Thursday, February 6, 2014
The Economist reports that Britain's mutually owned, not-for-profit banks are increasingly converting to shareholder owned, for-profit institutions or collapsing. These "building societies," which dominated the residential mortgage market in the 1970s, have suffered from a variety of ailments, including poor management, high-risk lending, and a push for demutualization. Interestingly, the Economist appears to regret this development, noting the continuing success of Nationwide Building Society and commenting that "The model is worth preserving. Mutuals have tended to offer better customer service; on average, they generate fewer complaints than other lenders. The fate of British mutuals notwithstanding, studies by the Bundesbank and the IMF suggest that, overall, mutual banks are more stable than their more commercial counterparts."
Saturday, December 7, 2013
Zhaohui Long (Sun Yat-Sen University) and Xiaoling Hu have posted Research on Tax Incentives for Charitable Donations of Non-Monetary Assetsby Chinese Corporations, 3 Journal of Chinese Tax and Policy 21 (2013). Here is the abstract:
Corporate donations form a substantial part of social charitable donations in China. Corporate non-monetary asset donations are important in this regard as they bring goods and materials to areas where they are desperately needed. However, the current scope and scale of corporate donations are narrow due to a lack of tax incentives. This paper will explain the incentive effects of the current tax regime by analyzing how asset donations are treated by Chinese taxation laws, from the perspective of macroeconomic policies and market demands. It particularly focuses on the relatively heavy tax burden and limited scope for tax exemptions on corporate asset donations in China. In light of this, we propose some pragmatic suggestions on incentivizing policies that are more suitable for China’s current situation, such as increasing the exemptions before tax and allowing exemptions to roll over to future years, developing incentive policies on indirect and property taxes, and establishing the mechanism for third-party price evaluation and equity donation regulation, etc
Martina Rechberger, Sandra Stoetzer, and Dennis Hilgers (all Johannes Kepler University Linz) have posted Designing New Ties: Public Governance by Outcome-Based Contracting in Austria. Here is the abstract:
Due to the growing relevance of output and outcome orientation in the public sector, contracts are becoming more important in public sector networks. Especially the core objects of cooperations between the public sector and non-profit organisations (NPOs) are to obtain a certain outcome, which is mainly due to fixed arrangements pointed out in contracts. What are the requirements for outcome-based contract design? How are outcome-based objectives implemented in contracts? What is the status of implementation of outcome-based contract management in Austria?
Saturday, September 28, 2013
The Ninth Clinton Global Initiative Annual Meeting ended in New York City on Thursday with an emphasis on optimism and mobilizing for action to address the most pressing global challenges. Over the three days of the meeting, Clinton Global Initiative (CGI) members made over 160 new Commitments to Action, expected to impact nearly 22.2 million lives and valued at more than $10.8 billion when fully funded and implemented.
According to a press release issued shortly after the meeting ended,
Through the CGI commitments announced this year, nearly 27 million metric tons of CO2 will not be released into the atmosphere, more than 2 million girls will be reached by efforts specifically targeting female enrollment in schools, more than 11.6 million children will have a better education, nearly 4 million people will have increased access to health services, and more than $7 billion will be invested in or loaned to small- and medium-sized enterprises.
Former President Clinton noted that "this year’s commitments highlight the enthusiasm, creativity, and general characteristic of CGI members. They also reinforced our theme of ‘mobilizing for impact.’ So many partners have come together, to increase their impact by drawing upon each other’s strengths and creating new partnerships to truly put ideas into action: this is what CGI is all about. I am so grateful to everyone who joined us this year, whether in person or online, and who continue to work with us to create a better world.”
The CGI announced two major Commitments to Action focusing on health and on animal preservation. First, Former President Clinton, joined by Don Thompson, President and CEO of McDonald's, and Dr. Howell Wechsler, CEO, Alliance for a Healthier Generation, founded by the Clinton Foundation and American Heart Association, announced a partnership to increase customers' access to fruit and vegetables and help families and children to make informed choices in keeping with balanced lifestyles.
Former Secretary [Hillary] Clinton, Chelsea Clinton, and African government leaders including the Presidents of Burkina Faso, Cote D'Ivoire, Gabon, Malawi, Tanzania, Uganda, and Ministers from Botswana and Zambia made an announcement with leaders of the Wildlife Conservation Society, the African Wildlife Foundation, the World Wildlife Fund, Conservation International, the International Fund for Animal Welfare, Save the Elephants, the Howard G. Buffett Foundation, and the Jane Goodall Institute regarding Partnership to Save Africa's Elephants, a new Commitment to Action aiming to end poaching by addressing poaching, trafficking, and international demand.
These are good plans. I wish the CGI all the success possible.
Tuesday, September 24, 2013
I thank May 2013 Texas Tech University School of Law graduate, Ibukun Adepoju, for bringing this story to my attention. Originally from Lagos, Nigeria, Ms. Adepoju now lives in Lubbock, Texas.
According to a report appearing in News Afrique Informations, the World Bank Group has announced that it plans to invest at least $700 million by the end of 2015 to help developing countries reach the Millennium Development Goals (MDGs) for women and children's health.
Financing will be provided by the bank's International Development Association (IDA) and Health Results Innovation Trust Fund. The funds will be used to develop successful reproductive, maternal, and child health projects in developing countries. The announcement comes almost a year to the day after World Bank Group president, Jim Yong Kim, announced that the bank would provide funding to help scale pilot projects for women's and children's health as part the UN's Every Woman Every Child global partnership.
Hats off to the World Bank Group for this initiative.
Tuesday, July 16, 2013
The N.Y. Times reports Russian prosecutors have stated that 215 nongovernmental organizations are in violation of a new law requiring them to register as "foreign agents" if they receive funds from outside of the country and engage in political activity. As the N.Y. Times previously reported, many of the groups that are allegedly subject to the new law have vowed to defy it by refusing to register. The United States also withdrew from a US-Russia civil society working group, apparently in part because of Russia's adoption of this law. The human rights commissioner for the Council of Europe has called for the suspension of the new law in the wake of the prosecutors' statement, according to Reuters. It is not yet clear how Russia, which is a member of the Council of Europe, will respond to this call, if at all. The prosecutors' statement comes in the wake of raids by Russian police and tax inspectors on the offices of Russian human rights groups.
Sunday, June 2, 2013
Lilian V. Faulhaber (Boston University) has posted Charitable Giving, Tax Expenditures, and the Fiscal Future of the European Union. Here is the abstract:
paper focuses on several cases decided by the Court of Justice of the
European Union in recent years. In these cases, the CJEU struck down
geographic limitations on tax expenditures for charitable giving,
thereby leaving Member States with a choice. Member States that chose
not to eliminate their tax expenditures entirely would have to extend
them to beneficiaries across the European Union. Those that did not
want to extend these benefits to the rest of the European Union,
however, would have to eliminate their tax expenditures and perhaps
replace them with direct subsidies.
The Court has thus effectively forced Member States into either subsidizing each other’s charitable sectors or no longer using their tax systems to encourage charitable giving. This paper shows that most Member States have chosen the first option, meaning that they are engaged in a web of horizontal subsidization. In the absence of any supranational taxing authority in the European Union, this horizontal subsidization represents a new model of fiscal federalism, where taxing and spending decisions are spread between Member States, rather than assigned vertically to a centralized government. This new model could arguably allow the Member States to retain the benefits of both centralization and decentralization, with Member States now paying for benefit spillovers yet still retaining the competition and representation of political preferences generally associated with decentralized systems.
However, horizontal subsidization should raise significant concerns because of the way that the Court reached its decisions in cases considering tax expenditures. In order to arrive at horizontal subsidization, the Court ignored both the economic equivalence of tax expenditures and direct expenditures and the fundamental regulatory and cultural differences between Member State charitable sectors. By prioritizing formalism over functionalism and overlooking the remaining differences between Member States, the Court distorted Member State policy choices, favored certain types of charitable organizations, and created incentives for Member States to increase barriers to entry to their charitable sectors. This paper suggests that the CJEU’s tax expenditure jurisprudence is thus more likely to be a cautionary tale than a model for future integration.
The New Zealand Herald reports that Family First NZ, which identifies itself as a pro-framily organization, has announced that it received a notice that the New Zealand Charities Commission plans to deregister the organization as a charity because it supports a view of the family that was not in the public interest. Among its many positions, Family First opposes same-sex marriage and a law that apparently criminalizes any form of corporal punishment for children. A later article indicates that the deregistration is based at least on part on the assertion that Family First's main purpose is political and therefore not charitable under New Zealand law. The final resolution of the situation will be decided by the courts, as Family First has already filed a High Court appeal.
Tuesday, April 2, 2013
While incentives for charitable giving have been a topic of much debate in Washington, DC, this topic is also of interest to our neighbor to the north. In a detailed report, the Standing Committee on Finance for Canada's House of Commons considered the effectiveness of existing and proposed tax incentives for charitable giving based on evidence provided by numerous organizations and individuals and put forward a dozen recommendations for legislative and executive branch action. Those recommendations include eliminating or reducing the capital gains tax on charitable donations of certain property and exploring an enhanced tax credit for donors who increase their contributions over time, while at the same time promoting greater accountability and transparency in the charitable sector.
Thursday, February 14, 2013
The Charity Commission for England and Wales has found itself in an ongoing dispute with a Brethren congregation over whether the congregation qualifies as a charity under British law. As detailed in a recent Parliamentary Briefing, the dispute focus on the status of a Brethren meeting Hall, the Preston Down Trust. The case involving the Trust is being used as a test case for the status of other, similar meeting halls. The Commission decided last year that the Trust did not qualify as a charity, which led to highly public criticism from both the Plymouth Brethren church and questions from MPs in Parliament according to a Telegraph article. The decision is traceable to a statutory change that led a charity Tribunal to conclude that advancing religion is no longer considered to automatically provide a public benefit. In considering whether the Trust provides a public benefit, the Charity Commission's denial letter indicates that the adherents to this particular faith sharply limit their interactions with those outside the faith and so the Charity Commission concluded that "[t]he evidence is [sic] relation to any beneficial impact on the wider public is perhaps marginal and insufficient to satisfy us as to the benefit to the community." According to a UK civil society website, the Charity Commission and the Trust are now in negotiations to attempt to resolve the issue short of a full Tribunal hearing, although a recent Charity Commission statement suggests such a resolution may be difficult to reach.
Wednesday, February 13, 2013
The New York Times reports that in the wake of various measures deemed hostile to nonprofit groups working in Russia, Deputy Assistant Secretary of State Thomas Melia announced that the United States would no longer be part of a "civil society working group" created in 2009. The article reports the group, which the US and Russia created under the US-Russia Bilateral Presidential Commission, has not met in plenary session for many than a year. We have previously blogged about some of the actions that apparently contributed to the withdrawal, including requiring nonprofits receiving funding from outside of Russia to identify themsevles as foreign agents.
Wednesday, December 26, 2012
Catching up on some of the year's news and scholarship, I will start on the international front with a story from Australia. In 2012, Australia created the Australian Charites and Not-for-profits Commission and earlier this month the Commission opened its doors. Here is the Commission's description of its role:
Who we are
The Australian Charities and Not-for-profits Commission (ACNC) is the independent national regulator of charities. The ACNC has been set up to achieve the following objects:
- maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency
- support and sustain a robust, vibrant, independent and innovative not-for-profit sector
- promote the reduction of unnecessary regulatory obligations on the sector.
What we do
To achieve our objects, the ACNC:
- registers organisations as charities
- helps charities understand and meet their obligations through information, guidance, advice and other support
- maintains a free and searchable public register so that anyone can look up information about registered charities
- is working with state and territory governments (as well as individual federal, state and territory government agencies) to develop a 'report-once, use-often' reporting framework for charities.
The ACNC is established under section 105-5 of the ACNC Act. Our objects and functions are in section 105-15 of this Act.
ACNC is led by Commissioner Susan Pascoe AM, Assistant Commissioners David Locke and Murray Baird, and a strong leadership team. The ACNC Commissioner's position is established by section 110-5 of the ACNC Act.
Our relationship with other government agencies
The Australian Taxation Office (ATO) remains responsible for deciding eligibility for charity tax concessions and other Commonwealth exemptions and benefits.
There are also many other government agencies that regulate charities and other not-for-profits. For example, government agencies may provide grants and other funding. They may also regulate particular services provided by charities, such as aged care or education.
Thursday, October 25, 2012
I'll confess my ignorance: up to a few minutes ago, I had never heard of "crowd funding." Then this story from Caribbean360 caught my attention. According to Caribbean360, the Grenada Goat Dairy recently announced that its campaign to fund its collaboration with the St. Patrick Anglican School had exceeded its goal of $55,000 (USD) through the campaign's use of the crowd funding website, www.Kickstarter.com. The Grenadian non-profit organization used the method to attract local and international support, with donors giving amounts ranging from $1 to $10,000.
I know nothing about crowd funding and how it works, but if it works for the Grenada Goat Dairy, it can work for other non-profits also. I wonder, however, whether donors' contributions are tax deductible, and whether the various websites hosting these crowd funding "events" are able to give individual donors receipts for their donations.
Tuesday, September 11, 2012
The International Herald Tribune (IHT) is reporting that the compilers of a leading league table of the world's top universities on Tuesday reported an “unstoppable rise” in the numbers of students choosing to travel abroad to study.
“Global student mobility is on a seemingly unstoppable rise, with those seeking an overseas education targeting the leading universities,” wrote John O'Leary, an academic adviser to the London-based Quacquarelli Symonds, which produces the annual QS World Universities Rankings. O'Leary continued: “Even after considerable growth in recent years, the latest rankings show an extraordinary rise of almost 10 percent in international student numbers at the top 100 universities.”
According to the IHT,
This year’s listings saw Massachusetts Institute of Technology (MIT) overtaking Britain’s Cambridge University as the top place in the influential league table, which is based on a range of factors that include the opinions of academics and prospective employers.
American and British institutions continued to dominate the QS rankings, which were launched in 2004, occupying all 10 top places.
QS factors foreign student and faculty numbers into the rankings. This practice is reflected in this year’s listing. According to O'Leary, “Cambridge, for example, has seen a significant increase in international students, but has dropped five places in this measure, contributing to its fall from first to second place in the overall ranking.”
Similarly, a drop in the ranking of the University of California at Berkeley — down to 22nd place from 2nd in 2004 — reflected not only a comparatively poor faculty-to-student ratio, but also “low attractiveness for international faculty and students,” said QS adviser, Martin Ince.
The IHT continues:
QS noted that the most successful universities competed to attract the world’s best students and faculty. “Simple evaluations of the proportion of international students and international faculty serve as indicators of an institution’s diversity and international attractiveness,” it said.
Traveling abroad to study has obvious attractions for students who want the very best education available globally. There is also an economic incentive for the institutions themselves, and the countries that host them, in terms of fees and foreign earnings.
However, the IHT notes, mobility depends on the readiness of governments to allow access to foreign students.
Thursday, August 9, 2012
Stefano Lombardo (European Corporate Governance Institute and Free University of Bolzano) has posted Some Reflections on Freedom of Establishment of Non-Profit Entities in the EU. Here is the abstract:
This article deals with the exclusion of non-profit-making entities from the right of freedom of establishment of Articles 49 and 54 TFEU. The article analyses the historical reasons for this exclusion. It is argued that the exclusion from freedom of establishment is no longer justified on the basis of two elements. Firstly, the development of the jurisprudence of the European Court of Justice in the fields of competition law, free movement of capital and tax law makes such exclusion systematically no longer tenable. Secondly, a law and economics treatment of non-profit firms as organisations that efficiently provide goods and services in alternative to for-profit firms weakens the reasons for the exclusion. The article proposes a uniform, European notion of non-profit entity based on a law and economics analysis of this type of firm for the purposes of Article 54 TFUE as opposed to possible different national notions. The article then analyses briefly the hypothesis of regulatory competition among jurisdictions for the provision of the law regulating the corporate governance of non-profit entities.
Wednesday, August 8, 2012
Mark W.H. Hsiao (Chinese University of Hong Kong) has published The Beginning and the End of an Era of Charitable Public Benefit in Hong Kong, 3 Conveyancer and Property Lawyer 228 (2012). Here is the abstract:
As with the UK Charities Act 2006 ('CA 2006'), the presumption of charitable public benefit will likely cease when the Charities Ordinance (“CO”) comes into force in Hong Kong. The reference to the United Kingdom is important in the formulation of the organizing principles of public benefit; this is because the common law cases previously applied in Hong Kong continued to sustain in Hong Kong after the 1997 handover. However, common law cases after 1997 may reflect a different direction. This paper illustrates two things relevant to charitable public benefit. First, it argues against the presumption test in Hong Kong from a comparative perspective, and the present Hong Kong tax policy is compatible with previous English common law cases. Against this comparative background, the author asks how public benefit should be modified in accordance with Hong Kong's tax policy. Secondly, it consolidates the principles of relation, deference, and against capriciousness into the organizing principle of the public benefit test. This organizing principle is subject to the paramount principle of tax distribution.
With the new CO in Hong Kong, the four headings of charitable purpose under Lord MacNaughten's formulation in the Special Commissioners of Income Tax v Pemsel case will become obsolete. The public benefit test will thereafter reverse the presumption of charitable purpose and create a new regulatory regime. The public benefit test will become a paramount means of assessment for market entry. No entity will be regarded as a legal charity unless it satisfies the public benefit test. This controls the market entry on charitable trust that financial institutions enjoyed in the past.
Tuesday, August 7, 2012
Led by Senator Orrin Hatch (R-Utah), ten GOP senators sent a letter to the IRS yesterday urging it not to revisit its regulations governing section 501(c)(4) organizations in response to outside political pressure without careful (and time-consuming) deliberation. More specifically, they stated "public confidence in the non-partisan integrity of the agency demands that you issue no sub-regulatory guidance nor engage in any similar efforts that would effectuate immediate changes without a lengthy period of review, separated in time from the current heated political environment." The Senators were writing in response to a letter the IRS sent last month to two groups supporting campaign finance reform stating:
I am responding to your letter dated March 22, 2012, which supplemented you [sic] letter dated July 27, 2011, urging the IRS to institute a rulemaking proceeding to address the rules related to political activity by organizations exempt under section 501(c)(4) of the Internal Revenue Code.
The IRS is aware of the current public interest in this issue. These regulations have been in place since 1959. We will consider proposed changes in this area as we work with the IRS Office of Chief Counsel and the Treasury Department's Office of Tax Policy to identify tax issues that should be addressed through regulations and other published guidance.
This letter underlines the political tightrope that the IRS is walking in this area, especially with countervailing pressure coming from the Democratic side of the congressional aisle. Whether the Service can successfully walk this tightrope - and where it leads - remains to be seen.
Monday, July 16, 2012
President Vladimir Putin is expected to sign into law a bill adopted by Russia’s parliament, which labels many foreign-funded, non-governmental organizations operating within the country as “foreign agents.” The Kremlin has stated that it believes such a bill is appropriate for protecting Russia from external attempts to influence internal politics. The new law has also been given some financial teeth. Human rights activists are already enraged by the legislation, as the Duma also voted to impose fines of up to 5m rubles ($153,000) and a potential two year prison sentence for any organizations or individuals found to be in violation of the new law. Lyudmila Alekseeva, head of the Moscow Helsinki Group, believes that their new ‘foreign agent’ status will force the organization to fold as a result of having to refuse foreign grant money. Alekseeva explains, “The non-wealthy are not used to donating money to non-profit organizations, while the rich fear they may lose their business [by doing so].” In response to his government’s critics, Prime Minister Dmitry Medvedev has assured those affected that state funding will be increased for any NGOs whose activity “as a whole is deemed useful and positive for our country.” For more see http://www.globalresearch.ca/index.php?context=va&aid=31901.
China’s first ever charity fair was held in Shenzhen on July 13 and 14. It was hosted by the Ministry of Civil Affairs and the local Shenzhen government. Attended by over 400 people, the opening ceremony featured a major speech by Minister Li Liguo, which stresses the importance of charity for China’s development. See http://www.chinanpo.gov.cn/1938/55122/index.html. Another story about the event can be found at http://www.chinanpo.gov.cn/1938/55060/index.html.