October 18, 2008
DOJ Legal Opinion Supports Charitable Preferences Based on Religion, But Refuses to Address Prefences Based on Race or Gender
The October 18, 2008, issue of the New York Times contains an article that discusses the recent release of a Justice Department Office of Legal Counsel opinion letter which supports the granting of federal money to a faith-based organization that hires Christians only and refuses to hire non-Christians. As the NYT article reflects, the analysis in the legal opinion is quite extension. However, the religious freedom law experts quoted in the article describe the analysis as, at worst, completely wrong, or at best, an overly aggressive application of "substantial burden" religous freedom legal doctrine. Here is an excerpt from the NYT article:
Christopher E. Anders, senior legislative counsel to the American Civil Liberties Union, said he was alarmed by the 2007 memorandum’s conclusion that the government does not have a “compelling interest” in enforcing a federal civil rights statute.
“It’s really the church-state equivalent of the torture memos,” Mr. Anders said. “It takes a view of the Religious Freedom Restoration Act that allows religious organizations to get federal funds without complying with anything.”
Professor Lupu did not go that far, but said the opinion made “an aggressive reading of ‘substantial burden’ in a way that is not consistent with what courts and other agencies have done in the past, and it is designed to serve the president’s political agenda.”
In reviewing the legal opinion, it appears to me that the analysis used in order to reach the conclusion that religious preferences by social service organizations are appropriate, the Bush administration officials used arguments eerily similar to those used to advance the cause of race and gender affirmative action advocates. Here is an excerpt from the DOJ legal opinion:
In addition, the exemption that World Vision is seeking is not one directed at allowing it to exclude people from a particular religion from employment. Rather, it is directed at allowing it to hire only coreligionists. There is nothing to suggest that its wish for such an exemption is driven by animus towards people of different religions, rather than by a desire to remain an organization of coreligionists and to expand an activity that it already engages in with coreligionists and that is consistent with the kind of charitable activities that religious organizations traditionally have engaged in with coreligionists in this country. Moreover, World Vision’s representations that it can remain true to its religious mission only if it is able to limit employment to coreligionists is borne out by its apparently consistent hiring practice since its founding, and we are aware of no information to indicate that its hiring practices reflect invidious discrimination. We need not resolve whether the Government would have a compelling interest in enforcing the Safe Streets Act’s nondiscrimination provision with respect to a differently situated grant applicant—perhaps one without such a history to authenticate its claim that homogeneity of belief is essential to its mission, or whose hiring practices implicate compelling government interests in eradicating racial or sex discrimination. In such a case, the Government might well have a compelling interest in requiring strict adherence with the Safe Streets Act’s nondiscrimination requirements. Cf. Hamilton v. Schriro, 74 F.3d 1545, 1552-53 (8th Cir. 1996) ("The Religious Freedom Restoration Act . . . establishe[s] one standard for testing claims of Government infringement on religious practices. This single test, however, should be interpreted with regard to the relevant circumstances in each case.") (quoting S. Rep. No. 111, 103d Cong., 1st Sess. 9 (1993), reprinted in 1993 U.S.C.C.A.N. 1892, 1898). This, however, is not such a case.
For the entire text of the article entitled "Bush Aides Say Religious Hiring Doesn’t Bar Aid", see the October 18, 2008, issue of the New York Times. For the entire text of the DOJ Office of Legal Counsel legal opinion on religious freedom preferences, see http://www.usdoj.gov/olc/2007/worldvision.pdf or click Download worldvision.pdf to dowload a copy.
October 15, 2008
Financial Crisis Hits Public Schools in Maryland and Virginia
The current global financial crisis is taking its toll on public education districts in Maryland and Virginia, districts that are close in proximity to Washington, D.C. According to an article appearing in today's Washington Post, Fairfax County, Virginia, is considering reductions in campus police officers, school health aides and preschool classes for needy students, while the Prince George's County school system in Maryland has begun a hiring freeze and is drafting plans for a possible 10 percent budget cut as educators confront the fallout of the economic downturn.
The article notes that the fiscal troubles in the two counties are echoed elsewhere in a region that prizes public education and for the past decade has lavished money on academic initiatives. In Montgomery County, Maryland, the superintendent has warned that the schools cannot honor scheduled teacher raises. Meanwhile, Loudon County, Virginia, is hoping voters will endorse a meals tax Nov. 4 to help fund school construction.
According to the Post report, school budget discussions do not usually begin in earnest until December or January. However, this year falling tax revenue and rising fuel costs have led officials to jump-start their budget review, giving a much earlier glimpse of the services at stake.
For the sake of our young people, we hope that relief is in sight.
October 14, 2008
GAO Releases Report on Community Benefit by Nonprofit Hospitals
The GAO just released a report on community benefit expenditures by nonprofit hospitals, available here. The gist of the report is that it is impossible to compare community benefit reports by hospitals because there is no standard methodology for reporting community benefit, and that the IRS's new schedule H doesn't really help this situation. In particular, the report highlights disagreements on how to report bad debt separately from charity care, whether Medicare (as opposed to Medicaid) "shortfalls" (e.g., expenses in excess of reimbursement) should count as community benefit; and whether so-called "community building" expenses should count. The report also notes that bad debt and Medicare shortfalls are a very significant portion of what hospitals report as community benefits.
Anyway, the report pretty much confirms comments I previously made to the IRS when the agency was in the middle of its 990 revision project: unless the IRS mandates (1) what counts as community benefit, (2) a standard methodology for reporting community benefit expenditures and (3) individual reports for every health care facility, no one will be able to make any meaningful policy judgments or compare individual hospitals to one another. The states aren't going to do this on their own, and hospitals will play the numbers game to the extent permitted, just like law schools play the game with U.S. News rankings. In particular, I don't know why the IRS didn't require nonprofit hospitals to report charity care and other community benefit costs using the same accounting methodology as they use in their Medicaid reports; participation in Medicaid is essentially a requirement of tax-exempt status, so all hospitals have to do these reports. What is so difficult or unfair, then, about making hospitals use the same methodology for reporting charity care costs to the IRS? As for Medicare shortfalls, these simply shouldn't count. Unlike Medicaid, Medicare does not target the poor or a specific group financially at risk for a lack of medical services. True, some retirees on Medicare are poor; and many of them aren't. As for "community building" expenses, don't get me started. I once remarked to a colleague that under the argument hospitals make for community-building expenses -- that these expenditures "improve community health" -- Toyota should get community benefit credit for building hybrid automobiles that pollute less, thus improving community health. "Community building" is just another way for hospitals to argue that everything they do is a community benefit and we all ought to thank our lucky stars that they even exist . . .
Of course, all this begs the question whether nonprofit hospitals should be exempt at all. Though I've mellowed on that subject since writing my first article about tax exemption for nonprofit hospitals 20 years ago, when I read stories like this one in the Wall Street Journal (subscription required), detailing how Ascension Health is closing inner-city facilities that lose money in favor of massive investment in suburban hospitals that generate profits (complete with widescreen TV's in private rooms!), I begin to think that any hospital that (1) does not qualify as an educational organization (e.g., a university-affiliated teaching hospital) or (2) does not PRIMARILY serve the poor (an inner-city hospital or perhaps some rural hospitals that are the only source of health care services in their geographic area) ought to be denied exempt status. Let Ascension Health, which reported aggregate net operating revenues of over $500 million last year, pay taxes like any other big business. Which is what it really is.
October 13, 2008
Grant Makers Urged to Respond to Financial Crisis
Yesterday's Chronicle of Philanthropy reported that the Council on Foundations, an association of the country’s largest grant makers, is urging its 2,000 members and other foundations to support charities that are struggling due to the downturn in the economy and to assist cities where the financial crisis has sapped philanthropic resources.
In an “open letter” to foundations, Council president, Steve Gunderson, and chairman of the board, Ralph Smith, wrote that philanthropy can not ignore the current credit crunch and other problems hitting America and the world. The Chronicle story continues:
While today’s economic stress was unexpected, “there is no avoiding the question: what could it mean for philanthropy to step up in these circumstances? How can we play a constructive role without raising unrealistic expectations?” they write.
First, they suggest assisting cash-strapped nonprofit groups. “Our nonprofit partners will bear the brunt of shrinking resources and growing need. Within parameters defined by our respective missions, resources and work, we should actively look for creative ways to assist the sector in weathering this storm and serving those most impacted.”
In addition, they said philanthropies could bring together state and local government officials, business leaders, and others to discuss what needs to be done to bolster the economy in their region and aid places facing a decline in grant making.
Recent College Grads Forego Money and Careers to Start Nonprofits Focused on Outreach
Today's Washington Post (For This Generation, Vocations of Service) reports that several recent college graduates, rather than pursuing regular careers and money-making opportunities, are engaging in social entrepreneurship, a movement in which people launch nonprofit or business ventures to address systemic problems in impoverished areas. These graduates -- most in their 20s or early 30s -- are leveraging business partnerships, grants and donations for their own initiatives to do good in the world. The Post reports that
In recent years, young people have started Orphans Against AIDS, a group that provides educational funding in a half-dozen countries for those left orphaned by HIV/AIDS; the Genocide Intervention Network, which, among other lobbying activities, funds civilian protection initiatives in areas of ongoing atrocities; and AYUDA (American Youth Understanding Diabetes Abroad), which gives insulin to diabetes sufferers in Latin America.
Well done, young people!
October 12, 2008
St. John's to Publish Article by Bernadette A. Meyler
The St. John's Journal of Legal Commentary has accepted for publication an article by Prof. Bernadette A. Meyler of Cornell Law School. The article, The Limits of Group Rights: Religious Institutions and Religious Minorities in International Law, has already been posted on SSRN. Following is the abstract:
Scholars and advocates of religious liberty within the United States are beginning to suggest that our constitutional discourse has focused too intently on individual rights and that our attention should now turn to the interests of religious institutions and the notion of church autonomy. The reoriented jurisprudence encouraged by such proposals is not without parallel in other national contexts, including those of Europe. Heeding calls to attend to church autonomy could thus bring the United States into closer harmony with its European counterparts. Placing priority on church autonomy might, however, generate unforeseen obstacles to the exercise of religious liberty. In particular, emphasizing religious institutions may lead to the unequal treatment of individuals and entities of minority religious persuasions. As this Symposium Article's analysis of pertinent cases from the jurisprudence of international tribunals demonstrates, the monolithic conception of religious associations that has emerged from an institutionally oriented approach to religious liberty has resulted in the neglect of the equality of free exercise on the individual level and, concomitantly, disregard for the freedom of religious dissent and sub-group formation. The piece concludes with a suggestion about how to avoid the pitfalls of both the individually and institutionally based approaches.