Friday, March 4, 2016

Backer, Note, Religious Nonprofit Political Activity

BackerJonathan Backer (Michigan '15) has published Thou Shalt Not Electioneer: Religious Nonprofit Political Activity and the Threat "God PACs" Pose to Democracy and Religion, 114 Mich. L. Rev. 619 (2016). Here is the abstract:

The Supreme Court’s 2010 decision in Citizens United v. FEC invalidated a longstanding restriction on corporate and union campaign spending in federal elections, freeing entities with diverse political goals to spend unlimited amounts supporting candidates for federal office. Houses of worship and other religious nonprofits, however, remain strictly prohibited from engaging in partisan political activity as a condition of tax-exempt status under Internal Revenue Code § 501(c)(3). Absent this “electioneering prohibition,” religious nonprofits would be very attractive vehicles for political activity. These 501(c)(3) organizations can attract donors with the incentive of tax deductions for contributions. Moreover, houses of worship need not file with a government agency to begin operating and deriving tax benefits, and the IRS has shown reluctance to aggressively audit their activities. Two circuits have previously upheld the electioneering prohibition against legal challenges, but recent jurisprudential shifts expose the tax code provision to challenge under the Religious Freedom Restoration Act (RFRA), which directs courts to apply strict scrutiny to facially neutral laws that substantially burden the free exercise of religion. First, Burwell v. Hobby Lobby Stores, Inc. greatly reduced the barriers to successful RFRA claims. Second, by lifting restrictions on political speech for many other types of organizations, Citizens United magnified the burden the electioneering prohibition imposes on religious organizations. The decision also rejected compelling state interests that might have previously shielded the law from invalidation. This Note is the first analysis of the electioneering prohibition’s vulnerability in this new legal climate. Despite these significant developments, this Note ultimately concludes that the electioneering prohibition can survive RFRA challenges because the prospect for widespread use of religious organizations as conduits for political activity undermines the values reflected in Establishment Clause jurisprudence.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Aprill, The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation

AprillEllen Aprill (Loyola L.A.) has published The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation, 13 Pitt. Tax Rev. 43 (2015). Here is the abstract:

As is well known, on May 10, 2013, at a session of the American Bar Association Tax Section meeting in Washington, DC, Lois Lerner, at the time the director of the Exempt Organization Division of the Internal Revenue Service, apologized for IRS mishandling of applications by Tea Party groups for exemption as social welfare groups under § 501(c)(4) of the Code. A few days later, the Department of the Treasury Inspector General released a report (TIGTA Report) concluding that the “IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention

 

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Fici, Recognition and Legal Forms of Social Enterprise in Europe

FiciAntonio Fici (European Research Institute on Cooperative & Social Enterprise) has posted on SSRN Recognition and Legal Forms of Social Enterprise in Europe: A Critical Analysis from a Comparative Law Perspective. Here is the abstract:

Social enterprise lawmaking is a growth industry. In the United States alone, over the last few years, there has been a proliferation of state laws establishing specific legal forms for social enterprises. The situation is not different in Europe, where the process began much earlier than in the United States and today at least fifteen European Union member states have specific laws for social enterprise. This article will describe the current state of the legislation on social enterprise in Europe, inquiring into its fundamental role in the development of the social economy and its particular logics as distinct from those of the for-profit capitalistic economy. It will explore the models of social enterprise regulation that seem more consistent with the economic growth inspired by the paradigms of the social economy. It will finally explain why, in regulating and shaping social enterprise, the model of the social enterprise in the cooperative form is to be preferred to that of the social enterprise in the company form.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Fishman, Who Can Regulate Fraudulent Charitable Solicitation?

FishmanJames Fishman (Pace) has published Who Can Regulate Fraudulent Charitable Solicitation?, 13 Pitt. Tax Rev. 1 (2015). Here is the abstract:

The scenario is common: a charity, typically with a name including an emotional word like “cancer,” “children,” “veterans,” “police,” or “firefighters,” signs a contract with a professional fundraiser to organize and run a campaign to solicit charitable contributions. The charity may be legitimate or a sham. The directors of the charity may be allied or coconspirators with the fundraiser, or as likely, well-meaning but naïve individuals. The fundraiser raises millions of dollars through telemarketing, Internet, or direct mail solicitation. The charity receives but a small percentage of the amount. In some cases, at the close of the campaign, the organization owes the solicitor more than the amount raised for the charity. Thereafter, the state attorney general investigates the charity and finds fraud in the solicitation or an improper use of the funds raised. As part of the settlement, the professional solicitor agrees to be barred from operating in that particular state. Thereafter, the fundraiser moves to a neighboring jurisdiction, opens business (perhaps under a different name), and commences the same cycle of fraudulent fundraising using another charity

Deception in solicitation and misuse of monies raised for charitable purposes is not only a fraud on the donor; it also can be a diversion of tax dollars from state or federal treasuries. This article examines several approaches for regulating unscrupulous professional fundraisers and preventing carpetbagging, moving from jurisdiction to jurisdiction, committing fraud, or willfully violating regulatory requirements. It examines limitations in the existing regulatory framework to prevent charity fraud and offers possible solutions to the problem. As a first solution, the Internal Revenue Service should revitalize and extend the “private benefit doctrine” as a tool of enforcement. Second, Congress and the Service should amend § 4958 to address excess benefit transactions to more clearly include unscrupulous solicitors. A third possible resolution to the problem outlined would be the expansion of the Federal Trade Commission’s enforcement authority to cover charitable solicitation generally. Currently, the FTC has authority over telemarketing by for-profit fundraisers.3 The legislation proposed would enable the creation of a self-regulatory organization under Federal Trade Commission aegis that fundraisers would be required to join. This new organization would enforce norms and rules for professional fundraisers, have the authority to discipline and, if necessary, to bar dishonest fundraisers from the fundraising industry. A final recommendation is the creation of an online, readily accessible database containing records of violations of professional fundraising companies and the individuals who own and work for them, the contracts between professional solicitors and the charities they work for, the results of fundraising campaigns listing the percentage of dollars raised that goes to the charity, and the texts of settlement agreements between state charity officials and fundraisers and the charities involved. An important issue not addressed in detail is the fiduciary responsibility of charity boards to carefully select the firms that manage their solicitation campaigns.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Fleischer, How is the Opera Like a Soup Kitchen?

FleischerMiranda Perry Fleischer (San Diego) has published on SSRN How is the Opera Like a Soup Kitchen, The Philosophical Foundations of Tax Law (Oxford University Press, forthcoming 2016). Here is the abstract:

The charitable tax subsidies are, at heart, redistributive. Some individuals (the recipients of charitable goods and services, such as students, museum-goers, and soup kitchen patrons) receive benefits. Other individuals pay for these benefits, both voluntarily (through donations) and involuntarily (in the form of higher taxes or reduced benefits). At first glance, it appears that the redistribution effectuated by the subsidies violates commonly-held notions of distributive justice. After all, the subsidies treat charities that serve the wealthy (like the opera) the same as charities that aid the poor (such as the soup kitchen). How can spending public funds on the wealthy in this manner be considered just? As this Chapter shows, so doing is just under expansive interpretations of resource egalitarianism and left-libertarianism that account for expensive tastes and talent-pooling. These understandings argue that individuals with expensive tastes deserve compensation to put them on equal footing with individuals with ordinary tastes when pursuing their visions of the good life – just as individuals who lack financial resources deserve compensation to put them on equal footing with the financially-advantaged when pursuing their life plans. Subsidizing not only the soup kitchen but also the opera thus helps a variety of individuals who are disadvantaged in their ability to pursue their visions of a good life to achieve those visions.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Hackney, Charitable Organization Oversight: Rules v. Standards

HackneyPhilip Hackney (LSU) has published Charity Organization Oversight: Rules v. Standards, 13 Pitt. Tax Rev. 83 (2015). Here is the abstract:

Congress has traditionally utilized standards as a means of communicating charitable tax law in the Code. In the past fifteen years, however, Congress has increasingly turned to rules to stop fraud and abuse in the charitable sector. I review the rules versus standards debate to evaluate this trend. Are Congressional rules the best method for regulating the charitable sector? While the complex changing nature of charitable purpose would suggest standards are better, the inadequacy of IRS enforcement and the large number of unsophisticated charitable organizations both augur strongly in favor of rules. Congress, however, is not the ideal institution to implement rules for charitable purpose. The IRS is the better institution generally to institute rules there because of its informational advantage over Congress. Additionally, the IRS can implement rules in a more flexible rule format than can Congress. Still, Congress as a rulemaker makes sense in a few scenarios: (1) where it implements transparent procedural requirements; (2) where it regulates discrete behavior of charitable organization acts; and, (3) where it intends to remove a set of organizations from charitable status through simple rules.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Knaplund, Becoming Charitable: Predicting and Encouraging Charitable Bequests in Wills

KnaplundKristine Knaplund (Pepperdine) has published Becoming Charitable: Predicting and Encouraging Charitable Bequests of Wills, 77 Pitt. L. Rev. 1 (2015). Here is the abstract from the SSRN posting of the article:

What causes people to leave their property to charity in their wills? Many scholars have explored the effects of tax laws on charitable bequests, but now that more than 99% of Americans’ estates are exempt from federal taxes, what non-tax factors predict charitable giving? This Article explores charitable bequests before the federal estate tax and a deduction for charitable bequests were enacted by Congress. By examining two years of probate files in Los Angeles and St. Louis, in which 16.6% of St. Louis testators, but only 8.3% in Los Angeles, made charitable bequests, we can begin to discern why testators in St. Louis were far more inclined to give to charity. The surprising results may help policy makers encourage those in the United States and in developing countries to give beyond their family and friends.

This Article is unique in that it is the first to examine not just whether a will included a charitable bequest, but whether the charity received it. This crucial information adds key insights to who gives to charity. In fact, if we compare the two cities by looking at charitable bequests which were actually received, St. Louis testators are even farther ahead of their Los Angeles counterparts, with 15% of St. Louis testators giving to charity compared to 6% in LA.

By examining hundreds of wills executed before the federal estate tax was enacted, we can see patterns for the vast majority of people who die with estates far too small to be impacted by the estate tax. Five clear steps emerge to ensure that testators will give to charity.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

McConnell & Goodrich, On Resolving Church Property Disputes

McConnellGoodrichMichael McConnell (Stanford) and Luke Goodrich (Becket Fund for Religious Liberty; Utah) have posted on SSRN On Resolving Church Property Disputes, Arizona Law Review (forthcoming). Here is the abstract:

In recent decades, major religious denominations have experienced some of the largest schisms in our nation’s history, resulting in a flood of church property disputes. Unfortunately, the law governing these disputes is in disarray. Some states treat church property disputes just like disputes within other voluntary associations — applying ordinary principles of trust and property law to the deeds and other written legal instruments. Other states resolve church property disputes by deferring to religious documents such as church constitutions — even when those documents would have no legal effect under ordinary principles of trust or property law.

We argue that both courts and churches are better served by relying on ordinary principles of trust and property law, and that only this approach is fully consistent with the church autonomy principles of the First Amendment. Only this approach preserves the right of churches to adopt any form of governance they wish, keeps courts from becoming entangled in religious questions, and promotes clear property rights. By contrast, deferring to internal religious documents unconstitutionally pressures churches toward more hierarchical governance, invites courts to resolve disputes over internal church rules and practices, and creates costly uncertainty.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Newman, What is a Church?

NewmanJoel Newman (Wake Forest) has posted on SSRN What is a Church? A Look at Tax Exemptions for the Original Kleptonian Neo-American Church and the First Church of Cannabis, Lexis Federal Tax J.Q. (Dec. 2015). Here is the abstract:

The tax definition of "church," as well as the definition of "religion," have evolved. For years, the IRS defined churches with a fourteen factor test. More recent cases and rulings, however, have used an "associational" test.

This article applies these two definitions to two "marijuana churches" -- the Original Kleptonian Neo-American Church, founded in the 1960's, and the First Church of Cannabis, founded in 2015. I conclude that both churches either would already pass muster under either definition, or could easily do so with a bit of tweaking and some lawyerly advice. Therefore, it would not be too difficult to game the system, and to create a religious organization and a church for tax purposes, even when that status is not legitimate.

However, in light of First Amendment concerns, there are no alternative definitions that would do the job any better. The risk that an occasional illegitimate organization might derive the tax benefits of being a religious organization or church is an acceptable price to pay for a robust First Amendment.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Yockey, Using Form to Counter Corruption: The Promise of the Public Benefit Corproation

YockeyJoseph Yockey (Iowa) has published Using Form to Counter Corruption: The Promise of the Public Benefit Corporation, 49 U.C. Davis L. Rev. 623 (2015). Here is the abstract from the paper's SSRN posting:

Many observers argue that part of the blame for foreign corrupt practices should be placed on legal form. Their claim is that traditional corporate norms of shareholder wealth maximization help explain why corporate corruption is so prevalent. This essay shifts that argument to examine whether there are characteristics among corporate forms that can boost the efficacy of internal compliance strategies. In doing so, the paper’s primary recommendation is for founders to focus greater attention on an emerging new corporate association — the public benefit corporation — as a promising option for blueprinting sustainable anti-corruption compliance.

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Nonprofit and Voluntary Sector Quarterly February 2016 Issue

NVSQ Feb 2016The Nonprofit and Voluntary Sector Quarterly has published its February 2016 issue. Here is the table of contents:

Articles

Suzie S. Weng, Leadership in an Asian American Community in the South: The Development of an Informal Support Network to Increase Access to Services

Floris VermeulenDebra C. Minkoffand Tom van der Meer, The Local Embedding of Community-Based Organizations

Melissa K. HydeJeff DunnCaitlin Baxand Suzanne K. Chambers, Episodic Volunteering and Retention: An Integrated Theoretical Approach

Florentine MaierMichael Meyerand Martin Steinbereithner, Nonprofit Organizations Becoming Business-Like: A Systematic Review

Genevieve G. ShakerVictor M. H. Bordenand Brittany L. Kienker, Workplace Giving in Universities: A U.S. Case Study at Indiana University

Arthur A. StukasRussell HoyeMatthew NicholsonKevin M. Brownand Laura Aisbett, Motivations to Volunteer and Their Associations With Volunteers’ Well-Being

Rikki AbzugAlexandre OlbrechtMurray Sabrinand Erwin DeLeon, Nonprofit Financing to the Rescue? The Slightly Twisted Case of Local Educational Foundations and Public Education in New Jersey

David A. Campbell and Kristina T. Lambright, Program Performance and Multiple Constituency Theory

Walter Wymer and Sharyn Rundle-Thiele, Supporter Loyalty: Conceptualization, Measurement, and Outcomes 

Research Note

Dyana P. Mason, Recognition and Cross-Cultural Communications as Motivators for Charitable Giving: A Field Experiment 

Book Reviews

Jenny Harrow, Book Review: Creating Value in Nonprofit-Business Collaborations: New Thinking and Practice by J. E. Austin and M. M. Seitanidi

Tobias Bürger, Book Review: Social Purpose Enterprises: Case Studies for Social Change by J. Quarter, S. Ryan and A. Chan (Eds.)

Amy Blackford, Book Review: Catalysts for Change by M. Martinez-Cosio and M. Rabinowitz Bussell

Lloyd Mayer

March 4, 2016 in Publications – Articles | Permalink | Comments (0)

Thursday, March 3, 2016

New IRS Stats for Charitable Organizations and Donor-Advised Funds

IRSThe IRS Statistics of Income Division has published Nonprofit Charitable Organizations and Donor-Advised Funds, 2012, reporting on selected data for Internal Revenue Code section 501(c)(3) organizations and donor-advised funds. Highlights from the tax year 2012 Form 990 and Form 990-EZ filings include the following:

  • 279,405 501(c)(3)s reported an estimated $3.3 trillion in assets, $1.3 trillion in liabilities, $1.7 trillion in revenues, and $1.6 trillion in expenses, representing modest increases in all of these categories over amounts reported for tax year 2011
  • 501(c)(3) with $10 million or more in assets represented only 8% of returns but reported 92% of total assets and 86% of total revenues
  • donor-advised funds, which less than 1% of 501(c)(3)s sponsor (2,121 total), had a value of nearly $53 billion
  • only 4% of 501(c)(3)s had donor-advised fund holdings over $100 million, but these organizations held over 80% of the total value of such funds and Fidelity Investments Charitable Gift Fund held $24 billion in such funds alone

Lloyd Mayer

March 3, 2016 in Federal – Executive, Publications – Articles | Permalink | Comments (0)

Saturday, February 27, 2016

Bruckner: "Bankrupting Higher Education"

Like December for children, or June for SCOTUS watchers, February is a time of wonder and excitement for legal scholars, as SSRN reveals new treasures by the hundred.

To that end, Matthew Bruckner (Howard) has posted "Bankrupting Higher Education" to SSRN.  This piece (which might hit a little too close to home for some academics) compares bankruptcy options across organizational types (for-profit, nonprofit, and government).  Here's the abstract:

Many colleges and universities are in financial distress but lack an essential tool for responding to financial distress used by for-profit businesses: bankruptcy reorganization. This Article makes two primary contributions to the nascent literature on college bankruptcies by, first, unpacking the differences among the three primary governance structures of institutions of higher education, and, second, by considering the implications of those differences for determining whether and under what circumstances institutions of higher education should be allowed to reorganize in bankruptcy. This Article concludes that bankruptcy reorganization is the most necessary for for-profit colleges and least necessary for public colleges, but ultimately concludes that all colleges be allowed to reorganize in chapter 11.

-Joseph Mead

February 27, 2016 in Publications – Articles | Permalink | Comments (0)

Monday, February 22, 2016

Nonprofit Policy Forum publishes special issue on Public Policy for Nonprofits

The Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA) and the Nonprofit Policy Forum have just published a special issue on nonprofit organizations and public policy.  Here is the content:

Editors’ Note: Issue 7:1: Introduction to the ARNOVA Fourth Symposium on Public Policy for Nonprofits Special Issue, by Chao Guo and Dennis Young

Local Government Interest in and Justifications for Collecting Payments-in-Lieu of (Property) Taxes from Charities, by Kirsten Grønbjerg and Kellie McGiverin-Bohan

Re-examining the Policies in the Humanitarian Aid Sector – A Call for Greater “Value Rationality," by Sabith Khan

Law and the Volunteer: The Uncertain Employment and Tort Law Implications of the Altruistic Worker, by Joseph Mead

Tsars, Task Forces and Standards: The New “IRS”? by John Casey

The Case for Using Robust Measures to Evaluate Nonprofit Organizations, by Katherine Cooper and Michelle Shumate

Researching Policy for Nonprofit Organizations: A Brief Observation on Dilemmas Created by Conflicting Values, David C. Hammack

A Commentary on David Hammack’s Policy for Nonprofit Organizations: The Values Dilemma, by John Tyler

The Changing and Challenging Environment of Nonprofit Human Services: Implications for Governance and Program Implementation, by Steven Rathgeb Smith and Susan D. Phillips

Nonprofit Organizations’ Involvement in Participatory Processes: The Need for Democratic Accountability, by Jennifer Mosley

-Joseph Mead

February 22, 2016 in Publications – Articles | Permalink | Comments (0)

Thursday, February 4, 2016

Johnston: Legality of Private Foundation Involvement in Trump Event

David Cay Johnston (Syracuse) published " Was Involvement of Private Foundation in Trump Event Illegal?" in the February 1st 1edition of TaxAnalysts:

Did Donald Trump violate the law January 28 by involving his private foundation in his campaign for the Republican presidential nomination?

Maybe -- and maybe not, according to three practitioners specializing in the nexus of tax and nonprofit law. But all agreed that Trump's actions put front and center why Congress needs to take a serious look at the growing connections between the charitable world and partisan politics, with a focus on what will make for sound policy.

Trump clearly used the charitable foundation under his control to further his campaign for the White House. But that may not be illegal.

Other politicians -- including the Clintons, the Kennedys, and the Rockefellers -- have or had foundations that they control. However, the politicians in those families did not hold campaign rallies to raise money for their charities while running for office.

Still, the existence of those foundations has sometimes led to controversy. The receipt of gifts to the Clinton Foundation, especially from foreign governments when Democratic presidential candidate Hillary Clinton was secretary of state, has drawn sharp rebuke from some Republicans and calls for an investigation.

(Hat tip:  TaxProfBlog)

Nicholas Mirkay

February 4, 2016 in Federal – Executive, Publications – Articles | Permalink | Comments (0)

Wednesday, February 3, 2016

Nagac: Religiosity and Tax Compliance

Kadir Nagac (Zirve University, Department of Economics) has posted "Religiosity and Tax Compliance" to SSRN:

The intention of this paper is to analyze religiosity as a factor that potentially affects tax compliance. Studies in the 90s have shown that the puzzle of tax compliance is "why so many individuals pay their taxes" and not "why people evade taxes". It has been noted that compliance cannot be explained entirely by the level of enforcement (Graetz and Wilde, 1985; Efflers, 1991). Countries set the levels of audit and penalty so low that most individuals would evade taxes, if they were rational, because it is unlikely that cheaters will be caught and penalized. Nevertheless, a high degree of compliance is observed. Therefore, studies that analyze a variety of factors other than detection and punishment are need. Religiosity can play an important role in determining one's tax compliance decision. I use religious adherence data from the American Religious Data Archive and reported income data from IRS to analyze independent effects of church adherence rates on tax compliance in the United States at the county-level. Tax compliance at the county-level is measured as discrepancy in reported income between IRS data and census data. Existing studies focus on effect of religiosity on tax fraud acceptability (tax morale), not the actual tax fraud or tax compliance behavior. To writer's knowledge, this study is the first study that analyzes the effect of religiosity on actual tax compliance behavior.

(Hat tip:  TaxProfBlog)

Nicholas Mirkay

February 3, 2016 in Federal – Executive, Publications – Articles, Religion, State – Executive | Permalink | Comments (0)

Archer: Combating Public Charity Fraud with Sarbanes Oxley

John George Archer (Law Student, Mississippi) has posted "This SOX: Combating Public Charity Fraud with Sarbanes-Oxley" to SSRN:

In the wake of the corporate scandals of the Enron era, Congress delivered the Sarbanes-Oxley Act (SOX) to bolster confidence in our nation’s financial system. To save the system and protect the investing public from corporate abusers, Congress created a capable “toolkit” within SOX to fight fraud and enhance disclosure. Sarbanes-Oxley has been effective in stemming the tide of corporate malfeasance. Currently, only for-profit, publicly traded companies are subject to SOX. But corporate fraud does not stop at the door of the nonprofit world. Fraud within nonprofit corporations is a widespread problem, and nonprofits – particularly large public charities – share many similarities (the good and the bad) with their for-profit cousins. By drawing a parallel comparison between large public charities and publicly traded companies, this Article makes the case that the strong governance principles encapsulated by Sarbanes-Oxley should also be imposed on large public charities.

While others have either argued against applying SOX to nonprofits or have cautiously advocated this approach because of the diverse and varying missions of nonprofits, this article particularly singles out large public charities and demonstrates that SOX is an ideal regulator for this group. While state governments and the IRS both engage in nonprofit regulation, the current regime suffers from a lack of resources and enforcement measures to be truly effective. This is where SOX can help. So much of what Sarbanes-Oxley accomplishes is self-reporting and a governance structure that promotes independence and transparency. Because of this, Sarbanes-Oxley is considered best practices for large entities, and is voluntarily followed by many public charities.

Extending SOX would not be as large a leap as previously imagined. The parallel to large public charities is this: there is a disconnect between the stakeholders of a nonprofit and its directors and management. Within this gap lies the great potential for abuse and fraud. The economic impact of the nonprofit sector upon the American economy is no small thing, much less its social impact. To protect this vulnerable system and combat nonprofit abuse, this Article contends that Congress should take notice of the problem and address it using the same “toolkit” it already created when it addressed fraud among publicly traded companies.

Nicholas Mirkay

February 3, 2016 in Federal – Legislative, Publications – Articles | Permalink | Comments (0)

Wednesday, December 2, 2015

Collaboration Theory of the Charitable Nonprofit Corporation

Eric C. Chaffee (Toledo) has posted Collaboration Theory: A Theory of the Charitable Tax Exempt Nonprofit Corporation to SSRN: 

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

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

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

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

Nicholas Mirkay

December 2, 2015 in Publications – Articles | Permalink | Comments (0)

Trends in Private Land Conservation

Jessica Owley (SUNY-Buffalo) and Adena R. Rissman (Wisconsin):  Trends in Private Land Conservation: Increasing Complexity, Shifting Conservation Purposes and Allowable Private Land Uses, Land Use Policy 51, 76-84 (2016 Forthcoming):

The terrain of private-land conservation dealmaking is shifting. As the number of acres of private land protected for conservation increases, our understanding of what it means for a property to be "conserved" is shifting. We examined 269 conservation easements and conducted 73 interviews with land conservation organizations to investigate changes in private-land conservation in the United States. We hypothesized that since 2000, conservation easements have become more complex but less restrictive. Our analysis reveals shifts in what it means for private land to be "conserved." We found that conservation easements have indeed become more complex, with more purposes and terms after 2000 compared to conservation easements recorded before 2000. However, changes in restrictiveness of conservation easements varied by land use. Mining and waste dumping were less likely to be allowed after 2000, but new residences and structures were twice as likely to be allowed. We found a shift toward allowing some bounded timber harvest and grazing, and a decline in terms that entirely allow or prohibit these working land uses. Interviews revealed staff perceptions of reasons for these changes. Our analysis suggests that "used" landscapes are increasingly important for conservation but that conserving these properties stretches the limits of simple, perpetual policy tools and requires increasingly complex and contingent agreements.

Nicholas Mirkay

December 2, 2015 in Publications – Articles | Permalink | Comments (0)

Empirical Study of Modification & Termination of Conservation Easements

Gerald Korngold (New York Law School), Semida Munteanu (Lincoln Institute of Land Policy), and Lauren E. Smith (London Fischer LLP):  An Empirical Study of Modification and Termination of Conservation Easements: What the Data Suggest About Appropriate Legal Rules, NYU Environmental Law Journal, Vol. 24, No. 1 (2016):

The acquisition of conservation easements by nonprofit organizations (“NPOs”) over the past twenty-five years has revolutionized the preservation of American land. Recently, however, legislatures, courts, practitioners, and commentators have debated whether and how conservation easements should be modified and even terminated. The discussion has almost always been on a theoretical level without empirical grounding and has sometimes generated much heat but little light. The discussion has lacked the necessary empirical context to allow legislatures and courts to thoughtfully develop resolutions to these issues free from sloganeering and posturing.

This article provides and analyzes a previously uncollected dataset that offers guidance on the appropriate rules of law for conservation easement modification. It examines policy goals in light of the data to suggest various modification rules that would be more effective than current practice. The dataset represents a significant sample of easement modifications that have been made during a six year period (2008-2013) and indicates several findings: first, modifications have actually been taking place, despite claims that conservation easements are “perpetual,” apparently indicating that NPOs need flexibility in at least some areas; most of the changes have been “minor” and have been either conservation neutral or conservation positive, though one would expect pressure for more significant alterations over time due to shifts in the environment and human needs; there is a range of types and degree of modifications to this point, suggesting that there should be a spectrum of procedural and substantive requirements for the different varieties of modifications; and, a mandate for a stand-alone, state registry of conservation easements and modifications would allow for improved policymaking.

The article suggests that a doctrine that requires different procedures and substantive rules for various categories of modifications — a sliding scale — may yield the best, policy-based results. The work also identifies and analyzes existing doctrines — federal tax law, specific state statutes, charitable trust doctrine, standing rules, and director liability — that would need to be altered or clarified to adopt effective modification rules.

Nicholas Mirkay

 

 

December 2, 2015 in Publications – Articles | Permalink | Comments (0)