According to Michael Thatcher, CEO of nonprofit evaluator Charity Navigator, the idea of a paperwork mishap or processing delay is “totally plausible.” In a charity filing system, there are multiple ways that something can go wrong without malintent. “There’s human error that can go into the filing of the documents,” he added. “There’s human error in the receiving and processing. Knowing where things went wrong is going to be really difficult.”
There are special circumstances in California that could have caused further complications. Last year, a new charity law went into effect, and its regulations are still being rolled out by the AG’s office. Called Assembly Bill 488, it was passed in 2021 in an attempt to increase regulatory oversight of what the legislation called “charitable fundraising platforms.” The state is due to roll out an online filing system eventually, but as of right now, they are still relying entirely on paper filings. That might explain the delay and the discrepancy between the dates on Archewell’s paperwork.
Thatcher said that regulatory changes often lead to compliance issues and the recent California change has affected a wide variety of charities operating in the state. “The rules have changed and the enforcement has changed, so there’s this uncomfortable adjustment period…. On the other side, clearly, I don’t think anybody wants those kinds of delays, and that’s not great operating procedures,” he said. “California is trying to figure things out on their end.”
The positive words from Newsom don’t mean that everything about the charity’s future has been settled. Thatcher noted that Charity Navigator only evaluates organizations after they have been around for three years, because the early years of a charity can be a start-up phase. But in the future, the composition of Archewell’s board of directors could cause issues when it comes to sustainability. In their 2022 filing, the Duke and Duchess of Sussex are the only listed board members, but best practice in the industry is that boards should also include independent members for oversight.
Thatcher added that the series of events has been a reminder about the importance of compliance for charities across the board. “This has been an expensive filing error, given the media and just how much attention it’s drawn, which probably has little to do with what the foundation’s trying to achieve from a mission perspective,” he said.
He also emphasized that documents like a delinquency notice should be the beginning of an investigation for the media and donors, not the end. “I had a donor say this to me once: Even charities are innocent until proven guilty. So in other words, give them the benefit of the doubt and verify,” he said. “Whenever there’s an anomaly, it doesn’t mean don’t give, it means ask questions.”