Nonprofit Law Prof Blog

Public Benefit v. Private Gain

In our basic income tax classes, we teach that a taxpayer is supposed to receive a charitable contribution deduction only for transfers for charity for which the taxpayer receives no benefit in return (except, of course, for the warm glow that comes from helping others).  But most of us that this distinction is not a bright line and that even the dim line is blurred in practice.  In her recent article, "From the Greedy to the Needy," published at 87 Ore. L. Rev. 1133 (2009), Professor Wendy C. Gerzog of the University of Baltimore School of Law faculty, examines the application of the public/private distinction under recent amendments to the Internal Revenue Code, decisional law, and Internal Revenue Services determinations.  She makes some interesting suggestions for changes that would improve the government's return on its investment of lost tax dollars on certain types of contributions.  Here is the abstract:

In some instances when a taxpayer makes a charitable donation, the loss of revenue to the government, and the corresponding gain to the taxpayer, far exceeds the benefit to the charity.  Some of these losses may be generated by government-sanctioned complex transactions and even government-created devices.  This Article analyzes various charitable donations in terms of the dollars gained by the taxpayer, the dollars lost by the government, and the dollars received by the charity.  After considering a sliding scale of benefits to the charities in light of the revenue losses to the government and taxpayer gains, this Article makes some normative conclusions about whether the good a donor does justifies his currently available tax benefits and then proposes some solutions.

Helge: Policing the Good Guys: Regulation of the Charitable Sector Through a Federal Charity Oversight Board

Terri Lynn Helge (Texas Wesleyan) has posted Policing the Good Guys: Regulation of the Charitable Sector Through a Federal Charity Oversight Board (Cornell Journal of Law & Public Policy, forthcoming) on SSRN.  Here is the abstract:

Recently, public confidence in the charitable sector has eroded due to a barrage of media reports on scandals and abuses. The principal parties charged with regulation of the charitable sector, the Internal Revenue Service and state attorneys general, are saddled with bureaucratic constraints that make it difficult to enforce the laws governing the fiduciary responsibilities of charity managers. Substantial reform in the regulation of charitable organizations is necessary to curb the reported abuses that have undermined confidence in the charitable sector.

Some advocate expanding private regulation of the charitable sector to improve enforcement of the fiduciary responsibilities of charitable managers. While some of these private regulatory alternatives have had success in isolated situations, none are satisfactory in providing comprehensive and effective oversight of the charitable sector. Overall, the policies underlying oversight of charitable organizations support maintaining primary responsibility for their regulation in a centralized authority. However, the financial, political, institutional, and agency constraints imposed on the Internal Revenue Service and state attorneys general make them unlikely to implement enough internal reform to be an ongoing, effective enforcement presence in the charitable sector.

This Article advocates the creation of a new, federal, quasi-public agency that would be the principal regulator of the charitable sector. The new agency would be a self-funded, independent, and proactive regulator that would serve the dual purposes of curbing the abuses that have eroded public confidence in the sector and educating charity managers of their obligation to be responsible stewards of charitable resources. The proposed agency would be primarily responsible for enforcing federal tax laws aimed at influencing fiduciary behavior of charity managers and preserving charitable assets for public benefit. Its formation, therefore, would separate oversight of charity governance from the tax collection function, thus harmonizing the United States with other countries that have established independent charity oversight agencies.

LHM

Fishman: Stealth Preemption: The I.R.S.'s Nonprofit Corporate Governance Initiative

James Fishman (Pace) has posted Stealth Preemption: The I.R.S.'s Nonprofit Corporate Governance Initiative (Virginia Tax Review, forthcoming) on SSRN.  Here is the abstract:

The Internal Revenue Service, the primary federal regulator of charities, has initiated a corporate governance initiative. The intervention by the Internal Revenue Service into an area traditionally the preserve of state nonprofit corporate law has little relationship to issues of tax compliance. This corporate governance initiative has been accomplished in the face of IRS acknowledgement that it has no statutory authority relating to these issues. Yet, the power of the Service to recognize tax exempt status and the method it has used to ensure it vision of correct corporate governance practices through a series of questions when an organization applies for recognition of tax exempt status and on the annual information return, the latter available on the Internet for public scrutiny, has resulted in substantial compliance. This article casts a skeptical eye on the IRS’s corporate governance initiative from the perspective of federalism. Its thesis is that the Service’s regulation of nonprofit corporate governance is a kind of stealth preemption, which undermines the principles of our federal system. The issues of preemption described herein relating to the IRS’s corporate governance initiative are at least one degree separated from traditional constitutional analysis. There is no question of an agency regulation, pursuant to direct or indirect Congressional authorization to supersede state legislation. Essentially, the Service has interpreted the scope of its own jurisdiction, expanding its authority at the expense of the states. The article argues the corporate governance initiative is inefficient from a cost/benefit basis, and diverts nonprofit organizations from their charitable mission. At a time when many charities are struggling to survive and maintain their level of activity, when there are pressures to reduce administrative expenses, the corporate governance initiative is an unwelcome, unnecessary distraction. It increases administrative costs, diverts boards and staff from the focus on the charity’s mission, and has no empirically verified relationship to tax compliance.

LHM

Tate: Should Charitable Trust Enforcement Rights Be Assignable?

Joshua C. Tate (SMU) has posted Should Charitable Trust Enforcement Rights Be Assignable? (Chicago-Kent Law Review, forthcoming) on SSRN.  Here is the abstract:

In recent years, scholars have given much attention to the problem of charitable trust enforcement. Departing from the common law, section 405(c) of the Uniform Trust Code provides that “[t]he settlor of a charitable trust, among others, may maintain a proceeding to enforce the trust.” This Article addresses the question of whether, and to what extent, a settlor’s right to enforce a charitable trust should be assignable to third parties. Should the law permit the settlor of a charitable trust to assign her enforcement rights after the creation of the trust, or should assignments be recognized only if they are spelled out in the trust instrument? How many potential assignees may the settlor properly select? Once the right has been assigned to a third party, should that third party also retain the right of assignment, so that the right can potentially be passed from one individual to the next in perpetuity? What would be the ramifications of granting a right of assignment to the settlor’s personal representative? Any resolution of these issues must protect the interests of charitable beneficiaries, but also be fair to trustees and not overwhelm the courts with frivolous litigation.

LHM

Gerzog: Reforming the Charitable Split Interest Rules (Again)

Wendy Gerzog (Baltimore) has posted The Times They are Not A-Changin': Reforming the Charitable Split Interest Rules (Again) (Chicago-Kent Law Review, forthcoming) on SSRN.  Here is the abstract:

The article reviews the history of the tax treatment of charitable split interest gifts, explains the inequities that Congress both cured and generated in its 1969 reforms, and proposes solutions that are consistent with the goals of the 1969 legislation. The article discusses variations in the 1969 definition of a charitable split interest, which, because of the enacted statutory language, applies in instances where there is no abuse potential. The inequity produced by that definition penalizes the donor and flouts the rationale behind the 1969 legislation. By contrast, the creation of some required statutory forms of charitable split interests in trust, enacted to prevent abuse, have themselves created new opportunities for donors to evade taxes in ways unanticipated by the 1969 Act. In the spirit of the 1969 law, the article makes several recommendations, including proposals: (1) to modify the statutory definition of charitable split interest to provide an exception from the statutory requirements where there is no statutory mandate to calculate value by means of the actuarial tables under section 7520 and no abuse potential; and (2) to eliminate, or to restrict the tax avoidance aspects of, some of the charitable split interest in trust devices created in the 1969 legislation.

LHM

Articles on the Lifespan of Private Foundations

Courtesy of the newsletter for the Aspen Institute's Program on Philanthropy and Social Innovation, here are two recent non-legal scholarly articles relating to how long private foundation leaders choose to have their charitable institutions exist:

• John R. Thelin, Richard Tollinger, Time is of the Essence: Foundations and the Policies of Limited Life and Endowment Spend-Down (Aspen Institute)

• Loren Renz, David Wolcheck, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? (Foundation Center)

LHM

Nonprofit and Voluntary Sector Quarterly December 2009 Issue

The Nonprofit and Voluntary Sector Quarterly has published its December issue.  Here is the table of contents:

• Richard A. Sundeen, Cristina Garcia, and Sally A. Raskoff, Ethnicity, Acculturation, and Volunteering to Organizations: A Comparison of African Americans, Asians, Hispanics, and Whites

• Femida Handy and Itay Greenspan, Immigrant Volunteering: A Stepping Stone to Integration?

• Richard K. Caputo, Religious Capital and Intergenerational Transmission of Volunteering as Correlates of Civic Engagement

• Jessica E. Sowa, The Collaboration Decision in Nonprofit Organizations: Views From the Front Line

• Russell N. James, III, Health, Wealth, and Charitable Estate Planning: A Longitudinal Examination of Testamentary Charitable Giving Plans

• Jill Nicholson-Crotty, The Stages and Strategies of Advocacy Among Nonprofit Reproductive Health Providers

• Melissa M. Stone and Jodi R. Sandfort, Building a Policy Fields Framework to Inform Research on Nonprofit Organizations

• Mary Tschirhart, Kira Kristal Reed, Sarah J. Freeman, and Alison Louie Anker, Who Serves?: Predicting Placement of Management Graduates on Nonprofit, Government, and Business Boards

• Ronald Austin Wells, Book Review: Clinton, Bill (2007). Giving: How Each of Us Can Change the World. New York: Alfred A. Knopf

• Anita Casey-Reed, Book Review: Foote, D. (2008). Relentless Pursuit: A Year in the Trenches With Teach for America. New York: Alfred A. Knopf

• Darlene Xiomara Rodriguez, Book Review: Adams, C., Bartelt, D., Elesh, D., & Goldstein, I. (with Freely, J., & Schmitt, M.). (2008). Restructuring the Philadelphia Region: Metropolitan Divisions and Inequality. Philadelphia: Temple University Press

• Thomas Adam, Book Review: Lee, M. (2008). Bureaus of Efficiency: Reforming Local Government in the Progressive Era. Milwaukee: Marquette University Press

• Thomas H. Jeavons, Book Review: McCully, G. (2008). Philanthropy Reconsidered: Private Initiatives—Public Good— Quality of Life. Bloomington, IN: AuthorHouse

LHM

Professor Ira Mark Ellman (Arizona State University Law School) Posts "On Developing a Law of Nonprofit Corporations"

Professor Ira Mark Ellman of Arizona State University Law School has posted his draft article on California Nonprofit Corporation Law on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "On Developing a Law of Nonprofit Corporations." Here is the abstract:

This article considers the California Nonprofit Corporation Law. That law was seen to have broken important ground, and the author’s role as one of the two draftsman of the California approach informs his discussion. This article explains the evolution of the California Nonprofit Corporation Law, describes some of the basic issues considered in its drafting, and offers tentative suggestions for the future development of nonprofit laws. It concludes that the innovations in the California law are only the beginning and hopes that further development will continue.   

DAB

Brian Galle (Florida State University Law School) Posts "Foundation or Empire? The Role of Charity in a Federal System"

Professor Brian Galle of Florida State University Law School has posted his draft articleon subsidies for the charitable sector on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "Foundation or Empire? The Role of Charity in a Federal System."  Here is the abstract:

This Article critiques the prevailing justification for subsidies for the charitable sector, and suggests a new alternative. According to contemporary accounts, charity corrects the failure of the private market to provide public goods, and further corrects the failure of government to provide goods other than those demanded by the median voter.

However, the claim that government can meet the needs only of a single “median voter” neglects both federalism and public choice theory. Citizens dissatisfied with the services of one government can move to or even create another. Alternatively, they may use the threat of exit to lobby for local change. Subsidies for charity inefficiently distort the operation of these markets for legal rules.

Nonetheless, there remains a strong case for subsidizing charity, albeit on grounds new to the literature. Charity serves as gap-filler when federalism mechanisms break down. For example, frictions on exit produce too little jurisdictional competition, and excessively easy exit produces too much competition - a race to the bottom. At the same time, competition from government constrains inefficient charities. Thus, charity and government each perform best as complements to the other.

Finally, this Article sketches the normative legal consequences of these claims. Most significantly, I respond to the claims by Malani and Posner that for-profit charity would be superior to current arrangements. That suggestion would fatally weaken competition between charity and government, defeating the only persuasive purpose for charitable subsidies.  

DAB

Lloyd Mayer (Notre Dame Law School) and Brendan Wilson (Akin Gump) Post "Regulating Philanthropy in the 21st Century: An Institutional Choice Analysis"

Professor Lloyd Mayer of Notre Dame Law School and Attorney Brendan Wilson of Akin Gump have teamed up to post their draft article on regulating charity governance on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "Regulating Philanthropy in the 21st Century: An Institutional Choice Analysis."  Here is the abstract:

For more than fifty years scholars, practitioners, and government officials have debated whether the federal government, the state governments, or the charitable sector itself can best ensure that charitable organization leaders fulfill their fiduciary duties. The dramatic growth of this sector, recent highly publicized governance scandals, and a push in Congress and the IRS for more federal involvement in this area have now brought this issue to a head. This article lays a foundation for resolving the dispute by developing an institutional choice framework for considering and comparing the various available options. Applying that framework, the article concludes that the best regulators of charity governance would most likely be state-level government agencies that work with but have a limited degree of independent from the state attorneys general. The article also determines that the best way to ensure adoption of this institutional choice – and limit potential weaknesses – is for the federal government to use a portion of the already existing private foundation investment income tax to provide funding for such agencies.  

DAB

Stewart Sterk (Cordozo Law School) Posts "Rethinking Trust Law Reform: How Prudent is Modern Prudent Investor"

Professor Stewart Sterk of Cordozo Law School has posted his draft article on reform in the trust investment doctrine on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "Rethinking Trust Law Reform: How Prudent is Modern Prudent Investor Doctrine?" Here is the abstract:

During the 1990s, modern portfolio theory provided the theoretical foundation for significant reforms in trust investment doctrine, reforms that freed trustees from a legal regime in which they faced potential liability for making 'speculative' investments. The reforms enabled trustees to pursue investment policies that protected beneficiaries against inflation risk. But the reforms worked too well: they encouraged trustees to invest a higher percentage of trust assets in equities just in time for a decade that has seen two precipitous stock market declines.

Although no sensible investment strategy would have avoided losses during these periods of market turmoil, the doctrinal reforms endorsed in the Restatement (Third) of Trusts and the Uniform Prudent Investor Act made matters worse. By structuring trust investment doctrine as a regime of vague standards, the UPIA and the Restatement provided trust beneficiaries with little protection against agency costs that would lead trustees to invest too heavily in equities. The current regime would be problematic even if its economic underpinnings - modern portfolio theory and, in particular, the efficient capital markets hypothesis - accurately described economic reality. But market behavior over the last ten years, combined with recent theoretical work, weaken those underpinnings and make the current regime’s bias toward equity investments even more questionable. A legal regime that replaced the current standard-based system with one providing trustees with 'safe harbors' for making investment decisions would provide trustees with more guidance, while simultaneously providing better protection to beneficiaries against excess market risk. 

DAB

Melanie B. Leslie (Cordozo) Posts "Conflicts of Interest and Nonprofit Governance: The Challenge of Groupthink"

Professor Melanie B. Leslie of Cordozo Law School has posted her draft article on nonprofit "group think" on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "Conflicts of Interest and Nonprofit Governance: The Challenge of Groupthink."  Here is the abstract:

The central dilemma for nonprofit law is that nonprofit fiduciaries are not accountable to a principal. Although state and federal governments have authority to enforce directors’ fiduciary duties, enforcement efforts range from minimal to nonexistent. The nonprofit corporation is also free from the market pressures faced by its for-profit counterpart. It is up to boards of directors to police themselves – to ensure that the nonprofit is run effectively and that charitable assets go towards mission and not into the pockets of insiders. Decades of psychological research about group dynamics teach us that “groupthink” can undermine social norms that facilitate good governance procedures. Groupthink occurs when directors place allegiance to fellow board members ahead of the nonprofit’s best interests. Groupthink blinds directors to conflicts of interest, and may also induce directors to refrain from adequately monitoring ongoing business relationships with board members. As a result, conflict of interest transactions often divert charitable assets away from the charities’ intended beneficiaries and into directors’ pockets. Recent nonprofit scandals, such as Yeshiva University’s decision to invest $15 million dollars with Ezra Merkin, the chair of its finance committee, who then quietly entrusted it to Bernard Madoff, demonstrate that charities are uniquely susceptible to groupthink.Because currently, fiduciary duty law is structured as a set of fuzzy standards that appear to sanction self-dealing, the law facilitates groupthink. Restructuring the state law fiduciary duty of loyalty as a set of clear rules would help support good governance norms. A flat prohibition on self-dealing and conflict of interest transactions would be the most effective way to ensure that fiduciaries place the best interests of the nonprofit ahead of self-interest. Short of that, clear directives requiring disclosure of conflicts, investigation of alternatives and proof that inside transactions are clearly below market would do much to counter the damaging impact of groupthink.

DAB

Dana Brakman Reiser (Brooklyn Law School) Posts "Charity Law’s Essentials"

Professor Dana Brakman Reiser posted an abstract of her working paper on the essential characteristics of charity law on SSRN's Nonprofit and Philanthropy Law Abstracting Journal.  The article is entitled "Charity Law's Essentials."  Here is the abstract:

The boundary between charity and business has become a moving target. Social enterprises, philanthropy divisions of for-profit companies (most notably at Google), and legislation creating hybrid nonprofit/for-profit forms all use business models and practices to mold and pursue charitable objectives. This article asserts that charity law must be streamlined in order to respond to these and other dramatic charitable innovations. My new vision of charity law centers around two essential requirements. First, charity law must continue to demand that charities maintain an other-regarding orientation, pursuing benefits for someone other than their own leaders and managers. Second, existing charity law must be revised and supplemented to mandate that charities utilize group governance. Additionally, this dual focus should be intensified by removing the limits on commercial and political activity that currently clutter charity law. These reforms will enhance charity law's ability to regulate traditional charities. Moreover, focusing charity law on its essentials will reveal the tools necessary to respond to the exciting developments blurring the boundary between charity and business.

DAB

Weisbord and DeScioli Publish "The Effects of Donor Standing on Philanthropy: Insights from the Psychology of Gift-Giving"

Reid Weisbord (Law Clerk, US District Court, Eastern District, PA) and Peter DeScioli (Post Doctoral Research Associate, Chapman University Economic Science Institute) have published "The Effects of Donor Standing on Philanthropy: Insights from the Psychology of Gift-Giving" inthe Gonzaga Law Review.  Here is the abstract from the SSRN Nonprofit and Philanthropy Law Abstracting Journal:

Societies have long struggled with contradictions between the ideals of philanthropy and the real motives of philanthropists. Cultural artifacts such as traditional Jewish legal codes and the legend of Saint Nicholas of Myra show that societies especially revere philanthropists who give anonymously, without expectation of repayment. But contrary to these ideals, donors often use philanthropy to obtain personal rewards, such as the wealthy patrons of ancient Greece whose opulent displays of benefactions were aimed at social status and political dominance. The gap between ideals and reality creates a dilemma: Societies wish to promote philanthropy but offering incentives taints the authenticity of the donor’s intent.

This dilemma is central to the recent policy debate about the enforceability of donor-imposed gift restrictions. The law has traditionally allowed donors to pursue their personal charitable goals by imposing restrictions on the use of charitable gifts, but until recently, donors lacked legal standing to enforce their restrictions in court.

In this Article, we describe the detrimental effects of donor enforcement rights on the public’s shared interest in charitable assets. We then investigate the issue of donor standing by reviewing and comparing economic and psychological models of gift-giving behavior. On the basis of research from experimental psychology, we propose the novel hypothesis that, contrary to the intended effect, donor standing is unlikely to promote charitable giving and may cause a decrease in charitable contributions.

For the entire article, go to http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1435149

DAB

Kenneth Anderson Posts Paper on NGO Accountability

Kenneth Anderson has recently posted his book review, What NGO Accountability Means -- And Does Not Mean, 103 American Journal of International Law 170 (2009).  Here is the abstract:

International and transnational NGOs have been under criticism for alleged lack of accountability since they emerged into prominence in the 1990s. In recent years, the debate over NGOs has shifted from legitimacy and "representativeness" to accountability in the narrower senses of internal governance, fiduciary responsibility, relationships with national governmental authorities, and similar issues. The volume under review seeks to cover both aspects of the debate, with emphasis on the latter, narrower issues. The review essay argues that the debate over representativeness and legitimacy - accountability in the large sense - cannot be left aside, but continues to be present, if only because the incentives that led NGOs to claim to represent the 'peoples of the world' in the first place have not gone away but have instead merely been submerged under critical pressure. The review essay argues that the question of NGO accountability as a matter of claims to governance remain salient, because global civil society still seeks a role in global governance in a way that relies upon claims of representativeness and that is not satisfied by narrower mechanisms by which NGOs make themselves accountable for other, narrower purposes, such as internal corporate governance or fiduciary accountability for charitable assets.

dkj

 

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

Zakreski on "Reform of the Law Relating to Unincorporated Nonprofit Associations"

Kevin Zakreski (member of the National Conference of Commissioners on Uniform State Laws unincorporated nonprofit committee) has posted Reform of the Law Relating to Unincorporated Nonprofit Associations, 41 University of British Columbia Law Review 115 (a peer-reviewed journal) on SSRN.  For U.S. readers, the last sentence of the abstract may be of most interest (emphasis added):

There are three primary modes of collective nonprofit activity: the nonprofit corporation; the charitable trust; and the unincorporated nonprofit association. The residual or default mode is the unincorporated nonprofit association. Whenever people band together and agree to pursue common nonprofit purposes and they do not take the steps required to incorporate or to create a charitable trust, they form an unincorporated nonprofit association. Unlike the coherent bodies of law that govern nonprofit corporations and charitable trusts, the law applicable to unincorporated nonprofit associations in common-law Canada is a hodgepodge of rules that are not well known and not well adapted to contemporary social needs. It is a body of law that is ripe for reform.

This comment reviews both the law of unincorporated nonprofit associations and the recent efforts to reform this area of the law. It begins by setting out some background information on the types of unincorporated nonprofit associations, the number active in Canada, and their typical activities. Then, it briefly explores the development of the law applicable to unincorporated nonprofit associations in the nineteenth century and examines how this body of law has led to a number of problems in connection with selected legal issues. The comment concludes by noting several law reform projects in Canada and elsewhere, with a special emphasis on the ongoing project to create a harmonized legal framework for unincorporated nonprofit associations in North America, which is being carried out jointly by the Uniform Law Conference of Canada, the National Conference of Commissioners on Uniform State Laws, and the Mexican Conference of Commissioners on Uniform State Laws.

LHM

Treasury's Joulfaian Publishes "On Estate Tax Repeal and Charitable Bequests"

David Joulfaian, an economist at the Treasury Department's Office of Tax Analysis, has published in Tax Notes (subscription required) an articlethat expresses his views (not necessarily those of the Treasury Department) regarding whether estate tax repeal would reduce the up to $20 billion in annual charitable bequests reported to the IRS on estate tax returns and, if so, to what extent.  He ultimately concludes that it is difficult to make this determination for a variety of reasons.  These reasons include the fact that existing studies indicate that such giving is sensitive to both tax prices (i.e., higher tax rates stimulate giving) and to wealth (i.e., reduced bequeathable or disposable wealth reduces giving), and the fact that we do not have reliable data about charitable bequests in the United States before the enactment of the estate tax.  His report also highlights a variety of other analytical difficulties, including the difficulty of controlling for differences among donors that may explain why the percentage of estate wealth given varies significantly even when estate tax rates remain unchanged.  His bottom line is that attempting to answer the question he poses is "a humbling experience and one that requires constant review of our models and methods."  This result is particularly interesting given that in a 2000 article he concluded that "[t]he overall effects of the estate tax . . . are likely to be modest as charitable bequests are wealth elastic."

LHM

Attorney Kenneth H. Ryesky publishes "Honorary Board Membership, Real Tax Liability: Limits to Tax-Exempt Organization Honorary Board Member Immunity Under Internal Revenue Code § 6672"

Attorney Kenneth H. Ryesky published "Honorary Board Membership, Real Tax Liability: Limits to Tax-Exempt Organization Honorary Board Member Immunity Under Internal Revenue Code § 6672" in the Akron Tax Journal.  Here is the introduction:

Well over half of the Internal Revenue Service's (IRS's) total revenue collections are taxes withheld from by employers from their employees' wages and salaries.  To ensure actual collection by the government of the withheld taxes, the Internal Revenue Code imposes personal liability upon the individuals responsible for withholding and paying over the taxes.  The withheld monies are commonly known as "trust funds."  In 1996, as part of the Taxpayer Bill of Rights 2 (hereinafter referred to as "TBOR2"), Congress provided a safe harbor to protect honorary board members of charitable organizations from liability for trust funds.

Over the past few years, Congress and the Internal Revenue Service (and, for that matter, the state taxation, legislative and law enforcement authorities) have increased their scrutiny over the charities and other tax-exempt entities. ⁸ The resulting climate change in the charitable sector presents challenges and issues for those who actively involve themselves in charitable works.

This article will discuss the implications of the various governmental trends and initiatives upon the potential trust fund liability of tax-exempt organizations' honorary board members.  

DAB

Professor Sophie Smyth Posts "World Bank Grants in a Changed World Order: How Do We Referee this New Paradigm?"

Professors Sophie Smyth (Temple Law School and Contributing Editor to Nonprofit Law Prof Blog) posted on SSRN's Nonprofit and Philanthropy Law Abstracting Journal an abstract of her University of Pennsylvania Journal of International Economic Law article on  entitled "World Bank Grants in a Changed World Order: How Do We Referee this New Paradigm?"  Here is the abstract:

Pressures rippling through the universe of international development aid over the last fifteen years are transforming overseas development aid from a top-down, government-only endeavor into a multi-layered, multi-party endeavor which engages governments and citizens at every level. In addition, aid priorities now reflect the reality that global problems (such as climate change and HIV Aids) need serious attention and that developing countries need grant finance to address these problems and other problems that stem from abject poverty. For the reasons described in this Article, these changes have made overseas development aid heavily dependent on grants channeled through the World Bank (referred to, throughout this article as “World Bank grants”). This dependence poses challenges for an institution set up to provide loans, not grants, and accustomed to thinking of a grant as a form of gentleman’s agreement rather than a binding commitment which may range from millions to hundreds of dollars and which, whatever the amount, reflects a host of interests and voices that clamor to be heard. These challenges set the context for this Article’s inquiry.

This Article begins by describing the changes that recent trends in international development aid have wrought and the reasons those changes have placed the World Bank at center stage of development grant finance. It then focuses on the legal framework governing World Bank grants. Its key inquiry is the extent to which that framework facilitates and effectuates the goals and values that development grant finance aims to achieve. The article is not about whether grants for development aid achieve their targets (for example a reduction of greenhouse gas emissions in a recipient country or in the number of Aids-related deaths), an important question but one for another day. Rather, it is about whether such grants are negotiated, agreed to and delivered in a way that promotes the inclusive, participatory and collaborative approaches that recent trends in development aid hold paramount.

As a starting premise, this Article concedes that the legal framework governing development grant finance is unclear (an inevitable state of affairs given the legal of clarity surrounding the legal status of a grant in the national jurisdictions of most developed countries, and, therefore, in an international legal system built on principles drawn from them). In the face of this lack of clarity the terms of the grant agreements pursuant to which development grants are made, become the operative legal framework. And so, this Article looks to those terms to determine whether such grants comport with current thinking on optimal development approaches.

But not all terms of an agreement are created equal. This Article posits that in the world of development grant finance, the key elements of a grant agreement to evaluate in order to determine whether the agreement reflects an inclusive, participatory and collaborative approach are the elements that deal with the right of the grantor to cancel or suspend a grant and the provisions that apply when things go, or appear to have gone, wrong; namely the dispute resolution arrangements. The grantor is always in a position of power; dispute resolutions arrangements set the parameters within which such power may be exercised. For this reason, this Article examines the dispute resolution arrangements in World Bank grant agreements.

That examination reveals that World Bank grant agreements reflect a top-down, take it or leave it relationship that does not promote or facilitate inclusion, participation and grantor/grantee collaboration. This Article concludes with some suggestions for the principles that should guide the redress of these deficiencies and the re-design of the dispute resolution arrangements that is required.  

DAB