Wednesday, July 2, 2014
In an interesting example of government transparency, Third Sector reports that the Charity Commission for England and Wales has issued its Annual Complaints Review showing that complaints made against the Commission increased in 2013/14 over a third from the previous year and that the proportion of complaints fully or partially upheld almost doubled (from 19 percent to 34 percent). More specifically, the Commission received 152 "Stage 1" complaints, with about a third of the complaints moving to Stage 2 consideration (because the customer was dissatisfied after the Stage 1 review). To put the number of complaints in context, the Commission during the same period received 6,681 applications for registration as a charity (or about a tenth of the § 501(c)(3) applications the IRS receives annually). The most common issue raised (and some complaints raised multiple issues) was insufficient regulatory intervention by the Commission.
While I realize that the National Taxpayer Advocate may to some extent gather similar information with respect to the IRS, it is telling that when the Advocate's office reviewed the exempt organization application process last summer it began by stating that "[i]In addressing the exempt organization (EO) issues, the Advocate’s office does not have investigative authority and did not seek to duplicate other ongoing investigations." The existence of this type of detailed information in the UK may be another argument for a national exempt organizations regulator that is not part of the IRS, as Marc Owens has proposed.
Monday, June 23, 2014
As reported in the Boston Globe, India’s Home Ministry has required the Reserve Bank of India to hold all foreign contributions to domestic Indian charities until the ministry says otherwise. A governmental report allegedly asserts that the charities “are costing the country up to 3 percent of its gross domestic product by rallying communities against polluting industries.” The story continues:
The national Investigative Bureau’s report — a copy of which was obtained Thursday by the Associated Press — also accuses the groups including Greenpeace, Amnesty International, and Action Aid of providing reports ‘‘used to build a record against India and serve as tools for the strategic foreign policy interests of Western Governments.’’
The Home Ministry said Thursday it would neither confirm nor deny the existence of the report, which has sparked a firestorm of debate in Indian newspapers and on TV news channels.
The governmental report, says the story, criticizes the charities for stirring protests against nuclear power plants, uranium mines, coal-fired power plants, genetically modified crops, and electronic waste.
Wednesday, May 14, 2014
The Bill and Melinda Gates Foundation is well known for its efforts to help eradicate diseases from the developing world. But achieving this goal has in the past encountered a significant problem: eradicating diseases often requires immunization, which relies on keeping vials of vaccine cold until they can be administered. The vials have to be kept at exactly the right temperature — too hot or too cold, and the vaccine could lose its effectiveness. That is a significant problem for places that do not have consistent access to electricity.
The foundation may have found a solution: the Sure Chill Company in Wales has announced receipt of a $1.4 million grant from the Gates Foundation to develop a vaccine cooler that will help advance efforts to eliminate preventable diseases worldwide.
The grant will enable the company to take the cooler from the proof-of-concept stage — which had been supported by a previous $100,000 grant from the foundation — to field trials over the next year in eastern and western Africa. The firm's technology harnesses a unique property of water to create a constantly chilled environment within the unit, enabling the cooler to operate for thirty-five days without power.
If the trials are successful, the development of these "super" coolers will represent a giant step in the eradication of diseases in the developing world.
Tuesday, May 13, 2014
The Luxembourg-based European Court of Justice today ruled that Internet companies can be made to remove irrelevant or excessive personal information from search engine results. In a case pitting privacy campaigners against Google, the European Union's highest court upheld the complaint of a Spanish man who objected to the fact that Google searches on his name threw up links to a 1998 newspaper article about the repossession of his home.
The case highlighted the struggle in cyberspace between free speech advocates and supporters of privacy rights who say people should have the "right to be forgotten" - meaning that they should be able to remove their digital traces from the Internet.
Here in the United States, today's NonProfit Times is pondering the ruling's impact on international nonprofits.
In its ruling, the court reasoned that "An [I]nternet search engine operator is responsible for the processing that it carries out of personal data which appear on web pages published by third parties. Thus," the court continued,
if, following a search made on the basis of a person's name, the list of results displays a link to a web page which contains information on the person in question, that data subject may approach the operator directly and, where the operator does not grant his request, bring the matter before the competent authorities in order to obtain, under certain conditions, the removal of that link from the list of results.
Moreover, the court ruled, the search engine operator is, "in certain circumstances, obliged to remove links to web pages that are published by third parties and contain information relating to a person from the list of results displayed following a search made on the basis of that person's name," even if "the publication in itself on those pages is lawful."
The Times notes that the impact of the decision on nonprofits is unclear. For example, it is unclaer whether the decision, which is based on a 1995 data protection directive, will affect requests for deletion of donor histories in nonprofits' databases. Fielding Yost, president and founder of database software producer Saturn Corporation in Cheverly, Maryland, stated: "Right now we don't know precisely what the law says. we just know that Google lost. We've never been faced [with a situation] where someone would say remove my donation history, unless they sent in a delete [request] from the charity. I don't think we're in the same application that Google is. Maybe it'll broaden and extend [to] that."
In the final analysis, Yost does not believe the law requires charities to scrub their donation history as Google must scrub links.
But Steven Shattuck, vice president for marketing at Bloomerang in Indianapolis, Indiana, believes the law will require nonprofits to scrub donor records. Said Shattuck: "Probably in Eurpoe, folks would have the right to be scrubbed. It is the electronic idenitification of a person's personal records. I think it sets a precedent, for sure."
The ruling's impact on international nonprofits will unfold as the days, weeks, and months go by.
Friday, May 9, 2014
Damian Alexander Bethke and Jędrzej Górski (both Chinese University of Hong Kong) have posted Rethinking Social Ventures in Hong Kong (Richmond Journal of Global Law and Business, Spring 2014). Here is the abstract:
Hong Kong has experienced a significant transformation in its understanding of business, which concerns the phenomenon of social ventures that attempt to combine a make money and do good approach and to apply business skills to address social needs. Social ventures live a mystical existence, as they are fully ignored from a legal perspective despite the recent reform of laws on charitable activities. This causes problems as to their general understanding, which the authors try to address with their own typology, systematically characterizing social ventures. Then the authors examine the legal environment of social ventures in Hong Kong and identify the challenges they face. Hong Kong’s company law and related public/administrative law issues are considered. The answer searched for is: what is the appropriate legal vehicle for social ventures, and what are the practical legal questions when a social venture wants to structure its make money and do good business? As to the first problem, the legal non-existence of social ventures results in coupled privileges — meaning a system which favors traditional business forms such as for-profit and not-for-profit companies and discourages doing good approaches by social ventures. The authors identify instances where privileges crediting charitable activities are coupled with not-for-profit status, and propose solutions under which social ventures could be registered and have tax privileges efficiently assigned by a one-stop supervision body. As the second problem, the situation of social ventures abandoning their mission of doing good poses further challenges to the legal system, and the authors propose a regime under which business organizations can easily adopt or abandon a social mission based on a partial application of the cy-près doctrine. The authors come to the conclusion that the social venture sector bears immense potential for Hong Kong as well as for all of Asia. But in order to use this potential, Hong Kong has to show a more refined understanding and has to be open to a profound discussion.
Saturday, April 26, 2014
The Economist earlier this month commented on the growth of non-governmental organizations (NGOs) in China ("Enter the Chinese NGO"). It estimates that there are approximately 2 million NGOs currently operating in China, about three-quarters of which are not officially registered, with many more likely to form in the near future. The communist party's plan appears to be to try to keep them small and local, and therefore presumably not a challenge to the party's authority or power. In a relatd, more detailed article ("Beneath the Glacier"), the Economist explores the reasons for the growth in Chinese NGOs and the wary response of the government to them (UPDATE: and quotes our blog's own Karla Simon).
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.