Nonprofit Law Prof Blog

IRS and Georgetown Sponsor Conference on Nonprofit Governance

The IRS and Georgetown University will be holding a conference on nonprofit governance on June 23, 2009.  Topics include investment strategies, financial management and oversight and executive compensation.  Brochure available here.

JDC

Sarah Hall Ingram to Take Over as Commissioner of TE/GE

IRS Commissioner Doug Shulman has selected Sarah Hall Ingram to succeed Steven T. Miller (who will become Commissioner, LMSB, which oversees tax administrations for the largest corporations and partnerships in the U.S.) as the commissioner of the Tax Exempt/Government Entities Division of the IRS.  According to the IRS news release, Ingram served as Chief of Appeals for the past three years and was TE/GE Deputy Commissioner from 2004-2006.  Prior to that, Ingram served as Division Counsel/Associate Chief Counsel for TE/GE, where she was responsible for providing legal servIces to TE/GE as well as other parts of the IRS.  Ingram began her career with the IRS in the former Tax Litigation Division in 1982.

JDC

Nonprofit Prof Darryll Jones to Join FAMU as Professor and Associate Dean of Faculty Development

I am pleased to announce that my friend, co-author, co-blogger, classmate and colleague, Professor Darryll Keith Jones of Stetson University College of Law will be joining the faculty of Florida Agricultural and Mechanical University (FAMU) College of Law next academic year as Professor and Associate Dean of Faculty Development.  As many of you know, Darryll is a prolific scholar, dedicated teacher and a fountain of knowledge.  I know that Darryll and his wife, Karla, are very excited by this move and I encourage you to join me in congratulating him on this magnificent accomplishment.  FAMU will be lucky to have Darryll given his prior experience as Academic Dean at Pittsburgh and his stellar scholarly record in the areas of tax law and nonprofit law.  Go Darryll!!

DAB

Coalition of nonprofit groups takes issue with "revolving door" ban on lobbyists entering government service; seeks exemption for charities and social welfare organizations' lobbyists

Though intended to protect the public interest, President Obama's exclusion of former lobbyists from certain government posts is screening out some registered lobbyists who share the Administration's vision of the public interest, as reported in Tuesday's The New York Times. 

The "revolving door" ban on lobbyists entering government" (section 1(1) of Executive Order Ethics Commitments by Executive Branch Personnel) precludes anyone who was a registered lobbyist from working for any executive agency they had lobbied in the past two years.  The ban is designed to screen out those who go through “the revolving door between government service and the private sector in order to achieve personal gain at the expense of the public interest." (Think of characters like Nick Naylor, the chief spokesman for Big Tobacco's chief spokesman and a "mass murderer/profiteer/bloodsucker/pimp" in the satirical novel and movie Thank You for Smoking.)  But the ban also screens out some people who don't fit that profile. People like registered lobbyist Tom Malinowski, the Washington advocacy director for Human Rights Watch.

The fact that Mr. Malinowski lobbied on behalf of genocide victims rather than military contractors, investment firms or pharmaceutical companies made no difference. Mr. Obama’s anti-lobbyist rules do not distinguish between those who advocate for moneyed interests and those who advocate for public interests, and so Mr. Malinowski was ruled out. But in the process, he has become the symbol of a deep discontent among many Democrats over Mr. Obama’s policy.

The article reports that a coalition of nonprofit groups, including the Center for Lobbying in the Public Interest, has started a campaign to lift the ban for lobbyists for charities and social welfare organizations that (in the Center's words) "lobby for a public purpose rather than for a financial bottom line." According to this coalition, the ban on registered lobbyists is a crude proxy for the real culprit, lobbying by profit-maximizing people on behalf of profit-maximizing interests. 

David Axelrod,  President Obama's senior adviser, says this distinction is too subtle and the need to increase public trust in government is too great.  The Times quotes him saying that “you can’t have carve-outs for lobbyists you like and exclude those that you don’t. It would be very hard for people to understand that distinction. This is one of those cases where we’ve had to sacrifice the help of a lot of very valuable people.”

rak

Bank Trustee Asks for Higher Fees Despite Fee Agreement - AG Says No

With stories about dropping endowment values and struggling charities sharing newspaper pages with stories about overpaid bankers, an article posted by the Philadelphia Inquirer seems hard to believe. A bank trustee wants to double its fees, taking money away from a summer camp for poor children, scholarships for art students, and the episcopal cathedral in Philadelphia.  The two primary charitable beneficiaries are fighting back, and they are getting support from the Attorney General of Pennsylvania. A court hearing is scheduled for July.

Since 1973 two Pennsylvania charities - the College Settlement Camp in Horsham (a camp for poor children who would not otherwise go to summer camp) and the Church of the Savior in West Philadelphia (now the Episcopal Cathedral) - have benefited from a trust created under the will of Elizabeth R. England.  As recently as last year, the trust distributed $450,000 to each charity, an amount that covered one-third of the camp's budget and over one-half of the cathedral's budget.  This year each distribution is expected to be $100,000 less and both charities have had to cut programs.

A big part of the reason behind the lower distribution is a dispute with the Bank of New York Mellon Corp., successor to Ms. England's original trustee, Girard Trust Corn Exchange Bank.  Mellon has asked the Philadelphia Orphans' Court to double its fees, altering an agreement that Ms. England made with Girard in 1963, 10 years before her death.  The trustee has operated under the agreement since the trust's inception, but Mellon now says it should be paid at its standard rate and also argues that it has been underpaid since 1994, the date it last filed a formal accounting with the court.  On top of all that, Mellon is charging the trust for the legal costs incurred in connection with its attempt to increase its trustee's fees.

According to the story in the Inquirer, the fee agreement includes a mechanism that allows the two charities to replace a trustee if it seeks a fee change but no agreement with the charities can be reached. The charities have asked Mellon to turn the trust over to Brown Bros. Harriman & Co., but Mellon has refused.  Mellon may think recent changes to Pennsylvania's trust law strengthen its position, because the changes permit a court to adjust fees in certain situations.  Whether any grounds for adjustment exist remains to be seen.  The charity division of the Attorney General's office has already gotten involved, opposing the request for higher and retroactive fees and also opposing the use of trust funds to pay the trustee's costs.  And that - the AG's involvement - may be a very good sign for kids who want to go to summer camp and for the neighborhood programs the cathedral has had to cut.

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