2026. The Annual Report is not a comprehensive survey—it summarizes actions submitted by state agencies but remains the only available compilation of state-level regulation of charitable organizations.

Together, the conference and Annual Report provide insight into regulatory trends and priorities. We continue to see activity in two broad categories: protecting charitable assets and donor intent through scrutiny of governance and fiduciary compliance, and protecting donors through consumer-protection actions targeting allegedly “sham” charities and fraudulent solicitations.

It’s worth noting that in the NASCO spirit of political neutrality, the public day of the conference and the Annual Report generally steered away from the more politically charged issues currently permeating the sector. Regulators emphasized their interest in supporting the sector through education and guidance, although the use of compliance and enforcement actions to provide important compliance reminders should not be ignored.

Below we provide practical lessons and takeaways for charities and their leaders and fundraising partners, and summarize illustrative cases from the Annual Report.

Lessons and Takeaways

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Board Oversight and Misuse of Assets. Regulators continue to scrutinize board oversight and alleged misuse of charitable assets. When a diversion occurs, boards should be prepared to demonstrate concerted efforts to assess the problem, recover funds and improve internal controls; remedies may include repayment, service bans, reporting, training and board changes.

Illustrative cases:

• In New York, the Appellate Division unanimously upheld the judgment against former NRA executive Wayne LaPierre, holding that the statutory duty to “account for” misconduct permits courts to order repayment of losses and that his resignation did not moot a bar on future fiduciary service.
• In the District of Columbia, the attorney general intervened in a lawsuit brought by a housing nonprofit against its former executive director regarding $1.25 million in allegedly unauthorized bonuses.
• In Minnesota, the attorney general settled claims with a charter school superintendent who allegedly invested over $4 million in a risky hedge fund contrary to school policy. The settlement banned the superintendent from working in Minnesota’s nonprofit sector and required $220,000 in restitution. In an earlier pre-lawsuit settlement, the school agreed to governance improvements.

Fundraising Practices and Third-Party Relationships. Deceptive fundraising and fundraising platforms remain regulatory priorities, with attention to transparency, charity consent and donor confusion. Crowdfunding and other fundraising partnerships are expected to remain a key focus of regulators across the country, highlighting the need for ongoing diligence around fundraising partnerships and the use of organizations’ name and intellectual property.

Illustrative cases:

• California sued allegedly sham charities and their principals for allegedly diverting over $3.8 million in stadium concession proceeds. The charities allegedly took advantage of a program at San Diego stadiums intended to benefit charitable causes, allegedly diverting the funds raised.
• California also issued a cease-and-desist order against Flipcause, a fundraising platform that allegedly operated like a Ponzi scheme, stopped communicating with its charity clients and eventually declared bankruptcy, owing its clients $29 million.
• Georgia imposed a $100,000 fine and issued an emergency cease-and-desist order on an unregistered donor-advised fund that the secretary of state alleged misappropriated donor funds.

Donor Intent and Restricted Assets. Regulators continue to enforce gift restrictions through estate proceedings, settlements and negotiated modifications. Before changing the use of restricted assets, organizations should consult counsel and determine whether donor, regulator or court involvement is required.

Illustrative cases:

• In California, heirs argued that an approximately $6.5 million charitable gift should pass to them because the foundation required by the will had not been created before the donor’s death. The attorney general intervened and secured a settlement directing $5.5 million to establish the foundation.
• In Missouri, a college sought permission to broaden an endowment restricted to no-interest loans for medical, nursing or STEM students with specified rural residency and 10-year work commitments. The college said it could not find qualified beneficiaries. The attorney general negotiated revised restrictions allowing scholarships for students in those fields who lived in rural Missouri counties and intended to work in a rural community.
• In Ohio, the attorney general settled with a seminary regarding plans to sell valuable texts from its collection. Under the settlement, the seminary must provide advance notice of planned collection dispositions and use of any net sale proceeds to acquire other collection items.

Major Transactions. Regulators in states requiring attorney general or court approval continue to scrutinize sale and merger petitions, with an eye toward preserving charitable mission and assets. States continue to focus in particular on health care transactions, but all charities should allow sufficient time for attorney general review when planning a major transaction.

Registration and Other Compliance Developments. States are canceling overdue registrations, imposing late-filing fines and updating solicitation rules. States launched various compliance initiatives. For example, New York is sending out reminders of reporting deadlines; Hawaii offered an amnesty period to encourage compliance; Maryland will notify up to 2,300 long-noncompliant organizations of cancellation; and Washington sent letters to 6,000 charitable corporations that were administratively dissolved, informing them of their obligation to either formally dissolve or reinstate. Efforts toward a unified registration system—something many charities have hoped will become available—have been paused, and there was little indication that they will resume in the near term. Organizations should continue registering state by state, keep filings current, and monitor new filing and attestation requirements.

Loeb’s Nonprofits & Tax-Exempt Organizations group includes several former senior officials from the Office of the New York State Attorney General Charities Bureau and the Internal Revenue Service. We help clients navigate the evolving regulatory landscape.