Thursday, March 4, 2010
This publication, Global Trends in NGO Law, is entitled “Survey of Arab NGO Laws.”
This issue addresses the NGO laws of the Middle East / North Africa (MENA), and includes:
· A brief history of the development of NGO laws in the region,
· A review of the current status of NGO laws in the MENA countries, and
· A review of the most recent initiatives to revise the region’s NGO laws.
Download the fourth issue (PDF) or read it online at http://www.icnl.org/globaltrends/glotrends1-4.htm.
At a conference celebrating the 80th bithday of Prof. Jerome Alan Cohen, originally of Harvard and most recently of NYU, there was a panel on civil society. According to Prof. Donald C. Clarke of GWU:
" The long-awaited video of our Feb. 19th Chinese law conference here in Washington, DC in honor of Jerome Cohen's upcoming 80th birthday is now out, just in time for the Oscars. Those interested may access the links to the videos here: http://bit.ly/jerrypalooza."
There is also a conference on March 5, entitled Leading Developments in Chinese law, which also features a civil society panel. When the video is posted to the web, I will post that as well.
Noshir Dadrawala of the Centre for the Advancement of Philanthropy writes that in India, Section 80G of the Income Tax Act provides for deduction to donors in respect of donations made to certain funds and institutions established for ‘charitable purpose’. Most 80G certificates expire on 31st March and therefore this note may be of interest and utility to charitable organizations based there. Earlier, as per section 80G(5)(vi) approval under section 80G had “effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval”. The Finance (No.2) Act, 2009 omitted clause (vi) of section 80G(5) with effect from 1-10-2009. According to the Memorandum explaining the provisions of the Finance (No.2) Bill, 2009, clause (vi) of section 80G(5) is omitted “to reduce the undue hardship caused to bona fide institutions and funds and also to eliminate wastage of time and resources of the tax administration in renewing approvals from time to time.” The effects of this amendment are: 1) Approvals once granted shall continue to be valid in perpetuity. Therefore all the approvals granted after 1-10-2009 shall be valid for all time to come unless withdrawn; 2) Existing approvals expiring after 1-10-2009 need not be renewed and shall be deemed to be continued in perpetuity, unless specifically withdrawn; and 3) Approvals expiring before 1-10-2009 will have to be renewed once and after such renewal these shall be valid for perpetuity, unless specifically withdrawn.
Just weeks after Russia’s Supreme Court outlawed their literature as extremist, Jehovah's Witnesses are encountering at least ten times the level of state harassment across the country as before the ban, their press secretary has estimated to Forum 18 News Service. Since 8 December 2009, they have catalogued over 30 incidents, including searches, threats and brief detentions. So alarmed are the Jehovah’s Witnesses by the growing similarity of their predicament with their repression during the Soviet period that their entire 160,000-strong Russian membership has begun distributing 12 million copies of “Is History Repeating Itself?” a leaflet refuting the religious extremism allegations against them. In December, Russia’s Human Rights Ombudsman informed President Dmitry Medvedev of an upsurge in citizens' complaints about religious freedom violations, but his only response was to check if they came from “non-traditional” confessions. Mikhail Odintsov of the Ombudsman’s Office declined to answer Forum 18’s questions. Readers of the late Turkish Muslim theologian Said Nursi - whose works are also banned - similarly note increased state scrutiny, with raids by the police and FSB security service on dozens of homes in the North Caucasus republic of Dagestan and Siberian city of Krasnoyarsk in the past two months.
According to an email received from Noshir Dadrawala (firstname.lastname@example.org), “The amendments proposed in the new Budget under the Income Tax Act concerning charitable organizations are soft and at places even encouraging.” Here are the Highlights:
· Implementation of the Direct Tax Code (DTC) has been postponed by a year and may be introduced only from April 1, 2011;
· A Goods & Services Tax (GST) may also be introduced from April 2011;
· The Finance Act 2008 had changed the definition of “charitable purpose” such that “Advancement of any other object of general public utility” would not be considered as “charitable purpose” if it involves carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for any fees or other consideration. The Finance Bill 2010 has attempted to provide some relief with retrospective effect from the 1st day of April, 2009 by exempting the aggregate value of the receipts from such activities up to ten lakh rupees;
· A small amendment has been proposed in sub-section (3) of section 12AA of the Income Tax Act such that the Commissioner, if satisfied that the activities of a trust or institution “which has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996]” are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing canceling the registration of such trust or institution.
· In section 35(1) it is proposed that the words “scientific research association” be changed to just “research association” and that the tax deduction allowed under this section be enhanced from “one and one-fourth” to “one and three-fourth”
· The service tax continues to be retained at 10 per cent to pave the way for GST. However, certain services, hitherto untaxed, are expected to be brought within the purview of the service tax levy. These new services will be notified separately.
The Charity Commission has cleared George Galloway’s Viva Palestina appeal of having links to Hamas, but has criticised several aspects of the way it has been run. Last year, the Charity Commission opened an inquiry following concerns over the financial governance of £1m that the appeal said it had raised for aid in Gaza. The Commission today said it found no evidence that the charity’s property or money was provided to Hamas, which is considered a terrorist organisation by the US and the EU, with Galloway confirming he had handed over £25,000 in cash to Hamas but been very clear that it was ‘personal money’ rather than the charity’s.
For the full text of the article describing the Charity Commission's action see here.
Another interesting news report from the BBC tells of Save the Children's concern that military support of NGO humanitarian efforts in war torn regions converts NGO's from impartial humanitarian actors to legitimate military targets.
Save the Children said the UK's policy of funding troops to work alongside aid workers threatened their impartiality. The link-up on projects such as rebuilding schools blurred military and humanitarian objectives, it warned. The Department for International Development (Dfid) said military and civilian efforts needed to be combined as security was such a huge problem. The charity, which is launching a humanitarian appeal for Afghanistan, said the current policy could turn hospitals or schools, rebuilt with military help, into targets.
Do any of our readers know what international laws of war have to say about this?
Is there a private inurement, excess benefit or private benefit issue when a for-profit buys a non-profit college's assets, including its accreditation?
I ran across an interesting issue today when I learned that ITT Educational Services, Inc. recently purchased Daniel Webster College for 20.8 million. According to this report:
In return, the company obtained an academic credential [accredittion] that may generate a taxpayer-funded bonanza worth as much as $1 billion. ITT Educational, the third-biggest higher education company in the United States, with a market value of $3.8 billion, may increase it by 26 percent, or $1 billion, within five years because of the purchase of 1,200-student Daniel Webster in Nashua, N.H., according to Michael Clifford, an investor in Del Mar, Calif., who has participated in the acquisitions of four nonprofit colleges.
If the investor is correct -- that the corporation paid $20.8 million for an asset worth $1 billion -- what then should be said about the charity's obligation to get fair market value for its assets? Probably not private inurement or excess benefit because of the "first bite" rule. Is this an actionable case of private benefit?
Tuesday, March 2, 2010
According to a report issued by the National Committee for Responsive Philanthropy, and discussed in today's L.A. Times, it is actually not a bad idea to give money specifically for political causes. The report, available in full here, "estimates that for every dollar invested in the work of a selection of advocacy groups [in Los Angeles] there was $91 in benefits to local workers." Wow! Imagine getting those kinds of returns on any investment. Put in one dollar, get back almost a hundred. No wonder people are so concerned about the influence of corporate dollars on our political process.
A New York Times article published last week detailed the anxieties felt by some Democrats over the extent to which the Supreme Court's decision in Citzens United v. Federal Election Commission will encourage coporations to use nonprofits to shield them from public disclosure of their campaign payments:
A 1986 Supreme Court decision, Federal Election Commission v. Massachusetts Citizens for Life, opened the way for certain narrowly-defined nonprofit groups to advertise for and against political candidates. However, the 1986 decision forbade corporations and unions to give money to nonprofit organizations that financed advocacy advertisements. The Citizens United decision lifts that ban.
That means that those nonprofit groups, which are not required to disclose their donors, can now use corporate contributions to buy political commercials, and the corporations can potentially operate behind the anonymity of their donations.“Clearly, that’s where the action’s going to be,” said Kenneth A. Gross, a Washington lawyer who advises corporations on political law.
While last month’s decision allows corporations to spend without limit on advertising for or against candidates, if they do so directly, they will have to report their expenditures and identify their donors. Mr. Gross said corporations are often loath to have their names attached to such advertisements. The nonprofit groups, with their legal ability to withhold donors’ names, offer an attractive alternative, he said.
The report states that Democrats have proposed legislation requiring more disclosure by nonprofits that receive political contributions. A summary of the proposed legislation is available here. For a complete lists of the federal legislative proposals made in response to Citizens United as of January 27, 2010, go here.
A recent report in the Tennessean (Nashville, TN) provides a nice case study regarding the extent to which the Preisdent of a 501(c)(3) is or is speaking on behalf of the 501(c)(3) for purposes of the ban on campaign intervention by a tax exempt charity. The nonprofit organization, Proclaiming Justice to the Nations, had planned on hosting a political fundraiser for U.S. Representative Michele Bachman, until it was suggested that doing would jeopardize the group's tax exempt status. What makes this a pretty good case study of "who is the charity" is that the organization is run out of the CEO's home and, according to the report,the CEO is a staunch supporter of Representative Bachman, who is presently running for re-election. The article details the efforts made by the organization's president to remain a supporter of Bachman without co-mingling the nonprofit's assets into her reelection efforts. Given tht the nonprofit has no separate existence from its President, that's easier said then done. For example, emails sent in support of the reelection campaign come from the same computers used by the nonprofit, and are sent to the same supporters of the nonprofit. It seems almost inevitable that small nonprofits essentially operated by one politically active person will have to deal with the issue raised in this report.