Thursday, March 19, 2015

Six Nonprofit Hospitals at Risk as Deal to Buy Them Collapses

1374572730_DCHSThe Los Angeles Times reports that a proposed plan for a for-profit company to buy six struggling nonprofit hospitals has collapsed. As detailed in the article, the buyer, Prime Healthcare Services, is blaming California Attorney General Kamala Harris for imposing "impossible" conditions on the purchase, while the AG claims the buyer previously indicated it was fine with the conditions. Those conditions on the proposed $843 million sale included requiring the buyer to keep five of the hospitals open for at least 10 years, maintaining the same level of charity care as before the purchase, and apparently numerous other requirements described in a 78-page document. Regardless of whom is to blame, the Daughters of Charity Health System that owns the hospitals is now saying "[e]very option is on the table, including bankruptcy" given that the System is losing $10 million per month. Before the deal collapsed the System filed a lawsuit against a major union and a private equity firm for allegedly interfering in the sale agreement, according to the San Francisco Business Times.

Additional Coverage: Nonprofit QuarterlyLA Times Editorial; Sacramento Bee.

Lloyd Mayer

March 19, 2015 in In the News, State – Executive | Permalink | Comments (0) | TrackBack (0)

Stateline: Should Nonprofits Have to Pay Taxes?

Logo-statelineAs often reported here, an increasing number of states and localities are challenging the property and other tax exemptions of nonprofits within their jurisdictions.  Some of the most notable recent developments have been in Maine, where the governor's budget proposal includes a tax on "large" nonprofit organizations in the state, and Pennsylvania, where a state constitutional amendment that would shift control over the standard for exemption to the state legislature is working its way through the amendment process.  Along these lines, the Stateline news project of the Pew Charitable Trusts recently published a article titled "Should Nonprofits Have to Pay Taxes?" that provides an overview of recent developments in this area. Besides discussing the the situations in Maine and Pennsylvania, it also discusses developments in Ohio, Vermont, and New York, as well as providing a chart showing the number of federally tax-exempt nonprofits in each state and their assets. Of course those assets include both assets on which the owning nonprofit does pay tax (because no available exemption applies) and also assets that are not subject to property or similar state and local taxes regardless of what type of entity owns them (e.g., investment assets).

Lloyd Mayer 

March 19, 2015 in In the News, State – Executive, State – Legislative | Permalink | Comments (0) | TrackBack (0)

California Quietly Revoked Blue Shield's Tax Exemption Seven Months Ago

Logo_BSCThe Los Angeles Times has just published two articles highlighting the State of California Franchise Tax Board's decision to revoke the state tax exemption previously enjoyed by Blue Shield of California seven months ago, but to only announce the fact by including the huge health insurer's legal name  (California Physicians Service) in a thousand plus page document on its website listing hundreds of organizations that had also lost their exemption. Here are links to the articles:

The articles report that the revocation came after a lengthy audit, and that Blue Shield is protesting the decision. On the line are tens of millions in state taxes annually. The articles also summarize past criticisms of Blue Shield with respect to executive compensation, multi-billion dollar reserves, increasing premiums, and an alleged failure to serve the state's poorest residents. Blue Shield for its part points to capping its profits at 2% of annual revenues, hundreds of millions give to its charitable foundation over the past decade, and hundreds of millions give back to customers and consumer groups in recent years. It also has reiterated its intention to remain a California mutual benefit nonprofit corporation.

Additional coverage: NPR (Health News); NPR (Morning Edition); SFGate.

Lloyd Mayer

March 19, 2015 in In the News, State – Executive | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 18, 2015

Shameless Self-Promotion: Vote for the Nonprofit Law Prof Blog as a 2015 Best Tax Blog!

Best-tax-blogs-700x500WalletHub is calling on the public to vote for the Best Tax Blogs of 2015 from among the 50 finalists chosen by its editors, including the Nonprofit Tax Prof Blog.  If you find this blog informative or otherwise helpful, we urge you to go to the voting website and vote for this blog (as well for other tax blogs you enjoy).

Lloyd Mayer

March 18, 2015 in In the News, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Mueller: An Argument for Continued Use of Standards to Evaluate the Campaign Activities of 501(c)(4) Organizations

JmuellerJennifer Mueller (American) has published "Defending Nuance in an Era of Tea Party Politics: An Argument for the Continued Use of Standards to Evaluate the Campaign Activities of 501(c)(4) Organizations," 22 George Mason Law Review 103 (2014).   The following excerpt is from the introduction (citations omitted):

    As this Article shows below, many of these premises are true: this is a complex area of law, and under the current system the agency’s final determination is, at the margins, unpredictable. When it comes to both tax and campaign finance, there will always be individuals seeking to circumvent the law. And certainly the public should be concerned for the robustness of the entire system. But all of these considerations counsel for retaining, with some modifications, the IRS’s standards-based approach to policing the campaign intervention line. They certainly do not support the contention that bright-line rules will markedly improve compliance or reduce the level of political participation by newly formed social welfare groups. Moreover, notwithstanding the political appeal of anti-IRS rhetoric, constraining the agency’s discretion in these cases will help no one but private actors looking for loopholes.

    This Article reaches this conclusion through two independent lines of analysis. The first is largely theoretical. It examines the characteristics of rules—where the content of a legal command is provided ex ante—and standards—where the exact contours are determined as applied to a concrete set of facts ex post—as set out in legal scholarship over the last several decades. Following the lead of Professor Ellen Aprill, who recently conducted a similar inquiry with regard to 501(c)(3) charitable organizations but reached a different conclusion, this Article relies on the comprehensive framework set out by Professor Louis Kaplow in his article “Rules Versus Standards: An Economic Analysis.”

    The second line of analysis is based on the observed effects of brightline rules in the parallel regime of campaign finance law. Campaign finance is an obvious choice for comparison for several reasons. First, many of the concerns and considerations set forth above, including complexity and circumvention, apply with equal force in the campaign finance arena. Second, it is a natural foil: the Federal Election Campaign Act (“FECA”) is increasingly administered through bright-line rules. Finally, many of those calling for reform of Section 501(c)(4) are motivated by concerns about the evasion of existing campaign finance laws, so there is a practical appeal to testing the hypothesis that rules in this area would be more effective.

Lloyd Mayer

March 18, 2015 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)

501(c)(4) Update: Handful of Applications Still Pending, Do Lost Emails = A Crime?, and (Another) Court Dismisses Claims Against Lerner

Form 1024IRC Section 501(c)(4) Applications:  The IRS reported that as of last month it had closed 138 or 95% of the 145 organizations that had applied for recognition of exemption under section 501(c)(4) and were eligible for optional expedited processing because the only issues their applications raised were possible involvement in political campaign intervention or providing private benefit to a political party.  The optional expedited process results in a favorable determination letter if the applicant represents that it devotes (1) 60 percent or more of both spending and time to activities that promote social welfare and (2) 40 percent or less of both spending and time to political campaign intervention.  Of the 106 favorable determination letters issued by the IRS, 43 were the result of applicants choosing this process.  Nevertheless a handful of such applications are still pending, including the application for Crossroads GPS and also several much smaller "mom-and-pop outfits," according to Politico.

Lost Emails:  Politico also reports that in response to questioning from members of Congress a representative of the  Treasury Inspector General for Tax Administration told a congressional Committee that TIGTA's ongoing search for IRS emails has revealed "potential criminal activity" in that the IRS failed to initially disclose some backup tapes and that other tapes were erased.  The TIGTA representatives emphasized, however, that the investigation was still ongoing and it was too soon to determine if the actions were purposeful or the result of ill intent.  A video of the full hearing is available here.

Federal Court Dismisses Claims Against Lerner:  In a decision issued late last month, the U.S. District Court for the Northern District of Texas (Dallas Division) dismissed claims brought by Freedom Path, Inc. against Lois Lerner without prejudice for lack of personal jurisdiction.  The claims arose out of the IRS's alleged mishandling of Freedom Path's application for recognition of exemption under IRC section 501(c)(4).  The court found that the group's allegations did not demonstrate sufficient contacts with the state of Texas to grant the court personal jurisdiction over Lerner.  The court also rejected several of the group's claims against the IRS and unnamed federal officials, including claims that challenged the constitutionality of two revenue rulings relating to political activity (2004-6 and 2007-41), finding the group had not pled sufficient facts to establish standing to challenge those rulings, and two other claims (for other deficiencies).  The court did, however, give the group 28 days to file an amended complaint although it felt that the defects in some of the dismissed claims appeared to be incurable.

Lloyd Mayer

 

March 18, 2015 in Federal – Executive, Federal – Judicial, In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 17, 2015

Third Circuit Affirms Multi-Million Damage Awards for Breach of Fiduciary Duties and Deepening Insolvency

Logo (1)Earlier this year, the U.S. Court of Appeals for the Third Circuit affirmed (for the most part) a multi-million jury damages award against the former officers and directors of the Lemington Home for the Aged.  The Home entered bankruptcy in 2005, and the Bankruptcy Court later that same year granted the request of the Committee of Unsecured Creditors to file suit against the former Chief Executive Officer, the former Chief Financial Officer, and the former directors of the Home.  After trial, a jury concluded that the two former officers had breached their duties of both care and loyalty, that the former directors had breached their duty of care, and that all of the defendants had deepened the insolvency of the Home by concealing the board's decision to close the Home and so defrauded the Home's creditors.  The court therefore affirmed an award of $2,250,000 in compensatory damages against all but two of the defendants (jointly and severally) and punitive damages against the former CEO and CFO in the amounts of $1 million and #$750,000, respectively, rejecting only the award of $350,000 in punitive damages against five of the former directors.

The appellate court found that facts supporting the jury's verdict include repeated failures to comply with applicable federal and state regulations, the failure of the CEO to work full-time at the Home despite collecting her full salary and a state law requiring that she be full-time,  and the failure of the CFO to provide a representative of a major creditor with basic financial information, to keep a general ledger for almost a year, and to bill Medicare for $500,000 owed.  The court also found that the directors had failed to remove the CEO and CFO despite being aware of many of their failings, and the Home's failings, in part through independent reports documenting those failings.

This case therefore presents a rare but unfortunately actual case study in how officers and directors can fail to fulfill their fiduciary duties, and the liabilities they can incur as a result.

Additional coverage:  Elder Law BlogPittsburgh Tribune-Review.

Lloyd Mayer

 

March 17, 2015 in Federal – Judicial, In the News | Permalink | Comments (0) | TrackBack (0)

Federal Court Enjoins Local Solicitation Ordinance on First Amendment Grounds

Logo11The City of Mercer Island, a suburb of Seattle, sought to prohibit solicitation activities between 7:00 p.m. and 10:00 a.m.  The nonprofit United States Mission Corporation (doing business as United States Mission) objected because it desired to have the participants in its transition program for homeless people solicit contributions on weekday evenings until 8:00 p.m.  The dispute eventually made its way to the U.S. District Court for the Western District of Washington, which has now granted a preliminary injunction to United States Mission barring enforcement of the 7:00 p.m. curfew on solicitation.  The court concluded that the ordinance as written was content-based because it only reaches individuals or organizations that ask for donations or contributions, but not non-commercial organizations that do not ask for funds, and so is subject to strict scrutiny review under the First Amendment.  Given that there were other, less restrictive ways to address the City's concerns regarding possible crime and protecting residential privacy, the court found a substantial likelihood that United States Mission would succeed on the merits and also that the other requirements for granting a preliminary injunction had been met.

The case demonstrates the difficult line that not only states, which presumably have relatively deep legal resources on which to draw, but also localities that may lack ready access to First Amendment legal counsel, have to walk to ensure that their attempts to regulate charitable solicitation efforts do not run afoul of the Constitution.  Ironically, the ordinance at issue in the case was a newly-enacted one, adopted to replace an earlier ordinance that had been enjoined since 2001, presumably also on First Amendment grounds.  Maybe the third try will be the charm.

Additional coverage: Mercer Island Reporter.

Lloyd Mayer

March 17, 2015 in Federal – Judicial, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, March 16, 2015

IRS National Office To Stop Automatically Providing Exemption Letters to the Media

502c3-determination-letter-767x1024Tax Analysts reports (subscription required) that the IRS has deciding to stop automatically providing the media with copies of favorable determination letters issued in response to applications for recognition of exemption because of the changes in the structure and geographic location of the IRS Exempt Organizations Division and related IRS Office of Chief Counsel functions.  Practitioners quoted in the article expressed disappointment with this decision.  While the media and other members of the public can still request such letters by submitting Form 4506-A for each organization for which the letter is sought, practitioners noted the burden doing so imposes and the usually lengthy delay in the IRS response to such requests.  

Additional coverage:  Forbes (contributor opinion).

UPDATE:  To clarify, the letters were previously provided by the IRS National Office and so were limited to the relatively few letters issued by that office, as opposed to the Cincinnati office that issues the vast majority of determination letters.  That said, the National Office tended to handle the most difficult - and interesting - cases.  According to later comments from the IRS, the change is apparently driven by the fact that the National Office will no longer be issuing determination letters.

Lloyd Mayer

March 16, 2015 in Federal – Executive, In the News | Permalink | Comments (0) | TrackBack (0)

IRS Sharply Reduces Application Backlog Using Form 1023-EZ and Other Streamlined Procedures

Form 1023-EZThe issuance of a new, streamlined Form 1023-EZ has caused a major shift in the exemption application world of the IRS.  The IRS reported last week that it has received 20,103 such forms, or approximately half of all applications for recognition of exemption under Internal Revenue Code section 501(c)(3) since the IRS introduced the Form 1023-EZ.  The IRS also reported that using streamlined procedures based on the Form 1023-EZ - that is, resolving open issues by asking applicants to attest to certain facts as opposed to requesting documents or narrative statements - it has reduced the backlog of all applications that had been pending for more than 270 days by 91 percent (from 54,564 in April 2014 to 4,791 in September 2014).  The GAO previously also reported that the IRS closed 117,000 cases in fiscal year 2014, more than double the closure rate for the previous fiscal year.  Not everyone is happy with the new form - see previous posts reporting concerns expressed by the National Association of State Charity Officials and the National Taxpayer Advocate, plus having a shortened form was not part of the recommendations promulgated by the IRS Advisory Committee on Tax Exempt and Government Entities when it looked at the application process.

Related Guidance:  Revenue Procedure 2015-5 (relating to the Form 1023-EZ), Revenue Procedure 2015-9 (relating to the processing of exemption applications generally).

UPDATE:  New memo dated March 12, 2015 regarding the streamlined application process that replaces the previously linked to February 27, 2015 memo.

Lloyd Mayer

March 16, 2015 in Federal – Executive | Permalink | Comments (0) | TrackBack (0)

IRS Issues Guidance for Hospitals that Fail to Meet the 501(r) Requirements

IRSLast week the IRS issued Revenue Procedure 2015-21, which provides "guidance regarding correction and disclosure procedures for hospital organizations to follow so that certain failures to meet the requirements of § 501(r) of the Internal Revenue Code will be excused for purposes of § 501(r)(1) and 501(r)(2)(B)."  Failures that are not willful or egregious may generally be resolved without financial penalty if they are both (1) corrected in a timely fashion, including restoring affecting individuals to the position they would have been in absent the failure and ensuring appropriate safeguards to prevent future failures, and (2) disclosed on the next Form 990 filed by the organization.  If the IRS has contacted the hospital organization concerning an examination, the organization must have already corrected or be in the process of correcting the failure and must have disclosed the failure on its annual information return for the year in which the failure was discovered (if the due date, including extensions, for that return has passed).

Additional coverage:  CharitablePlanning.comKMPG.

LHM

March 16, 2015 in Federal – Executive | Permalink | Comments (0) | TrackBack (0)

IRS Issues Final 501(c)(29) Application Procedures (Qualified Nonprofit Health Insurance Issuers)

IRSThe IRS has issued both final regulations and Revenue Procedure 2015-17 providing the final procedures for issuing determination letters and rulings relating to exemption under Internal Revenue Code section 501(c)(29).  Paragraph 29 is the latest addition to section 501(c); it provides a federal income tax exemption for qualified nonprofit health insurance issuers (QNHIIs), also known as CO-OP health insurance insurers, that under the Affordable Care Act receive a loan or grant under the federal Consumer Operated and Oriented Plan Program.  The CO-OP Program is designed to foster the creation of these new nonprofits to offer competitive health plans.  These health care co-ops have had mixed success, as NPR reported earlier this year that the second largest one in the country recently collapsed.

Additional coverage:  Squire Patton Boggs Alert.

LHM

March 16, 2015 in Federal – Executive | Permalink | Comments (0) | TrackBack (0)

Friday, March 13, 2015

Balsam Mountain v. Commissioner—Conservation Easement Authorizing Limited Swaps Not Deductible Under § 170(h)


Balsam Mountain copyIn Balsam Mountain v. Commissioner, T.C. Memo. 2015-43, that Tax Court held that a conservation easement that authorized the parties, for a period of up to 5 years, to remove up to 5% of the land from the easement in exchange for protecting a similar amount of contiguous land was not eligible for a deduction under IRC § 170(h). Citing to the 4th Circuit’s recent decision in Belk v. Commissioner, 774 F.3d 221 (4th Cir. 2014), the Tax Court explained that the easement did not qualify as a “restriction (granted in perpetuity) on the real property” as required by 170(h)(2)(C).

Background

In 2003, Balsam Mountain Investments, LLC (BMI), granted a conservation easement on 22-acres in North Carolina to the North American Land Trust (NALT). BMI reserved the right in the easement to, for five years following the donation, make alterations to the boundaries of the area protected by the easement, subject to the following conditions:

  • the total amount of land protected by the easement could not be reduced,
  • land added to the easement had to be contiguous to the originally protected land,
  • land added to the easement had to, in NALT’s reasonable judgment, make an equal or greater contribution to the easement’s conservation purpose,
  • the “location and reconfiguration of a boundary” could not, in NALT’s judgment, result in any material adverse effect on the easement’s conservation purposes, and
  • no more than 5% of the originally protected land could be removed from the easement as a result of such alterations.

Analysis

In Belk, the 4th Circuit affirmed the Tax Court’s holding that a conservation easement was not “a restriction (granted in perpetuity) on the use which may be made of the real property” as required by § 170(h)(2)(C) because the easement permitted the grantor and grantee to swap land in and out of the easement, subject to the approval of the grantee and certain other conditions. The 4th Circuit explained that, to be eligible for a deduction, an easement must protect, in perpetuity, a “defined and static” (or in the Tax Court’s words, “identifiable, specific”) parcel of real property. Based on Belk, the Tax Court held that the Balsam easement, which authorized the grantor to change the property subject to the easement, was not a “a restriction (granted in perpetuity) on the use which may be made of the real property” and, thus, was not eligible for a deduction.

BMI argued that Belk was distinguishable because the Belk easement allowed for the substitution of all of the land originally protected by the easement, while the Balsam easement allowed for the substitution of only 5% of the originally protected land. The Tax Court was not persuaded. While the court agreed that the Belk and Balsam easements were different, it said “the difference does not matter.” For five years following the donation, BMI, with the approval of NALT, could change the boundaries of the area protected by the easement. Accordingly, the easement was not an interest in an identifiable, specific piece of real property and, thus, was not deductible. Finding no genuine dispute as to any material fact, the court granted the IRS’s motion for summary judgment on the issue.

Nancy A. McLaughlin, Robert W. Swenson Professor of Law, University of Utah S.J. Quinney College of Law

March 13, 2015 | Permalink | Comments (0) | TrackBack (0)

Thursday, March 12, 2015

Dewey Winburne Awards to Honor Community-Service Projects in Far-Flung Countries

The Chronicle of Philanthropy is reporting that ten individuals using technology to improve the world will be honored tonight at the Dewey Winburne Community Service Awards at the South by Southwest (SXSW) Interactive Conference.  The awards honor the late Dewey Wineburne, a co-founder of SXSW Interactive, who had deep interests in education and technology.

According to the Chronicle:

This year’s honorees, selected by a panel of previous winners who live in Austin, represent five countries and a range of interests, including literacy, economic opportunity, and journalism. Each will receive $1,000 for the charity of their choice.  

Among the honorees are: 

  • Rebecca McDonald of Australia who, after seeing footage of the 2010 earthquake in Haiti, quit her job in Australia and moved with her husband to the Caribbean country where she founded Library for All, an online digital library accessible using tablets distributed to schools across Haiti.  Books are carefully selected to be culturally relevant and language-appropriate, with most written in French or Creole.  The organization pays local publishers for texts and asks larger companies, which do not usually sell books to Haiti, to donate books.
  • Jukay Hsu, a native of Queens, New York, who founded Coalition for Queens, a nonprofit designed, according to Mr. Hsu, to foster "a more inclusive tech ecosystem" and "pioneer a pathway from poverty to the middle class."  The organization's keystone program, Access Code, trains people — many of them immigrants — to create mobile applications and prepare for entry-level developer jobs.  So far, the average income of participants going into the program has been $26,000, while their average income after completion is $73,000. 
  • Libby Powell, of London, England, who has used her training as a journalist to found Radar, a communications-rights organization that trains citizen reporters and promotes the stories they tell through social media and other ways online.  Based in the United Kingdom, the staff offers editorial guidance to local correspondents who report from the field.  The group has generated coverage about elections and Ebola in Sierra Leone and slavery in India and is working on new projects that give voice to people living with dementia and those who are homeless.  Created with money raised through the crowdfunding site Indiegogo, Radar works to raise awareness among the public, policy makers, and service providers about issues affecting marginalized groups.  The organization has helped place articles in The Guardian and the BBC. 
  • Tembinkosi Qondela, of Cape Town, South Africa, who founded Whizz ICT Centre, an organization that seeks to facilitate the use of information communication technology (ICT) tools for development efforts of the community in Khayelitsha, one of the largest and poorest areas of Cape Town, South Africa.  Mr. Qondela observed that marginalization of poor people in the use of ICT and the lack of access to information perpetuates the inequalities and poverty that face most young South Africans.  Whizz ICT runs a center which gives young people access to computer training, other ICT related services and training in a range of income generating skills.  To date Whizz ICT has provided training to over 1000 youth.

The names and brief profiles of the other six honorees are available on SXSW's website.   We congratulate them all.

VEJ

March 12, 2015 in Current Affairs, In the News, International, Other | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 11, 2015

Study Finds Combination of Employment and Income Policies, New Tax Credit, Could Cut NYC Poverty Rate

I just came across this 116-page report commissioned by the Federation of Protestant Welfare Agencies, Catholic Charities of the Archdiocese of New York, and the UJA-Federation of New York titled How Much Could Policy Changes Reduce Poverty in New York City?  The report was actually prepared by the Urban Institute.  According to the report, a combination of employment and income policies, in-kind benefits, and a new tax credit could significantly reduce the poverty rate in New York City, where 20 percent of all residents currently live in poverty.

Giving a summary of the report, the Philanthropy News Digest states that

the report . . . analyzed the potential impact of a transitional jobs program, increased earnings supplements, a $15/hour minimum wage, increased Supplemental Nutritional Assistance Program benefits, more housing vouchers, guaranteed childcare subsidies, and a tax credit for non-working seniors and people with disabilities.  Among the individual policy options, the study found the jobs program likely to be most effective (assuming that 50 percent of the unemployed living under the poverty line participate), reducing the poverty rate from 21.4 percent to an estimated 15.9 percent, followed by the tax credit for seniors and people with disabilities, a $15/hour minimum wage, and increased SNAP benefits.

The combined effect of multiple policy options, however, would be far greater, the report argues.  Based on an analysis of three scenarios, the study found that even the least extensive combination — increased SNAP benefits, Earned Income Tax Credit, and childcare benefits; the tax credit for non-working seniors and people with disabilities; and 25 percent participation in the transitional jobs program at $9/hour but no change in the minimum wage or housing subsidies — would nearly halve the city's poverty rate to 12.1 percent. In the scenario with the most extensive combination of policy options, including 50 percent participation in the jobs program at a minimum wage of $15/hour, Paycheck Plus earning supplements, and housing vouchers for half the people on the waiting list, the poverty rate would fall by more than two-thirds, to 6.7 percent.

The study also found that the most effective individual policies, the jobs program and the tax credit, were the most expensive, and that total costs for the combination of policy options was estimated to range from $6.5 billion to $9.1 billion. While the costs are substantial, the report concludes, the analysis shows "that a package of policies can greatly reduce the number of people living in poverty," with potential long-term effects "that differ from those in the short run, especially if less near-term poverty helps more of today’s children avoid poverty in adulthood."

I guess the question we need to ask is this: who would pay for the program?  And if your ready answer is "The taxpayers," I have a follow-up question: Which taxpayers? American taxpayers?  New York State taxpayers?  New York City taxpayers?  A combination of all three?
 
VEJ

March 11, 2015 in Church and State, Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, March 9, 2015

In 2013, California Professional Fundraisers Kept 45% of Donations Raised for Charities

I have always found it troubling when people donate to charity but the donees receive a very small share of the donation.  And yesterday's Orange County Register published a story about such a practice, a story that made me see, well, not orange, but red.  According to the Register, in 2013, the for profit firms that raise money for charities collected $361.3 million from well-meaning Californians and pocketed $161.2 million, or 45.4 percent, of the take, this according to the latest figures from the Office of the Attorney General.  Incidentally, those figures were better than those for 2012, when the for-profit firms pocketed 63 percent of the money raised in nonprofits' names.

California Attorney General Kamala Harris has bemoaned "the alarming extent to which charitable donations are often diverted to for-profit companies."  However, Assemblywoman Jaqui Irwin, D-Thousand Oaks, noted that at least the trend seems to be going in the right direction (i.e., from 63 percent last year to 45.4 percent this year).  Meanwhile, here's an interesting statistic: "generally speaking, charities with the words 'police' or 'firefighter' in their names kept less than one-third of what was raised on their behalf, with the overwhelming majority going to the for-profit fundraiser," reports the Register.

The Register continues:

In their defense, officials said some campaigns costing millions were strategic investments that will pay off far more than they cost, in future contributions.

Others, however, are run-of-the-mill, we-need-your-money-now-please affairs, where for-profit firms kept huge chunks of what donors believed would fund good works.

Charities often argue that it’s not really money out of their pockets, since professional fundraisers take a percentage of proceeds, or a pre-determined amount if a minimum is not met, said Sandra Miniutti, vice president of Charity Navigator, a nonprofit watchdog.

“However, from a donor’s perspective, that argument does not hold, since it is actually the donor’s money that is going to a professional fundraiser as opposed to the charity they thought they were supporting,” Miniutti said by email. “In large part, it is still professional companies taking advantage of the lack of education on the giving public’s part.”

And that’s why the Attorney General’s Office started gathering these numbers to begin with.

Well, I hope the Attorney General's Office can use these numbers to do something to change this sad situation.

VEJ

 

March 9, 2015 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

NCAA Suspends Boeheim, Penalizes Syracuse

OK; I'll admit it: my heart is breaking as I write this blog.  I was Orange before I stepped foot on the SU campus, remained Orange while I was a student there, and am still Orange.  And now my Orange pride has taken a hit.  All weekend long I've  been hanging my head in shame as the TV stations have kept repeating the news over and over: "The NCAA suspended Syracuse University basketball coach Jim Boeheim on Friday for nine Atlantic Coast Conference games and took away scholarships after a lengthy investigation of the school's athletic programs."

I've been trying to figure out just what happened.  What did Boeheim and my alma mater do?  I'll let Reuters tell the story:

Syracuse discovered and self-reported 10 violations, over an eight-year period dating to 2001, that primarily involved men’s basketball but also football, the NCAA Committee on Infractions said.

Those infractions included academic misconduct, extra benefits, failure to follow the school's drug testing policy and impermissible booster activity.

"Over the course of a decade, Syracuse University did not control and monitor its athletics programs," the committee said in a statement, "and its head men's basketball coach failed to monitor his program."

Boeheim's suspension will cover the first nine ACC games of the 2015-2016 season.

The National Collegiate Athletic Association's penalties include five years' probation, financial penalties, and a reduction of three men’s basketball scholarships per year through 2018-19.

Also Syracuse will vacate all wins in which ineligible men's basketball students played in 2004-05, 2005-06, 2006-07, 2010-11 and 2011-12 and all wins in which ineligible football students played in 2004-05, 2005-06 and 2006-07.

Boeheim, a Hall of Famer who has been the Syracuse head coach since 1976, won 135 games in those five seasons and 108 of those wins will be wiped out.

Say what?  One hundred and eight wins erased?  Treated like losses?  How is that possible?  Well, I guess the games are being forfeited after they were played and won!  And in addition to that, Syracuse must return to the NCAA all money it received through the former Big East Conference for its appearances in the 2011, 2012 and 2013 NCAA Men's Basketball Tournament. 

I'll be honest: I find these sanctions harsh -- and not only because Syracuse is my alma mater.  These sanctions are saying to me, "Let us pretend that Syracuse did not play basketball in 2011, 2012 and 2013."  That doesn't make much sense. 

On the other hand, I find one sentence of the report of the NCAA Committee on Infractions troubling:

  • Two staff members completed course work for an academically ineligible student "when the school was under investigation for other potential violations." 

I have a problem with that.  That was dishonest.  It was wrong.

Not surprisingly, Chancellor Kent Syverud is not amused.  According to the Chancellor, "Syracuse University did not and does not agree with all the conclusions reached by the NCAA, including some of the findings and penalties included in [the] report.  However, we take the report and the issues it identifies very seriously, particularly those that involve academic integrity and the overall well-being of student-athletes."

There is much talk about an appeal by Boeheim and an appeal by Syracuse.  I guess this is not over.  Stayed tuned for the next installment.

VEJ

 

 

March 9, 2015 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

L'Oreal Paris Seeking Nominations for 2015 Women of Worth Awards

Philanthropy News Digest reports that L'Oreal Paris has announced a Call for Nominations for the 2015 L'Oreal Paris Women of Worth awards, an annual program designed to honor women making a "beautiful difference" in the world through voluntarism.  

According to the Digest,

Since 2006, the program, in partnership with Points of Light, has recognized eighty inspiring women who have selflessly devoted themselves to causes at the local and national level and motivated others to get involved.  Past honorees have been involved in a range of important causes, from advocating for victims of childhood abuse and mentoring homeless children, to helping break the cycle of poverty and empowering teens with disabilities.  

As regards the current Call for Nominations, the Digest states that this year, "ten women will be awarded $10,000 each and one woman will be named the national honoree and receive an additional $25,000 to further her charitable efforts.  All ten honorees will be recognized in December at a star-studded awards ceremony hosted by L'Oreal Paris in New York." 

Complete program guidelines, information about previous recipients, and nomination instructions are available at the Women of Worth website

VEJ

March 9, 2015 in Current Affairs, In the News, International | Permalink | Comments (0) | TrackBack (0)

Friday, March 6, 2015

Newly Revised Publication 557 Issued

The Internal Revenue Service has issued a newly revised Publication 557, Tax-Exempt Status for Your Organization. The beginning “What’s New” section lists the following topics:  IRS issues new interim guidance for supporting organizations and grantors; New guidance provides transition relief for employee health insurance expenses; Final regulations under section 501(r) issued in December 2014; Correction and disclosure procedures under section 501(r); New Form 1023­EZ; Exempt Organizations Division Limited the Types of Cases that Are Referred to Exempt Organizations (“EO”) Technical, and Provided for Administrative Review of EO Technical Determinations; and Future developments.

 

JRB

March 6, 2015 in Federal – Executive | Permalink | Comments (0) | TrackBack (0)

California Considers Heightened Disclosures by Fundraisers

The Chronicle of Philanthropy reports that proposed legislation in California would impose greater disclosure requirements on charity fundraisers. Explains the article:

California law requires "commercial fundraisers" to include a disclosure in charity solicitations whenever a portion of a donor’s charitable contributions will go to a for-profit company. However, some fundraisers have skirted that requirement by establishing their operations as "fundraising counsel" instead of "commercial fundraiser."

According to the story, the bill, sponsored by California Assembly member Jacqui Irwin and supported by California Attorney General Kamala Harris, would impose the transparency requirement on “all for-profit companies involved in fundraising for charities,” and would also lengthen to 10 years the statute of limitations applicable to particular offenses relating to "the exploitation of charitable assets."  The article states that a recent attorney general’s report has found that “an average of 54.6 percent of funds raised through campaigns conducted by commercial fundraisers in the state in 2013 went to the charities.”

 

JRB

March 6, 2015 in Current Affairs | Permalink | Comments (1) | TrackBack (0)