March 23, 2012
Komen: And another one falls...
It's sort of like watching a train wreck in slow motion, isn't it? According to the Washington Post, the Board chair for the Komen Foundation has now stepped down (although he has not resigned from the Board.) The article goes on to state, "[t]o replace Leffall as chairman, Komen brought back founding board member Robert Taylor, 83, from retirement. Taylor is a close friend of Komen founder and chief executive Nancy Brinker. Taylor retired in 2010 after nearly 30 years on the board." Successful succession planning is a hallmark of good nonprofit governance. From the outside looking in, this change does not look great - clearly, things are not happy at Komen.
Everything Must Go!
Who knew that local governments were in the business of museum acquisitions? Not necessarily a great idea, if Harrisburg, Pennsylvania's experience is any evidence. According to this article, in an effort to boost tourism, a prior mayor planned to open a variety of new museums: Civil War, sports history, African-American history and the Wild West. Apparently, the Civil War museum did become operational; the rest of the museums never got off the drawing board. It isn't all that odd for a city to be involved in a public-private partnership to enhance and grow local cultural institutions, but the description from the article seems to have the government really driving the creation of these museums.
Odder still (or maybe evidence of the fact that this project really was government driven), the City actually started acquiring art and artifacts before the museums were open. According to the article, "[w]hen current Mayor Linda Thompson took office in 2010, she inherited about 8,000 historical artifacts stored in two separate warehouses." At least the City was behaving like many of the start-up nonprofits with which I've worked - lots of good intentions, not a lot of money, even less organization.
Finding itself under severe budget pressure for a variety of reasons, Harrisburg is now auctioning off all this stuff. So if you are an actual museum ... not just a theoretical one... there are deals to be had!
March 21, 2012
Target: Charitable Deduction?
Yesterday, Representative Paul Ryan presented the House Republican’s budget proposal for FY 2013. Of note for charities, the tax section of the Ryan budget proposal places great emphasis on expanding the tax base by “getting rid of distortions, loopholes and preferences that divert economic resources from their most efficient uses,” noting that “these tax preferences are disproportionately used by upper-income individuals…”. It, however, gives no details regarding which specific "distortions, loopholes and preferences” that might encompass – including, for example, the charitable deduction available only to Schedule A filers.
As this blog discussed in February, a proposal to limit the charitable deduction for upper income taxpayers has been part of the Obama administration’s budget in the past, much to the great consternation of the charitable community. The burning question is whether the Ryan proposal's general tax discussion hints on actual common ground between the Administration and House Republicans on this issue? I’m jaded enough to think the answer is no … it may be that the charitable community will benefit in this instance from the fact that common ground doesn’t appear to exist anywhere in D.C. these days.
And the Fallout Continues...
Apparently, Susan G. Komen Foundation for the Cure is losing two more executives (see gossipy link here). Wherever one might stand on the underlying issue, it's pretty clear that Komen has made an utter hash of the PR and donor relations part of all of it. Hopefully, somewhere there is a business school/public policy professor or student that is using this as a case study on how not to handle difficulty policy issues.
March 19, 2012
The Phenomenon That Is Kony 2012
My daughter came home from school wanting to raise money for it. Volunteers braved the crowded streets of Chicago on St. Patrick's Day to support it. News sites and blogs are abuzz with it. No matter where I go, it seems that the Kony 2012 is there.
For those of you who have been somehow managed to miss it (how?), here is the short film on YouTube about African warlord Joseph Kony's abuse of children as part of his rebel force in Uganda that went viral. Twitter and Facebook soon followed, and the video sparked online activism overnight, especially among younger viewers (see, for example, this CNN piece.) Next thing you know, Rihanna is tweeting racy pictures of herself to raise awareness for the cause (sorry, no link).
Almost immediately thereafter, questions began to arise. The video was produced by the San Diego-based nonprofit Invisible Children. News organizations noted issues with its BBB Wise Giving Alliance rating and its 3 out of 4 rating by Charity Navigator. No doubt that Guidestar was flooded with requests for IC's Forms 990s (free subscription required). IC posted its official response to these and other criticisms on its website. Given the rapid rise of the video, I suppose it was inevitable that an ignominious fall would follow. Jason Russell, the director of Kony 2012 and a co-founder of IC, was found drunk, indecent, and essentially having a breakdown in the middle of a street in San Diego. His family blamed the stress from the intense media scrutiny of the film, the organization, and the director himself.
While the final chapter of the story of IC is yet to be written, I do think that the Kony 2012 phenomenon presents a teachable moment about the need for and limits of disclosure in a system that depends upon private philanthropy. If anyone doubted it before, the power of social media to further social movements is evident in the Arab Spring, the Occupy Wall Street movement, and now Kony 2012. It's cheap, it's ubiquitous, and most of all, it's FAST...so fast, that it is easy for the message to get ahead of the organization. Add to the mix the fact that social media users tend to skew younger, and you end up with my daughter and her friends wanting to hold a bake sale to help the poor kids in Uganda. On the one hand, this is a noble sentiment and one I don't want to suppress; on the other hand, trying to explain Form 990 disclosures to an 11 year old is... well, let's just say it's not a productive use of time. When it comes to charitable giving, I'm not sure caveat emptor works well in this new media environment (assuming it ever worked in the old one).
Even if a donor does have the presence of mind to put down the Twitter and slowly back away long enough to do some research, are the tools available adequate to the job? A review of the Form 990, in my opinion, really doesn't say very much in this case. Of the two largest private rating services, Charity Navigator gave a three out of four and Wise Giving Alliance said IC didn't respond. Is this sufficient for a donor to move forward - not to move foward? Are there other resources that a government should provide to donors (a timely question in light of the approval of the Model Protection of Charitable Assets Act by NCCUSL over the summer) to assist them in the process? How do we make interested donors know these assets are available to them? Is the availability enough?
Afield: Resolving the Debate Over Political Campaign Participation by Religious Organizations Through Fiscal Subsidiarity
W. Edward Afield III (Ave Maria) has posted Getting Faith Out of the Gutters: Resolving the Debate Over Political Campaign Participation by Religious Organizations Through Fiscal Subsidiarity on SSRN (published at 12 Nevada Law Review No. 12 (2011)). Here is the abstract:
This Article proposes a unique resolution to the debate over political campaign participation by tax-exempt organizations, specifically religious organizations. By virtue of their tax-exempt status, these organizations are banned from participating in political campaign activity. Commentators have debated the merits of this ban for years and to say that commentators have been all over the map regarding their opinions over the ban is putting it charitably. The ban’s advocates and opponents have staked out seemingly every position imaginable in arguing the merits of this ban. Some commentators have argued forcefully that the ban is needed to preserve constitutional separation of church and state. Other commentators have argued as passionately that the ban is unconstitutional and pulls at the fabric of American democracy by unduly limiting political participation by churches and religious organizations. The arguments of each side of the debate take a zero-sum gain approach to resolving the debate, and commentators seem to discount the concerns of the opposition as either irrelevant or insignificant.
This Article does not attempt to resolve the debate in the literature over the ban’s legitimacy. Rather, this Article proposes a solution that the literature has apparently ignored: finding a compromise between the two extremes of the debate that addresses the primary concerns of both sides. This Article proposes that section 501(c)(3) organizations be permitted an increased amount of political campaign activity in ex-change for paying a tax referred to as a “self-directed tax.” What makes the self-directed tax unique is that the organizations themselves would be permitted to direct the government as to how to allocate the proceeds from the tax to a preset group of government spending choices. Similar rules would apply to the charitable deduction as well. The self-directed tax would allow section 501(c)(3) organizations to become more politically active. This Article’s proposal, however, still allows section 501(c)(3) organizations to preserve their unique status as partners with government in the provision of public goods — a status that justifies not requiring them to provide a portion of their profits to the government for the government to do with as it pleases.
March 18, 2012
The Conservation Easement Tax Expenditure: In Search of Conservation Value
Roger Colinvaux, Associate Professor of Law at The Catholic University of America, Columbus School of Law, and former Legislation Counsel with the Joint Committee on Taxation has published The Conservation Easement Tax Expenditure: In Search of Conservation Value, 37 Colum. J. Envtl. L.1 (2012).
Professor Colinvaux argues that a fundamental problem with the current conservation easement tax expenditure (the charitable income tax deduction under IRC § 170(h)) is that the measure for the tax benefit – lost economic development value – is erroneous. He argues that the measure for the tax benefit should be changed to one that better approximates conservation value. He also argues that serious consideration should be given to converting the deduction to a credit.
Some of the ideas for the tax credit Professor Colinvaux proposes include:
- Prioritization of conservation purposes, with conservation easements designed to protect ecosystems being eligible for the highest credit percentages.
- Making certain types of conservation easements ineligible for the new credit, such as façade easements that merely duplicate local law restrictions and conservation easements on golf courses (deductions for golf course conservation easements are already on the chopping block).
- Maintenance of the perpetuity requirement, in part, because conservation is undervalued by the private property system and “perpetual easements are like affirmative action for conservation; normal rules are switched off to redress a perceived land use imbalance in favor of development.”
- Suspension of a land trust’s ability to accept new credit-eligible donations if an audit of the organization reveals repeated failures to enforce easements or an unsustainable ratio of easements held to available resources.
- Availability of higher credit percentages for donations for which a publicly available “conservation appraisal” indicates good conservation outcomes, with factors of importance potentially including whether the state attorney general has unambiguous power to enforce conservation easements, whether there is a history of enforcement in the state, and whether the state has a public registry tracking easements.