Friday, February 10, 2012
In this week’s blog we have been following the controversy over the Affordable Care Act’s requirement that most employers, including church-affiliated nonprofits, provide coverage for contraceptives to their employees. Early this afternoon, the President addressed the public and explained the administration’s solution to the controversy in the CBS Special Report: President Obama Announces Compromise On Contraception.
Russell N. James III (Associate Professor, Personal Financial Planning, Texas Tech University) and Michael W. O'Boyle (Professor, Human Development and Family Studies, Texas Tech University) have posted Charitable Estate Planning as Visualized Autobiography: An fMRI Study of its Neural Correlates on SSRN. Here is the abstract:
This first ever functional magnetic resonance imaging (fMRI) analysis of charitable bequest decision-making found increased activation in the precuneus and lingual gyrus of the brain compared to charitable giving and volunteering decisions. Greater lingual gyrus activation was also associated with increased propensity to make a charitable bequest. Previous studies have shown that activation of these brain regions is related to taking an outside perspective of one’s self, recalling the recent death of a loved one, and recalling vivid autobiographical memories across one’s life. We propose that bequest decision-making is analogous to visualizing the final chapter in one’s autobiography and that fundraisers may do well to emphasize donors’ autobiographical connections with the charity. Due to inherent mortality salience, people may resist creating this final chapter, but once engaged may seek to leave an enduring legacy.
In 4 Adventist Hospitals to Pay $4M in Medicare Fraud Settlement, the Orlando Sentinel reports that the United States Department of Justice has announced that four hospitals in Central Florida will pay $3.9 million to the U.S. government to settle allegations that they submitted false claims to Medicare. The four hospitals named in the story are Florida Hospital Orlando, Florida Hospital-Oceanside, Florida Hospital Fish Memorial and Florida Hospital Heartland Medical Center.
The Florida hospitals are apparently not alone. The story explains the national scope of the settlement:
The settlement includes a total of 14 hospitals in seven states, which collectively will pay more than $12 million to the government, according to a justice department statement. More than a third of that tab belongs to Florida facilities. …
Other hospitals involved in the settlement include two health-care facilities in New York, and hospitals in Mississippi, North Carolina, Washington, Indiana and Missouri. …
The settlements resolve allegations that these hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally invasive procedure used to treat certain spinal fractures that often are due to osteoporosis.
The article states that the hospitals were defendants in “a whistleblower lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds.” Reportedly, two former employees of a consulting firm/supplier of spinal surgery equipment “blew the whistle” and stand to gain in excess of $2 million from the settlements.
Thursday, February 9, 2012
In House Approves Sex Trafficking Study, the Atlanta Journal-Constitution reports that the Georgia House of Representatives has voted to form a 13-member commission to study “[t]rafficking in sex workers and laborers -- modern slavery.” The commission must also be approved by the state senate. The role of nonprofits in this process reportedly is significant:
Rep. Buzz Brockway, R-Lawrenceville, who sponsored House Resolution 1151, said he hopes the commission will look at what other states are doing and copy practices that seem to be working. He praised nonprofits and church groups, who have pushed the Legislature for better laws and founded services to help the victims get out of the trade and re-establish their lives.
The Office of Exempt Organizations (”EO”), Tax Exempt & Government Entities Division of the Internal Revenue Service, has just published its 2011 Annual Report and 2012 Work Plan. Among other matters summarized in the report, the following are notable:
Proposed Treasury Regulation section 301.6104(c)-1) revised rules governing disclosure to state charity regulators, in view of amendments to Internal Revenue Code section 6104(c) by the Pension Protection Act. EO reportedly “coordinated extensively with the National Association of State Charity Officials to reduce barriers to states’ participation in the information-sharing program.”
Regulations implementing the revised Form 990 have been finalized.
Rev. Proc. 2011-15 increases the Form 990 filing threshold from $25,000 to $50,000 and consolidates many of the exceptions from filing Form 990 in one document.
As a result of the Affordable Care Act of 2010, the IRS must review the community benefit activities of tax-exempt hospitals. Accordingly, EO Exam created and trained a Review of Operations group dedicated to completing the statutorily required community benefit reviews, which began in March of 2011.
EO is completing its review of colleges and universities, based on the compliance questionnaire it sent to 400 institutions.
The Affordable Care Act’s requirement that most employers, including church-affiliated nonprofits, provide coverage for contraceptives to their employees continues to make headlines. Additional stories follow:
Wednesday, February 8, 2012
The Affordable Care Act’s requirement that most employers, including church-affiliated hospitals and other institutions, provide health care coverage for contraceptives to their employees is receiving a great deal of press. Given the obvious relevance of the story to nonprofits, I have reproduced below some representative articles. The first and last stories suggest that David Axelrod may be hinting that there is room for compromise in this politically charged election year:
In From Guns to Urns, People Donate Wacky Things to South Florida Charities, the Fort Lauderdale Sun-Sentinel tells of many strange gifts that charities in South Florida have received over the years. Such gifts include urns (and yes, that’s with ashes), a missile launcher, prostheses, and dentures. One gift – a hand grenade – prompted a call to the bomb squad. Charities speculate that people responsible for clearing family members’ houses hand over boxes with little idea of their contents.
Tuesday, February 7, 2012
Egypt—Restrictive Law on Associations and Foundations Proposed by Government; Less Restrictive Draft Submitted to Parliament by Civil Society
The raids on Egyptian and foreign CSOs in December 2011 (and reported on in the February IJCSL Newsletter) were followed on January 17, 2012 by an announcement from the Egyptian Ministry of Social Justice and Solidarity that it had completed a draft Law on Associations and Foundations to amend Egypt’s existing Law 84 of 2002. The proposed law is nearly identical to a draft prepared in March 2010 by a committee composed of members of the now-disbanded former ruling party and chaired by ex-Prime Minister Abdelaziz Hegazy. It places extreme burdens on CSOs. The Ministry announced a fifteen-day public comment period, after which the draft Law on Associations and Foundations is expected to be taken up by Egypt’s newly elected People’s Assembly as one of its first orders of legislative business. More than 55 Egyptian CSOs have refused to submit comments and are instead calling on the Ministry and the People’s Assembly to replace the draft with one endorsed and authored by Egyptian human rights organizations. On January 31, the Egyptian Organization for Human Rights submitted the draft developed by CSOs to the Parliament. For what the civil society draft contains, see http://en.eohr.org/2012/01/31/eohr-submits-the-ngos-draft-law-to-the-parliament/. More information about this will be availabl ein the March 2012 issue of the IJCSL Newsletter.
In Democratic Nonprofits Send Funds to 'Super PACs,’ the Los Angeles Times reports that “two Democratic nonprofit groups that do not disclose their donors made payments last year to their affiliated ‘super PACs,’ a tactic that can be used to undermine transparency.” Representatives of the organizations reportedly (off record) have maintained that the nonprofits just reimbursed the super PACs for administrative costs. Says the Times:
[C]ampaign finance experts said that such transfers underscore a troubling relationship between super PACs and their affiliated 501(c)4 social welfare organizations. The latter are "weakening transparency in the political world," said Michael J. Malbin, executive director of the nonpartisan Campaign Finance Institute. …
The dual-armed groups are part of a phenomenon that took off in 2010 after several court decisions, including the Supreme Court's ruling in the Citizens United case. That led to the advent of super PACs — independent political action committees that can accept massive donations, as long as they do not coordinate with the candidates or party committees.
Super PACs must disclose their contributors to the FEC. But that's not the case with 501(c)4 social welfare organizations, which are allowed to participate in a limited amount of political activity. Under the current guidelines, nonprofits can't spend more than 49% of their budget on political activities, including donations to super PACs. Yet even with these limitations, electioneering by such groups has swelled in the last two years.
In Conservative Group Funnels Money to Super PAC, USA Today reports that a group with Tea Party ties “has funneled more than $1.3 million in anonymous contributions to a super PAC working aggressively to unseat Utah Sen. Orriin Hatch and other congressional veterans, raising alarms among some watchdogs that these outside groups are emerging as a new avenue for secret political money.”
The story continues:
The non-profit's money paid legal expenses, salaries, overhead and travel for the super PAC, which is working hard to recruit and train activists to become delegates to the Utah's Republican convention this spring where Hatch must stand for renomination. A similar campaign by outside groups helped oust three-term Sen. Bob Bennett at the 2010 GOP gathering.
Russ Walker, the super PAC's national political director, said there's "absolutely no" attempt to hide donations. The super PAC's non-profit arm is supported by more than 40,000 people, many of whom donate in small amounts, he said. "They give to our institution because they believe in our mission, which is smaller government."
Benjamin Leff, Assistant Professor at American University's Washington College of Law, has posted Federal Regulation of Nonprofit Board Independence: Focus on Independent Stakeholders as a 'Middle Way,' 99 Ky. L.J. 731 (2011), on SSRN. Here is the abstract:
While the federal government and the states have regulated charities for decades, significant opposition has recently been voiced to a perceived increase in IRS regulation of the management of charitable nonprofits. Some argue that the IRS has over-stepped its bounds recently by, among other things, requiring charitable nonprofits to have 'independent' boards of directors. The IRS argues that it is not requiring anything, but critics point to a series of recent actions by the IRS in which charities without 'independent' boards have been denied tax-exempt status. This article attempts to discern the IRS’s position, and provide a theoretical framework to make sense of it. That theoretical framework makes 'independent stakeholders' the centerpiece of an approach that both justifies the limited actions the IRS has taken thus far, and provides a rationale for cabining the IRS’s intervention going forward. The approach described in this article could be a model for the proper balance between federal and state regulatory interests in the nonprofit sector, as well as between regulation and nonprofits’ interests in autonomy.
Monday, February 6, 2012
In For Congregations Gathering in City Schools, Time to Move, the New York times reports that New York City, with approval from the courts, will begin enforcing its policy prohibiting churches from renting space for Sunday worship services in otherwise unused public school facilities:
The issue of using public schools for religious services has been a matter of debate for decades. Because of a recent federal court ruling that upheld a city policy of not allowing religious services in public schools, dozens of congregations throughout New York have been told that they must move; next Sunday will be the last time they will be allowed to rent space in schools for services. …
The debate over churches in schools has been passionate and has provoked harsh exchanges. Opponents say that the congregations are violating the separation of church and state, causing confusion among children who attend the schools, and that they are trying to impose their beliefs on others in a city known for its religious and cultural diversity. Supporters argue that they use the schools only when students are not around and that the buildings represent nothing more than a physical space in which they can gather. Some churches are holding out hope that the Legislature will intervene. The State Senate is expected to consider a bill this week that would allow the churches to continue worshiping in the schools. A similar bill has been proposed in the Assembly and may be debated this week.
Church leaders and their advocates say they will suffer from the decision; some funds used for charitable work will now have to be redirected toward higher rent. They also say the schools and communities they occupied will be hurt, because they are losing tenants who became interested in the schools’ well-being.
In Politics and the Cost of Conscience, syndicated columnist Kathleen Parker links the pressures faced by the Susan G. Komen for the Cure foundation and Catholic charities. Parker opines that both cases “concern a person's or an institution's freedom of conscience and the right to act upon one's moral beliefs without fear of intimidation and/or government coercion.” She reasons that Catholic institutions face a looming requirement under the Affordable Care Act to “provide health insurance that covers contraception, including in some cases abortifacient drugs,” with the result that they must “forfeit their most fundamental beliefs or face prohibitive penalties — or close hospitals, schools and other charities, with catastrophic consequences.” As for the Komen foundation, Parker notes that it “created a firestorm with its recent decision to stop donating about $680,000 a year to Planned Parenthood” (a decision that is now said to have been premature, according to subsequent reports). It is apparent that Catholic charities face a “political” obstacle – governmental regulations. But is the Komen matter also a “political” one?
Some, perhaps many, seem to think of the nonprofit’s decision concerning its future funding of Planned Parenthood in terms of “politics.” In response to the Komen foundation’s statement that the funding decision was “not about politics,” journalist Lori Stahl counters in a Washington Post article:
But the truth is that Komen founder Nancy Brinker has strong Republican ties and Cecile Richards, who leads Planned Parenthood, is daughter of late Texas Gov. Ann Richards and has longtime Democratic Party ties. Also worth noting: This is an election year.
Another story in the Washington Post quotes a Planned Parenthood spokesperson – commenting on the funding spike that the organization received in the wake of the Komen hubbub – as saying “People respond powerfully when they see politics interfering with women’s health.”
I realize that we throw around the term “politics” very loosely to refer to any number of interpersonal and social dealings (e.g., “office politics,” “faculty politics,” etc.). But when I read the words used by both supporters and critics of the foundation, more seems to be implied in characterizing this nonprofit’s recent decisions as “political” or “not political.” The notion seems to be that (1) to make a decision concerning funding an entity that provides abortions (like Planned Parenthood) is necessarily a “political” decision; and (2) nonprofit foundations should refrain from entertaining “political” considerations in making funding choices.
I am troubled by the apparent assumption that “social policy” is solely a “political” matter. The assumption cuts at the heart of so much of what the nonprofit sector is about. Nonprofits do not simply deliver goods ordered by the government. They decide what goods to deliver, and how much to deliver. Social policy is very much the concern of nonprofits. This point does not deny that controversial social policies – including those concerning the funding of abortions – invite and demand political (i.e., governmental) action. But social policy is not exclusively the province of government. Nonprofits do form, after all, a sector that is distinct from government. And as long as they comply with the law and serve charitable ends, nonprofit charities are free to support the social policies that they believe best serve the community. Although they can do so to a limited degree through actual “political” means (i.e., through modest attempts to influence legislation), they can do so extensively through non-political means. Articulating a charitable mission and fulfilling that mission through funding choices fall squarely within the latter.
Notwithstanding her pairing of Catholic charities and the Komen foundation, Kathleen Parker seems to grasp this basic point, when she writes as follows:
Whatever one believes about the motivation behind its decision, the larger point is that Komen has no binding responsibility to allocate any part of its $93 million in grants to any organization. Komen is a nonprofit, free agent, and the good it has performed for millions of underserved women around the world is staggering. … Even if their real reason for ending funding is because they no longer want to be associated with an organization as politically controversial as Planned Parenthood, it is inarguably their right to change course.