Tuesday, August 9, 2016

IRS Issues Charitable Remainder Annuity Trust Guidance

IRSAs reported by Accounting Today and Bloomberg BNA Daily Tax Report (subscription required), the IRS yesterday issued Revenue Procedure 2016-42 (available through Bloomberg BNA) to provide some relief for donors desiring to create a charitable remainder annuity trust (CRAT) but frustrated because low interest rates make it difficulty to do so. The articles explain that CRATs are subject to a "probability of exhaustion" test (described in Revenue Rulings 70-452 and 77-374)  that requires there be no more than a 5 percent chance that there is no remainder to go to the designated charity or charities. When interest rates are low, as they are now, it can be difficult to satisfy this requirement and also the requirement under Internal Revenue Code section 664(d) that a CRAT pay out a minimum 5 percent annuity to the trust beneficiary. The Revenue Procedure permits CRATs to include an early termination provision that ends the CRAT and causes the distribution of the remainder to the designated charity or charities when the trust corpus minus the annual payment and multiplied by a discount factor falls below 10 percent of the initial trust corpus; if the sample provision is included in a CRAT, then the probability of exhaustion test will not apply.

The Revenue Procedure will be published in Internal Revenue Bulletin 2016-34, which will be dated August 22nd.

Lloyd Mayer

August 9, 2016 in Federal – Executive | Permalink | Comments (0)

Monday, August 8, 2016

Breen: Charitable Trust Supervision Practice and Procedure in the Common Law World

Oonagh BreenOonagh B. Breen (University College Dublin) has posted "Guardians of the Charitable Realm: Charitable Trust Supervision Practice and Procedure in the Common Law World" on SSRN (European Review of Private Law, forthcoming). Here is the abstract:

This article examines the control framework for the supervision and oversight of charitable trusts in the common law world. It outlines the fundamental differences between private and public trusts that necessitate a separate enforcement regime for charitable trusts and explores the historical and political powers and duties of the Attorney General as parens patriae of charities. In light of the limitations of the Attorney General’s effective scrutiny, Part II considers the emergence of alternative charity regulators - from tax authorities to independent charity commissions - comparing the relative regulatory achievements of these agencies with that of the AG. Part III turns its attention to the role of the courts and tribunals in the enforcement of the interests of donors, beneficiaries and charitable entities. The article concludes in Part IV with a discussion of the merits and demerits of the charitable trust vis-à-vis the public benefit foundation.

Lloyd Mayer

August 8, 2016 in International, Publications – Articles | Permalink | Comments (0)

Bethke: Charity Law Reform in Hong Kong: Taming the Asian Dragon?

Damian BethkeDamian Bethke has published "Charity Law Reform in Hong Kong: Taming the Asian Dragon?" in the International Journal of Not-for-Profit Law. Here is the abstract:

The number of charitable organizations in Hong Kong has increased significantly despite unclear and lax regulation. A legislator has identified flaws in the present law and recommended changes. The proposed recommendations, however, do not consider the unique characteristics of Hong Kong. If implemented, they would not address the existing problems adequately. In order to tame the Asian Dragon, this article proposes an alternative model: self-regulation, which relies on the work of charity watchdogs.

Lloyd Mayer

August 8, 2016 in International, Publications – Articles | Permalink | Comments (0)

Gary: Values and Value: University Endowments, Fiduciary Duties, and ESG Investing

Gary-SusanBlog contributing editor Susan N. Gary (Oregon) has published "Values and Value: University Endowments, Fiduciary Duties, and ESG Investing" at 42 Journal of College and University Law 247 (2016). While the JCUL published version is not readily available online, here is the SSRN posting of the article. Here also is the abstract:

The trustees managing university endowment funds must comply with fiduciary duties that require the trustees to act in the best interests of the university and to act as prudent investors when managing the funds. This article shows that these fiduciaries may adopt investment policies that consider material environmental, social, and governance (ESG) factors as part of an overall investment strategy. The article explains why older arguments that fiduciaries should avoid “social investing” are no longer relevant and how the prudent investor standard has evolved to include ESG investing. The article discusses the changes in socially responsible investing since the anti-apartheid era and reviews a significant number of empirical studies that show that ESG investing has had a neutral or positive effect on financial return. Based on the empirical work, evidence of the financial industry’s growing use of extra-financial factors in investment analysis, and recent guidance from the Department of Labor, the article concludes that a trustee responsible for a university endowment will not breach the duty of loyalty or the duty to act as a prudent investor by directing the endowment’s use of ESG investing as part of an overall financial investment strategy.

Lloyd Mayer

August 8, 2016 in Publications – Articles | Permalink | Comments (0)

Plerhoples: Nonprofit Displacement and the Pursuit of Charity Through Public Benefit Corporations

Alicia PlerhoplesAlicia Plerhoples (Georgetown) has posted "Nonprofit Displacement and the Pursuit of Charity Through Public Benefit Corporations" on SSRN. Here is the abstract:

Nonprofits dominate the charitable sector. Until recently, this statement was tautological. Charity is increasingly being conducted through for-profit entities, raising concerns about the marketization of the charitable sector. This article examines for-profit charity conducted through the public benefit corporation, a new corporate form that allows its owners to blend mission and profit in a single entity. Proponents of public benefit corporations intended it as an alternative to a for-profit corporation and largely ignored its impact on the charitable sector. While public benefit corporations are ripe for conducting charity because they can pursue dual missions, they lack the transparency and accountability mechanisms of charitable organizations.

This article chronicles the supply and demand for public benefit corporations that conduct charity (i.e., “charitable public benefit corporations”) and hypothesizes the micro and macro level harms caused by them. At the micro level, the harm is fraud or “greenwashing”, i.e., deceiving unwitting stockholders, customers, or other stakeholders into investing or spending their time and money in the negligent or fraudulent enterprise. At the macro level, the more pernicious harm is that “market-based charity” injects individualistic and autocratic business values and methods into charitable work. To mitigate these harms, this article proposes that charitable public benefit corporations be required to grant or sell shares to a group of stakeholders sufficient to give such stakeholder-stockholders standing to bring a derivative suit against the public benefit corporation should it fail to pursue its charitable public benefit. These stakeholder-stockholders are akin to impact investors, or investors who value charitable returns above, or concomitantly with, financial returns. The derivative suit offers the rare stick to guard against greenwashing. More importantly, stakeholder-stockholders can (i) guide the founders and boards of a charitable public benefit corporation in pursuing charity as an ordinary business decision, and (ii) import the participatory and democratic values of the charitable sector to public benefit corporations.

Lloyd Mayer

August 8, 2016 in Publications – Articles | Permalink | Comments (0)

Friday, August 5, 2016

Critics Want Wealthy Schools to Stop Hording Endowments.

Twin Cities Pioneer Press reports that two private colleges alone in Minnesota have combined endowments of over $1.5 billion. This seems wonderful in a time where education budgets are on the chopping block. However, critics of the colleges and universities contend the institutions need to be less scrooge-like and spread the wealth to meet the financial needs of their students. “Private foundations with nonprofit status must spend five percent of their fund’s value each year under federal law.” But, this requirement does not apply to colleges and universities.

As of 2013, there were 138 educational institutions with over $500 million in endowment. A study of 67 private schools revealed that just over half of those schools did not meet the 5 percent mark required by other nonprofits. With an estimated 40 percent of college students receiving Pell grants, it is clear that there remains unmet financial needs for students.

An official from one of the colleges studied said “it’s unfair to expect colleges to spend their endowments at the same rate as charitable nonprofits. If a college’s endowment earns 7 percent but they spend 5 percent, it won’t grow fast enough to keep up with inflation.”

Time will tell if the Legislature will require colleges and universities to meet the five percent mark as their nonprofit peers must. With the rising cost of education, one can assume debate will arise sooner than later.

David Brennen

August 5, 2016 in Current Affairs, Federal – Legislative, In the News, State – Legislative | Permalink | Comments (0)

Thursday, August 4, 2016

D.C. Debating Property Tax Laws

A recent post on Non Profit Quarterly by Ruth McCambridge explains tensions between nonprofits in big cities (Such as D.C. in this article) and the legislature. In Washington D.C., nonprofits occupy over $10 billion worth of real estate, which could generate over $111 million per year in tax revenue. Instead, the district collects nothing from them.

Two universities in the district alone account for $48 million in uncollectable property tax revenue. The District is considering the idea of making a change requiring payments in PILOT form, but has been pondering this idea for nearly fifty years.

Undoubtedly, these institutions bring an immense amount of revenue to the District, through research, attracted talent, and general expenditures by students and faculty. However, it is not clear if these benefits outweigh the costs of not receiving property taxes.

It is estimated that currently 28 different states have municipalities that collect PILOT payments; however these payments amount to far less than what the property taxes would have been worth.

It will be interesting to see if the legislature changes the current set up. Between the federally owned tax-exempt buildings, and those occupied by nonprofits, the district is missing out on over one billion dollars of tax revenue.

David Brennen

August 4, 2016 in Current Affairs, Federal – Legislative, In the News, State – Legislative | Permalink | Comments (0)

Tuesday, August 2, 2016

California Blood Bank Faces Uncertainties

A recent development in California leaves the status of a local non-profit blood bank in question. However, Hemopet is not your typical blood bank, it is a blood bank for animals. Founded in 1986, Hemopet was the nation’s first 501(c)(3) non-profit blood bank and quickly grew to national scale. Currently, Hemopet supplies 40% of the nation’s emergency canine blood, and saves the lives of thousands of dogs each year.

In 1965, a law was enacted that exempted blood banks from taxation. Unfortunately, animal blood banks were not around at the time. A recent audit by state officials led to the conclusion that Hemopet should not be considered tax exempt, and that they owed over $80,000 in unpaid taxes. A bill is set to be presented to the California Assembly Committee on Appropriations on August 3rd that will clear up the status of the non-profit. Dr. Jean Dodds, president and founder of Hemopet, believes that if the bill passes requiring Hemopet to pay the $80,000 they will be forced to shut down. In addition to the potential shortage on emergency canine blood, closing Hemopet would leave over 200 Greyhounds homeless and 45 people would lose their jobs.

Hemopet officials are encouraging Californians to contact the Assembly Committee on Appropriations to voice their support for the organization.

 

David Brennen

August 2, 2016 in Current Affairs, In the News, State – Legislative | Permalink | Comments (1)

Monday, August 1, 2016

Non-Profit Challenges Legality of Zoning Restriction

Community Basics, a Lancaster, PA non-profit, is challenging the legality of a local zoning ordinance that effectively limits the ability of the Salisbury Township’s residents to obtain affordable multifamily housing. The proposed law would require the re-zoning of a 16.6-acre plot of land that is currently zoned for industrial use. The site would contain six buildings and 138 apartment units.

Currently, less than one percent of the township’s total land is zoned to allow multifamily housing. Township officials deny any wrongdoing and contend the zoning is necessary for critical industrial development. The Supreme Court has invalidated a zoning restriction before that only allotted 1.14 percent of a town’s land for multifamily housing. The Salisbury Township ordinance allows for .74 percent of the town’s land to be used for multifamily housing. To further limit the access to multifamily housing, the township requires four parking spaces per housing unit, an expensive barrier to building new housing units.

The challenge aims to curb the shortage of rental housing available to the Salisbury Township residents. Rent for the new units would be based on income, and would range from $315 to $945 monthly. The hearing for the ordinance is set for Aug. 24.

David Brennen

August 1, 2016 in Current Affairs | Permalink | Comments (0)

Sunday, July 31, 2016

Massachusetts Contemplating Change in Non-Profit Property Tax

Proposed legislation in Massachusetts would potentially shake-up the current state of their local non-profits. The proposal would make it necessary for current non-profits to begin paying property taxes, and continue to do so for the next four years (churches and houses of worship remain exempt). Currently, non-profit organizations are exempted from paying property tax, but occupy more than 13 percent of taxable property within the state. The proposal is a small part of an overall economic stimulus plan that seeks to provide over $700 million in assistance throughout the state.

Proponents of the legislation argue that aggressive land purchases by larger non-profits make it more difficult for smaller entities to find land. They also believe exempting the non-profits ultimately raises property taxes for others in the community. Opponents believe that taxing non-profits will make it necessary for them to cut back on their services provided, and could lead to employees being laid off. This could have a wide impact, as non-profit jobs are an estimated 17 percent of the state’s workforce (approximately 500,000 jobs), and pay more than $30 billion in wages.

Although both sides present compelling arguments, it is imperative for policy makers to thoroughly analyze the true impacts of their decisions. It will be interesting to see what how the good people of Massachusetts respond to this proposal.

David Brennen

July 31, 2016 in Current Affairs, In the News, State – Legislative | Permalink | Comments (1)

Thursday, July 28, 2016

501(c)(3) Organizations & the Ban on "Intervening" with Political Campaigns

A recent post by Benjamin Leff on The Surly Subgroup highlights the 50+ year ban on 501(c)(3) organizations (here, specifically churches) “intervening” in a campaign for public office. Arguments for and against the ban range from an infringement of free speech, to churches using their power to distort the electoral process. However, the main issue discussed is that although churches want to get in to court to challenge the ban, they believe the IRS won’t let them. For a compelling read on how these organizations may be granted their “day in court” and some possible reform suggestions, read the above linked post.

David Brennen

July 28, 2016 in Current Affairs, Federal – Legislative, In the News, Weblogs | Permalink | Comments (0)

Thursday, July 7, 2016

Town and Tech in San Francisco

The Guardian reports that under a proposal in San Francisco: “large tech employers in the city, potentially including Google, Twitter, Uber, Airbnb and Salesforce, would be required to pay a 1.5% payroll tax. The estimated $120m in annual revenue would be used to fund affordable housing and services for the city’s large homeless population." The effort is intended to help address that San Francisco is “one of the most unequal places in the US.”

July 7, 2016 | Permalink | Comments (0)

Public Trust in UK Charities at All Time Low

The Nonprofit Times Reports that trust in charities in the UK has fallen to its lowest level, declining 10% over the past two years. The article cites concerns about aggressive fundraising practices, charities more concerned in sustaining themselves than in their mission, scandal, high compensation levels, and low expenditures all as leading to public revolt. The government is contemplating setting up a new fundraising regulatory body. The article notes that the crisis in confidence comes at a terrible time, because after the Brexit vote it is likely that British charities will have fewer resources (loss of EU funding) and face greater need. RC

July 7, 2016 | Permalink | Comments (0)

Wednesday, June 29, 2016

Dept of Labor: Volunteers who Provide a Benefit to Organization Are Employees, Must Be Paid Minimum Wage

A church encourages its parishioners to volunteer for a fundraiser.  More than 100 individuals heed the call and volunteer their time: some a few hours, some much more.  The Department of Labor then sues for violations of federal labor law for failing to pay the workers—who DOL considers “employees”—a minimum wage as required by the Federal Labor Standards Act (FLSA). Angley

Sound unlikely?  Well, this exact scenario is playing out in Ohio in the case of Perez v. Cathedral Buffet.  Ernest Angley, of televangelism infamy, runs a church and a buffet restaurant.  According to court papers, the restaurant is organized as a for-profit organization owned entirely by the church, although the restaurant does not make and has not made a profit.  Parishioners volunteer for the buffet—sometimes sporadically, sometimes regularly.  105 of the would-be employees signed affidavits indicating that they did not receive any economic advantage from volunteering, and they volunteered for the sense of community the opportunity provided.  Department of Labor has sued Cathedral Buffet and the Ernest Angley for years of failing to pay volunteers.

In response to the argument that the volunteers do not need to be paid a minimum wage, the Department of Labor has taken the following position:

But even if the volunteers did not expect compensation, they certainly did not work solely for their own purpose or pleasure, without immediate benefit to the Buffet.  Former Church member Roadman declared that she felt pressure to volunteer.  (Roadman Decl. ¶6.)  And although the Employers claim the volunteers received a “sense of community” or “satisfaction,” the benefit to them was vastly outweighed by the benefit received by the Buffet.  The Buffet actively sought out volunteers to help staff the Buffet, and Angley even admitted that the use of volunteers was a cost-saving measure.  (Angley Dep. 35:7-36:11, 50:21-25.)   And unlike in Portland Terminal, the Buffet’s workers are not being trained or otherwise working under the close scrutiny of paid employees.  

The Buffet cannot rely on the goodwill of the Church members to provide labor that would otherwise be done by paid employees and be compensable under the Act.  And the Buffet cannot pressure individuals into providing free labor, then shield itself from FLSA liability under the guise of the Church’s religious mission.

---

In other words, DOL’s legal position seems to be that an organization MUST pay minimum wage to volunteers as employees if it 1) asked the individual to volunteer and 2) it receives a benefit from those volunteers. If this is the standard, then a lot of organizations are in trouble.  After all, a lot of organizations depend on appeals to religious or moral duty to convince people to volunteer.  And while some charities likely tolerate volunteers even if they don’t add value, many organizations depend on volunteers to make their operations successful.  (Earlier in the case, DOL took the position that it was impossible to "volunteer" for a for-profit enterprise, although its latest briefing appears to have abandoned this position, which had been rejected by several other courts.)

Can Labor’s position possibly be right? Well… probably not, but maybe:

Continue reading

June 29, 2016 in Federal – Judicial | Permalink | Comments (3)

Thursday, June 23, 2016

For Purpose Law Group: Origins of Ban on Political Electioneering for 501(c)(3) Organizations

With the election season coming up (errr, well underway), the ban on 501(c)(3) tax-exempt organizations supporting or opposing a candidate for political office will no doubt be cited, critiqued, and misunderstood by countless pundits and nonprofits.  For Purpose Law Group has a blog post tracing its interesting history:

First, the total ban on political campaigning for 501(c)(3) charities was offered as a last-minute, “non-germane” amendment to the massive new Internal Revenue Code; and, second, Senator Johnson’s rationale was based on a significantly incorrect characterization of the 1934 lobbying restriction.

First, the total ban on political campaigning for 501(c)(3) charities was offered as a last-minute, “non-germane” amendment to the massive new Internal Revenue Code; and, second, Senator Johnson’s rationale was based on a significantly incorrect characterization of the 1934 lobbying restriction. - See more at: http://www.forpurposelaw.com/501c3-political-ban-history/#sthash.tO9YJwoL.dpuf

Read the rest here.

@JosephWMead

June 23, 2016 in Federal – Legislative | Permalink | Comments (0)

Monday, June 20, 2016

State Attorneys General Urge Caution When Donating in Response to Orlando Massacre with UPDATE

Seal_of_the_Attorney_General_of_IndianaAnticipating an uptick in charitable giving, some state Attorneys General (e.g., Indiana and Ohio) urge caution before donating to charity, and supply the following tips:

  • Evaluate charities using information from AG offices, IRS filings, and other resources such as Charity Navigator* (UPDATE: see below) or Guidestar
  • Beware of sham charities & look-alike sites:  some appeals will use similar names to well-established nonprofits
  • Be cautious of newly-formed charities:  may lack the experience to properly or effectively handle donations
  • Investigate how your donation will be used:  look for destination of funds and what percentage will benefit specific charitable purpose
  • Stay away from crowdfunding or peer-to-peer fundraising:  state law typically prohibits soliciting donations on behalf of a charity without charity's prior consent

It is good to be prudent, but do these consumer alerts discourage charitable giving? Are there any tips that you would add or eliminate to the list? (Note that these "tips" go beyond law and offer the Attorney Generals' views on best practices for charity, without distinguishing between law and opinion, the latter of which might not be shared by everyone.)

Editor’s note: A national organization with broad knowledge about local operations of charitable organizations privately shared that Charity Navigator only rates a small number of nonprofits but many people don’t realize this and assume that if a nonprofit is not listed, it is not recommended. Additionally, Charity Navigator has itself acknowledged the downsides of analyzing overhead ratios as a method of rating a charity’s effectiveness, but continues to use a methodology that places emphasis on administrative costs. Consequently, the national organization recommends that donors ideally should get to know the nonprofit first-hand, and learn more by reading about the nonprofit on GuideStar.org.

@JosephWMead

June 20, 2016 in Current Affairs, State – Executive | Permalink | Comments (2)

Friday, June 17, 2016

IRS Releases Searchable Form 990 Data

The IRS has released over one million Form 990 series returns spanning a six year time period in machine-readable format, using Amazon Web Services (AWS) as the host site for this data.  From the AWS website:

Machine-readable data from certain electronic 990 forms filed with the IRS from 2011 to present are available for anyone to use via Amazon S3.

Form 990 is the form used by the United States Internal Revenue Service to gather financial information about nonprofit organizations. Data for each 990 filing is provided in an XML file that contains structured information that represents the main 990 form, any filed forms and schedules, and other control information describing how the document was filed. Some non-disclosable information is not included in the files.

This data set includes Forms 990, 990-EZ and 990-PF which have been electronically filed with the IRS and is updated monthly in an XML format. The data can be used to perform research and analysis of organizations that have electronically filed Forms 990, 990-EZ and 990-PF. Forms 990-N (e-Postcard) are not available withing this data set. Forms 990-N can be viewed and downloaded from the IRS website.

The related IRS News Release provides:

“The publicly available information on the Form 990 series is vital to those interested in the tax-exempt community,” said IRS Commissioner John Koskinen. “The IRS appreciates the feedback we’ve received from a variety of outside partners as we’ve worked together to explore improvements to make this data more easily accessible.” 

The data includes Form 990, Form 990-EZ and Form 990-PF and related schedules with the exception of certain donor information. The IRS also redacts certain personally identifiable tax-identification numbers to prevent the data’s misuse. Data from Form 990-N (e-postcard) used by certain smaller exempt organizations is not available with this data, but it can be accessed through IRS.gov.

Over 60 percent of all Form 990 returns are electronically filed with the IRS. Both paper and electronically filed 990 returns will continue to have image files made and these files will continue to be available by DVD.

. . .

Form 990 is the IRS' primary tool for gathering information about tax-exempt organizations, educating organizations about tax law requirements and promoting compliance. Organizations also use the Form 990 to share information with the public about their programs. Additionally, most states rely on the Form 990 to perform charitable and other regulatory oversight and to satisfy state income tax filing requirements for organizations claiming exemption from state income tax.

With filed Forms 990 now available in machine-readable format, it will be easier for interested persons, including charity watchdog groups and state regulators, to search for information regarding an organization's revenues and expenditures, compensation practices, lobbying activities, related party transactions, officers and directors, and other activities required to be disclosed on Form 990.  Previously, the IRS released filed Forms 990 only in image format as PDF documents, even when the organization filed its Form 990 electronically. 

TLH

June 17, 2016 | Permalink | Comments (0)

Friday, June 10, 2016

Totally OT: Your Daily Funny Courtesy of the FEC and the Business Law Prof Blog

So this is off topic, I'll admit, but it gave me a laugh this morning so I thought I'd share.   There's some law in there, somewhere.   From fellow Law Prof Blog blogger Anne Tucker at the Business Law Prof Blog, her blog post entitled Your Daily Funny Courtesy of the FEC

 

Keep reading only if you have 3 minutes that you don't care about being productive or relating to business law, at least not directly.

The Federal Election Committee issued a proposed draft of an advisory opinion on a question brought by Huckabee for President,  Inc.--the committee responsible for the 2016 presidential campaign of  former Arkansas Governor Mike Huckabee.  The Committee wanted to know if it can use part of a legal defense fund to pay a settlement. The FEC says yes.  This isn't an election law blog, so I won't go into the details.  The litigation arose over the campaign's use of the song "Eye of the Tiger".  The FEC,  feeling quite cheeky writes the following: 

The complaint, seeking injunctive relief and monetary damages, alleged that 21 the Committee had violated federal copyright law by playing the song “Eye of the Tiger” at a campaign event on September 8, 2015. The Committee,rising up to the challenge of its rival, incurred attorneys’ fees and other expenses in defending itself in that litigation. After briefly relishing the thrill of the fight, the parties settled the lawsuit for an undisclosed amount.

Has the political circus of the 2016 election warped the sense of decorum at the FEC or should we all want to be friends with the lawyers there?  I can't decide.  But I do know that you should (a) click on the link to the song, and (b) jam away in your office for the next 4 minutes.  

You are welcome.

-Anne Tucker

 
Enjoy having that go through your head for the rest of the day.  And if that leaves you wanting more, try this!    EWW
 
 
(P.S. It's far happier that mourning Gordie Howe with strains of Brass Bonanza, which is what was stuck in my  head previously.  God's speed, Mr. Hockey.)  
 
 
 

June 10, 2016 in Federal – Executive, Other | Permalink | Comments (0)

Wednesday, June 8, 2016

Chaffee, "Collaboration Theory: A Theory of the Charitable Tax Exempt Nonprofit Corporation"

Eric C. Chaffee, Professor and Associate Dean of Faculty Research & Development at the Univerity of Toledo College of Law,  presented his paper entitled "Collaboration Theory: A Theory of the Charitable Tax Exempt Nonprofit Corporation" on June 2 at the most recent Law & Society conference (Program Link here). The current draft of the paper, which is forthcoming 2016 in the U.C. Davis Law Review, is available on SSRN here - the SSRN abstract follows:

Legal scholarship regarding tax exempt nonprofit entities is meager at best. Although some excellent treatises, book chapters, and journal articles have been written, the body of scholarship relating to these entities is not nearly as healthy and robust as the scholarship relating to their for-profit companions. This is especially troubling considering that nonprofit entities help to improve our society in a myriad of different ways.

This Article seeks to fill a void in the existing scholarship by offering an essentialist theory for charitable tax exempt nonprofit corporations that helps to explain the essence of these entities. Beyond the purely academic metaphysical inquiry into what is a corporation, understanding the essential nature of these corporations is important because it helps to determine how they should interact with society, what rights they should have, and how they should be governed by the law. This discussion is especially timely because the recent opinions by the Supreme Court of the United States in Citizens United and Hobby Lobby have reinvigorated the debate over the essence of the corporation.

This Article breaks new ground by offering a new essentialist theory of the corporation, which shall be termed “collaboration theory.” The decades of debate over the essence of for-profit corporations has coalesced into three prevailing theories of the corporation, i.e., the artificial entity theory, the real entity theory, and the aggregate theory. The problem is that none of these prevailing theories fully answers the question of what is a corporation.

Collaboration theory suggests that charitable tax exempt nonprofit corporations are collaborations among the state governments, federal government, and individuals to promote the public good. Unlike the prevailing theories of the corporation, collaboration theory explains both how and why charitable tax exempt nonprofit corporations exist, which provides a fuller and more robust understanding of these corporations. Collaboration theory advances the existing scholarship by finally offering an essentialist theory for nonprofit corporations, and it shows remarkable promise for understanding the essential nature of for-profit corporations as well.

 

E.W.W.

 

 

June 8, 2016 in Conferences, Paper Presentations and Seminars, Publications – Articles | Permalink | Comments (1)

Monday, June 6, 2016

Senate Finance Scrutiny of Private Museums Continues

According to this Chronicle of Philanthropy article (citing arts newsletter Hyperallergic), Senate Finance Committee Chair is continuing his scrutiny of private museums, now by requesting clarification from the IRS regarding its stance on private museums.    You may recall that last fall, Senator Hatch sent a letter of inquiry to a number of private museums, requesting details regarding the museum's operation - fellow blogger Nickolas Mirkay detailed those letters here.   Hyperallergic indicated that one of Hatch's primary concerns was the public availability of collections  (including limited hours and advance reservations)  and the continuing role of donor of the art collection in the management of the museums.   Much of this scrutiny may stem from a series of New York Times articles regarding private museums, including here and here.

Inquiries of this type bother me somewhat.   It seems to me that current law regarding private benefit is probably sufficient to handle many of the perceived abuses (maybe it's an enforcement issue - just throwin' it out there).   The drumbeat of the articles and the Senate inquiry may lead to additional regulation - and I suspect they will use a mallet rather than a surgical instrument to deal with the issue, if history is any guide.

EWW

 

June 6, 2016 in Current Affairs, Federal – Executive, Federal – Legislative, In the News | Permalink | Comments (0)