Nonprofit Law Prof Blog

Columbia Law School Hosts Conference on The Future of State Charities Regulation

I was fortunate enough to be invited to present at a conference hosted by Columbia Law School's Charities Law Project last week.  Featuring presentations and draft papers (available on the conference website) from a who's who list of charity law experts from the academy, state AG offices and other agencies, and private practice, the conference provided an incredible opportunity to consider and discuss emerging issues in the regulation of charities.  Topics covered included:

• Jurisdictional Boundaries: State/Federal, State/State Relationships
• The Fundamental Role Of States In Governance Issues
• Emerging Issue: Political Activity/Advocacy By The Sector & The States' Role
  
• Transparency, Media And Technology: New Expectations, New Opportunities
• Emerging Issue: Challenges & Interests Of States In Social Mission/Hybrid Organizations
• Mapping The Trajectory: The Changing Role Of The State Regulators
• Emerging Issue: State Jurisdiction Over Religious Organizations
• Emerging Issue: Changing Landscape Of Charitable Solicitation
• Emerging Issue: The Dynamic Role Of States In Nonprofit Healthcare
• Federal Partners
• Envisioning The Future: New Structures

The conference organizers also gathered an extensive set of additional resources that will be helpful to anyone interested in the conference topics.

LHM

Preservation Easements in an Uncertain Regulatory Future

Jess R. Phelps (Historic New England),  Preserving Preservation Easements?:  Preservation Easements in an Uncertain Regulatory Future, 91 Neb. L. Rev. 121 (2012):

While federal tax deductions are an important tool for organizations operating easement programs, recent IRS enforcement activity has called the future of this incentive into question--at least as currently constituted. Even if these incentives continue, the presence of continued regulatory uncertainty will make federally subsidized easements less viable unless enforcement activity decreases or easement-holding organizations begin to change how they protect privately-owned homes. However, these challenges provide easement-holding organizations a chance to step back and evaluate their accomplishments of the past thirty years. Many significant structures have been protected, but preservation easements lag far behind in numbers, impact, and public awareness when compared to land conservation efforts. The public has yet to fully “buy in” to the concept of preservation easements and are suspicious of efforts to provide funds to protect private residences.

For this perception to change, easement-holding organizations need to fundamentally re-evaluate the role they play within the preservation movement and determine whether a larger role is possible. There are a variety of ways that easement-holding organizations can shift their thinking and practices to expand the benefit provided through their programs. Similarly, there are clear alternatives to securing the preservation of significant historic resources via reliance on the federal tax incentives. In the end, the efforts of easement-holding organizations to respond to these challenges and reimagine the possibilities of preservation easements will go a long way toward fulfilling SPNEA's original vision of obtaining control of the most significant historic properties and “let[ting] them to tenants under wise restrictions.”  Perhaps more importantly, these efforts can also expand upon this vision to protect the underlying stories and preserve a more meaningful spectrum of our collective architectural heritage.

EWW

Law, Society & Taxation Nonprofit Panel & Papers

The Law and Society Association's 2012 International Meeting in Honolulu earlier this month featured the following panel and additional papers relating to nonprofits:

• Charities and Public Policy Panel
  • Nina J. Crimm (St John's) & Laurence H. Winer (Arizona State), 
  • Terri Lynne Helge (Texas Wesleyan), Reforming the Private Benefit Doctrine
  • Grace S. Lee (Alabama), Toward a More Dynamic Theory Regarding the Charitable Deduction
  • Henry Ordower (Saint Lewis), Charitable Contributions of Services
  • Miranda L. Stewart (Melborne), Doing Business to Do Good: Should We Tax the Business Profits of Not for Profits

• Meredith A. Cartwright (York), Tax Subsidies for the Religious Training of Children in Religious Schools in US and Canadian Tax and Constitutional Law: “Public” or “Private” “Personal” (In)Tangible Benefits of a Suspect “Gift”

• Daniel B. Rubin (Michigan), A Population Health-Based Approach to Nonprofit Hospital Tax Exemption

• Richard Schmalbeck (Duke), The Role of Declaratory Judgments in Shaping the Concept of Charity

LHM

Call for Papers from Columbia Law School Charities Law Project

The Charities Regulation and Oversight Project, which is part of the National State Attorneys General Program at Columbia Law School, has issued a call for papers for its February 2013 conference "The Future of State Charities Regulation".  Here are the details:

The Charities Regulation and Oversight Project of the National State Attorneys General Program at Columbia Law School will host the 2013 Charities Regulation Policy Conference: “The Future of State Charities Regulation and Enforcement”, to be held on February 7th & 8th, 2013, at Columbia Law School in New York City. The 2013 conference will be the third major policy conference at Columbia Law School devoted to issues regarding state regulation, oversight and enforcement of the charitable and nonprofit sector. Developed in partnership with the National Attorneys General Training and Research Institute, the conference will address the complex issues surrounding the current status, and the future trajectory of, state regulation of the charitable sector.

 

The 2013 conference is intended to promote dialogue among regulators, leaders from the sector, practitioners and academics regarding challenges confronting state regulation of the sector and to develop proposals for improvement.

 

Anticipated topics include the state/federal relationship; structure and funding of state charities officials; the fundamental role of states in governance issues; challenges and interest of the states in social mission/hybrid corporate organizations; the role of states in nonprofit healthcare; changing landscape of state-based charitable solicitation; jurisdiction over religious organizations; interstate and international jurisdiction; emerging issues surrounding advocacy and political activity by the sector. The Charities Project seeks a diverse range of perspectives for the conference; paper submissions are encouraged from practitioners, regulators, leaders from the sector itself and academics. Proposal abstracts, no more than one page in length, should be sent to charities@law.columbia.edu by July 13, 2012. Drafts for final papers for the conference should be approximately 5000 words.

 

Please contact Frances Laviscount Program Coordinator, at flavis@law.columbia.edu or 212-851-1061 with any questions regarding the conference or paper submissions.

LHM

Moreno: Governance of Microcredit Article

Frede Moreno (Western Midanao State University, Philippines and Alliance for International Education, Germany) has posted a short paper on Governance of Microcredit as a Strategy for Poverty Reduction in the Philippines on SSRN.  Here is the abstract:

Microcredit can be an effective tool for tackling the global poverty problem. Making microcredit work better for the poor necessitates a framework that integrates the principles of good governance in the design and implementation of a microcredit program. The integration of good governance principles in microfinance is argued to have positive consequences in improving financial viability and increasing social outreach of microcredit programs as well as in widening the livelihood and economic options of Agrarian Reform Beneficiaries within Third World economic and poverty conditions. Governance principles can be applied as implementation strategies of Official Development Assistance (ODA)-assisted microfinance program as a tool for poverty reduction and development. In view of the Philippine government’s limitations, economic and fiscal challenges, the financial and technical support programs of the international donor community provide a big boost to the effectiveness and impact of microfinance in reducing the incidents of poverty in Third World countries such as the Philippines. As a tool for poverty reduction, microcredit is applicable only to the enterprising poor. The use of microcredit to assist poverty groups is recommended to be based on existing livelihood activities and micro-entrepreneurial skills and capabilities. Furthermore, the program design of the Bangladesh Rural Advancement Committee (BRAC) is found to be appropriate for the agrarian reform beneficiaries in Zamboanga Peninsula (Region IX), Philippines. Joe Remenyi’s (1999) Poverty Pyramid reinforces BRAC’s graduated strategy for helping the poor when they are grouped into: (1) micro-enterprise operators or the less poor, (2) enterprising or moderately poor, (3) laboring or very poor, and (4) poorest of the poor and most vulnerable or the ultra-poor.

LHM

CORRECTED LINKS for Law, Society & Taxation Nonprofit-Related Papers

A reader alerted me that the links I previously provided for these papers were not working.  I have now corrected those postings (first set of papers and second set of papers) with updated information for accessing the abstracts and, where available, drafts of the papers.  My apologies for the problematic links.

LHM

Law, Society & Taxation: More Nonprofit-Related Papers

The following authors presented nonprofit-related papers at the Law and Society Annual Meeting over the weekend.  To see the abstracts of these papers, click on the above link, click on "Search the Preliminary Program" of the left side of the page, and then search for the author of the paper.  For those papers with publicly available drafts, I have provided a link to those drafts below.

• Adam Chodorow (Arizona State), Charity with Chinese Characteristics

• Ellen Aprill (Loyola-L.A.), Regulating the Political Speech of Noncharitable Exempt Organizations after Citizens United

• Roger Colinvaux (Catholic), Citizens United and the Political Speech of Charities

• Brian D. Galle (Boston College), The Normative Basis for Legal Restrictions on Nonprofit Political Activities

• Jill S. Manny (NYU), Lobbying: Hear the Public Voice of Public Charities

Hat Tip: TaxProf Blog

LHM

Law, Society & Taxation: Nonprofit-Related Papers

As part of the Law, Society, and Taxation  portion of the Law and Society Association's annual meeting in San Francisco, the following nonprofit-related papers were presented yesterday or are being presented today.  To see the abstracts of these papers, click on the above link, click on "Search the Preliminary Program" of the left side of the page, and then search for the author of the paper.  For those papers with publicly available drafts, I have provided a link to those drafts below.

• Samuel D. Brunson (Loyola-Chicago), Stopping Tax Haven Abuse without Stopping Tax-Exempt Investment

• Nicholas A. Mirkay (Widener), International Philanthropy and the Public Policy Doctrine: A Modern Conundrum

• Heather Elliott (Alabama) & Grace Soyon Lee (Alabama), Zoning for Dollars: What Is the True Value of Donated Real Property?

• Darryll K Jones (Florida A&M), Is There Theoretical justification for Payment in Lieu of Taxes?
  

Hat tip:  TaxProf Blog

LHM

Aprill on Politics and the Gift Tax

Ellen Aprill (Loyola-Los Angeles) has posted a comment on the Loyola-L.A. faculty blog regarding the emerging dispute over whether the federal gift tax applies to large, individual donations to tax-exempt, section 501(c)(4) nonprofit organizations.  Readers interested in more in-depth discussion of this topic would be well advised to take a look at her recent article on the same subject.

LHM

Aprill, Colinvaux, Mayer on Citizens United and Nonprofit Speech

Ellen Aprill (Loyola - L.A.), Roger Colinvaux (Catholic), and I have posted papers examining different ways that the Supreme Court's Citizens United v. FEC decision affects - or does not affect - speech by nonprofit organizations.  We initially presented these papers at the National Center on Philanthropy and the Law's Annual Conference last fall, which focused on nonprofit speech in the 21st century.  Richard Briffault (Columbia) also presented a paper on this topic at that conference, but that paper is not yet publically available.  Here are the abstracts and links for our three papers in the order they were presented:

Roger Colinvaux, Citizens United and the Political Speech of Charities

The Supreme Court’s decision in Citizens United v. Federal Election Commission makes a Supreme Court challenge to the tax law rule that prohibits charities from involvement in political activities likely, and a reexamination of the political speech of charities necessary. Part I of the Article surveys the history of the political activities prohibition in order to emphasize that it was not a reactionary policy but quite considered, and that there are strong State interests supporting it. Part II of the Article analyzes Citizens United in detail and argues that if the Supreme Court considers a challenge to the political activities prohibition, Citizens United is distinguishable: the purpose of the political activities prohibition is not to suppress speech but to define charity; the legal setting is tax and not campaign finance; unlike the campaign finance rule, violation of the political activities prohibition is not criminal; and the political activities prohibition is by nature a rule associated with a tax status rather than a ban on corporate speech. Accordingly, the political activities prohibition, unlike the campaign finance rule, is not a burden on speech and therefore is constitutional. Part III of the Article discusses cautionary notes to the analysis of Part II, and explains that even if there is a constitutional defect to the political activities prohibition, the political activities limitation on the charitable deduction nonetheless would survive. Regardless of the constitutionality of the political activities prohibition, Part IV examines a number of possibilities for a charitable tax status in which political activity is allowed, and concludes that the current rule is the best option. Part V concludes that the prohibition represents the evolution of a century of wrestling with the subject of political activity and charity, and the wisdom that the two are not compatible. Such wisdom should not be contravened.

Lloyd Mayer, Charities and Lobbying: Institutional Rights in the Wake of Citizens United

One of the many aftershocks of the Supreme Court’s landmark decision in Citizens United v. FEC is that the decision may raise constitutional questions for the long-standing limits on speech by charities. There has been much scholarly attention both before and after that decision on the limit for election-related speech by charities, but much less attention has been paid to the relating lobbying speech limit. This article seeks to close that gap by exploring that latter limit and its continued viability in the wake of Citizens United. I conclude that while Citizens United by itself does not undermine the limit on lobbying by charities, the decision does reinforce the constitutional requirement that the government allow charities to easily form a non-tax favored alternative for engaging in unlimited lobbying. Some post-Citizens United proposals for regulating speech-related activity may in fact run afoul of this requirement. More importantly, the intersection of Citizens United and this tax-based limit on charity speech may be a catalyst for renewed consideration of whether the unconstitutional conditions doctrine could be successfully refined in the subsidy context through an approach that considers the purpose of the subsidy and how important the speech-related limit is to the accomplishment of that purpose.

Ellen Aprill, Regulating the Speech of Noncharitable Exempt Organizations after Citizens United

The role of noncharitable exempt organizations was perhaps the key feature of this year’s election. Senator Baucus as Chairman of the Senate Finance Committee, for example, sent a letter calling upon the IRS to survey major noncharitable 501(c) organizations to ensure that they are obeying the rules regarding political activity, including limits on politicking. In Citizens United, however, the Supreme Court decreed that “[n]o sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” Nowhere does Citizens United acknowledge the tax limits on political speech or address their constitutionality. Supreme Court cases predating Citizens United have justified these tax limits on the grounds that government has no duty to subsidize political speech. To the extent that “no duty to subsidize” is and remains the justification, nothing in Citizens United explicitly threatens the current tax regime. Nonetheless, we must ask whether the reasoning of Citizens United has undermined Regan v. Taxation with Representation of Washington (“TWR”), the key ”no duty to subsidize” case. In addition, the rules regarding politicking by tax exempt entities have changed significantly since TWR. As a result, the standards as announced in the case and interpreted by its progeny may call for a different conclusion today.

Furthermore, this piece will explore both the tax rules that are, and some that might be, applicable to the political speech of noncharitable tax exempt organizations. Part I will review TWR, its ancestors and its progeny as well as Citizens United. Part II will describe the current tax rules regarding lobbying and politicking applicable to exempt organizations that can engage in unlimited lobbying and politicking as part, but not the primary purpose, of their activities: section 501(c)(4) social welfare organization, section 501(c)(5) labor organizations, and section 501(c)(6) trade associations. The discussion will include consideration of treatment of contributions to such organizations for gift tax purposes and the special tax that may be applicable to membership dues because of lobbying and politicking by such organizations. Part II will also review the history of section 527, the section governing political organizations, with particular attention to the 2000 amendments that added registration and disclosure requirements. Part III examines the possible impact of Citizens United on the tax law’s current approach to political speech. It highlights the difference between the definitions of lobbying provided in the Internal Revenue Code and Treasury regulations and the uncertain “facts and circumstances” approach employed by the Internal Revenue Service (“IRS” or “Service”) in identifying politicking. It offers a reconciliation of seemingly contradictory language in Taxpayers With Representation and Citizens United regarding use of affiliates to conclude that Citizens United has not sub silentio overturned TWR’s “no duty to subsidize” holding. It defends, albeit unenthusiastically, the 2000 amendments to section 527. Part IV proposes a number of possible additional disclosure requirements for noncharitable exempt organizations engaged in lobbying and politicking. They include requiring applications for exemption, establishing a new category of exempt organizations for organizations primarily engaged in lobbying and expanding disclosure of contributors for all or for some noncharitable exempt organizations. It also explores the possibility of taxing the politicking expenditures of noncharitable tax exempt organizations not conducted through a separate segregated fund, whether or not the organization has investment income. The piece concludes by reminding us that the tax law regulation cannot substitute for campaign finance regulation.

Discussion of Hammack & Anheier's American Foundations: Roles and Contributions Hosted by Hudston Institute

On Tuesday, January 25th in Washington, DC, the Hudson Institute will be hosting a book discussion of American Foundations: Roles and Contributions, edited by David Hammack (Case Western Reserve) and Helmut Anheier (UCLA).  According to the announcement, the panelists will include co-editor David Hammack, as well as Leslie Lenkowsky of Indiana University, Steven Rathgeb Smith of Georgetown University, and Susan Ostrander of Tufts University.  Bradley Center Director William Schambra will moderate the discussion.

LHM

Schwarz: Navingating the Charity/Business Border

Stephen Schwarz (UC Hastings) presented Navigating the Charity/Business Border: Structures, Strategies and Solutions at the University of San Diego School of Law's Tax Law Speaker Series yesterday.  The paper builds on the draft he presented in 2008 at the National Center on Philanthropy and the Law's annual conference that year, The Architecture of Charities: Commercial Activities, Structural Reactions: Basic Structures.  For more information, see this TaxProf Blog entry.

LHM

Junior Tax Scholars Workshop Exempt Organizations Papers

For the last two days I helped Notre Dame Law School host the fifth annual Junior Tax Scholars Workshop.  Among the papers presented by the attending, pre-tenure law school faculty were the following on exempt organizations topics.  Since these papers are works in progress, public copies are not yet available, but we can expect to see most if not all of them eventually in law reviews.

Miranda Perry Fleischer (University of Colorado), Equality of Opportunity and Charitable Giving  

Benjamin Leff (American), The Case Against For-Profit Charity: An Agency Cost Analysis 

Lloyd Hitoshi Mayer (Notre Dame), Charities and Lobbying: Institutional Rights in the Wake of Citizens United  

Phyllis Smith (Florida A&M), Benevolence v. Bureaucracy: The Impact of Over Regulation of Tax-Exempt Organizations 

Samuel Brunson (Loyola-Chicago), Rethinking Public Charities and Political Speech

LHM

Law and Society Conference Nonprofit Papers

A list of "Law, Society, and Taxation" papers relating to taxation that will be presented at the Law and Society Conference in Chicago this weekend includes the following relating to nonprofit organizations:

• David Louk  (Yale/Berkeley)  "Unrelated Operations of Universities and Religious Organizations and Their Favorable Tax Treatment"

• Shannon McCormack  (UC Davis)  "Deconstructing the Charitable Deduction: Devising a Workable Framework to Analyze Charitable Transfers"

• Brian Galle  (Florida State/GW (and soon Boston College))  "Keep Charity Charitable"

• Todd Henderson  (Chicago)  "Corporate Philanthropy and the Market for Altruism"

• Benjamin Leff  (American)  "Tax Benefits for For-Profit Do-Gooders"

• Shruti Rana  (Maryland)  "Micro-Innovation"

• Roger Colinvaux  (Catholic)  "The Pension Protection Act of 2006: The Beginning or the End of Reform of the Tax Status of Charitable Organizations"

• James Fishman  (Pace)  "Stealth Preemption:  The IRS’s Corporate Governance Initiative"

• Terri Helge  (Texas Western)  "The Limitless Private Benefit Doctrine"

• Richard Schmalbeck  (Duke)  "Differential Subsidies among Charities and Their Relation to Worthiness"

LHM

Georgia State Hosts Forum on "Social Enterprise and Social Change: Should Nonprofits Embrace Business"

The Nonprofit Studies Program at Georgia State University is hosting a forum on social enterprise on April 22, 2010.  The forum will feature Michael Edwards, author of Small Change: Why Business Won't Save the World, and a panel including corporate citizenship and philanthropy officers from IBM, the ING Foundation, and Newell Rubbermaid Corporation.

LHM

Washington, DC – Debating Equality of Tax Treatment Across Charities

The Chronicle of Philanthropy reports that Catholic University in Washington, DC is hosting a symposium today, April 14, entitled  "Philanthropy in the 21st Century: Should All Charities Be Equal?"  The primary focus of the symposium is consideration of whether tax law should distinguish between different types of charities.  This issue raises questions of line drawing and what to emphasize in distinguishing charities from other companies and from each other.  Many charities engage in activities that closely resemble for-profit companies but enjoy more favorable tax treatment. 

One of the most recent and high profile examples of the issues in this area is the Provena case recently decided by the Illinois Supreme Court.  That case upheld denial of a charitable hospital's property tax exemption because the hospital had failed to provide sufficient charitable services.  Another question regarding the charitable exemption is whether charities directly aiding the poor deserve greater tax benefits.

The panelists include Diana Aviv, head of Independent Sector; Richard L. Schmalbeck, a professor of law at Duke University; Eugene Steuerle, a fellow at the  Urban Institute, a Washington think tank; and Russ Sullivan, chief of staff of the Senate Finance Committee and an aide to its chairman, Sen. Max Baucus, Democrat of Montana.  The moderator is Professor Roger Colinvaux, professor of?, Catholic University?.

SS

Schmalbeck Presents "501(say)(what?): Considering a New Exempt Category for Churches"

Richard Schmalbeck (Duke) presented his draft paper 501(say)(what?): Considering New Exempt Category for Churches yesterday as part of UCLA's Colloquium on Tax Policy & Public Finance.  I was fortunate enough to see an earlier draft of this paper, and it raises important (and undoubtedly controversial) issues relating to the current tax status of churches.  While Richard and I disagree on some key points relating to that tax status, this looks to be an important and interesting paper.

(Hat tip: TaxProf Blog)

LHM

Symposium on Philanthropy Law - Free!

A Symposium on the Law of Philanthropy in the 21st Century will be held at Chicago-Kent College of Law, in Chicago, Illinois,  on October 23, 2009.  This full-day symposium features academic papers presented on panels organized around governance, tax and donor intent.  Marian Fremont-Smith will be the keynote speaker and will speak following lunch.  The symposium concludes with a reception at the end of the day. Chicago-Kent is hosting the symposium and its law review will publish the papers in a symposium issue. The ACTEC Foundation has provided funding for the symposium which makes it possible for the symposium to  offered free of charge - registration, materials, lunch and the reception are all free!

The symposium brochure and information about online registration can be found at www.cklawreview.com.

sng

International Society for Third Sector Research Issues Call for Papers

The International Society for Third Sector Research (ISTR) has issued a call for contributions.  Here is the text of the CFC.

Call for Contributions

ISTR 9th International Conference

"Facing Crises:Challenges and Opportunities Confronting the Third Sector and Civil Society"

The International Society for Third-Sector Research (ISTR) is pleased to announce that the Call for Contributions for the 9th International Conference is published on our website (www.istr.org/conferences/istanbul/). The conference will be held at Kadir Has University in Istanbul, Turkey, on July 7-10, 2010.

The Call is currently available in English and Spanish; Arabic, Chinese, German and French languages will be added in the very near future.

The deadline for submissions is October 19, 2009.

For more information, see the ISTRwebsite at: www.istr.org/conferences/istanbul/

DAB

Politics in the Pulpit 2008 AND 2009

The Alliance Defense Fund, which brought you Pulpit Freedom Sunday 2008, and the Federalist Society recently teamed up to host a panel discussion at the National Press Club on the constitutionality and wisdom of the Internal Revenue Code section 501(c)(3) prohibition as applied to pastors speaking from their pulpits.  The speakers included Professors Doug Laycock (Michigan) and Donald Tobin (The Ohio State University), as well as Rev. Barry Lynn from Americans United for Separation of Church and State and Benjamin Bull of ADF.  I finally had a chance to listen to the debate, and regardless of your views on this issue it is very informative about the various positions.

One interesting additional note.  The Alliance Defense Fund is apparently already gearing up for Pulpit Freedom Sunday 2009, for which it will recruit churches both to comment on current government officials and to comment on candidates for office.

LHM