Saturday, May 24, 2008

Chinese Red Cross plays a large role in helping earthquake victims

The Wall Street Journal reports about the role of the Chinese Red Cross in helping the victims of the earthquake in China.  In contrast with the struggles of the international Red Cross to get aid to people in Myanmar, in China the Chinese Red Cross itself responded quickly and also was able to invite international aid to assist.  The contrast may stem from ties between the Chinese Red Cross and the Chinese government.  Although the Chinese Red Cross is now separate from the government, for many years the Ministry of Health controlled the Chinese Red Cross.  Created in 1904, the Chinese Red Cross came under government control in 1949, when the Communists gained power.  Today the national and provincial offices are completely separate from government, although local offices maintain links to local health officials

The Chinese Red Cross is one of only two organizations authorized to solicit donations from the public in China.  Chinese citizens have already contributed much of the $2.3 billion raised for earthquake relief.

Beyond the immediate crisis, the Chinese Red Cross is growing as an international organization and sees part of its role as helping address needs in other countries.  The Chinese Red Cross had been sending relief supplies to Myanmar prior to the earthquake in China, and those shipments have continued even though China now faces its own disaster. 


May 24, 2008 in International | Permalink | Comments (0) | TrackBack (0)

Decrease in Car Donations

The Chronicle on Philanthropy notes that a recently released IRS report shows a significant decrease - 80% - in deductions claimed for car donations in 2005, the year more restrictive rules on deductibility went into effect. 

Prior to 2005 donors could take as a deduction the fair market value of the car.  The IRS worried about inflated values, and the worry appears to be borne out by the decrease in claimed deductions.  Under the new rules, the donor can deduct only the amount the charity receives when it sells the car - the true fair market value.  The IRS report shows a drop from $2.4 billion in 2004 to $470 million in 2005 in deductions claimed between 2004 and 2005.  The report does not indicate whether the drop in value also reflects a decrease in cars donated.  Many people may not claim the deduction and those that do may simply claim the more appropriate amount, so the number of cars in charities' hands probably did not drop as much as the 80% decline might suggest on first glance.


May 24, 2008 in Federal – Legislative | Permalink | Comments (0) | TrackBack (0)

Deduction for Conservation Easements Extended

On Thursday Congress passed HR 2419, overriding the President's veto.  HR 2419 began as the Farm Bill and was renamed the Food, Conservation and Energy Act in the final version.  The Act includes a two-year extension of the conservation easement deduction originally enacted under the Pension Protection Act.  The PPA created the deduction as a temporary incentive and provided for its expiration at the end of 2007.  The Act extends the deduction until December 31, 2009.


May 24, 2008 in Federal – Legislative | Permalink | Comments (0) | TrackBack (0)

Myanmar Finally Agrees to Allow Foreign Aid Workers Enter Affected Areas, But No Foreign Governments

After much consternation by Myanmar officials, it appears that charitable aid by the world's non-governmental humanitarian organizations will soon be on its way without hindrance to the victims of the May 2, 2008, cyclone.  According to an article in the May 24, 2008, issue of the Washington Post, U.N. Secretary General Ban Ki-moon reports that Myanmar (also known as Burma) agreed through one of its leaders to "allow all foreign aid workers, regardless of nationality, to join relief efforts for survivors."  However, aid from foreign governments is still prohibited.  Here is an excerpt from the article:

The concession, a potential turning point in getting help to victims of the devastating May 2-3 storm, came during a two-hour meeting between Ban and Than Shwe, head of the ruling military junta, in the isolated Burmese capital, Naypyidaw.

"He has agreed to allow all the aid workers, regardless of nationality," Ban told reporters after the meeting. There was no immediate confirmation from Burmese authorities concerning the pledge.

The U.N. chief said the junta expressed willingness to let foreign civilian ships bring in aid.

But according to U.N. officials, the generals stood firm on their refusal to accept delivery from military vessels -- the United States, Britain and Frances have naval ships in the region. That remains "a very sensitive issue," a senior U.N. official said.

For the entire article, see "Burma to Admit 'All Aid Workers': Storm Relief From Foreign Navies Is Still Barred, U.N. Officials Say" in the May 24, 2008, issue of the Washington Post.


May 24, 2008 in In the News, International | Permalink | Comments (0) | TrackBack (0)

American Red Cross Appears Headed for Victory in Trademark Dispute

The American Red Cross appears headed for victory in its legal dispute with Johnson & Johnson over its Congressionally granted right to use the Red Cross symbol.  J&J and the Red Cross have been sharing use of the symbol since 1895.  But in a recent ruling, the judge in the case dismissed more cliams by J&J that the Red Cross infringed on J&J trademark rights by licensing the use of the symbol to third parties as a fund-raising mechanism.  Here is an excerpt from the May 13, 2008, article in the New York Times:

Last August, the company said it had no recourse but to take the dispute to court. In his second ruling dismissing part of the case — the first one was in November — Judge Rakoff said that charitable reasons for Red Cross’s business ventures made them all the more reasonable.

“The fact that the ultimate purpose of these licensing activities is a ‘charitable purpose’ — i.e. to raise funds that A.R.C., a not-for-profit organization, can utilize for its charitable endeavors — only further emphasizes their legitimacy,” his decision said.

Judge Rakoff said the doubtfulness of Johnson & Johnson’s claim against the organization was “well illustrated by the ironic fact” that in 1986 the company itself entered into a similar promotional agreement with the Red Cross.

For the entire article, see "Judge Sides With Red Cross Over Trademark" in the May 13, 2008, issue of the New York Times.


May 24, 2008 in Federal – Judicial, In the News | Permalink | Comments (0) | TrackBack (0)

Friday, May 23, 2008

Brody and Fremont-Smith on the Proposed Model Nonprofit Corporations Act

To follow up on David's posts today about the Model Nonprofit Corporations Act, anyone interested in this subject should read the short article in the May 12 Tax Notes (page 617) by Evelyn Brody and Marion Fremont-Smith. They note some key problems with the proposed new Act that should concern anyone working in the nonprofit area. The article is available on Lexis here.


May 23, 2008 in Publications – Articles, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Thursday, May 22, 2008

Trust in Charities Has Increased According to Research in England and Wales

According to a study released on May 21, 2008, the public's trust in charities in England and Wales has increased since 2005.  Here is an excerpt from a summary of the study, "2008 Charity Commission Study into Public Trust and Confidence in Charities":

More people are giving time and goods to charity now than said they did three years ago as public trust has increased. Overall public trust and confidence in charities is measured as a mean score out of 10, which has increased from 6.3 in 2005 to 6.6 in 2008. A third of the public (35%) give charities a trust rating of eight out of ten or above.

According to the report 2008 Study into Public Trust and Confidence in Charities published today;

  • nearly 1 in 5 people (18%) say they have given more than £200 to charity in the last year;
  • nearly half of the public (47%) say they have given goods and
  • one in three (36%) people say they, or someone they know, are actively involved with charities (either as an employee, trustee or volunteer)

all increases from the last time the same survey was conducted in 2005.

The majority of people (85%) say they have given money to charity within the last year.

The survey shows that of those listed, only doctors and the police score higher than charities with the public for trust and confidence, and that the public trust charities more than several bodies including social services, banks and central and local Government.

A third (35%) say that ‘charities making a positive difference to the cause they work for’ is the most important quality in engendering trust and confidence, while 71% of people agree that charities are effective at bringing about social change.

The research also outlines the most common reasons for trusting some charities either more or less than others. Asked if there are any specific charities they trusted more or less, and asked to give a reason, the most common reason for trusting a charity more (at 25%) is people having experienced or seen for themselves what the charity does, or that they believe in its cause (19%).

The report, 2008 Charity Commission Study into Public Trust and Confidence in Charities, is available with an executive summary on the Charity Commission website.  (Thanks again to Professor Karla Simon for this lead.)


May 22, 2008 in International, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Comments on January 2008 MNCA Exposure Draft: American College of Parliamentary Lawyers (ACPL)

Here are Comments by the American College of Parliamentary Lawyers to the January 2008 Exposure Draft of the Model Nonprofit Corporation Act.

Download acpl_comments.pdf

Thanks to Professor Karla Simon for providing this to us.


May 22, 2008 in Other, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Call for Comments on Model Nonprofit Corporations Act

As we blogged in April of this year, the June 1, 2008, deadline for comments on the ABA Business Law Section's January 2008 Exposure Draft of the Model Nonprofit Corporations Act.  Below is the Call for comments.  You can view the exposure draft on the ABA website: Part 1 and Part 2.  If you have comments that you have or will make concerning the January 2008 exposure draft, please send them along to us so that we can post on the blog.

Dear Committee Members:

I am pleased to announce that the January 2008 Exposure Draft of the Model Nonprofit Corporations Act (MNCA) is now posted on the Section of Business Law website, on the Nonprofit Corporations Committee homepage The Task Force to Revise the Model Nonprofit Corporation Act is soliciting comments on this draft and will consider any comments received at the June, 2008 meeting of the Task Force. Any additional comments that any committee member would like the Task Force to consider should be sent to the Reporter for the Task Force, Bill Clark at, with a copy to the Chair of the Task Force, Liz Moody, at and to me, as Chair of the Nonprofit Corporations Committee, at

The Nonprofit Corporations Committee will accept additional comments on the Act until June 1, 2008. The Task Force will meet on June 14 to review and discuss comments, and will thereafter produce a final version that, upon review and approval by Committee Leadership, will be posted to the Committee website on or before July 31. That version will be considered approved by the Committee unless the Committee Chair receives, before August 8, 2008, a significant number of comments from Committee members expressing new and material concerns of a nature such that, in the opinion of the Committee Chair, further study is required.

Once the new Model Act is finalized, a new subcommittee of the Nonprofit Corporations Committee will be organized to continue to review, consider amendments to and update annotations for the Model Act -- similar to the continuous review process followed by the Committee on Corporate Laws for the Model Business Corporations Act. This subcommittee will be open to all Committee members.

Cynthia R. Rowland Chair, Nonprofit Corporations Committee, ABA Business Law Section One Ferry Building, Suite 200 San Francisco, CA 94111-4213 Tel: (415) 772-5747 Fax: (415)989-1663


May 22, 2008 in Other, Studies and Reports | Permalink | Comments (0) | TrackBack (0)


Attorney Karl Emerson (Montgomery, McCracken Walker & Rhoads, LLP) published an article on increasing state and federal scrutiny of tax exempt charitable hospitals in Pittsburgh Journal of Environmental and Public Health Law.  The article is entitled "COMMENTS ON THE ROLE OF THE MODERN CHARITABLE HEALTH CARE PROVIDERS"  Here is an excerpt:

Hospitals and their foundations, just like other types of charitable organizations, are increasingly having their operations scrutinized much more closely by not just state enforcement authorities—but also by the IRS, the media, and the public at large. As a result, they need to know what the applicable state and federal statutes require and, equally important, the types of conduct these statutes prohibit. In this age of significantly heightened governmental and media scrutiny, hospitals and their foundations, like all other charitable organizations, need to ensure they are operating in conformity with all applicable state and federal laws. If they do not, they can be held accountable by the federal government through the IRS which has recently begun to significantly ramp up its enforcement efforts; by the various states through their attorneys general, district attorneys, and/or secretaries of state; by private watchdog organizations such as the Better Business Bureau’s Wise Giving Alliance; by an ever-vigilant media always eager to expose irregularities and fraud in the sector; and lastly, but in many cases most importantly, by the donating public that can, and does, stop its support of organizations that violate its trust.


May 22, 2008 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)


Attorney Thomas K. Hyatt (Ober, Kaler, Grimes & Shriver, P.C.) published an article on public policy aspects of tax exempt charitable hospitals in Pittsburgh Journal of Environmental and Public Health Law.  The article is entitled "THE ROLE OF THE MODERN CHARITABLE HOSPITAL"  Here is an excerpt:

The question that I bring to you today is one of those questions. I would argue it is one of the most formidable public policy questions of our time. That question is: What is the role of a modern charitable tax-exempt hospital? I would suggest you take note of the date April 28, 2005. That was the date that the following comment was made: "What’s the difference between a profit making hospital and a not-for-profit hospital these days? Not a lot." Who do you suppose said that? If it was an executive from the Federation of American Hospital Systems, the for-profit hospital trade association, I’d have said, "to be expected." If it was a grandstanding politician, I’d say, "it’s okay, it comes with the territory." Do you know who said that? Mark Everson, the Commissioner of the Internal Revenue Service. The regulator in chief of tax exempt hospitals. If the IRS Commissioner says he can’t really tell you the difference between a for-profit and a nonprofit hospital, you had better be worried. It’s a rallying cry if ever I heard one. Clearly, nonprofit hospitals must do a better job of making their case as to why in their current iteration they ought to continue to be recognized as charitable organizations. This is not a new debate. It has been going on for over 50 years. Certainly the health care field has changed a great deal in that period of time. Still, the debate continues.

My premise today is that the role of a modern charitable hospital is threefold. First, it is nonprofit organization. It is a member of the community of nonprofit organizations and as such has a responsibility to that community. Second, it is a tax-exempt public charity. In exchange for freedom from taxation, it has certain obligations to fulfill. Finally, and let there be no mistake about it, a modern charitable hospital is a business enterprise. There are lines to be drawn, lines not to be crossed, but that business enterprise function is a very real part of what they do every day. So let’s look at charitable hospitals’ roles through those three prisms and see where that leads us.


May 22, 2008 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)


Professor Jonathan Klick (Florida State) and Professor Robert H. Sitkoff (Harvard) posted an abstract of their Columbia Law Review article on charitable trust governance on SSRN.  The article is entitled "AGENCY COSTS, CHARITABLE TRUSTS, AND CORPORATE CONTROL: EVIDENCE FROM HERSHEY'S KISS-OFF"  Here is the abstract:

In July 2002, the trustees of the Milton Hershey School Trust announced a plan to diversify the Trust's investment portfolio by selling the Trust's controlling interest in the Hershey Company. The Company's stock jumped from $62.50 to $78.30 on news of the proposed sale. But the Pennsylvania attorney general, who was then running for governor, brought suit to stop the sale on the grounds that it would harm the central Pennsylvania community. In September 2002, after the attorney general obtained a preliminary injunction, the trustees abandoned the sale and the Company's stock dropped to $65.00. Using standard event study econometric analysis, we find that the sale announcement was associated with a positive abnormal return of over 25 percent and that canceling the sale was followed by a negative abnormal return of nearly 12 percent. Our findings imply that instead of improving the welfare of the needy children who are the Trust's main beneficiaries, the attorney general's intervention preserved charitable trust agency costs on the order of roughly $850 million and prevented the Trust from achieving salutary portfolio diversification. Overall, blocking the sale destroyed roughly $2.7 billion in shareholder wealth, reducing aggregate social welfare by preserving a suboptimal ownership structure of the Company. Our findings contribute to the literature of trust law by supplying the first empirical analysis of agency costs in the charitable trust form and by highlighting shortcomings in supervision of charitable entities by the state attorneys general. Our findings also contribute to the literature of corporate governance by measuring the change in the Hershey Company's market value when the Trust exposed the Company to the market for corporate control.


May 22, 2008 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)

IRS Clears UCC of Tax Exempt Law Violation Charges

On May 21, 2008, the United Church of Christ announced on its website that the IRS has clear it of charges that it violated U.S. tax laws "when U.S. Sen. Barack Obama addressed the denomination's 50th anniversary General Synod in Hartford, Conn., in June 2007."  Here is an excerpt from the announcement:

The IRS determination outlined several steps taken by the UCC that indicated compliance with the law. The letter said the UCC's invitation to Obama came "well before he announced his candidacy and that [he] was invited to speak … in a non-candidate capacity, on how his personal faith intersected with his public life."

"You further established that the United Church of Christ had verbally communicated to those in attendance that Senator Obama was there as a member of the church and not as a candidate for office, that the audience should not attempt to engage in any political activities, and that the church's legal counsel had advised Senator Obama's campaign on the ground rules for the speech," the IRS determined.

To see the full announcement, see "Concluding its UCC inquiry, IRS offers complete vindication" on the UCC website.  For a copy of the IRS determination letter, go here.

Hat Tip to our sister blog TaxProf Blog for this lead.


May 22, 2008 in Church and State, Federal – Executive | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 21, 2008

Philanthropic Needs of the Poor: Ethiopia

The May 20, 2008, issue of the New York Times contains an article describing the philanthropic needs of the poor around the world, with a particular focus on Ethiopia.  Here is an excerpt from the article:

The U.N. children's agency said in a statement Tuesday an estimated 126,000 Ethiopian children urgently need food and medical care because of severe malnutrition -- and called the current crisis ''the worst since the major humanitarian crisis of 2003.''

The U.N. World Food Program estimates that 2.7 million Ethiopians will need emergency food aid because of late rains -- nearly double the number who needed help last year. An additional 5 million of Ethiopia's 80 million people receive aid each year because they never have enough food, whether harvests are good or not.

For the entire article, see "Children starving, again, in Ethiopia," in the May 20, 2008, issue of the New York Times.


May 21, 2008 in In the News, International | Permalink | Comments (0) | TrackBack (0)

One Laptop Per Child Donor Program Resumes

As we reported over the weekend, the One Laptop per Child program is partnering with Microsoft to have the windows operating system available on laptops donated to poor children around the world.  On May 20, 2008, the New York Times reports that the One Laptop per Child donor program is set to resume.  Here is an excerpt from the article:

The One Laptop Per Child project plans to resume its Give One Get One program, in which people spend $400 to buy one of the nonprofit's rugged computers and donate a second one to a child in a developing country.

Nicholas Negroponte, the founder of the laptop group, announced the return of the donor program Tuesday as he disclosed plans for a second generation of the ''XO'' computers. By 2010 Negroponte hopes to unveil a smaller, more energy-efficient version with two touch screens and a price closer to the long-term goal of $100. Negroponte said his new target is $75.

For the entire article, see "Laptop - for - children program to resume sales to donors," in the May 20, 2008, issue of the New York Times.


May 21, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 20, 2008

IRS Seeks to Fill "Jurisdictional Gaps" in Charitable Exemption Law

On the heels of a recent speech in which TE/GE Commissioner Steve Miller speaks of "jurisdictional gaps" in IRS authority, the Chronicle of Philanthropy published an article describing a recent private letter ruling denying "tax exemption to an organization [because it] did not spend enough of its money on charitable programs."  Here is an excerpt from the article:

These state records also showed that the money that the organization reported spending on its charitable program during the year was less than one-half of 1 percent of its total revenue and about 3 percent of its total expenses.

Last year, the Tennessee Department of Commerce and Insurance said that the National Foundation of America had been running an insurance business without a licence. State authorities said that the organization promised consumers that its annuity product would entitle purchasers to significant tax benefits because of its federal status as a charity, even though it had not been approved as a charity by the IRS.

In its ruling, the IRS concluded that the organization did not qualify as a charity because it was organized and operated for the primary purpose of running a business. “You do not carry on a charitable program that is commensurate in scope with your financial resources,” the IRS said.

For the entire article, see "IRS Denies Tax-Exempt Status to Group That Spends Too Little Money on Charitable Programs," in the May 13, 2008, issue of the Chronicle of Philanthropy.  For the full text of the private letter ruling, go here.


May 20, 2008 in Federal – Executive, In the News | Permalink | Comments (0) | TrackBack (0)

Benjamin Todd Jealous Appointed Head of NAACP

Benjamin Todd Jealous, at age 35, has been appointed President and CEO of National Association of Colored Persons.  Here is an excerpt from the announcement:

Benjamin Todd Jealous served as President of the Rosenberg Foundation- a private independent institution that supports advocacy efforts to make significant improvements in the lives of California's working families and recent immigrants. He was the fourth person to hold the position since the Foundation was founded in 1935.

Mr. Jealous was Director of US Human Rights Program at Amnesty International. While there he led its efforts to pass federal legislation against prison rape, rebuild public consensus against racial profiling in the wake of the September 2001 terrorist attacks, and expose the widespread sentencing of children to life without the possibility of parole. He is the lead author of the 2004 report Threat and Humiliation: Racial Profiling, Domestic Security, and Human Rights in the United States, the release of which received coverage by major media outlets in most states and on six continents.

For the entire announcement, see the NAACP website posting.


May 20, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)

Aid Organizations Organize in China

The May 20, 2008, issue of the New York Times reports that China is allowing aid organizations to organize is ways that are very positive in terms of earthquake relief efforts.  Here is an excerpt from the article:

Beijing is instinctively wary of public activism and has long maintained tight restrictions on private charities and religious, social and environmental groups that operate outside government control. The public outpouring is so overwhelming that analysts are debating whether it will create political aftershocks and place pressure on China’s authoritarian state to allow more space for civil society.

When the quake struck, party officials initially assigned oversight of private relief efforts to the Communist Youth League, the political base of President hu Jintao. But many individuals, corporations and nongovernmental organizations, or NGOs, simply rushed into action to supplement what they say is an overburdened Chinese Red Cross or to help with the rescue, according to representatives of some private citizens’ groups.

Faced with the potential for a grave humanitarian crisis, officials loosened their grip. They have since begun warning volunteers to stay out of the earthquake zone, citing safety concerns. But thousands are already there.

In Chengdu, relief volunteers have formed a command structure called the NGO Relief Action Group to coordinate 30 organizations. They have collected donations of instant noodles, biscuits, rice, medicine, clothes and bedding.

For the entire article, go to "Many Hands, Not Held by China, Aid in Quake," in the May 20, 2008, issue of the New York Times.


May 20, 2008 in In the News, International | Permalink | Comments (0) | TrackBack (0)