Saturday, October 24, 2009
More than 70 people attended the Symposium held yesterday in Chicago, at Chicago-Kent Law School. Practicing lawyers as well as academics from around the country enjoyed the event, sponsored by the ACTEC Foundation. Four panels covered topics ranging from corporate governance (two panels) to tax to donor intent. Marion Fremont-Smith spoke at the luncheon, describing the changes she has seen in her career in nonprofit law and noting how many things remain unchanged and in need of more work. The Chicago-Kent Law Review will publish the papers from the Symposium, so if you were not able to be there, watch for the Symposium issue from the Law Review, out next spring.
Friday, October 23, 2009
The Council on Foundation has released a study of 440 CEOs and Executive Directors appointed between 2004 and 2008. The study will serve as a baseline for information on hiring practices, professional backgrounds of the executives, and milestones contributing to career success and advancement. The report is available on the Council's website.
The Council of Bar and Law Societies of Europe (CCBE) reported the following in its latest newsletter: on 16 February 2009, the European Commission launched a public consultation on a possible European Foundation Statute. The consultation focused on the difficulties foundations face when operating cross-border, on the content of a possible European Foundation Statute and on how a Statute might affect donors’ and founders’ attitudes. CCBE responded to this consultation. It pointed to the main legal and tax related obstacles which currently exist (such as the difficulty of recognition of the legal personality in another state or the differences in tax treatment). Overall, the CCBE expressed its support for the creation of a European Foundation statute in order to overcome current deficiencies in the cross-border operation of foundations.
Thursday, October 22, 2009
The Financial Accounting Standards Board announced today that it will create a Non-for-Profit Advisory Committee of 12-15 people. The NAC will "provide an important discussion forum on critical issues and a key vehicle for hearing perspectives from the not-for-profit sector." In addition, the NAC will assist the FASB and its staff in communicating information to the not-for-sector. The FASB will begin accepting nominations in December.
The Chicago Tribune reports that an Iowa woman has filed a complaint with the FEC, alleging that the West Hills United Methodist Church funneled contributions to the Iowa Christian Alliance. The complaint alleges that potential donors were told to make contributions to the church, with the understanding that the church would forward the contributions to the ICA. The contributions to the church were deductible, while a contribution directly to ICA would not be deductible. ICA officials have attacked the woman as a "troublemaker," but a GOP activist described a similar process - being told that if he donated to the church he would receive recognition as having donated to ICA - in a phone interview. The FEC is reviewing the complaint.
Pew Charitable Trusts and the Robert Wood Johnson Foundation have announced the Health Impact Project, a national initiative that will examine the impact of government programs and actions on health. The idea is to look at activities and projects that policy makers typically do not associate with health - road construction projects, housing policies and housing developments, labor policies, oil and gas development, and a variety of other government programs. The initiative hopes to identify the unintended health consequences of these projects, giving policy makers better - and more complete - information.
Wednesday, October 21, 2009
The Louisiana State University System and its Board of Supervisors have authority over Louisiana's system of hospitals for the uninsured, and after Hurricane Katrina the LSU System closed Charity Hospital. Seven patients challenged the closing of the hospital, arguing that consent of the Legislature is required to close a hospital in Louisiana. For nearly a year, the argument has been about venue - should the case be heard in East Baton Rouge Parish, the home of the LSU System, or in Orleans parish, where the plaintiffs live. The trial court and appellate court had both denied LSU's motion to move the venue, but the Louisiana Supreme Court has now agreed that the case should be heard in East Baton Rouge Parish, because that is the proper venue for a suit against a state agency. The case will now proceed on its merits, and the LSU System will continue work on a new academic medical complex to be built near the shuttered hospital. The New Orleans Times Picayune reported this story.
The Catholic Archdiocese of New Orleans and Catholic Charities settled some 20 lawsuits that alleged sex abuse and other physical and emotional abuse at two orphanages in the 1950s and 1960s. A few lawsuits remain unsettled and more may be brought. Under the settlement the Archdiocese will pay more than $5 million, with the money coming from cash reserves from investment income and non-church real estate sales. Unlike the Archdiocese of Delaware, which has filed for bankruptcy, the Archdiocese of New Orleans says that the settlement will not affect parish operations. For the news story, go here.
Tuesday, October 20, 2009
We previously mentioned the case brought by the James Madison Center for Free Speech against the IRS on behalf of Catholic Answers, a charitable section 501(c)(3) organization. Catholic Answers challenged the IRS imposition of excise taxes for political campaign intervention expenditures on void-for-vagueness grounds, asserting that the IRS definition of such intervention is unconstitutional. Last week a federal district court dismissed the case on procedural grounds, including that the claim was moot in that the government had refunded the taxes initially assessed (as various commentators, including Marc Owens, had predicted would happen). Another case brought by the James Madison Center on behalf of the Christian Coalition of Florida, a section 501(c)(4) organization, raising similar issues is still pending.
Early in the summer we blogged about the scandal at the University of Illinois - the preferential admissions treatment given applicants with political connections. The law school was involved, and the preferential treatment also applied to undergraduate admissions and admissions to various graduate programs. The Chancellor of the University of Illinois, Richard Herman, stepped down today. The article reporting his decision to resign describes him as the "principal enforcer" of the priority admissions process, in particular an undergraduate admissions program he started as provost. The University President and six university trustees had already stepped down or been removed in the aftermath of the scandal.
The annual Western Conference on Tax-Exempt Organizations will be held November, 19-20 in Los Angeles, California. Loyola Law School and the IRS co-sponsor the conference. This year Sarah Hall Ingram Commissioner, Tax Exempt and Government Entities Division of the IRS, and Joan Hirsch, from the IRS in California, will provide the Pacific Coast and Washington Update. Belinda Johns, from the California Attorney General's office will provide the update from that office. Other topics include the impact of the economic downturn on charities, the new supporting organization regulations, mergers and strategic alliances for charities, civil and criminal penalties that affect exempt organizations, and Form 990 developments. Bruce Hopkins will discuss current developments.
The IRS is developing software to assist new charities in completing Form 1023. The software is currently in the testing phase and should be released sometime in 2010. After its release, the IRS will offer a significantly reduced filing fee to charities that use Cyber Assistant.
Monday, October 19, 2009
The Catholic Diocese of Wilmington, Delaware has filed for Chapter 11 bankruptcy protection, making it the seventh diocese in the U.S. to file for bankruptcy. The Boston Globe reported the filing. The proximate cause for the filing was a civil case that was the first of eight sex abuse trials about to begin against the diocese and a Catholic priest. The filing for bankruptcy automatically delays the civil case.
IRS Update: Supporting Org Proposed Regs, Vehicle Donation Documentation Issues, and Form 990 Videos
Proposed Supporting Organization Regulations. The proposed regulations interpret Congress's 2006 legislation relating to Type III supporting organizations. The most significant aspect of these regulations is the lack of state law trust provisions that existed in the pre-2006 regulations governing such supporting organizations. Comments and requests for a public hearing are due by December 23, 2009.
TIGTA Criticizes IRS Procedures for Vehicle Donation Documentation. The Treasury Inspector General for Tax Administration issued a report critical of the IRS's procedures for ensuring that taxpayers who donate motor vehicles to charities meet the additional documentation requirements imposed by Congress in 2004. While the IRS has created a special form (1098-C) that is supposed to be filed by charities for each contribution of a motor vehicle with a claimed value of more than $500, TIGTA found that there was no record of such a form being filed in a significant number of cases and that the IRS does not match information on that form (when filed) with information on the contributors's returns. TIGTA estimated that this and other procedural failures resulted in over 90,000 taxpayers claiming (apparently unchallenged) deductions totaling $204 million without adequate documentation in 2007. The IRS responded, however, that Form 1098-C matching would not be effective, and additional outreach efforts (also recommended by TIGTA) were not necessary.
Form 990 Video Series. As part of its ongoing efforts to provide additional guidance on how to complete the newly expanded Form 990, the IRS has developed a video series covering key aspects of the new form. The videos use a hypothetical organization as a case study to illustrate how to complete the form.
In a story posted on October 13, the LA Times noted the continuing discussion about whether government support to museums during these difficult economic times is appropriate or wasteful. A couple of legislators, Rep. Jeff Flake (R-Ariz) and John Campbell (R-Irving) are quoted for opposition to any government spending for museums. Rep. Campbell says that supporting a local museum project is like "supporting a charity" and that his constituents did not elect him to give money to charity. In contrast, Ford Bell, the president of the American Association of Museums talked about all the ways museums enrich the community: "as educators, as stewards of history and culture, and as economic engines." The article focuses on projects funded as part of the last transportation bill, and notes that the next bill will likely contain many fewer projects.
The Commission has published its second annual report on the themes and wider issues arising from its compliance work it is entitled “Charities Back on Track: themes and lessons from the Charity Commission's compliance work 2008-09,” click to download a copy of the report. This is Commission’s regulatory work which is concerned with ensuring that charities comply with their legal obligations, and with undertaking investigations into serious abuse or mismanagement in charities. Using case studies, the Commission aims to improve trustees’ awareness of the common problems that can arise in charities, and provide guidance on how to avoid similar situations from happening in their charities. The Commission hopes the report will help to build an understanding of its compliance work by demonstrating the sort of regulatory action it can take and the impact it has in protecting charities from abuse and harm. It also provides basic statistical information on casework and performance, and outlines some relevant policy and other developments and our key priorities for the future.