Friday, October 28, 2011
As some of you know, I spend much of my time supervising a Community Development Law (CDL) Clinic at UNC-Chapel Hill. We work exclusively with nonprofit organizations, and, although we don't go to court for them, we do pretty much anything else that 1) they need, 2) will create a good learning experience for our law students and 3) the faculty supervisors feel competent so supervise. I collaborate in the CDL Clinic with Professor Judith Wegner. More on her, below.
Because most of my Nonprofit Law colleagues in the academy are from the "podium" side of their law schools, I thought it would be interesting to briefly describe some of the work we do. We began this year with approximately thirty-eight clients, most of them new. We split our eight students (who work with us for the full academic year) into two-person teams and each team received five or six clients. We give them multiple clients because it ensures they will always have sufficient work to keep them occupied and because it compels them to be careful about setting priorities, planning ahead, and communicating carefully with their clients about the timing of the legal tasks.
I try to limit the number of nonprofit formations we accept each year, but we usually do one per student and I try to choose organizations that will present novel, or at least interesting, legal issues. This year, for example, we are forming a nunnery for adherents of a non-Judeo-Christian religion. After interviewing the client, the students immediately recognized that there could be a private inurement or private benefit problem, since the principals who wish to form the organization would be living in the community and benefiting from its religious education program, not to mention its food and shelter. Another new organization wishes to stimulate economic development in poverty-stricken South American communities, partly by teaching peasant cofee growers how to improve the quality of their harvests and market them at premium prices to coffee exporters. In addition to the usual complications of forming organizations that work overseas, the students recognized that they might have to grapple with "commerciality" concerns.
We also work with existing organizations of various sizes. One public health organization we have been advising for several years has been grappling with legal issues caused by its tremendous success and impact. It has grown from a small, local nonprofit organization to a national model with projects around the country. CDL students this year have been advising the organization about protecting its intellectual property and about its obligations to file Certificates of Authority and/or Charitable Solicitation licenses in various jurisdictions.
Other clients have us working on zoning and land-use planning, UBIT, risk reduction strategies (particularly for organizations that work with minors), affordable housing, and finding the line between "religious organization" and "church" for IRS purposes. As I have mentioned in earlier blog postings, we have a regular stream of clients who consider themselves social enterprises and want to know whether to form as nonprofits or for-profits.
Earlier in this prolix post, I mentioned my colleague, Judith Wegner. As many of you know, she was the dean of this law school, was the president of the AALS, and was one of the authors of the Carnegie Report. Several years ago, Judith decided that she wanted to add clinical supervision to her vast teaching experience, so she approached me about sitting "second chair" in the CDL Clinic. She has been supervising CDL students since then, and she and I have learned much from one another.
For those of you who teach podium classes on Nonprofit Law but have not strayed down to your clinics, you ought to think about giving it a whirl. I think you would find it fun and challenging.
Thursday, October 27, 2011
I am not surprised by the revelation in the new Steve Jobs Biography, written by Walter Isaacson and described in a recent Chronicle of Philanthropy article, that Jobs turned away from philanthropy because he was annoyed when the person he hired to manage it kept talking about "venture philanthropy," how to "leverage giving," and the promotion of "social entrepreneurs." As I and others have written in various academic publications, drawbacks of the Fourth Sector include the breathless rhetoric that its promoters employ in describing it, coupled with their insistence that everything about it is innovative, even revolutionary. Over several years of observing the Fourth Sector, I have noticed that the MBAs often are comfortable with the language of "leveraging" and "outcome metrics" and "social return on investment," while many of the lawyers -- even those who are excited about the development of the Fourth Sector -- roll their eyes and grit their teeth. Maybe Jobs would have been more accepting of the Fourth Sector rhetoric if he had gone to Business School.
This week my Nonprofit Law class discussed the increasing trend of financially pinched states (and their local governments) squeezing money out of charitable organizations either through narrow interpretations and applications of their property tax statutes or by demanding PILOTs and SILOTs. It is therefore timely that a recent Chronicle of Philanthropy blog post quoted two national nonprofit leaders as claiming that states and local governments are "overreaching." They ask whether it is wise and just for states and localities to be imposing property taxes on charities at the same time that many are tripping over one another to offer tax breaks to private enterprises to lure them into their jurisdictions. I agree with the nonprofit leaders, especially when one considers that the tax break/incentive programs targeted at private firms rarely work as matter of long-term economic development. States and local governments lure industries to their regions, and then, a few years later when another state (or foreign country) offers a better deal, the industry leaves town taking its jobs with it. As a long-term economic development strategy, the states and local governments would be much wiser to invest in education and infrastructure. That's what attracts private employers who sink roots.
Wednesday, October 26, 2011
I spent part of my summer in Kenya looking into the possibility of establishing a medial-legal partnership (MLP) in Kibera, a sprawling slum on the outskirts of Nairobi. The project, if it goes forward, will be in collaboration with an NGO called Carolina for Kibera (CFK), which I have mentioned in previous posts. It would involve placing a Kenyan lawyer on staff at CFK's highly successful Tabitha Medical Clinic and asking that lawyer to address the "upstream social determinants" of the patients' health problems. More on that below.
The MLP movement has been building in the U.S. since the early 1990s. By many accounts, it started when Barry Zuckerman, a medical doctor at a pediatric health clinic in Boston, realized that he repeatedly treated children with asthma and other respiratory ailments, but that they repeatedly returned to his clinic in crisis because their poor housing conditions, including infestation by mold, roaches, and rodents, were exacerbating their medical conditions. He hit on the idea of putting a lawyer on staff in the medical clinic to deal with the upstream social determinants. In the case of the asthmatic child, the staff lawyer compelled the landlord to improve the child's housing conditions, and the medical problem improved. This early success has now been duplicated across the U.S., and there is a budding literature describing the concept and a national organization dedicated to spreading the idea.
In Kibera, the legal issues affecting patients' health are different. The paramount legal/health issue is gender based sexual violence, which is perpetrated with virtual impunity. Another legal issue is the absence of wills. Men who provide resources for their families die without wills, and collateral male relatives often claim the resources of the deceased, sometimes citing customary law. This leaves the widow and children economically vulnerable, leading in turn to a panoply of negative health consequences including exposure to HIV/AIDS.
The question is whether the MLP model developed in the U.S. will be efficacious in Africa and other parts of the developing world. One group in Kenya, Legal Aid of Eldoret (LACE), has launched what appears to be a successful MLP in a regional city. That project was founded with the assistance of our law colleague, Fran Quigley, from the University of Indiana.
The project I have in mind would attempt to implement such an MLP in Kibera and would from the start include a research component that would carefully measure the outcomes. If the MLP works, and if its success can be measured, more programs and more funding will follow.
Tuesday, October 25, 2011
This morning's New York Times included a story on a grass-roots radio newscast called Democracy Now! (Apparently they are on TV, too, but I've never seen them in that medium.) This struck me as interesting because I have stumbled on to Democracy Now! radio broadcasts several times in recent months and was struck by the fact that a) their production values are much less slick than commercial radio and/or All Things Considered and the like, and b) the content is much harder hitting and much more interesting. I have long been a NPR listener, but I have grown dismayed at how bland their reporting has become. It seems obvious to me that most public radio has been cowed into submission political attacks, de-funding threats, and their increased need to rely on corporate sponsorship. Democracy Now! is an independent nonprofit organization, which means that its producers "never have to worry about how an advertiser might feel . . .." It's worth a listen.
Yesterday's Chronicle of Higher Educationreports that a study commissioned by the Knight Commission on Intercollegiate Athletics has determined that "[a]thelitic programs in the Football Bowl Subdivision spent on athletes at a rate that far outpaced academic spending per student during a recent five-year period." One extreme example at the athletic conference level found that one league, the Southeastern Conference, reported academic spending of $13,471 per student in 2009 while athletic spending per athlete was $156,833. These results will no doubt inflame Senator Grassley and will add to the public's growing the public's growing skepticism about whether revenues from college athletic programs ought to be tax exempt because of their close connection to education.
Monday, October 24, 2011
The Chronicle of Philanthropy reportsthat the Senate recently rejected Sen. Grassley's proposal to bar the Justice Department from awarding grants to charities that put money in offshore accounts to avoid paying income taxes. In a news item that I somehow missed, a 2010 Senate investigation found that the Boys & Girls' Clubs of America held more than $50 million in offshore equities and partnerships in order to "avoid paying . . . UBIT." I would not have thought that such passive investment income would be subject to UBIT, but perhaps one of the true tax profs among us can explain.
I have been out of the blogosphere for quite a while, so I hope readers will forgive a review of ancient history.
For a couple of years I have been active with a group in my home state of North Carolina that calls itself the Fourth Sector Cluster Initiative. It is comprised of social entrepreneurs from the business, government, and nonprofit sectors who intend to make North Carolina a nexus for the emerging Fourth Sector. My involvement has been largely confined to discussing legal impediments under state and federal law to the flowering of the Fourth Sector. If you look here, you can see a video of one of my typical rants against the Commerciality Doctrine.
Last June, the Cluster Initiative got face time with White House officials when President Obama and his Council on Jobs and Competitiveness came to Durham, NC. In a meeting with the Council, I had the privilege of explaining the work of Carolina Law's Community Development Law Clinic in a twenty-second burst. Interestingly, I was warned by event organizers not to refer to the Fourth Sector as the "Social Enterprise Sector." Why? Because that term sounds too much like "socialism" and therefore might be attacked by Republicans. I kid you not.
Later, I watched President Obama give a talk at Cree Industries in Durham. From that experience, I learned two things. First, our president is an extremely impressive extemporaneous speaker. Second, it's not worth it to attend a presidential speech because afterwards you have to wait for an hour in the parking lot until the big man heads for the airport.