September 21, 2012
The Fiscal Cliff
Congress has folded its tent until after the election and, by most peoples' lights, has accomplished extraordinarily little, leaving untouched a profusion of urgent matters. One unresolved issue is the looming "fiscal cliff": massive automatic budget cuts that will take place if Congress and the president cannot agree on an alternative plan for reducing the budget deficit. Last week, the White House issued a report on how it will execute the massive cuts if no agreement is reached. According to a recent analysis published in The Nonprofit Quarterly, the picture is grim for the nonprofit sector. There will be crippling cuts in support for programs that 1) provide housing for the elderly and disabled, 2) focus on juvenile justice, 3) combat violence against women, 4) spur community economic development. And so on.
September 20, 2012
Mother Jones and Nonprofit Journalism
I find that it is a slow news day in the world of nonprofit law. I have, however, noticed several articles about the role that the nonprofit magazine Mother Jones Journal (which might now go by the shorter name Mother Jones) played in revealing Mitt Romney's comments about the "forty-seven percent" of us who are moochers and slackers. One article in The Nonprofit Quarterly points out that Mother Jones obtained its tax exempt status more than thirty years ago when it was much easier to convince the IRS that (c)(3) status for a journalism outlet was a good idea. As we all know, it has become much harder in recent years because the business models for nonprofit news outlets are so similar to those of for-profits. As others have blogged about, it's an interesting conundrum for the IRS that an entire industry has become so unprofitable that it is in heightened and direct competition with organizations that want to provide the same valuable services as nonprofits.
September 19, 2012
A Dumb Legal Action Against a NonprofitThe Nonprofit Quarterly reports that Neiman Marcus has threatened a nonprofit thrift store with legal action over the thrift store's use of the name Last Call in connection with clothing sales. Revente's Last Call is located in Columbia, South Carolina and donates all of its revenues to a local women's shelter. In its two years of existence, it has handed over more than $40,000. Neiman Marcus sells its left-over, out of season clothing in boutiques called Last Call, though they have no such stores in South Carolina.
Nature Conservancy Edges Toward Social Enterprise?
The Chronicle of Philanthropy reports that the Nature Conservancy has created a new investment vehicle, called Conservation Notes, as a way defraying the costs of its land transactions. Investors/supporters who provide at least $25,000 to the Nature Conservancy for a term of one, three, or five years will earn somewhere between 0 and 2 percent in interest and get all of their money back at the end of the term. The article implies that private foundations will be able to count these Conservation Notes as program related investments, though it does not mention whether the IRS has already weighed in.
September 18, 2012
UNC-Chapel Hill Chancellor Resigns
Yesterday Holden Thorp, the Chancellor of the University of North Carolina at Chapel Hill, resigned after only four years in the position. He was and is a thoroughly decent person, a renowned Chemistry Professor before he entered academic administration, who was swept up in an interminable series of scandals all of which can be traced to the university's revenue sports programs, football in particular.
The scandal began when a UNC football player revealed on Twitter that he was having a great time at a sports agent's lavish party. The investigation that followed revealed that there was systematic contact between football players and agents, and that at least one member of the coaching staff knew about it. That initial scandal led to revelations that football players were receiving inappropriate academic assistance from tutors provided by the university, and that at least one football player had engaged in blatant plagiarism on an academic paper. Then it was discovered that football players and other athletes were being guided toward "no-show" courses in the African and Afro-American Studies Department and were receiving inflated grades. And so on. The scandals are summarized in today's issue of the campus newspaper, The Daily Tar Heel.
UNC's scandal is yet another dreary example of a great educational institution losing its way in the hunt for big-time sports legitimacy. It also provides yet more evidence that the IRS's rationale for exempting athletic program revenue -- the quaint notion that sports are inextricably tied to schools' educational missions -- is absurd, at least when applied to big-time sports.
September 17, 2012
The Tea Party
This post does not focus on any breaking news about the Tea Party. It is only that I had been content to ignore that particular group until recently but now I find that they are affecting my work.
For several years I have been observing and chronicling the rise of the 4th Sector in the U.S., including the spread of certain hybrid entities such as B Corporations. Two weeks ago, I ran into a colleague who had been involved in efforts to pass B Corporation legislation in our home state of North Carolina When I asked for an update, he grimaced and said that the proposed law was moving through the North Carolina legislature until Tea Party activists intervened and claimed that B Corporations and the whole notion of social enterprise were part of a United Nations plot to achieve world domination. The objections were taken seriously and the legislation stalled.
Then, last week, I heard something similar when I was leading a workshop for nonprofit leaders in South Carolina. At lunch, one of the workshop participants who works for a council of governments (often referred to as COGs) told me that her efforts to coordinate transportation planning among several local governments in rural South Carolina had been blocked by protesters claiming that such planning was also part of the grand U.N. conspiracy.
A quick google search revealed that this assault has been going on for a while and that it arose in reaction to an innocuous U.N. report called "Agenda 21" that urged governments, among other things, to focus on encouraging dense development near transportation corridors as a way of reducing energy consumption. I had heard vague rumblings about fringe groups that focused on Agenda 21, but I had no idea that the wacky conspiracy theory was actually affecting public policy.
What is the world coming to?