Wednesday, November 6, 2013
Matthew J. Lindsay (Baltimore) has posted "Federalism and Phantom Economic Rights in NFIB v. Sebelius" to SSRN. The abstract provides:
Few predicted that the constitutional fate of the Patient Protection and Affordable Care Act would turn on Congress’ power to lay taxes. Yet in NFIB v. Sebelius, the Supreme Court upheld the centerpiece of the Act — the minimum coverage provision (MCP), commonly known as the “individual mandate” — as a tax. The surprising constitutional basis of the Court’s holding has deflected attention from what may prove to be the decision’s more constitutionally meaningful feature: that a majority of the Court agreed that Congress lacked authority under the Commerce Clause to penalize individuals who decline to purchase health insurance. Chief Justice Roberts and the four joint dissenters endorsed the novel limiting principle advanced by the Act’s challengers, distinguishing between economic “activity,” which Congress can regulate, and “inactivity,” which it cannot. Because the commerce power extends only to “existing commercial activity,” and because the uninsured were “inactive” in the market for health care, they reasoned, Congress lacked authority under the Commerce Clause to enact the MCP. Critically, supporters of the activity/inactivity distinction insisted that it was an intrinsic constraint on congressional authority anchored in the text of Article I and the structural principle of federalism, rather than an “affirmative” prohibition rooted in a constitutional liberty interest.
This Article argues that the neat dichotomy drawn by the Chief Justice and joint dissenters’ between intrinsic and rights-based constraints on legislative authority is false, and that it obscures both the underlying logic and broader implications of the activity/inactivity distinction as a constraint on congressional authority. In fact, that distinction is animated less by the constitutional enumeration of powers or federalism than a concern about individual liberty. Even in the absence of a formal constitutional “right” to serve as a doctrinal vehicle, the justices’ defense of economic liberty operates analogously to the substantive due process right to “liberty of contract” during the Lochner era — as a trigger for heightened scrutiny of legislative means and ends — through which the justices constricted the scope of the commerce power.
Current scholarship addressing the role of individual liberty in NFIB v. Sebelius tends to deploy Lochner as a convenient rhetorical touchstone, to lend an air of illicitness or subterfuge to the majority’s Commerce Clause analysis. I argue that the Lochner-era substantive due process cases are both more nuanced and more instructive than judges and many scholars have realized. They illustrate, in particular, that constraints on legislative authority that are rooted in individual liberty and constraints on legislative authority that are rooted in enumerated powers and federalism can and do operate in dynamic relationship to one another. Reading NFIB v. Sebelius through this historical lens better equips us to interrogate the role that economic liberty plays in the majority’s Commerce Clause analysis, and provides an important alternative analytical framework to the structure/rights dichotomy advanced by the Chief Justice and joint dissenters. The activity/inactivity distinction not only portends a constitutionally dim future for federal purchase mandates, but may also herald more far-reaching restrictions on congressional interference with individual liberty, in which individual sovereignty assumes a place alongside state sovereignty in the Court’s federalism.
Daniel C. Willingham (Husch Blackwell, St. Louis) has published "'Are You Ready for Some (Political) Football?' How Section 501(c)(3) Organizations Get Their Playing Time During Campaign Seasons," in 28 Akron Tax J. 83 (2013). The introduction to the article provides the following:
The purpose of this Article is to analyze the ways in which Section 501(c)(3) organizations take part in lobbying activities while still maintaining their tax-exempt status. This topic is crucial as we revisit these same issues at all levels of government every election season.
This Article examines the Tax Code, treasury regulations, revenue rulings, case law, and scholarly research. Its purpose is to provide a detailed analysis of the current law and how exempt organizations can apply it in practice. To achieve this goal, this Article is broken down into seven parts. Section II provides the statutory framework under which Section 501(c)(3) organizations operate. Sections III and IV examine the "substantial part" test and the Section 501(h) expenditure election, respectively. If an organization routinely fails both the "substantial part" test and the Section 501(h) test, then it should establish an affiliated Section 501(c)(4) organization, which is covered in Section V. Section VI attempts to tie all the rules together for the "substantial part" test, the Section 501(h) election, and the use of a Section 501(c)(4) affiliate. Section VI then provides a proposal on how Section 501(c)(3) charitable organizations advance their tax-exempt purposes through lobbying while still protecting their tax-exempt status during campaign seasons. Section VII offers some final thoughts on why the study of this area of the law is so important.
Wednesday, October 16, 2013
Grace Soyon Lee, Associate Professor at the University of Alabama School of law, has recently published “Mitigating the Effects of an Economic Downturn on Charitable Contributions: Facing the Problem and Contemplating Solutions,” 22 Cornell J. L. & Pub. Pol'y 589 (2013). Here is the abstract:
Hat Tip: TaxProf Blog
Charitable giving has been a foundation of American society almost since the nation began, but the issue of how such giving should be treated for tax purposes has been the subject of frequent debate. Scholars have proposed various theories explaining why the positive effects of this deduction on both donors and donees outweigh the negative impact on government coffers of this tax expenditure, although many still criticize certain features of the deduction in its current form. However, one area of this research that has previously been neglected is how the charitable sector is affected by changes to the economy at large. Contributions to charitable organizations tend to decline during an economic downturn, and such a decline may be catastrophic to the charitable sector. In particular, an economic downturn can affect charitable organizations in three different ways. First, some organizations may experience an increase in donations but simultaneously experience an increase in demand for their services. Other organizations may experience an increase in demand for their services without experiencing an accompanying increase in donations. Finally, some organizations may experience such a steep decline in donations that their very survival is put in jeopardy, regardless of whether the demand for their services increases. In order to meet the recessionary needs of all three types of organizations, the government should: 1) convert the current charitable deduction to a refundable credit that is available to all taxpayers; 2) provide a tax credit to employers who second their employers [sic] to work for charitable organizations; and 3) provide direct funding to those charities that can demonstrate dire financial need.
Thursday, October 3, 2013
Charities must serve public rather than private interests. Much of the enforcement effort in this area of the law tries to ensure that such organizations do not engage in impermissible self-dealing, that is, in providing unreasonable benefits to insiders. That is, limits on self-dealing are crucial to regulation of this section. Both state law and federal tax law include provisions designed to prevent such behavior. These laws, however, often exhibit inefficiencies and differences that impose unnecessary burden on organization seeking to comply with applicable law.
State law regulates both trusts and nonprofit corporations. If the organization is formed as a trust, the “no further inquiry rule” of common law applies. Under this rule, a trustee, whether of a charitable trust or a private trust, is per se liable so long as a beneficiary shows that the trustee had a personal interest in the transaction; harm to the trust is irrelevant. If the organization is formed as a corporation, nonprofit corporation statutes generally include requirements as to the procedures for board approval of self-dealing transactions, procedures that, in practice, are usually easy to meet.
Tax law supplies self-dealing rules for organizations exempt under section 501(c)(3) of the Internal Revenue Code. Under federal tax law, public charities must satisfy the so-called intermediate sanction rules, which impose excise taxes on transfers between the organization and an insider that confer an “excess benefit” on the insider. Private foundations, which are section 501(c)(3) organizations that, in general, receive their support from a single individual or corporate source or family group and make grants to other charitable organizations, face stricter rules than public charities regarding self-dealing. They face two-tier excise taxes that in practice prohibit transactions between the private foundation and certain specified insiders, even when the transaction would benefit the organization.
This article uses both the economic theory of deterrence and norms theory to argue for a change to both state law and federal tax law. Using the California nonprofit corporation statute and the availability of individual exemptions from the prohibited transactions rules of ERISA, it argues for advance approval procedures. Making state and federal self-dealing rules as similar as possible would best carry out the rules’ shared purpose. Reconciling these rules would aid nonprofit charitable organizations in adopting a set of operating procedures to ensure compliance with the various laws applicable to them. Similar rules would also render state and federal enforcement easier and more efficient.
Part I describes why self-dealing rules are so important in the nonprofit context. Part II details and evaluates the various self-dealing regimes in which nonprofit tax-exempt entities operate. Part III considers how these various approaches could be reconciled with use of administrative advance approval.
Wednesday, October 2, 2013
Michael J. DeBoer (Faulkner) has posted "Religious Hospitals and the Federal Community Benefit Standard - Counting Religious Purpose as a Tax-Exemption Factor for Hospitals" to SSRN. Here is the abstract:
This Article argues that the religious purpose of religious hospitals should be explicitly counted for purposes of determining tax exemption under federal corporate income tax law as well as state tax law. This argument is premised upon the special protections secured to religious institutions under federal and state constitutions, the history of tax exemptions extended to religious and charitable institutions, the separate enumeration of religious purpose as an exempt purpose in § 501(c)(3) of the Internal Revenue Code, and the important role of nonprofit organizations in American society.
This Article develops this argument in several steps. First, it traces some of the historical background regarding the tax exemption of nonprofit and religious hospitals in the United States, including the development of the community benefit standard. Second, it examines recent federal legislative and regulatory initiatives, including the Affordable Care Act, that have amplified the community benefit standard with additional requirements that hospitals must meet to qualify for and retain tax-exempt status under federal income tax law. Third, it offers a range of reasons that support counting the religious purpose of religious hospitals for determining tax-exempt status. Fourth, it sets forth a typology of nonprofit hospitals and offers two sets of proposals — the first suggesting revisions to federal income tax exemption law and regulation, and the second encouraging religious hospitals to make their religious purpose more evident in their organizations and operations.
Jeremy M. Christiansen (Utah) posted "'The Word Person...Includes Corporations': Why the Religious Freedom Restoration Act Protects Both For- and Nonprofit Corporations" to SSRN. Here is the abstract:
In recent months, lawsuits challenging the Patient Protection and Affordable Care Act’s (“ACA”) requirement that providers of health insurance pay for contraceptives and abortifacient drugs have attracted attention from legal commentators, the news media, and even the Supreme Court. Plaintiffs argue that the contraception mandate violates the Religious Freedom Restoration Act (“RFRA”) by imposing a substantial burden on their religious exercise without meeting strict scrutiny requirements. Early circuit court decisions at the preliminary injunction phase foreshadowed a circuit split on the issue, with some siding with the plaintiffs, and others siding with the government. While this Note was going to print, the Tenth Circuit issued a complicated en banc decision in Hobby Lobby Stores, Inc. v. Sebelius, that reversed a lower court ruling in favor of the government. Although that case signaled a victory for the plaintiffs, the fractured nature of the decision only underscores the likelihood that this issue will ultimately land on the Supreme Court’s doorstep.
Hobby Lobby highlights a novel issue — whether for-profit corporations can seek exemptions from the ACA by invoking RFRA. This Note will consider the arguments put forward by the majority in Hobby Lobby, as well as those put forward by the dissenters. Moreover, this Note will address additional textual and contextual factors that courts have failed to consider, ultimately concluding that RFRA draws no distinction between for- and nonprofits. Policy arguments against allowing for-profits protection under RFRA are then considered. In the end, if courts will stay true to RFRA’s text and context, they will be led to two ultimate conclusions. First, for-profits are within RFRA’s auspices. And second, the sacrifice of conscience is not the cost of incorporation in America.
Susannah Camic Tahk (Wisconsin) has posted "Crossing the Tax Code's For-Profit/Nonprofit Border" to SSRN. Here is the abstract:
The federal tax code erects and enforces a firm border between for-profit and nonprofit organizations. Multiple provisions of the code monitor the boundaries of the tax-exempt, or nonprofit, sector to ensure that no nonprofit organization slips over the border to become a for-profit organization. Other code provisions restrict entry into the tax-exempt sector by for-profit organizations. Despite serious legal impediments, however, organizations on both sides of the boundary have increasingly found means by which they can cross the border. Arrangements such as corporate social responsibility, for-profit philanthropy, and social enterprise illustrate this recent trend. Through these arrangements, for-profit organizations are beginning to embrace social goals, while nonprofit organizations have started to use methods more traditionally associated with efficient business organizations. Research in organizational sociology provides tools by which to understand these new cross-border developments. This body of research has shown that organizational sectors, or fields, evolve according to well-understood patterns, whose significance tax scholars have overlooked. Then, federal tax law has failed to recognize and to make productive use of these organizational trends. This Article proposes that tax law should acknowledge the cross-sector movements of for-profit and nonprofit organizations, as well as the major advantages that these movements can produce. Tax law could then harness border-crossing activity to create social benefits. To achieve this result, federal tax law needs significantly to loosen the for-profit/nonprofit boundary. This change would enable the tax code to encourage cross-sector "collaborations" between for-profit and nonprofit organizations. This change to the tax law is one that Congress and the IRS could now accomplish through several basic measures. These measures would make it possible for federal tax law to realize the large potential for social good that lies at the changing for-profit/nonprofit border.
Daniel E. Chand (New Mexico State) has posted "Nonprofit Electioneering Post Citizens United: Has the System Become More 'Complex'? to SSRN. Here is the abstract:
Nonprofits face a complex web of congressional statutes and administrative rules designed to regulate their advocacy activities. As a result, most politically active nonprofits have formed “complex organization structures” of multiple tax-exempt statuses, which are intended to bolster an organization’s overall advocacy by allowing the group to delegate specific activities to different entities. Citizens United v. FEC (2010) and the subsequent rise of “super PACs” has further incentivized groups to develop these complex structures. This study describes the system of regulations governing nonprofits involved in elections and examines the electioneering activities of 50 of the most politically active nonprofits involved in the last four elections: 2006 through 2012. The findings show that groups – especially 501(c)(4) social welfare organizations – are relying less on their traditional PACs to make direct contributions to candidates and are, following Citizens, increasingly making independent expenditures directly from their 501(c) tax-exempt status and from loosely affiliated super PACs.
Philip C. Blackman (Penn State) and Kirk J. Stark (UCLA) have posted "Too Good to Be True? How State Charitable Tax Credits Could Increase Federal Funding for California" to SSRN. Here is an abstract of the article:
An IRS chief counsel memorandum published in 2010 found that a taxpayer was permitted to claim a charitable contribution deduction for the full amount of a gift, even thought a substantial portion of the gift was effectively refunded to the taxpayer through a charitable state tax credit. In this article, Blackman and Stark explain that the IRS memorandum permits states to adopt charitable tax credits that effectively enable taxpayers to convert state taxes to charitable gifts — a strategy that would be attractive to alternative minimum taxpayers. Those state charitable tax credits (some with extraordinarily high credit percentages) appear to be on the rise, perhaps in part because they effectively enable a transfer of revenue from the federal government to the states. The authors believe the memorandum should be repudiated (as a matter of appropriate federal tax policy), but if it is not, states should consider taking advantage of it. The article discusses how the strategy applies in the case of proposed California legislation that would permit a 60 percent tax credit for contributions to a state fund designed to increase financial support for low- and middle-income students to pursue secondary education.
Sunday, September 22, 2013
Adam Chodorow (Arizona State) has posted Charity with Chinese Characteristics, UCLA Pacific Basin Law Journal (forthcoming). Here is the abstract:
Over the past 30 years, scholars and activists have called on the Chinese government to ease the registration and oversight rules governing non-governmental organizations (NGOs) and to increase funding for such organizations by, among other things, broadening the charitable deduction. While China has made significant progress in this regard, the government continues to throw up roadblocks for NGOs, suggesting that it has not fully embraced this path.
This article considers the extent to which the justifications for a broad charitable deduction adduced in the West make sense in China. The goal is to develop a normative basis consistent with Chinese values and interests that Chinese authorities would find compelling and which might lead to additional efforts to develop China’s civil sector. This article also considers the extent to which China’s political and social culture may affect such efforts, concluding that, even if China were to adopt Western-style laws governing NGOs and provide for a broad charitable deduction, China’s culture would shape both how government officials implement the laws and how the Chinese people respond to them, leading to a system of charity, but one with Chinese characteristics.
Danshera Cords (Albany) has posted Charity Begins at Home? An Exploration of the Systemic Distortions Resulting from Post-Disaster Giving Incentives. Here is the abstract:
Looking back to the turn of the twenty-first century, there have been many major disasters, both here and abroad. These disasters all require significant private charitable assistance to provide for victims immediate needs and also see the area through cleanup and recovery.
This article reviews a number of past efforts to encourage charitable giving through temporary tax provisions. While these are well-meaning efforts on Congress’ part, temporary provisions have some significant disadvantages. First, they treat different victims with similar harm differently. Second, they are not enacted following each major disaster. Third, both equity and efficiency would be improved if disaster relief contributions were addressed in a single permanent provision with fixed triggers and established thresholds for incentivizing charitable giving for disaster relief.
This article concludes that a permanent approach should be adopted to improve the aid available to disaster victims. This would also reduce political infighting at the time a disaster has occurred. Ex ante any Congressional district could be hit by a major disaster, everyone should support a permanent solution.
Brian Galle (Boston College) has posted Social Enterprise: Who Needs It?, 54 Boston College Law Review (forthcoming 2013). Here is the abstract:
State statutes authorizing firms to pursue mixtures of profitable and socially-beneficial goals have proliferated in the past five years. In this invited response essay, I argue that for one large class of charitable goals the so-called “social enterprise” firm is often privately wasteful. While the hybrid form is a bit more sensible for firms that combine profit with simple, easily monitored social benefits, existing laws fail to protect stakeholders against opportunistic conversion of the firm to pure profit-seeking. Given these failings, I suggest that social enterprise’s legislative popularity can best be traced to a race to the bottom among states competing to siphon away federal tax dollars for local businesses. Not all hybrid forms inevitably are failures, however. For example, the convertible debt instruments proposed by Brakman Reiser and Dean -- the inspiration for this response -- offer a promising route forward for “cold glow” firms wishing to promise to clean up some easily-measured but harmful business practices.
Friday, August 23, 2013
Once I put away the blogging about the Van Hollen v. IRS case, I started to tackle the pile of journals and magazines that the College of Law's circulation department dutifully sends me daily. And what did I see on the cover of the Virginia Tax Review, Volume 32, No. 4 (Spring 2013):
- Chevron's Conflict with the Administrative Procedures Act by Patrick J. Smith, a partner with Ivins, Phillips & Barker in Washington D.C.
Given the apparent issue in the Van Hollen case, this seems very timely - it's in the "to read over the weekend pile." Which weekend, of course, remains to be seen, but that has nothing to do with the article!
Friday, August 2, 2013
This paper explores whether ownership matters in a fundamental sense by comparing the performance of stockholder-owned firms with the much less analyzed nonprofit firms. No stakeholder has residual cash flow rights in nonprofit firms, and the control rights are held by customers, employees, and community citizens. Accounting for differences in size and risk and comparing only firms in the same industry, we find that stockholder-owned firms do not outperform nonprofit firms. This result is consistent with the notion that the monitoring function of stockholders may be successfully replaced by other mechanisms. We find evidence that product market competition may play this role as a substitute monitoring mechanism.
Martha Reeves (no affiliation provided) has posted Brand Partnerships as Joint Ventures: A Comparison of Two Partnerships in the Small Non-Profit Arena to SSRN. Here is the abstract:
Through a case study approach, this article explores how non-profits can effectively participate in joint ventures with larger, for-profit institutions. In addition to offering a new product or service, these partnerships should build the brands of both organizations. The similarity between for-profit business joint ventures and non-profit joint ventures is examined. The author compares two non-profit joint ventures – one successful and one unsuccessful – to demonstrate the importance of several aspects of joint ventures. Just as in business ventures, non-profits must carefully select their partners, have a clear understanding of roles and responsibilities, engage in open communication, and have a written charter of each partner's roles and responsibilities. Most importantly, non-profits must ensure that they are treated as equal partners and that their brand is reinforced in any communication to their stakeholders.
Wednesday, July 31, 2013
Riley Lovendale (Boston College, J.D. 2014 expected) posted Tax Versus Penalty, Round Two, Fight! Intepreting the PPACA's Assessable Payment as a Tax for Federal Funding Costs Allowances to SSRN. Here is the abstract:
The Patient Protection and Affordable Care Act (PPACA), significant health care reform enacted in 2010, imposes an “assessable payment” on certain employers that fail to offer affordable health insurance to their employees. The ambiguity of the exaction’s title poses a planning problem for some nonprofits receiving federal grant funds with restrictions imposed by the Office of Management and Budget’s Circular A-122. Circular A-122 permits these restricted grant funds to be used for “taxes,” but not for “penalties.” On June 28, 2012, the U.S. Supreme Court, held in National Federation of Independent Business v. Sebelius that the PPACA’s individual mandate’s “shared responsibility payment” could, for constitutional purposes, be interpreted as a tax. This Note argues that the PPACA’s assessable payment should be interpreted as a tax by applying the Supreme Court’s recent tax versus penalty analysis and analyzing the exaction’s characteristics and effect on employer behavior. This interpretation will provide organizations with predictability in planning and ensure that Congress does not escape political accountability for imposing taxes by using the ambiguous term “assessable payment.”
Friday, July 19, 2013
George Dent (Case Western) has posted on SSRN Probing Corporate Governance Without Shareholders: A Cautionary Lesson From Non-Profit Organizations. Here is the abstract:
over 80 years, debate over corporate governance has centered on the
balance of authority between the board and shareholders. One side in
this debate advocates “shareholder primacy”, so that directors would
actually be chosen by and accountable to the stockholders. The other
side touts “director primacy” and keeping shareholders weak. This side
claims that directors who are free of shareholder control would strive
to maximize long-term firm value, and have the wisdom and independence
to pursue this goal intelligently and conscientiously.
The boards of non-profit organizations (“NPOs”) are self-perpetuating: They are not answerable to shareholders because they have no shareholders. If director primacists are right, NPO boards should function as director primacists wish corporate boards would. The reality is quite the contrary. Commentators agree that NPO boards are generally worse than corporate boards. This brief article describes the functioning of NPO boards, discusses why they are so dysfunctional, and what lessons their example holds for corporate governance.
From the Editors' Desk
- Femida Handy, Jeffrey L. Brudney, and Lucas C.P.M. Meijs, From the Editors' Desk
- Jo Anne Schneider, Introduction to the Symposium: Faith-Based Organizations in Context
- Wolfgang Bielefeld and William Suhs Cleveland, Defining Faith-Based Organizations and Understanding Them Through Research
- Wolfgang Bielefeld and William Suhs Cleveland, Faith-Based Organizations as Service Providers and Their Relationship to Government
- İpek Göçmen, The Role of Faith-Based Organizations in Social Welfare Systems: A comparison of France, Germany, Sweden, and the United Kingdom
- Jo Anne Schneider, Comparing Stewardship Across Faith-Based Organizations
- Patricia A. Wittberg, Faith-Based Umbrella Organizations: Implications for Religious Identity
- Jill Witmer Sinha, Unintended Consequence of the Faith-Based Initiative: Organizational Practices and Religious Identity Within Faith-Based Human Service Organizations
- Khaldoun AbouAssi, Hands in the Pockets of Mercurial Donors: NGO Response to Shifting Funding Priorities
- Joanne G. Carman and Rebecca Nesbit, Founding New Nonprofit Organizations: Syndrome or Symptom?
- David C. Hammack, Book Review: Civic Engagement in Postwar Japan: The Revival of a Defeated Society, by R. Kage
- Marne Bariso, Book Review: The Volunteer Management Handbook: Leadership Strategies for Success, by T.D. Connors
- Wesley E. Lindahl, Book Review: The Science of Giving: Experimental Approaches to the Study of Charity, by D.M. Oppenheimer and C.Y. Olivola
Alicia Plerhoples (Georgetown) has posted Is Chick-Fil-A a Social Enterprise?: The Place of Conservative Values within Social Enterprise Legislation on SSRN. Here is the abstract:
This article examines whether recent social enterprise legislation (i.e., the benefit corporation and its various iterations) accommodates companies that have ideologically conservative social missions in addition to internal governance structures and operations that embrace corporate sustainability principles. The article examines whether the benefit corporation and the social and environmental standards employed to measure “general and specific public benefits” are ideologically neutral, and explores what normative values are incorporated into social enterprise legislation. This examination will be conducted through inquiring into whether Chick-fil-A, the popular U.S. fast food restaurant that donates to conservative causes and nonprofit organizations, and also embraces environmentalism and fair employment standards in its internal governance structure, could re-incorporate as a benefit corporation. The author argues that while the corporate legal form might be ideologically neutral, measurements of social and environmental benefits play a critical role in determining what constitutes sustainability and the public benefit produced. These measurements often incorporate ideologically liberal values and exclude conservative values.
Yuan Ji (Wilson Sonsini) has posted Burning Man: A Case Study of Altruism Thriving in a For-profit Organizational Form and the Rationales for LLC-to-Nonprofit Conversion, 9 Hastings Business Law Journal 449 (2013). Here is the abstract:
Burning Man is a temporary city of over 50,000 citizens that exists for one week every year in Nevada’s Black Rock Desert. Burning Man is perhaps best known in popular culture for its celebration of interactive art, experimental community building, gift economy, and ritual burning of a large wooden structure in the shape of a man. The case study of Burning Man is used to illustrate that an altruistic organization, one that is ideologically committed to the provision of public goods and not driven by profit, can nevertheless thrive in a for-profit legal form while staying true to its mission. Depending on organization-specific conditions, the nonprofit form can be, but does not necessarily have to be, the best structure for the provision of altruism and public goods (or quasi-public goods). As an organization evolves and becomes more complex overtime, however, the organization form that best serves its mission can change as well. Still, the nonprofit form alone neither guarantees altruistic commitment nor is immune from abusive practices within the management or board of directors. This Article discusses the theories on nonprofit formation that make persuasive rationales for Burning Man’s conversion to a nonprofit structure; it also makes specific recommendations for better organizational accountability and transparency in the Project’s current and future operations.