Nonprofit Law Prof Blog

Channeling Compassion and Enlightened Self-Interest To Help The Bottom Billion

In a talk given for TED in February 2008, Paul Collier - director of the Centre for the Study of African Economies at Oxford (and former director of the World Bank’s Development Research Group) – discusses ways in which the gap between the developed world and the “bottom billion” can be closed.

His thesis for the bottom billion is that a billion people are stuck in economies which have been stagnant for 40 years. He believes by channeling compassion and “enlightened self-interest” we may offer hope to these people and avoid giving future generations a “nightmare.” “We need compassion to get ourselves started, and enlightened self-interest to get ourselves serious,” says Collier. “That’s the alliance that changes the world.”

As part of his discussion, he looks at some of the decisions which prevent commodity-rich countries from making sustained economic progress. In addition, he discusses the impact of democracy and governance in developing countries, and proposes solutions to help guide international assistance. The full talk may been seen here.

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Putin Cuts Tax Benefits for Foreign NGOs

Last Thursday, Prime Minister Vladimir Putin reduced the number of foreign non-profit organizations eligible for tax benefits on grants.  As the Kommersant newspaper reports, a list of 101 privately-funded organizations has been cut down to only 12 groups. The resolution may mean fewer grants and programs in Russia, and may force some organizations to close their offices entirely.  Groups will now have to pay a steep tax on foreign funding given as grants.  NGOs in Russia say they are already hobbled by a 2005 law requiring burdensome reporting and registration practices.

The decree is set to take effect on January 1st, 2009.

SS

Food and Energy Shortages: "A Man-Made Castrophe"; What, If Anything Has NonProfit Law Got To Do With It?

On the eve of the 34th G8 Summit, which will take place in Tokyo, Japan, July 7-9, 2008. World Bank Group President, Robert Zoellick, and U.S. President George W. Bush are calling on the G8 countries to follow through with their promises to help alleviate poverty and disease in Africa and to address the devastating effects of food and fuel shortages in the developing world.  Responding to these calls will require overcoming both political and legal obstacles. 

Promises have been made, but not of a legally binding nature.  For example, President Bush's plan to renew the global AIDS initiative, pledging $50 billion over the next five years, is being challenged by some Republican senators as being too expensive. Further, there is speculation that the G8 countries may back out on their promise to double development assistance to Africa by 2010 for an increase of $25 billion.  The New York Times reports that the communiqué being prepared for this year’s meeting in Japan says the G8 countries are “firmly committed” to doubling the assistance, but does not mention the $25 billion amount.

Concerned about this backsliding, on Wednesday, World Bank Group President Robert Zoellick sent a letter to the head of the 2008 G8 Summit calling on the G8 countries to follow through with the commitment they made in 2005 to increase overall development aid, particularly to Africa, which accounts for two thirds of the countries most affected by the food and energy crises.  Mr. Zoellick also called on major oil producers to deal with rising food and energy prices, warning that the world is now "entering a danger zone."  The World Bank, World Food Program and International Monetary Fund estimate that $10 billion is needed to provide short term help to those hit hardest by the food and energy crises.

"What we are witnessing is not a natural disaster - a silent tsunami or a perfect storm: It is a man-made catastrophe, and as such must be fixed by people," Mr. Zoellick wrote in his letter.

The law cannot create the political will to address these catastrophies but, where that will exists, the law plays a crucial role in providing mechanisms to facilitate solutions.  Since these crises developed, Mr. Zoellick's letter reports that the World Bank has provided 12 countries with funding from a $200 million grant fund, which is part of a $1.2 billion rapid financing facility to provide immediate assistance.  New requests from 31 countries for almost $400 million have poured in.  These are  beyond the Bank's available grant resources but, according to Mr. Zoellick, the Bank has a multi-donor trust fund in place that donors can use  to provide immediate help.

Enter the role of non-profit and charitable trust law.  The gaping needs created by these crises appear far beyond what sovereign donors alone will be able (for political or other reasons) to fill.   This mandates looking to other sources of funding such as foundations, charities, philanthropists and the private sector.  A diverse group of sources are desperately needed to fund the kind of multi-donor trust fund and rapid financing facility to which Mr. Zoellick's letter refers.  Yet the legal principles and framework for creating and governing such pooled financing mechanisms for international development aid  are hopelessly under-developed.  What law would govern a public-private trust fund to address world hunger?; who would have standing to police it?; and in what forum would such standing be exercised?  Some food for thought for the charitable trust/nonprofit law scholar as the developing world starves .......

SS

Further Comments on Micro-Finance in Mexico

Yesterday we blogged about a Wall Street Journal op-ed piece defending the growth of for-profit microfinance companies in Mexico.  In its most recent edition, The Economist takes a similar position.  It argues that for-profit microfinance lenders such as Mexico's publicly traded CompartamosBanco can grow faster and so achieve greater economies of scale than their nonprofit counterparts, plus if they are successful the for-profit lenders will attract new investors to the microfinance field.  To support this last point, The Economist notes that since Compartamos started to pursue a profit, seven new regulated microfinance providers have begun to compete with it in Mexico.  Compartamos itself has provided a more detailed defense of its activities through an 11-page "Letter to Our Peers" available on its homepage.

LHM

Sidel on Philanthopy in Asia

We previously blogged about Mark Sidel's (University of Iowa) article on The Promise and Limits for Collective Action for Nonprofit Self-Regulation: Evidence from Asia.  He recently posted two other articles relating to philanthropy in Asia.  Here is the abstract for Philanthropy and Law in South Asia: Recent Developments in Bangladesh, India, Nepal, Pakistan and Sri Lanka:

This report, edited by Mark Sidel and written by Sanjay Agarwal (India), Qadeer Baig (Pakistan), Noshir Dadrawala (India), Zafar Ismail (Pakistan), Thanuja Jayawardene (Sri Lanka), Sumaiya Khair (Bangladesh), Sapana Pradhan Malla (Nepal), Mark Sidel (US), Anil Kumar Sinha (Nepal), Priya Viswanath (India), Arittha Wikramanayake (Sri Lanka), and Iftekhar Zaman (Bangladesh), provides a comprehensive discussion and analysis of recent developments in state-nonprofit relations and the regulation of the nonprofit sector and philanthropy in five key countries of South Asia - Bangladesh, India, Nepal, Pakistan, and Sri Lanka.

The report covers the full range of government regulation of the nonprofit sector and philanthropy, including registration and incorporation, governance requirements, board, trustee and staff issues, tax treatment, regulation of foreign and domestic donations, regulation of special sectors and issues (such as microcredit organizations, foreign donations, and other topics), nonprofit self-regulation, and other areas. It serves as an update to Mark Sidel and Iftekhar Zaman (eds.), Philanthropy and Law in South Asia (Asia Pacific Philanthropy Consortium, 2004). Both the 2004 volume and this update report are also available at http://www.asiapacificphilanthropy.org/. This multi-year, multi-country research study has been generously supported by the Ford Foundation, Asia Foundation, Myer Foundation, Himalaya Foundation, and the University of Iowa, and sponsored by the Asia Pacific Philanthropy Consortium.

And here is the abstract for A Decade of Research and Practice of Diaspora Philanthropy in the Asia Pacific Region: The State of the Field:

This paper provides an overview of research on diaspora philanthropy to the Asia Pacific region over the past ten years (1997-2008), with a focus on diaspora giving to China, India, the Philippines, Vietnam, Bangladesh, Pakistan, Indonesia, and other countries in the Asia Pacific region. It identifies practices in social investment and social entrepreneurship through strategic philanthropy by migrants and discusses how these may have facilitated sustainable social change and development in the diasporas' communities of origin; analyzes the enabling environment for diaspora philanthropy in the key countries of the region with respect to its degree of conduciveness in allowing or encouraging diaspora giving; and focuses on identifing and analyzing the gaps in research on diaspora philanthropy in Asia. The paper was prepared for presentation to the international conference on diaspora philanthropy convened by the Asia Pacific Philanthropy Consortium in Hanoi, Vietnam in May 2008.

LHM

UK Law Enforcement Investigating 25 Charities for Terrorist Ties

The Sunday Mirror reports that Scotland Yard and United Kingdom security services are investigating 25 charities that apparently raise funds in the UK and may support terrorist training camps and attacks.  Eight of the charities have ties to the 7/7 (2005) London bombings that killed 52 people and another three to a failed plot to blow up several airplanes.  The article does not identify any of the charities under investigation, but the New York Times in an August 14, 2006 article identified one of the latter charities as Jama'at-ud-Da'wah, a Pakistani-based charity active in the mosques of Britain's largest cities.

The UK government has taken significant steps to protect the charitable sector from being used to support terrorism, as detailed in "consultation" documents issued last year, and according to a recent news report the Charity Commission plans to issue counter-terrorism guidelines later this year.  The Charity Commission already issued, in August 2007, "operational guidance" on how it will handle cases where it suspects a terrorist organization is involved.

LHM

Canada Disallows Millions in Donations to Foundation

The Toronto Globe and Mail reports that the Canada Revenue Agency has disallowed $208 million in donations to the Banyan Tree Foundation.  The Foundation apparently used a giving program under which donors, through the Foundation, pledged part of a donation to another charity and supposedly made loans to provide for the rest of the pledged donation.  The Foundation purportedly used the loans to purchase millions of dollars in term annuities from an insurance company, with the payments from the annuities to be used to fund the rest of the pledged donation.  A Revenue Agency investigation found, however, that the Foundation never provided the insurance company with the loan funds to support the purchase of the annuities.  Instead, it appears that just enough funds were provided to the insurance company to ensure that the purported annuity payments would be made to the various charities, but these payments ceased in 2008.  The Revenue Agency's conclusion is that the program was a sham to make it appear that that there were legitimate loans being used for charitable purposes, which apparently would create significant tax benefits for the donors, when in fact those loans never existed.  The Foundation is challenging the Revenue Agency's claims, according to letters available on the Foundation's website.

LHM

Unusual Hedge Fund Fee Arrangement Supports Foundation

The New York Times reports that the $1.6 billion Children's Investment Fund Foundation is funded through an unusual fee arrangement with the Children's Investment Fund or T.C.I., a hedge fund.  T.C.I. investors agree to pay a 0.5 percent fee to the Foundation in addition to a 1 percent fee to T.C.I., with the Foundation fee increased by an additional 0.5 percent if T.C.I. earns more than an 11 percent profit.  T.C.I.'s profits are also contributed to the Foundation.  The close relationship between the Foundation and T.C.I. dates from their simultaneous creation in 2003 by Christopher Cooper-Hohn, who runs T.C.I., and his wife Jamie Cooper-Hohn, who runs the Foundation.  The Foundation also invests 90 percent of its assets with T.C.I., with no fees charged and no restrictions on withdrawals.  T.C.I.'s success - a 42 percent annual internal rate of return - has allowed the Foundation to play a major role in shaping programs to benefit children in developing countries.  The Foundation has a smaller U.S. affiliate with current assets of approximately $156 million.

LHM

British Newspaper Reports on the "New Philanthropists of Britain"

The British newspaper, The Guardian, reported yesterday that two of Britain's wealthier individuals announced that they would leave sizable donations (in the billions) to charities instead of their children.  Below is an excerpt of the story:

The 'new philanthropists' are different from you and me. Hugely ambitious, they get stuck into big issues, often on an international scale. They import their strict business discipline to the charitable sector and demand tangible results, sometimes as a condition of further funding. And instead of signing a cheque and walking away, they take a hands-on approach, sometimes exerting direct influence over charities.

Hohn, 41, who runs the Children's Investment Fund, has donated £466m to the foundation run by his wife, Jamie Cooper-Hohn, to support projects across Africa and the developing world. The Hohns have given almost £800m in four years, making them Britain's most generous philanthropists. American-born Cooper-Hohn, 43, meticulously researches each cause to find those that will produce 'transformational change' on a large scale. She once said: 'I was very eager that, if we did this, we would do it very much in the way Chris invests, making long-term, well-researched investments, bringing business rigour into development.'

Hohn is also increasingly typical because he did not inherit vast wealth. The son of a mechanic who came to Britain in the Sixties from Jamaica, he studied at Southampton University and Harvard Business School, going on to a lucrative career in the City. He now lives in St John's Wood, north London, with his wife and four children - it is not known whether Buffet's philosophy will be applied to them.

Duncan Bannatyne is also a self-made millionaire, having begun his entrepreneurial career with a second-hand ice cream van, then going on to build a business empire of health clubs, hotels and a bar. He said yesterday that he aims to help charities around the world through his Bannatyne Foundation and is looking for causes to help.

Bannatyne, 59, said he had experienced being both poor and rich and that inspired him to give money. 'I first went to Romania in 1992, found children who were abandoned and built a hospice,' he told The Observer. 'I just want to continue doing it. I have got £300m now and over the next few years that will be half a billion. I have nothing else to do with it.'

He explained why he will not pass on the fortune to his six children. 'I don't think it is in their best interests. Look at the examples of children whose lives have been ruined. There are children who don't have a purpose in life, don't know how to live properly, are on drugs.'

The rise of the super-rich has spawned a class of super-givers on a scale never before seen. It is estimated that the top 30 philanthropists among Britain's richest 1,000 people either gave away or pledged to give away £2.38bn over the year to May 2008 - almost double the total of the previous year.

For the complete story, please click here.

AMT

More Debate About Charity Oversight (from the UK)

The Philanthropy|UK Newsletter has published this interesting exchange between Martin Brookes, New Philanthropy Capital’s (NPC) Director of Research and Stuart Etherington, Chief Executive of the National Council of Voluntary Organisations (NCVO) in the UK regarding whether there should be a governmental board to provide independent assessment of charities' effectiveness. The question of how one measures the performance of charities is a tough nut to crack; one can obviously measure things like program expenditures, the amount of donations actually spent on programs vs. fundraising overhead and so forth. For certain charities, moreover, one could measure the number of beneficiaries served (e.g., for poor-relief charities). But how, exactly, does one measure the "performance" of the Lincoln Center? The Chicago Symphony Orchestra? The Metropolitan Museum of Art? Has the Bill and Melinda Gates foundation "performed" well in its pursuit of international health issues? How should we measure how well Harvard accomplishes its educational mission? On the other hand, its not that folks aren't trying to develop performance measures; "outcomes assessment" has become a mantra of educational accreditation organizations (just ask any educational administrator who has gone through an accreditation cycle in the past decade). But I honestly don't think we're there yet, and the thought of some kind of government-sponsored assessment board gives me the complete willies.

JDC

"Franchising" Churches

An interesting story in the Wall Street Journal about how some U.S. churches are expanding overseas through the use of satellite TV links, DVD's and "franchise marketing." Serious questions about whether churches should be tax-exempt already exist. Not an insubstantial number of folks who work and write in the nonprofit field believe that many (if not most) churches are nothing more than clubs for the faithful (contributions to which mostly directly benefit the congregation) and that they should not be tax-exempt at all (or if exempt, they should be treated like trade associations or social clubs, who don't get the benefit of tax-deductible contributions under I.R.C. Section 170). Another major debate concerns the role of churches in the political process and the seeming unending violations of the prohibition on political campaign activity in Code Section 501(c)(3). Add this story's component (the mass franchising techniques used by some mega-churches), and one begins to wonder if churches (at least some of them) are charities or slick mass entertainment. Another illustration of why the lack of agreement on the core definition of "charity" for tax-exemption purposes is a major policy problem.

JDC

U.S. Freezes Assets of Kuwait Charity

The AP reports that the Treasury Department has frozen the assets of the Revival of Islamic Heritage Society headquartered in Kuwait for allegedly supporting terrorists. Story here.

JDC

New York Times: Zimbabwean Authorities Seize American Aid

A report published in today's New York Times states that Zimbabwean authorities have confiscated a truck loaded with 20 tons of food aid for poor school children and ordered that the food be handed out to supporters of President Robert Mugabe instead.

The seizure was first revealed by U.S. Ambassador James D. McGee in an interview in which he stated, "This government will stop at nothing, even starving the most defenseless people in the country — young children — to realize their political ambitions."

As we blogged on June 5 ("Zimbabwe Blocks Charitable Aid") and June 6 ("More on Zimbabwe's Blockade of Charitable Aid"), last week the government ordered all humanitarian aid groups to suspend their operations, charging that some of them were giving out food as bribes to win votes for opposition leader, Morgan Tsvangirai, in the upcoming June 27 presidential runoff election against President Mugabe. 

However, according to the Times article,

political analysts, aid workers and human rights groups contend that it is, in fact, Zimbabwe's governing party that has ruthlessly used food to reward supporters and punish opponents in a country where agricultural production has collapsed over the past decade and millions of people would go hungry each year without emergency aid.

The seizure of the truck laden with food assistance occurred last Friday (June 6) in an area called Bambazonke near the town of Mutare in eastern Zimbabwe.  According to the Times,

The truck was hired by one of three nongovernmental organizations — CARE, Catholic Relief Services and World Vision — that form a consortium and contract with the United States Agency for International Development to distribute food aid in Zimbabwe. Its cargo of wheat, beans and vegetable oil was intended for 26 primary schools, American officials said, part of a program that provides hungry children with one solid meal a day.

For the entire article, see "American Aid Is Seized in Zimbabwe" in the June 12, 2008, New York Times.

VEJ

More on Zimbabwe's Blockade of Charitable Aid

The New York Times reported on June 6, 2008, that the tightening of controls on charitable aid groups in Zimbabwe is increasing.  We blogged earlier this week about Zimbabwean government's ordered suspension of charitable activities of CARE in the impoverished country.  The government has now apparently "ordered all humanitarian aid groups to suspend their operations in the deeply impoverished nation, a prohibition that relief agencies estimate will deprive two million people of food aid and other basic assistance."  Here is an excerpt from the article:

Aid workers and human rights groups say the suspension of humanitarian operations and the detention of the diplomats are part of the governing party’s strategy to clear the countryside of witnesses to its brutal efforts to decimate the political opposition and drive its supporters out of the wards in which they are eligible to vote.

ZANU-PF, the governing party, is clearly determined to go ahead with the runoff in the hope of preserving a veneer of legitimacy for a government that is increasingly viewed internationally as a pariah, and the party is trying to win it at any cost, Zimbabwean political analysts say.

At an emergency meeting on Thursday in Harare, the capital, United Nations agencies and aid groups agreed to protest the suspension and issue a statement about its humanitarian implications, according to the minutes of the meeting. The nongovernmental organizations there worried about the safety of their field staff once the prohibition order reaches local administrators across the country.

For the entire article, see "Zimbabwe Tells All Aid Groups to Halt Efforts" in the June 6, 2008, issue of the New York Times.

DAB

Zimbabwe Blocks Charitable Aid

In addition to the issues in Myanmar, blogged here, it appears that charities in Zimbabwe are being hampered in their charitable efforts.  Here is an excerpt from an article in the new York Times describing government orders to NGO's in Zimbabwe to suspend operations:

In recent days, CARE, one of the largest nonprofit groups working in the country, has been ordered by the Zimbabwean government to suspend all its operations, which help 500,000 of the country’s most vulnerable people. This month alone, CARE would have fed more than 110,000 people in schools, orphanages, old-age homes and in various programs, it said.

But the aid restrictions go far beyond any one group. Muktar Farah, deputy head of the United Nations Office for the Coordination of Humanitarian Affairs in Zimbabwe, said Tuesday that millions of people had lost assistance because of what he called “the shrinking of humanitarian space.”

“NGOs have been told to scale down or stop operations throughout the country,” he said, referring to nongovernmental organizations.

Zimbabwe’s president, Robert Mugabe, speaking on Tuesday at a United Nations food conference in Rome, accused nongovernmental organizations of interfering in politics and contended that the West had conspired “to cripple Zimbabwe’s economy” and bring about “illegal regime change.”

For the entire article, see "In a Crackdown, Zimbabwe Curbs Aid Groups" in the June 4, 2008, New York Times.

DAB

Disaster Fatigue Affects Giving to Cyclone and Earthquake Victims

$27 million, the amount Americans have contributed to US charities to help with disaster relief in Myanmar, sounds like a lot of money, and so does $25 million, the amount contributed to help the Chinese earthquake victims.  Yet two articles describe the amounts as "relatively little" and the result of "donor fatigue."  On May 19, the Washington Post published an article emphasizing the problem of donor fatigue or disaster fatigue.  The article notes that in response to the 2004 Asian tsunami Americans contributed $1.92 billion and in response to Hurricane Katrina donors gave $5.3 billion.  As the disasters pile up, some donors give up trying to help.  The magnitude of the problems can discourage giving.

Caroline Preston, writing in the Chronicle of Philanthropy, agrees that the amount raised is small in part because of donor fatigue.  She adds that lower giving may have occurred because Americans distrust the governments of Myanmar and China and because the Myanmar government has blocked aid efforts.  The weak U.S. economy probably also plays a role.  This article lists amounts raised by a number of U.S. organizations and also lists corporate and foundation grants. 

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Chinese Red Cross plays a large role in helping earthquake victims

The Wall Street Journal reports about the role of the Chinese Red Cross in helping the victims of the earthquake in China.  In contrast with the struggles of the international Red Cross to get aid to people in Myanmar, in China the Chinese Red Cross itself responded quickly and also was able to invite international aid to assist.  The contrast may stem from ties between the Chinese Red Cross and the Chinese government.  Although the Chinese Red Cross is now separate from the government, for many years the Ministry of Health controlled the Chinese Red Cross.  Created in 1904, the Chinese Red Cross came under government control in 1949, when the Communists gained power.  Today the national and provincial offices are completely separate from government, although local offices maintain links to local health officials

The Chinese Red Cross is one of only two organizations authorized to solicit donations from the public in China.  Chinese citizens have already contributed much of the $2.3 billion raised for earthquake relief.

Beyond the immediate crisis, the Chinese Red Cross is growing as an international organization and sees part of its role as helping address needs in other countries.  The Chinese Red Cross had been sending relief supplies to Myanmar prior to the earthquake in China, and those shipments have continued even though China now faces its own disaster. 

sng

Myanmar Finally Agrees to Allow Foreign Aid Workers Enter Affected Areas, But No Foreign Governments

After much consternation by Myanmar officials, it appears that charitable aid by the world's non-governmental humanitarian organizations will soon be on its way without hindrance to the victims of the May 2, 2008, cyclone.  According to an article in the May 24, 2008, issue of the Washington Post, U.N. Secretary General Ban Ki-moon reports that Myanmar (also known as Burma) agreed through one of its leaders to "allow all foreign aid workers, regardless of nationality, to join relief efforts for survivors."  However, aid from foreign governments is still prohibited.  Here is an excerpt from the article:

The concession, a potential turning point in getting help to victims of the devastating May 2-3 storm, came during a two-hour meeting between Ban and Than Shwe, head of the ruling military junta, in the isolated Burmese capital, Naypyidaw.

"He has agreed to allow all the aid workers, regardless of nationality," Ban told reporters after the meeting. There was no immediate confirmation from Burmese authorities concerning the pledge.

The U.N. chief said the junta expressed willingness to let foreign civilian ships bring in aid.

But according to U.N. officials, the generals stood firm on their refusal to accept delivery from military vessels -- the United States, Britain and Frances have naval ships in the region. That remains "a very sensitive issue," a senior U.N. official said.

For the entire article, see "Burma to Admit 'All Aid Workers': Storm Relief From Foreign Navies Is Still Barred, U.N. Officials Say" in the May 24, 2008, issue of the Washington Post.

DAB

Trust in Charities Has Increased According to Research in England and Wales

According to a study released on May 21, 2008, the public's trust in charities in England and Wales has increased since 2005.  Here is an excerpt from a summary of the study, "2008 Charity Commission Study into Public Trust and Confidence in Charities":

More people are giving time and goods to charity now than said they did three years ago as public trust has increased. Overall public trust and confidence in charities is measured as a mean score out of 10, which has increased from 6.3 in 2005 to 6.6 in 2008. A third of the public (35%) give charities a trust rating of eight out of ten or above.

According to the report 2008 Study into Public Trust and Confidence in Charities published today;

• nearly 1 in 5 people (18%) say they have given more than £200 to charity in the last year;
• nearly half of the public (47%) say they have given goods and
• one in three (36%) people say they, or someone they know, are actively involved with charities (either as an employee, trustee or volunteer)

all increases from the last time the same survey was conducted in 2005.

The majority of people (85%) say they have given money to charity within the last year.

The survey shows that of those listed, only doctors and the police score higher than charities with the public for trust and confidence, and that the public trust charities more than several bodies including social services, banks and central and local Government.

A third (35%) say that ‘charities making a positive difference to the cause they work for’ is the most important quality in engendering trust and confidence, while 71% of people agree that charities are effective at bringing about social change.

The research also outlines the most common reasons for trusting some charities either more or less than others. Asked if there are any specific charities they trusted more or less, and asked to give a reason, the most common reason for trusting a charity more (at 25%) is people having experienced or seen for themselves what the charity does, or that they believe in its cause (19%).

The report, 2008 Charity Commission Study into Public Trust and Confidence in Charities, is available with an executive summary on the Charity Commission website.  (Thanks again to Professor Karla Simon for this lead.)

DAB

Philanthropic Needs of the Poor: Ethiopia

The May 20, 2008, issue of the New York Times contains an article describing the philanthropic needs of the poor around the world, with a particular focus on Ethiopia.  Here is an excerpt from the article:

The U.N. children's agency said in a statement Tuesday an estimated 126,000 Ethiopian children urgently need food and medical care because of severe malnutrition -- and called the current crisis ''the worst since the major humanitarian crisis of 2003.''

The U.N. World Food Program estimates that 2.7 million Ethiopians will need emergency food aid because of late rains -- nearly double the number who needed help last year. An additional 5 million of Ethiopia's 80 million people receive aid each year because they never have enough food, whether harvests are good or not.

For the entire article, see "Children starving, again, in Ethiopia," in the May 20, 2008, issue of the New York Times.

DAB

Aid Organizations Organize in China

The May 20, 2008, issue of the New York Times reports that China is allowing aid organizations to organize is ways that are very positive in terms of earthquake relief efforts.  Here is an excerpt from the article:

Beijing is instinctively wary of public activism and has long maintained tight restrictions on private charities and religious, social and environmental groups that operate outside government control. The public outpouring is so overwhelming that analysts are debating whether it will create political aftershocks and place pressure on China’s authoritarian state to allow more space for civil society.

When the quake struck, party officials initially assigned oversight of private relief efforts to the Communist Youth League, the political base of President hu Jintao. But many individuals, corporations and nongovernmental organizations, or NGOs, simply rushed into action to supplement what they say is an overburdened Chinese Red Cross or to help with the rescue, according to representatives of some private citizens’ groups.

Faced with the potential for a grave humanitarian crisis, officials loosened their grip. They have since begun warning volunteers to stay out of the earthquake zone, citing safety concerns. But thousands are already there.

In Chengdu, relief volunteers have formed a command structure called the NGO Relief Action Group to coordinate 30 organizations. They have collected donations of instant noodles, biscuits, rice, medicine, clothes and bedding.

For the entire article, go to "Many Hands, Not Held by China, Aid in Quake," in the May 20, 2008, issue of the New York Times.

DAB

More Support for Improving the Microfinance Industry

On May 7, 2008, Corporate Social Responsibility Newswire reported that MasterCard Foundation, a nonprofit private company, awarded a three quarter million dollar grant to Microfinance Information Exchange to share information on the financial strength of microfinance institutions.  Here is an excerpt from the article:

The grant underscores the MasterCard Foundation's commitment to building the capacity of the microfinance sector, which provides financial services to low-income populations in developing countries. MIX Market 2.0 will improve the speed, accuracy and usability of the current MIX Market Web platform, which serves more than 25,000 visitors per month. The platform provides annual financial and operating information on more than 1,150 microfinance institutions, as well as profiles of 100 funders that invest in microfinance and almost 200 partners, including evaluators and development programs. However, significant technological improvements are needed to expand and upgrade the platform to support the growing demand for real-time information.

For the entire article, see "MasterCard Foundation Partners with Microfinance Information eXchange to Enhance Transparency of Microfinance Industry," in the May 7, 2008, on-line edition of Corporate Social Responsibility Newswire.

DAB

More Nonprofits Suspend Aid for Orphans in Zimbawbe

On the heels of the trouble aid groups are having getting into Myanmar, the New York Times reported on May 10, 2008, that more than half of 55 nonprofits surveyed in Zimbawbe say they have suspended aid for orphans in that country due to violence and political strife.  Here is an excerpt from the article:

Zimbabwe’s ruling party, bent on retaining control after 28 years in power, has broadened its campaign of intimidation and violence to include teachers and even aid workers, disrupting education and basic care for tens of thousands of children across the country, according to humanitarian groups, union officials and the teachers themselves.

Teachers have been upbraided by the ruling party for allegedly siding with the opposition during the nation’s disputed March elections, in which they served as poll monitors. More than 2,700 of them have fled or been evicted from classrooms, the teachers’ union says. Dozens of schools have closed, the union says, and 121 are being used as bases for the ruling party’s youth militias as they harass and beat opponents in the countryside.

Beyond that, the United National Children's Fund says that more than half the 55 nonprofit groups it recently surveyed have partly or fully suspended aid for orphans in Zimbabwe.

For the entire article, see "Violence in Zimbabwe Disrupts Schools and Aid" in the May 10, 2008, issue of the New York Times.

DAB

Ontario, Canada: New Legal Framework for Non-Profits

The International Journal for Civil Society Law reports in its May 2008 issue that the Government of Ontario is reviewing the Ontario Corporations Act (OCA) with a view to developing a new legal framework to govern the structure and activities of charities and not-for-profit corporations.  The OCA, which was originally enacted in 1907 and which has not been substantially revised since 1953, provides the current legal framework for governing the creation, governance and dissolution of not-for-profit corporations.  The not-for-profit sector has experienced tremendous change in the intervening 55 years, prompting the need for reform.  The Ministry of Government and Consumer Services has released three Consultation Papers to solicit comments.  Interested persons may comment on the third and final paper until May 31, 2008.

ss

Proposed Amendment to Definition of "Charitable Purpose" in India

N. Dadrawala of the International Center for Not-for-Profit Law reports that the Finance Minister of India has proposed an amendment to Section 2(15) of the Income Tax Act which currently defines "Charitable Purpose" to include: relief of the poor; education; medical relief; and "advancement of any other object of general public utility."  The proposed amendment provides that "advancement of any other object of general public utility"  will not be considered a "charitable purpose" if it involves carrying on an activity in the nature of trade, commerce or business or rendering services in relation to any trade, commerce or business for consideration. 

The proposed amendment is not intended to affect organizations involved in activities such as relief of the poor, medical relief and education.  It is only intended to apply to entities carrying on regular trade, commerce or business, or providing services in connection with regular trade, commerce or business, and earning incomes, which have sought to claim that their purposes also advance objects of general public utility.  The amendment does not target all activities falling under "advancement of any other object of general public utility"; only those activities which are commercial or support commerce are affected.  Thus, organizations involved in the relief of the poor, medical relief and education may safely carry out income-generating activities without losing their exemption under Section 2(15).  Trade organizations and associations supporting commerce and industry, will, however, be affected by the amendment.

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A CALL FOR REFORM OF NATIONAL LEGAL FRAMEWORKS GOVERNING CIVIL SOCIETY ORGANIZATIONS

DEFENDING CIVIL SOCIETY, a recently released report of The World Movement for Democracy (co-authored by the International Center for Not-for-Profit Law and the World Movement for Democracy Secretariat) calls  for the removal of legal barriers to the existence and operations of civil society organizations worldwide and the adoption of a set of international principles protecting civil society.

In recent years, the report notes, there has been a change in the form of government opposition to civil society organizations in many countries. Such opposition has shifted from outright repression to more subtle forms of restrictions such as imposing barriers to entry to discourage or prevent the formation of organizations, and barriers to resources to restrict the organizations' ability to secure the resources they need to carry out their activities. 

The report outlines the various legal impediments used to constrain civil society and exposes and refutes the rationales with which regimes seek to legitimize them.  The set of principles the report promulgates are rooted in international law. They are intended to inform proper government-civil society relations and protect civil society organizations.

Commissioned by an Eminent Persons Group, including former Czech President Vaclav Havel and former Malaysian Deputy Prime Minister Anwar Ibrahim, amongst others, the report draws upon legal and political analysis done by the International Center for Not-for-Profit Law (ICNL) and consultations with democracy, human rights and civil society activists at several regional forums. 

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Israel Moves to Shut Down Charity Allegedly Linked to Hamas

USA Today has published an Associated Press article on Israel's decision to close all operations of the Islamic Charitable Association.  According to the article, Israel asserts that the Association is a front for the Islamic militant group Hamas.  The Association, which is the largest Islamic charity in Hebron, West Bank, denies any links to Hamas. 

The Israeli military took the first step to implement the closure decision this week when it closed a sewing workshop run by the Association, seizing both sewing machines and bolts of cloth.  The Association also operates a boarding school for 600 children, mostly with single parents, a number of day schools and nurseries that serve 6,400 more children, a bakery, a cattle farm, and apartments.  It's total assets are approximately $10 million, and it has a $635,000 per month operating budget.

A lawyer for the Association has appealed the closure order to the Israeli Supreme Court, but the Court has not yet set a hearing date.  Officials of Palestinian President Mahmoud Abbas' government have also stated they are trying to block the closure.  American and Canadian volunteers from the pacifist group Christian Peacemaker Teams are sleeping in the boarding school dormitory in an attempt to deter the Israeli military from shutting that facility.

LHM

BBC Reports on New UK Foundation Formed by UK Muslims

Today, April 22, the BBC reports that a group of UK Muslims launched a new nonprofit, the Quilliam Foundation, to eradicate extremism in British Islamic communities.  The group says that it "calls for renouncing extremism and promoting peaceful coexistence among various races and cultures."  The group also says that it "aims to alter the stereotype image that began forming inside the British society in the aftermath of the . . . September [11] attacks and the blowing up of two subway trains in the British capital, London, in July 2005."  The BBC report further provides that "[t]his development is in harmony with a similar development in some EU countries, despite some radical trends' opposition of this move."  The BBC report was taken from a televised report that aired on Al-Jazeera Satellite TV on April 21.  See below for the balance of the telecast as reported by the BBC:

[Begin recording of video report by Yusuf Nur Awad, read by Su'ad Abdallah]
[Abdallah] A call for supporting a multiracial and multicultural society was
launched by a group of British Muslims to eradicate what it termed tendency
towards extremism. The group, which calls itself Quilliam Foundation, said on
its internet website that it is trying to support the value of pluralism in the
British society in the face of what it termed cultural values imported from the
Indian subcontinent and from the political problems in the Arab world. This
tendency comes as an attempt to make up for the outcome of the 2005 London
subway bombings, which were carried out by a number of British Muslims who were
born in Britain but who are not considered to be representatives of the peaceful
majority of British Muslims in this country.

[Ed Husayn, Quilliam Foundation, in English with voice-over translation into
Arabic, translated from the Arabic] This is the first time since the 11
September attacks and 7 July attacks when such effort emerges among those who
were linked to extremism and who now call for combating the ideology of
Al-Qa'idah organization.

[Abdallah] The foundation realizes that reaching large sectors of the public
is not an easy task, but it is a mission that many are determined to undertake.

[Unidentified young man, in English with voice-over translation into Arabic,
translated from the Arabic] Well, I think it is a good idea actually. I am a
Muslim and do not like this extremism and so I support what we are doing.

[Abdallah] The Quilliam Foundation, which was named after an Englishman who
embraced Islam in the 19 century, succeeded in opening dialogue among the
Islamic organizations in Britain, such as the Muslim Council of Britain.
However, other elements of the British society do not support the goals of this
foundation.

[Unidentified man, in English with voice-over translation into Arabic,
translated from the Arabic] The individuals who are carrying out this action are
non-committed Muslims, who are in reality the voice of the British Government.
No one trusts them.

[Abdallah] Differences in viewpoints might be a normal thing with regard to
such moves, but what is more important is the presence of voices calling for
calm and not escalation in Britain, which echoes a new Islamic tendency in some
EU countries. [End recording] [Video of people entering a mosque]

Source: Al-Jazeera TV, Doha, in Arabic 1620 gmt 21 Apr 08

BBC Monitoring Middle East - Political Supplied by BBC Worldwide Monitoring.  See BBC News for more in-depth coverage of this story.

The organization's website can be accessed by clicking here - Quilliam Foundation.  On the organization's website, the foundation is described as a counter extremism think tank created by former activists of radical Islamic organizations, making the founders familiar with the mindset and methods of extremist organizations.  See the website for more information.

AMT

British Newspaper Reports that Body Shop Owner Anita Roddick Gave Her Entire Fortune to Charity Before Her Death

The Daily Telegraph, a British newspaper, reported today, April 21, that the founder of The Body Shop, a well-known international cosmetics and toiletries company, Anita Roddick donated her entire fortune to charity before her death just last year in December 2007 (read her obituary), leaving nothing for her family and friends.  She left just enough in her estate to pay a British Inheritance Tax required when the donor dies within seven years of making monetary gifts.  Ms. Roddick died from a brain hemorrhage.  She is reported to have said that "leaving money to your family is obscene."  Most of her fortune went to green projects and issues affecting people in developing nations.  Below is an excerpt of the story:

Details of her estate, which were published yesterday [April 20, 1008], revealed that she had donated her £51 million fortune to good causes before her death from a brain haemorrhage last September.

Dame Anita, who was 64 when she died, once described leaving money to your family as obscene" and said instead she wanted her fortune to go towards green issues and curing Third World.

Dame Anita left a total of £665,747 when she died but this was consumed by inheritance tax, leaving her net worth as nil.

Under the rules set out by the Inland Revenue, individuals have to pay such tax if they do not survive for seven years after making monetary gifts.

See Article for the Full Story.

AMT

Dubai Charity to Donate $1 Billion to Improve Education in World's Poorest Countries

Agence France Presse reported on Wednesday that United Arab Emirates-based charity Dubai cares is to soon launch a one-billion-dollar (627-million-euro) project to fund education in 12 of the world's poorest countries: Bangladesh, Bosnia, Chad, Comoros Islands, Djibouti, Maldives, Mauritania, Niger, Pakistan, occupied Palestinian territories, Sudan, and Yemen.  Some of the money will also be going to Palestinian refugees in Lebanon and Jordan.

According to the AFP report, Dubai Cares expects the money to be spent on new schools, redeveloping existing facilities, and providing medical services and drinking water.  Through this effort, the charity hopes to eventually educate one million children in these developing countries.

VEJ

Uganda seeks to tax private universities

According to an online report from allafrica.com:

ThE Uganda Revenue Authority (URA) is demanding sh1.3b in corporation tax arrears from Uganda Christian University (UCU), a move that has drawn an outcry from other private universities that see themselves as the next targets. The vice chancellors have objected to the demand and urged the Government to emulate Kenya and Tanzania, where non-profit universities are exempt from corporation tax. "We the vice chancellors of the Uganda Vice Chancellors' Forum do stand in solidarity with Uganda Christian University and other not-for-profit universities in their appeal to receive exempt status from Corporation tax as a not-for-profit educational organisation with a public purpose," they said in a resolution after a meeting held on March 3, 2008.

The report discusses in broad detail the United States' approach exempting universities from taxation, as evidence of the need to maintain tax exemption for private universities. 

dkj

Charities Take British Government to Court

Two British charities, Friends of the Earth and Help the Aged, are asking for judicial review of the British government's fuel poverty policy.  The charities are asking the government to set out its plans to meet its legal responsibility to eradicate fuel poverty.  The government had responded to concerns about households that had to spend more than 10% of their income on heating and lighting.  The government set two targets, one to erase fuel poverty for the most vulnerable households by 2010 and the other to address fuel poverty in all households by 2016.  The two charities are asking the government to impose a minimum standard of energy efficiency for households facing fuel poverty.

sng

Should Private Schools Have Charitable Status in United Kingdom?

The Guardian (Education Section) has some interesting opinions about private schools in United Kingdom having charitable status.  Here is an excerpt from one of the opinion letters:

I think it's absurd to give charitable status to something that's there to benefit the privileged few. I was in private school from nursery right through to A-levels. I had my first state education at university, and I've been left with a strong feeling that it's a very iniquitous system. I think private schools should be abolished. They lie at the root of the class system; there will always be a class system, but private schools are about buying your way in society.

For the entire story, see "Multiple choice: In the private interest - Should private schools have charitable status?" in the March 25, 2008, issue of The Guardian.  For earlier blog coverage of this issue, see here and here.

DAB

International Public Health Work with NGO's

Karen E. Gieseker of the Institute of Public Health at Georgia State University will present "International Public Health Work with NGO's" on March 25, 2008, at Georgia State's Andrew Young School of Policy Studies.  Here is the text of the announcement:

Seminar Announcement

What: The Nonprofit Studies Program of the Andrew Young School of Policy at Georgia State University presents its Brown Bag Seminar Series in Nonprofit Research.

Who: Karen E. Gieseker of Institute of Public Health, GSU will address the topic: "International Public Health Work with NGOs"

When: Tuesday, March 25, 2008 at 12:30 PM

Where: Seminar Room #749 at the Andrew Young School of Policy Studies Building at 14 Marietta Street, NW

The purpose of these seminars is to discuss research-in-progress by faculty associated with the nonprofit program. We invite students, faculty and interested members of the community to join us!

Drinks and cookies will be served.

Listed below are the remaining seminars

Tuesday, April 15, 2008, 12:30 PM Prof. Russell James Dept. of Housing & Consumer Economics, UGA Health, wealth, and charitable estate planning: A longitudinal examination of testamentary charitable giving plans

Tuesday, April 22, 2008, 12:30 PM Bonnie Koenig Going International, Chicago, Illinois US Nonprofits Working Internationally

DAB

Uganda's New Services Tax Proposal

In light of the situation in Florida (possibly reducing school property taxes in exchange increased sales tax on services, increased sales tax rates and reduced sales tax exemptions), I found this editorial about a new services tax proposal in Uganda quite intriguing.  After Uganda eliminated its Graduated Tax (referred to in the editorial as the "GT"), it failed to look for viable alternative sources of government revenue for local governments.  This has, in turn, forced the central government and local governments to seek out various new forms of taxes.  While the central government looks to taxes on services, local governments look at things like taxes on church marriages (previously blogged here).  Here is a short excerpt from the editorial in The Daily Monitor:

Currently local governments are faced with significant shortages of locally generated revenue hence their reliance on central government, a significant threat to decentralisation. The above situation hasn't been helped by the rampant creation of new local government units especially districts, most of them not economically viable.

The result has been increased cost of public administration and unless the above trend is checked, Ugandans should brace themselves to pay many other taxes of a similar nature. For instance, it has been reported that in a bid to fill the gap created by suspension of GT, Sironko District Local Government (DLG) plans to levy a new tax on traditional and church marriages.

This follows a resolution passed barely a year by Bududa local government to tax traditional marriage (Kwanjula) ceremonies. The local service tax is therefore meant to salvage the desperate situation currently obtaining in most local governments but the implementation of the tax seems tricky. The tax is not much different from GT and one wonders why government should re-introduce GT in a new form.

For the entire story, see "Uganda; Local Service Tax; It's Double Burden" in the March 19, 2008 issue of The Daily Monitor.

DAB