Wednesday, February 21, 2018
Last week the U.S. Court of Appeals for the Second Circuit issued an opinion rejecting federal constitutional and other challenges to New York regulations requiring "charitable organizations" to disclose the identities of their significant donors to the state's Attorney General by submitting copies of Schedule B from the annual information returns (Form 990) they file with the IRS. In Citizens United and Citizens United Foundation v. Schneiderman, the section 501(c)(3) Citizens United Foundation and the section 501(c)(4) Citizens United organizations challenged the regulations on First Amendment, Due Process, federal preemption, and state constitutional grounds.
With respect to the First Amendment challenge, the court rejected the organizations' arguments that the required disclosure would intimidate potential donors from contributing and operated as a presumptively unconstitutional prior constraint. Disagreeing with the organizations' argument that strict scrutiny applied, the court instead applied exacting scrutiny and concluded that the state's interests in preventing fraud and self-dealing in charities were sufficient to support the limited chilling effect of the required disclosure to the Attorney General, especially given that the disclosure did not go beyond that office. The court also found that regulations did not constitute the sort of prior restraint that is presumed to be unconstitutional.
With respect to the other claims, the court found that the Due Process claim was ripe for consideration (contrary to what the District Court had concluded), but rejected the claim on its merits. The court also rejected the federal preemption argument and the state constitutional claim that the Attorney General lacked the authority to include organizations classified as social welfare organizations under section 501(c)(4) of the Internal Revenue Code within the ambit of "charitable organizations" for purposes of the AG's authority under state law.
Presumably the organizations will seek certiorari, so the final chapter has yet to be written in this developing case.
Exemption Application Changes: IRS Removes Need to Reapply for Exemption for Some Changes in Legal Form & Revises Application Forms, Fees
The IRS has recently made a number of significant changes to the process for applying for recognition of exemption under Internal Revenue Code section 501. Probably the most important is found in Revenue Procedure 2018-15, which provides that the IRS will not require a new exemption application from a domestic section 501(c) organization that merely changes its legal form or legal place of organization in many situations. This welcome change obsoletes Revenue Rulings 67-390 and 77-469, which generally required a new application under these circumstances. As detailed in the new Revenue Procedure, changes that generally will no longer require a new exemption application assuming no change in purposes include:
- an unincorporated nonprofit organization becoming incorporated,
- a corporation formed under the laws of one state reincorporating under the laws of a different state,
- a corporation formed under the laws of one state filing articles of domestication under the laws of a different state, and
- mergers of two corporations.
Changes that generally will still require a new exemption application include:
- a charitable trust becoming incorporated,
- any change where the surviving organization is a disregarded entity, limited liability company, partnership, or foreign business entity,
- any change where the surviving organization obtains a new employer identification number, and
- any change involving a foreign entity becoming a domestic entity.
While not addressed specifically in the Revenue Procedure, it appears that if a corporation becomes a charitable trust a new exemption application would be required because a charitable trust is not considered a business entity for federal tax purposes.
The IRS has also:
- revised Form 1023 (application for recognition of exemption under section 501(c)(3) of the Internal Revenue Code), although the changes appear relatively minor
- revised Form 1023-EZ (streamlined application for recognition of exemption under section 501(c)(3) of the Internal Revenue Code) as explained here by the IRS, including adding a request for a brief description of the organization's mission or most significant activities
- finalized new Form 1024-A (application for recognition of exemption under section 501(c)(4) of the internal revenue code)
- in Revenue Procedure 2018-5, changed the user fee for all exemption applications other than Form 1023-EZ to $600, updated the procedures for requesting relief to limit retroactive revocation of modification of a determination letter, and added organizations applying for retroactive reinstatement after being automatically revoked for failure to file required annual information returns to the list of entities ineligible to submit Form 1023-EZ
Monday, February 19, 2018
- According to NPR, the General Counsel and Chief International Officer of the American Red Cross resigned in the wake of a report from ProPublica that several years ago ARC had forced a senior official to resign amid sexual harassment and assault allegations but still provided a positive review of his performance to another nonprofit interested in hiring him.
- Doctors Without Borders (Medecins Sans Frontieres) announced that in 2017 it had dealt with 24 cases of alleged sexual harassment, resulting in the dismissal of 19 people, in an attempt to distinguish itself from the Oxfam and the scandal enveloping that organization (see below), according to Reuters.
- The CEO of the Humane Society of the United States resigned in the wake of sexual harassment allegations, after fighting the allegations for weeks and even though a majority of the organization's board voted to immediately end an investigation into his behavior, according to the N.Y. Times. Additional coverage: NPR.
- The Times of London reported that in 2011 Oxfam International covered up the use of prostitutes by senior aid workers in Haiti. Trying to get ahead of the growing scandal, Oxfam has promised to appoint an independent commission to investigate claims of sexual exploitation, according to The Guardian.
- The Presidents Club, a prominent United Kingdom charity that raised money from the British elite to fund grants to other charitable organizations, closed after The Guardian conducted an undercover investigation that revealed alleged groping and sexual harassment at the charity's most recent men-only fundraising dinner. Additional coverage: CNN.
In a Monkey Cage column in today's Washington Post, Nives Dolsak, Sirindah (Christianna) Parr, and Aseem Prakash, all at the University of Washington at Seattle, argue the presumption of virtue for nonprofits often leads to regulators and stakeholders neglecting issues of accountability and governance. (UPDATE: For a contrary perspective, see this Nonprofit Quarterly column by Ruth McCambridge and Steve Dubb.) At the same time, even the above examples illustrate everything from an apparently robust response to allegations of sexual harassment in the case of Doctors Without Borders to the alleged creation of an environment that encouraged such harassment in the case of the Presidents Club. What appears inescapable, however, is that nonprofits, like for-profits, have to invest in developing procedures to properly handle such complaints and deal with alleged harassers.
Sunday, February 18, 2018
On February 6, 2018, Robert Cenedella filed an antitrust class action complaint against the Metropolitan Museum of Art, the Whitney Museum of Art, the Museum of Modern Art, the Solomon R. Guggenheim Museum, and the New Museum, alleging a conspiracy to manipulate the art market. Cenedella is a painter who studied with George Grosz and has been a minor presence in the art market for decades. He is also known as the "Art Bastard" and is the subject of a movie. The Harvard Journal of Sports & Entertainment Law and Artnet have also reported on the complaint.
I am skeptical that Cenedella's action will succeed.
For one thing, I doubt that the court will certify the class. Who are the members? How can a federal court determine which artists should have qualified for gallery representation?
For another, what is Cenedella's claim? As far as I can tell, he wants to participate in a cartel, and is complaining about his exclusion. That isn't the kind of problem that antitrust law was intended to solve. And he doesn't allege any facts to support an antitrust conspiracy. Which creates an obvious Twiqbal problem.
In any case, I will be very interested to see how this action proceeds.
Brian L. Frye
Friday, February 16, 2018
So I teased yesterday that I was looking at the statutory language of new Code Section 4943 with my estate planning hat on. I fully admit I'm spitballing here and haven't taken this all the way through, so work with me. Recall from yesterday that there is a three-part test for new Section 4943(g): Ownership of voting control, receipt of net operating income, and an independent board. Here is the statutory language for the first requirement, ownership of voting control:
(2) OWNERSHIP. —The requirements of this paragraph are met if—
(A) 100 percent of the voting stock in the business enterprise is held by the private foundation at all times during the taxable year, and
(B) all the private foundation’s ownership interests in the business enterprise were acquired by means other than by purchase.
So note that the foundation must receive 100% of the "voting stock." This leads me to two questions. First, does that necessarily imply that one could have non-voting stock? After all, Section 4943(c)(2) specifically talks about voting stock and, thereafter, what happens with the non-voting stock as permitted holdings by the foundation. (By the way, the Regulations specifically state, for purposes of determining permitted holdings, voting means voting for the election of directors. Reg. 53.4943-3(b)(1)(ii)). Could, for example, the donor’s children own non-voting stock?
Question number 2, of course, is whether voting stock really means "stock" - as in corporate stock. Which means an actual state law corporation, or would an LLC that checks the corporate box count? Could you do this with a LLC taxed as a partnership? There's a whole layer of UBIT planning there as well, I know... so that would inform that choice. That being said, Section 4943(c)(3) specifically gives guidance on the permitted holdings issue for non-corporate entities and directs Treasury to promulgate regs on that, although that doesn't apply by its terms to new Section 4943(g). The new Section is just silent, so it’s not clear whether this is bad drafting or intentionally limited to corporations (compare, for example, Section 4941(d)(2)(F) regarding corporate reorganizations).
Now one might say that the second requirement of Section 4943(g), the net income distribution requirement, would limit any gamesmanship. Here’s the language:
(3) ALL PROFITS TO CHARITY. —
(A) IN GENERAL. —The requirements of this paragraph are met if the business enterprise, not later than 120 days after the close of the taxable year, distributes an amount equal to its net operating income for such taxable year to the private foundation.
(B) NET OPERATING INCOME. —For purposes of this paragraph, the net operating income of any business enterprise for any taxable year is an amount equal to the gross income of the business enterprise for the taxable year, reduced by the sum of—
(i) the deductions allowed by chapter 14 for the taxable year which are directly connected with the production of such income,
(ii) the tax imposed by chapter 1 on the business enterprise for the taxable year, and
(iii) an amount for a reasonable reserve for working capital and other business needs of the business enterprise.
Note that the net operating income provision is keyed off gross income (statutory construct) minus deductions (more statutory constructs) and a working capital reserve (fiduciary duty to non-voting shareholders? Hmmm..) This isn’t off something like E&P in the C Corporation context or partner capital in the Sub K context, which takes into account economic inflows and outflows that don’t hit gross income or deductions (because they are statutory constructs people!) Say, for example, the business has real estate throwing out losses? Or holds a life insurance policy of $2.0 million on the donor. In the first instance, all the deductions; in the second, there’s no gross income to begin with. Could some of the value of the company that isn’t technically included in operating income get allocate to share value (or specifically, non-voting share value?)
Could you draft a class of voting stock with only economic rights to net operating income so defined, leaving everything else to the non-voting shares? Could you do it in a member-managed LLC that checks the box as a corporation, but structures the governance so as to avoid the tests in the third requirement of independent management?
So many question… no answers at all. I’m sort of glad I’m not doing this planning any more….
Thursday, February 15, 2018
Section 41110 of the Bipartisan Budget Act of 2018 includes the so-called Newman’s Own provision – an amendment to Code Section 4943 (the private foundation excise tax on excess business holdings) that would allow a private foundation to own a significant stake in an operating business under certain circumstances. By all reports, the foundation that owns Newman’s Own is subject to Code Section 4943, and would need to liquidate its holdings in the company in short order without legislative changes to Code Section 4943.
As you may know, Code Section 4943 provides that a private foundation may not own an “excess” holding in a operating business. Very generally, the excess holding for an operating business in corporate form is equity having 20% of the corporation's voting power reduced by the voting power held by “disqualified persons” – typically, substantial contributors, foundation managers, and their family and related entities under Code Section 4946. If a foundation holds an excess business holding by gift or inheritance (e.g., Paul Newman dies and leaves all his stock to his foundation), the foundation has five years to dispose of the excess holding. If the foundation could demonstrate that it could not dispose of the holding despite its efforts during that five year period, the Service could grant a discretionary additional five years.
New Code Section 4943(g) would allow a private foundation to hold 100% of the voting stock of an operating business if it acquires those interests by gift, it receives the net operating income of from the business annually, and the business and the foundation are operated independently, as determined by certain board composition rules. Presumably, this would allow Paul Newman's foundation to continue to own Newman's Own and receive the proceeds from operation.
I am not going in to the details of the actual language of the statute (yet…) – there are some questionably drafted provisions (shocking…) that raise some issue I’m still thinking about. No worries, I’m here all week.
That being said, I am troubled by this provision as a general matter. First, the idea of changing statutes for specific taxpayers, no matter how well-intentioned and deserving (I love the salsa….), is always distasteful to me. Now, I’m not so naïve that I don't know that it happens all the time (I’m looking at you, motorsports facilities and the Orange Bowl and race horses…) but it doesn’t mean it’s good practice and one that should be lauded.
More to the substance, however, this new provision really flies in the face of the whole purpose of Code Section 4943. If you read the legislative history (which I have and have helpfully summarized for you here: (shameless plug): Better Late Than Never: Incorporating LLCs Into Section 4943)), you find that the original intent behind Code Section 4943 was not really about prohibiting self-dealing. After all, Code Section 4941 (the self-dealing prohibition) was passed at the same time. Code Section 4943 is about focus: is the foundation focusing on its charitable endeavors, or it is spending a more than insubstantial amount of its time running a business? It is, to some degree, understandable that the foundation would pay close attention to the primary source of its income. That being said, the source of the private foundation’s exemption is its charitable program, and if that program suffers in the shadows of operation of a substantial business subsidiary, what is the point of exemption? Do we still believe that the destination of income test is not a thing? In my mind, none of the requirements of new Code Section 4943(g) address this concern directly.
I suspect my discomfort will grow as my estate planner hat takes over, but in the meanwhile, pass the tortilla chips.
P.S. I know “It’s In There” was Prego – you try making a pithy headline involving tax and pasta sauce.
Wednesday, February 14, 2018
Fershee: The End of Responsible Growth and Governance?: The Risks Posed by Social Enterprise Enabling Statutes and the Demise of Director Primacy
My friend and colleague Josh Fershee recently posted this piece on SSRN, which is cross blogged at the Business Law Prof Blog under the screaming headline, “These Reasons Social Benefit Entities Hurt Business and Philanthropy Will Blow Your Mind!!!!!” Okay - I added the exclamation points. And the bold. Alas, there are no cat pictures or bad high school year book photos of celebrities, but there is an important discussion about impact of the existence of social enterprise entities on traditional for profit businesses engaged in social activity. The abstract:
The emergence of social enterprise enabling statutes and the demise of director primacy run the risk of derailing large-scale socially responsible business decisions. This could have the parallel impacts of limiting business leader creativity and risk taking. In addition to reducing socially responsible business activities, this could also serve to limit economic growth. Now that many states have alternative social enterprise entity structures, there is an increased risk that traditional entities will be viewed (by both courts and directors) as pure profit vehicles, eliminating directors’ ability to make choices with the public benefit in mind, even where the public benefit is also good for business (at least in the long term). Narrowing directors’ decision making in this way limits the options for innovation, building goodwill, and maintaining an engaged workforce, all to the detriment of employees, society, and, yes, shareholders.
The potential harm from social benefit entities and eroding director primacy is not inevitable, and the challenges are not insurmountable. This essay is designed to highlight and explain these risks with the hope that identifying and explaining the risks will help courts avoid them. This essay first discusses the role and purpose of limited liability entities and explains the foundational concept of director primacy and the risks associated with eroding that norm. Next, the essay describes the emergence of social benefit entities and describes how the mere existence of such entities can serve to further erode director primacy and limit business leader discretion, leading to lost social benefit and reduced profit making. Finally, the essay makes a recommendation about how courts can help avoid these harms.
Tuesday, February 13, 2018
I’m scrolling through the Bipartisan Budget Act of 2018 (the “BBA”)(P.L. No. 15-123 signed on February 9, 2018 – enrolled bill from Thomas.gov here) in my leisure time. It appears that there are two provisions that directly impact exempt organizations, as follows:
- Section 41109 of the BBA clarifies the application of the investment income excise tax for private colleges and universities. As you may recall, Section 13701 of the legislation formerly known as the Tax Cuts and Jobs Act (TCJA) added new Section 4968, which imposes an excise tax on the investment income of certain private colleges and universities. This new excise tax only applies to private colleges and universities that have at least 500 students, more than 50% of which are located in the U.S. The BBA clarifies that this refers to “tuition paying” students only – but of course, it didn't actually give us a statutory definition of “tuition paying.” Full tuition? External scholarship? Internal scholarship? Tuition waiver? Work study? Have fun with the counting, university admin types.
- Section 41110 of the BBA contains the Newman’s Own provisions by adding Code Section 4943(g) (h/t to Evelyn Brody for the CT Mirror article). These provisions were originally in the TCJA but were struck by the Senate Parliamentarian for having insufficient budget impact. I will have more to say about Section 4943(g) in another post.
Unless I missed it (let me know if I did!), absent from the BBA are the following: (1) the Johnson Amendment provisions that were also struck from the TCJA by the Senate Parliamentarian, and (2) the technical fix to the exempt organization excess compensation excise tax found in new Code Section 4960 that would actually make it applicable public universities - as apparently was originally intended but, as discussed by Professor Ellen Aprill, there was a significant drafting fail. (I heard a rumor that someone from the IRS agreed at the ABA Tax meeting that the technical fix was, in fact, necessary - can anyone confirm?) If only there were a process by which Congress could talk to experts like Ellen before it finalized draft legislation…
Sunday, February 11, 2018
In this article, Stephen Fishman explains that under the new tax bill many nonprofits will likely be liable for additional taxes for unrelated business activity. Previously, nonprofits that operated multiple unrelated business activities could deduct the losses from the one business activity from the profits of another business activity in determining the total amount of net unrelated business income subject to unrelated business income tax. Under the tax reform bill, nonprofits cannot cross apply losses in this manner. This will likely result nonprofits having to pay more unrelated business income tax. The new bill also makes private colleges and universities with at least 500 students and endowments worth at least $500,000 per full-time student subject to a 1.4% excise tax on their net investment income. To learn more about the other changes in the new tax reform, click here: https://www.nolo.com/legal-encyclopedia/gop-tax-bill-and-impact-on-nonprofits.html
Saturday, February 10, 2018
Friday, February 9, 2018
In this article, Pam Fessler discusses how nonprofits oppose the GOP tax bill. She says that many nonprofits believe that the tax bill will reduce charitable contributions. She believes that the new tax bill incentivizes people to take the standard deduction instead of itemizing. The new bill raises the standard deduction to $12,000 for individuals and $28,000 for married couples. Majority of people who itemize their tax returns take the deduction for charitable giving. If tax payers start taking the standard deduction, they will not be able to take the deduction for charitable contributions. Nonprofits worry this could cause people to not make donations. For more information about why nonprofits oppose the new tax bill, click here: https://www.npr.org/2017/11/04/561978437/nonprofits-fear-house-republican-tax-bill-would-hurt-charitable-giving
Thursday, February 8, 2018
In his article John Novak, discusses how the new tax bill prevents nonprofit corporations from paying executives more than $1million per year. The tax bill accomplishes this by creating a new 21% tax on any organization that pays any of its top five earning employees more than $1million per year. He argues that it is unfair for nonprofits to pay executives like university presidents, college football and basketball coaches, and church executives over $1million per year because American’s are facing rising healthcare bills and tuition costs, all while these nonprofits continue to ask for donations to run their organizations. To learn more about this new tax, click here: https://www.cnbc.com/2017/12/20/tax-reform-smacks-down-excessive-nonprofit-executive-pay-commentary.html
Wednesday, February 7, 2018
In this article, David Brunori discusses how some states are proposing to tax nonprofits on property they own. In Maine, the Governor proposed to end property tax exemptions for nonprofits with assets of more than $500,000. He details that both nonprofit organizations and local governments are against this. He then goes on to propose that we end all property tax exemptions. He believes we should end these exemptions because by narrowing the tax base through these exemptions everyone else pays more and because nonprofits use local government services. To learn more about these ideas, click here: https://www.forbes.com/sites/taxanalysts/2015/02/14/its-time-to-end-property-tax-exemptions-for-everyone/#2312adc57497
Tuesday, February 6, 2018
In this article Kelly Phillips discusses several cities’ decisions to tax nonprofit corporations. She details a Rhode Island Mayor’s decision to tax nine previously tax-exempt hospitals, colleges, and universities to raise revenue. She begins by outlining how public perception of taxing nonprofits at the local level is usually viewed negatively because the public believes that since nonprofits do so much good for the community they shouldn’t have to pay taxes. She then begins to discuss how even though nonprofits are tax-exempt from federal income taxes, they can be taxed at the local level. Also, she points out that, to the extent that the nonprofit has income that is not related to its charitable purpose, income can be taxed. To learn more about the rise in cities’ attempts to tax nonprofits, click here: https://www.forbes.com/sites/kellyphillipserb/2011/05/11/taxing-non-profits-is-it-the-modern-day-solution-to-balancing-budgets/#2d2dd6167290
Monday, February 5, 2018
In this article, Michael Wayland, discusses what Nonprofit entities can expect with the new GOP tax reform. There are many things changing come tax time for these corporations some changes are new excise taxes on selected nonprofits, the treatment of unrelated business income generated by charities, and changes in the tax-exempt treatment of interest income from certain bonds issued by nonprofits. With all of these changes, the repeal of the Johnson Amendment did not make it into the final bill. Many nonprofits were against repealing the Johnson Amendment. To learn more about the tax reform pertaining to nonprofits click here: https://nonprofitquarterly.org/2017/12/18/what-nonprofits-can-expect-in-the-gop-tax-bill/
Tuesday, January 2, 2018
James Fishman, Stephen Schwarz, and I have written supplemental update memos for our Nonprofit Organizations casebook reflecting the recently passed federal tax legislation. One update is for students and the other is for teachers. Foundation Press should make them available shortly, but for those of you who need them urgently please email any of us and we can send them directly to you.
Saturday, December 30, 2017
The end of 2017 brought significant new tax legislation. Although the Johnson Amendment remained intact, the increase in the standard deduction means that fewer people will itemize deductions, which, in turn, effectively eliminates the value of the charitable deduction for many US taxpayers. The Washington Post article "Charities fear tax bill could turn philanthropy into a pursuit only for the rich" catalogs worries by major nonprofits' leaders that donations will drop and the shift will be towards wealthier donors. On his blog, Alan Cantor warns that "An earthquake just hit the nation," and the tax changes will reduce the funds to the sector and increase the power of the wealthiest at the very time when nonprofits will face greater demands. The Wall Street Journal editorial board, however, was unimpressed, publishing a sharp critique entitled "Uncharitable Charities:"
These nonprofits want to keep millions of Americans filing more complicated tax forms and paying higher tax rates. They also sell Americans short by assuming that most donate mainly because of the tax break, rather than because they believe in a cause or want to share their blessings with others. How little they respect their donors.
How will the nonprofit sector fare in 2018?
Saturday, December 23, 2017
William A. Drennan (Southern Illinois University School of Law) has written Conspicuous Philanthropy: Reconciling Contract and Tax Laws, 66 Am. U. L. Rev. 1323 (2017). Below is Professor Drennan's abstract:
It sold for $15 million, and the IRS treated it as worthless. Avery Fisher, a titan of industry and a lover of classical music, made a generous contribution to renovate a charity’s building, and in exchange the charity agreed to name the building after Fisher in perpetuity. Forty years later, the Fisher family sold the naming rights back to the charity for $15 million in cash. The IRS treats these publicity rights as worthless when charities grant them, and this generates substantial tax benefits for the donor and the donor’s family. In contrast, the common law can treat these publicity rights as valuable consideration supporting an enforceable contract, and a charity may be liable for damages if it renames a building. Why the contradiction? What are the consequences? Should we reconcile these positions? How? This Article asserts that the common law contract approach is well-suited for today’s mega-million dollar charitable building naming rights deals, but the tax approach is outdated and inconsistent with U.S. Supreme Court precedents.
At a 1996 conference on the “Law of Cyberspace,” Judge Frank Easterbrook famously criticized “cyberlaw” as the equivalent of “The Law of the Horse”: superficial and unilluminating. He argued that we should study general legal principles and apply them to cyberspace and horses alike. Easterbrook’s genial jeremiad provoked a litany of responses defending the worthiness of cyberlaw, typically arguing that cyberspace regulation is sui generis and studying it illuminates general legal principles.
“Art law” is arguably analogous to “cyberlaw.” Or at least the “law of the horse.” While precious little law is specific to art, a rich and complex body of social norms and customs effectively governs artworld transactions and informs the resolution of artworld disputes. In any case, a smattering of scholars study art law and a similar number of lawyers practice it. In this essay, I will provide a brief overview of art law from three different perspectives: the artist, the art market, and the art museum.
Brian D. Galle (Georgetown University Law Center) has written The Dark Money Subsidy? Tax Policy and Donations to 501(c)(4) Organizations. Below is Professor Galle's abstract:
This Article presents the first empirical examination of giving to § 501(c)(4) organizations, which have recently become central players in U.S. politics. Although donations to a 501(c)(4) are not legally deductible, the elasticity of c(4) giving to the top-bracket tax-price of charitable giving is - 1.24, very close to the elasticity for charities. 501c(4) donations also correlate with changes in the tax savings from in-kind gifts. These responses could be driven either by donor-side behavior, such as misunderstandings or intentional over-claiming, or by firm-side fundraising.
I find evidence consistent with both explanations. 501(c)(4) fundraising is also highly responsive to the value of the deduction, with an elasticity of -2.9, and is more effective when the value of the deduction rises. These results imply that the U.S. is currently granting much larger subsidies to c(4) firms than is generally understood, and that subsidies for charity cause previously unobserved pressures on competing c(4)s.