Takeover controversy dogs annual FPA event

Register now

A heated background controversy has split the two main organizers of the FPA of New York's annual forum

The national FPA based out of Denver ended its affiliation agreement with the local FPA of New York chapter in March, after the chapter's president Devika Kamboh accused several fellow board members, including the previous president, of breaking the nonprofit's bylaws by improperly soliciting clients for business at public awareness events. Kamboh filed a complaint with the New York attorney general's charities bureau on the matter.

Now Kamboh questions whether the national organization is legally entitled to use funds she and her former fellow colleagues helped raise through the local chapter for the event.

“If there is a leadership transition, I have to be involved with it, because I am still the current president of FPA of New York until any new leadership is elected by our members," Kamboh says. "How can you have a leadership transition by acting as if I'm invisible? They should be working with me, but instead they are totally bypassing me."

About 200 attendees were expected at the one-day forum to be held on the campus of New York University's School of Law, says Scott Kahan, whom the national FPA brought in to run a newly created New York chapter run out of Denver. That chapter will be renamed the FPA of Metro New York, Kahan says.

Corporate sponsors and exhibitors include Betterment, Charles Schwab, Dimensional Fund Advisors, Vanguard and the XY Planning Network, among others.

The national body is legally entitled to the local chapter's funds, Kahan says, because they were raised due to the chapter's prior affiliation with the national body.

"Legally they have no leg to stand on," Kahan says of the vestige of the local chapter, which he says may technically still exist but cannot function without the national tie-in. "The money that they were raising from dues or from events really is coming because they were a part of FPA."

Both Kahan and Kamboh cited the since-dissolved affiliation agreement as supporting their positions.

The national body provided the following language from that agreement, regarding the "voluntary or involuntary dissolution of the chapter":

In the event of termination or dissolution of the chapter, to the extent allowed under applicable law, all of the assets of the chapter will be distributed to FPA within 60 days of the date of termination. In the event that the chapter board of directors will fail to act in the manner herein, the state court in which the principal office of this chapter has been located will make such distribution as herein provided, upon the petition of FPA or other persons having an interest in the chapter or its assets.

Based on this language, it appears that the national body needs to obtain permission from a New York state court to take the funds, says Seth Perlman, a lawyer and expert in nonprofit governance whose late father, Bernard Perlman, was the country's first regulator overseeing charities in the 1950s. The state organization he ran through the state's Department of Social Welfare eventually became the attorney general's charities bureau, the law firm's website says.

However, the reach of the court in this instance may be limited, given that that the FPA is a 501(c)6, a nonprofit that raises money not from the public for charitable works, but from or for its members, says Perlman, who is not involved in the FPA dispute.

"If the national body did something that violated the language of the affiliation agreement, then the local chapter can go to court saying they absconded with funds, they had no right to take," Perlman says.

However, unless the dispute involves possible misuse of charitable funds, the AG's office might not choose to become involved, Perlman says.

"Anybody can make a complaint to the AG," Perlman says. "Whether they deem it sufficient enough to warrant an investigation is another story. Even if they do investigate, it doesn't mean they are going to take action."

Kamboh did not immediately respond when asked if she planned to press the matter of the use of funds as part of her complaint or through a separate action.

For reprint and licensing requests for this article, click here.
Non-profits Fiduciary Rule Compliance reviews Client acquisition Client communications FPA New York Attorney General EEOC