May 15, 2010
ICCSL publishes Journal and Newsletter
The May issue of the IJCSL Newsletter and the April issue of the Journal itself are available online. Both Lloyd Mayer and Terri Helge graciously allowed articles that appeared elsewhere to be reproduced electronically for a wider audience.
Israel--ICCSL posts information and comments about the proposed NGO laws
ICCSL has posted its comments on the first proposed legislation aimed at a crackdown on NGOs, which was part of the successful campaign to get that bill dropped. The most recent bill and its proposed impact are also analyzed in a separate document.
China NGO "clamp-down"
http://www.npr.org/templates/story/story.php?storyId=126821399 (link good)
This story from NPR's Morning Edition Friday, May 14 (by Anthony Kuhn) is the best analysis I have read or heard about the "clamp-down" on NGOs. It quotes externsively from Deng Guosheng, who heads the NGO Center at Tsinghua. It also quotes Xu Zhiyong from Gongmeng, who says he wants now to be more strategic in what he does and that he will no longer accept foreign funding. Prof. Deng also mentions the local level efforts to make it easier for certain NGOs to register. If anyone would like more info on that, please let me know directly
Foundation Center Reports Grantmaking Down by 8.4 Percent in 2009
The worst economic crisis since the Great Depression resulted in the biggest reduction in U.S. foundation giving on record. In 2009, the nation’s more than 75,000 grantmaking foundations cut their giving by an estimated 8.4 percent, or $3.9 billion. This was by far the largest decline in foundation giving ever tracked by the Foundation Center.
Despite its unprecedented severity, the reduction in 2009 foundation giving could have been worse. Among factors helping to moderate the overall decline in giving were the decision of a significant number of funders to reduce their operating expenses and/or use their endowments to shore up their giving during the crisis; increased giving by the Bill & Melinda Gates Foundation; continuing gifts and bequests from donors into new and existing foundations; and the practice of asset-averaging by some foundations, which reduces the impact on giving of year-to-year fluctuations in asset values.
Findings from the Foundation Center’s annual “Foundation Giving Forecast Survey” suggest that 2010 foundation giving will remain flat—a prospect that would have seemed improbably optimistic at the nadir of the market just over one year ago. Should poor housing sales, increasing oil prices, persistent unemployment, or other unforeseen factors not derail the economic rebound that began late last year, it appears likely that foundation giving will show positive, albeit very modest growth in 2011.
Report Challenges Nonprofit Hospitals on Charity Care Transparency
Two Boston area advocacy organizations that promote greater access to health care released Best Kept Secrets: Are Non-Profit Hospitals Informing Patients About Charity Care Programs challenging whether charity hospitals are complying with American Hospital Association "Communicating Charity Care and Financial Assistance Policies" guidelines designed to ensure patients are aware of charity care policies. In the report, the Access Project and Community Catalyst described survey results for 99 randomly selected nonprofit hospitals. They found that while most (85) of the hospitals mentioned the availability of charity care on their websites and/or during telephone calls with surveyors, fewer than half (42) provided application forms, only a quarter (26) provided information who qualified for charity care, and only a third (34) provided information in a language other than English. The report recommended, among other measures, that states consider enacting laws and regulations designed to increase the transparency of charity care policies and that both the federal and state governments provide greater oversight to ensure compliance with all charity care related legal requirements, including compliance with the new transparency obligations contained in the recent federal health care reform legislation.
May 14, 2010
IRS Issues Colleges and Universities Interim Report
The Internal Revenue Service released a long awaited interim report on the responses it received to a questionnaire sent to a sample of 400 public and private nonprofit colleges and universities. Among the highlights:
- The report provides results for the 177 private institutions and 167 public institutions that responded. Of the remaining schools in the sample, 31 indicated they were not the type of organization targeted by the survey (e.g., not tax-exempt or only offering a two-year degree), 11 provided system-wide responses and were not included in the interim report, one was removed because it had been assigned to an incorrect size category, and 13 schools did not respond. The 13 non-respondents were referred to Exempt Organizations Examination (memo to self: always respond to letters from the IRS).
- Top executive compensation ranged from an average of $428,000 (median $361,000) for large schools (15,000 or more students) to an average of $202,000 (median $174,000) for small schools (fewer than 5,000 students). For the small schools the highest paid person other than an officer, director, trustee, or key employee was most often a faculty member (approximately 50% of the time) while at the large schools it was most often a sports coach (43%), followed in frequency by a faculty member (34%).
- Most although not all schools followed commonly recommended (including by the IRS) governance practices such as using the rebuttable presumption of reasonableness process to set at least some executive compensation (55% of the 122 small private schools that responded to this question, 71% of the 28 medium private schools, and 63% of the 8 large private schools), having a writing conflict of interest policy (over 80% in all categories), and making financial statements publicly available (over 75% in all categories).
- Almost all schools had an endowment fund, with target and actual spending rates of approximately 5 percent across the three size categories the IRS applied. An interesting question is whether this finding provides additional support for a mandatory payout rate - is this too little? - or undermines such a requirement - enough is already being spent without a legal mandate. (Not surprisingly, Senator Grassley has an opinion on this point.)
- A significant majority of the schools reported having related entities, with a large minority having at least 50% control of one or more such entities.
- Most schools had international activities, including educational programs outside the United States and foreign investments (often through investment entities - can you say "blocker corporation"?).
The IRS launched more than 30 examinations based on responses to the questionnaire, focusing primarily on executive compensation and unrelated business income issues, including the previously blogged about audit of Harvard University. The final report will include additional analysis and further information relating to responses.
For press coverage, see USA Today.
Doomsday (i.e., Revocation Day) Looms for Non-Filing Tax Exempts
In what appears to an all out effort, the Internal Revenue Service is doing all it can to get the word out regarding the automatic revocation of tax-exempt status that will hit nonprofit organizations that fail to file three required annual returns in a row. Enacted by Congress as part of the Pension Protection Act of 2006 for tax years beginning after 2006, this penalty now has particularly urgency because Monday, May 17th will be the due date for the third return for organizations with calendar fiscal years (absent an extension request) since this provision went into effect. What makes this penalty especially a trap for the unwary is that at the same time Congress imposed on almost all tax-exempt organizations other than churches and church-related entities the requirement to file some type of annual return. Previously exempt organizations that normally had annual gross receipts of no more than $25,000 did not have to file any return unless they were a private foundation; starting with years beginning after 2006, they have to file at least the online Form 990-N. No one knows how many organizations will be affected, or how many such organizations are inactive or non-existent so revocation will not matter, but estimates are in the hundreds of thousands.
May 13, 2010
Helge: The Taxation of Cause-Related Marketing
Thomas: Re-envisioning the Charitable Deduction to Legislate Compassion and Civility
Alice M. Thomas (Howard) has published "Re-envisioning the Charitable Deduction to Legislate Compassion and Civility: Reclaiming Our Collective and Individual Humanity Through Sustained Volunteerism" (westlaw; subscription required) in the Kansas Journal of Law and Public Policy. Here is the conclusion:
Nonprofit and Voluntary Sector Quarterly June 2010 Issue
- Marty Sulek,
- Ahmad Kaleem and Saima Ahmed,
- Jennifer Lynn Oser,
- Brent Never,
- Janelle A. Kerlin,
- Femida Handy, Ram A. Cnaan, Lesley Hustinx, Chulhee Kang, Jeffrey L. Brudney, Debbie Haski-Leventhal, Kirsten Holmes, Lucas C. P. M. Meijs, Anne Birgitta Pessi, Bhagyashree Ranade, Naoto Yamauchi, and Sinisa Zrinscak,
- Susan H. Evans and Peter Clarke,
- William A. Brown and Chao Guo,
- Donna Hardina,
- Debbie Haski-Leventhal,
- Renée A. Irvin,
- Carol Chetkovich,