Saturday, August 9, 2008


With the eyes of the world on China during the Olympics, today's Washington Post (Beijing Curbs Religious Rights -- Christian Activists Detail Harassment) reports that while China describes itself as a religiously tolerant society that allows its citizens to worship freely and is this week extending that freedom of worship to athletes in the form of worship rooms in the Olympic Village, each dedicated for one of the world's major religions, religious freedom does not extend "beyond the heavily secured perimeter fence of Olympic Village."

According to the article, church members and religious activists in China have stated that in this Olympic Year, Chinese government officials "have sharply tightened restrictions on religion, arresting leaders of unregistered 'house churches,' stepping up harassment of congregations, denying visas to foreign missionaries and shutting down places of worship."

This crackdown on religious freedom

is part of a security campaign that has targeted human rights advocates, domestic dissidents and petitioners -- anyone who might interfere with the ruling Communist Party's efforts to showcase China as a harmonious society in which the government maintains a firm grip on power.

Officially, China allows worship only at registered churches belonging to the Three-Self-Patriotic Movement, a government-sanctioned Christian organization that, in combination with the China Christian Council, form the only state-sanctioned ("registered") Protestant church in mainland China.  The state also attempts to exercise supervision over mainland China's Catholics through the Chinese Patriotic Catholic Association, an organization that operates without the blessings of the Roman Catholic Church and that church's leader, Pope Benedict XVI.


August 9, 2008 in Church and State, International | Permalink | Comments (0) | TrackBack (0)

Friday, August 8, 2008

VSP' Files Petition for Cert. Full Text Available Here

We recently informed you that Vision Service Plan hired Ken Starr to file a petition for cert. challenging the revocation of its 501(c)(4) status.  Here, now, is the petition, filed yesterday:  Download vsp_cert.Petition.pdf and here is the appendix to the petition:  Download vsp.Appendix[1].pdf


August 8, 2008 in Federal – Judicial | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 6, 2008

FASB Issues Guidance on Endowment Accounting

The FASB announced today that it has issued a final staff position statement on endowment accounting.  FSP FAS 117-1 provides guidance on the net asset classification of donor-restricted endowment funds of a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act, and also provides for enhanced disclosures for all endowment funds.

Draft guidance had been issued in February and the FASB received many comment letters which it considered before making changes to the draft guidance.  The final guidance recognizes the legal restrictions a donor intends when a donor contributes to an endowment fund, even one without a purpose restriction.  Under the final guidance much more of an endowment will be classified as "temporarily restricted" than has been the case in the past.  The accounting rules will thus be a better reflection of the legal rules. 

The FASB's press release says that the goal is "to improve the quality and consistency of financial reporting of endowments held by not-for-profit organizations."

The FSP is posted on the FASB's website.


August 6, 2008 in In the News | Permalink | Comments (1) | TrackBack (0)

Tuesday, August 5, 2008

Anti-terrorism legislation and nonprofits around the world

Several articles in the July 2008 issue of the International Journal of Civil Society Law (IJCSL) examine anti-terrorism legislation around the world and its effect on charities and other civil society organizations.  It address concerns that in some developing countries, governments use anti-terrorism legislation to target organizations out of official favor.


August 5, 2008 in International | Permalink | Comments (0) | TrackBack (0)

Political activity by 501(c)(3)s: guidance and commentary

On July 28, 2008, the Director of the IRS's Exempt Organizations Examinations, issued a directive examining several cases involving allegations of how political campaign activity on the websites of section 501(c)(3) organizations.  This directive is the latest installment of the agency's Political Activity Compliance Initiative (PACI) for the 2008 electoral cycle. (In June 2008, the Deputy Inspector General for Audit issued a report on the initiative entitled "Improvements Have Been Made to Educate Tax-Exempt Organizations and Enforce the Prohibition Against Political Activities, but Further Improvements Are Possible.")

The July 2008 issue of the IJCSL contains an article that examines federal tax law restrictions on the political activities that tax-exempt charities can pursue.  In "Should the 501(c)(3) Political Activity Prohibition Be Revoked?",  Joseph Boatwright, a Jacksonville, FL attorney, argues that it should be repealed, at least with respect to religious organizations.   


August 5, 2008 in Federal – Executive | Permalink | Comments (0) | TrackBack (0)

Monday, August 4, 2008

Charity spends bulk of outlays on its director's legal fees

Is it legal for a charity to spend money on lawyers defending its director against charges of allegedly misusing that money?  That's the question posed by a columnist for the Philadelphia Inquirer about Citizens Alliance for Better Neighborhoods, in an article entitled Nonprofit spends to defend director's deeds.  The mission of the organization, formed in 1991, is to improve Philadelphia neighborhoods by picking up trash, clearing alleys, planting trees, among other activities.  According to its Form 990, the organization granted $208,000 to local charities, compared with the $719,000 it spent on legal fees while its director, Ruth Arnao, 51, was being investigated by the FBI and IRS for misuse of funds. Arnao was indicted in February 2007 on 45 counts, including fraud and obstruction of justice, and she resigned in June of that year.

The column quotes Donald W. Kramer, a Philadelphia lawyer described as an expert on nonprofit issue, for the proposition that Pennsylvania law permits charities "to pay the legal bills for people who are being sued because of activities in connection to the charities."  This assertion is contested by Marcus S. Owens, lawyer and former head of the tax-exempt division of the IRS. "This sounds like another misappropriation.. To me, there's a difference between paying for some suit that's in one's service to the organization that has been approved by the board, and another in paying legal bills due to the unilateral taking of the assets."

Most respondents to an unscientific on-line survey believe the charity shouldn't pay for legal fees in this case.  Of the 69 responses to the column at the Inquirer's website, 25% expressed the belief that state law authorizes the charity to continue paying Arnao's legal bills, while 75% believe that this is "a misuse of funds." 

In truth, Title 15 section 5741 of the Pennsylvania code provides that:

Unless otherwise restricted in its bylaws, a nonprofit corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation... against expenses (including attorneys' fees)... actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. 


August 4, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)