Nonprofit Law Prof Blog

Most Americans Don't Want Faith Leaders Endorsing or Opposing Candidates

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Freedom Path, Inc. v. IRS: Issue Advocacy or Campaign Intervention?

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23andMe to be Acquired by 501(c)(3)

Today at Jonesing on Nonprofits:

New Floors and Ceilings for the Charitable Contribution Deduction Worry Stakeholders

 

The Big Beautiful Bill good news for charity is that starting in 2026, average taxpayers can once again take a deduction for charitable contributions. As a practical matter, the charitable contribution deduction is currently available only to the very wealthy — those with enough income and deductions that it makes better sense to itemize than to take the standard deduction. The standard deduction was significantly increased as part of the Tax Cut and Jobs Act. BBB, at Section 70102, not only increases the standard deduction — making it even less advantageous to itemize — but it allows a $1000 ($2000 for married couples) above the line charitable contribution deduction in Section 70424. It remains to be seen, however, if various floors and ceilings on the charitable contribution deduction will wipe out any increase in giving resulting from the above the line deduction.

In an article I published about 18 months ago, I argued that the effect of practically limiting the charitable contribution deduction to itemizers was that it provided wealthy taxpayers with a subsidy for charitable contributions that the rest of us did not enjoy. The wealthy already exercise undue influence over Civil Society precisely because they are wealthy. They should not be further advantaged by a deduction unavailable to the rest of us. The advantage and disadvantage to wealthy and average taxpayers, respectively, is undemocratic because it lessens grassroots influence over organizations that purport to extend democratic influence to regular folk. Reinstating the charitable contribution subsidy for regular folk, via an above the line deduction, lessens the relative advantage and disadvantage.

Still, observers are bemoaning the BBB’s predicted overall impact on charitable giving because of two new floors and two new ceilings. First, Section 70426 disallows the first 1 percent of corporate charitable contributions. In other words, corporations will be eligible for the deduction only to the extent the contribution exceeds 1% of taxable income. According to the Chronicle of Philanthropy, the typical corporation “gives slightly less than 1 percent of pre-tax profits.” An Ernst and Young study estimates that the 1% floor (combined with a 10% ceiling discussed below) will result in a decrease of between $4 and $5 billion in charitable contributions. Another provision, Section 70425, limits the deduction for individual itemizers to the amount that exceeds one half of one percent of a taxpayers modified AGI (i.e., the contribution base). As a general matter, floors present taxpayers with the choice of giving more than they might otherwise give or giving nothing at all.

Analysts assert also that new ceilings in the Tax Code will cost charities billions in charitable contributions. Section 10111 places a limit on the amount of itemized deductions available to [wealthy] taxpayers. Essentially, for each dollar of charitable contributions made, an itemizer can save no more than 35 cents. Under current law, the wealthiest donors save 37 cents. Thus, wealthy taxpayers will save less money under the BBB. Here is what a math and statics-heavy study (too heavy for me to understand or explain!) by the Lilly Family School of Philanthropy says about a new 35% ceiling on the value of itemized deductions:

We have calculated the estimated changes in itemized donations that would result from a tax deduction cap imposed on all deductions, including charitable donations, at 35%. This would only affect those who fall into the 37% marginal tax rate bracket (MTR). Given that the research literature has found a range of tax-price elasticities of demand, we have calculated the estimates for the decline in itemized charitable deductions using commonly assumed elasticities ranging from -0.5 to -2.0. Once adjusted for inflation to 2025 price levels, the lost charitable contributions range from approximately $2 billion (-0.5 elasticity) to $8.2 billion (-2.0 elasticity).

Finally, the 1% floor on corporate charitable contribution deduction is combined with a 10% ceiling. This means that only the amount between 1% and 10% of of taxable income will be deductible. The new law, at Section 70426, allows for a carryover of amounts in excess of 10% but as noted above, Ernst and Young estimates the floor and ceilings will decrease charitable giving by $4 to $5 billion.

A 2017 study by the Lilly foundation found that extending the charitable contribution deduction, as the BBB does, would likely increase charitable giving by 1.3% and 4.3%. I haven’t found a study yet that concludes that the increase will offset the decreases caused by the floors and ceilings. But the charitable sector would obviously prefer the above the line deduction be authorized without the floors and ceilings imposed on itemizers and corporations.

Jonesing

"The Anatomy of Nonprofit Control of Business Enterprise:" A comparative analysis of legal systems in Europe, the U.K., and the U.S.

Here is an abstract of an interesting forthcoming article by Ofer Eldar and Mark Orberg:

ABSTRACT

Nonprofit control of operating businesses has long been a feature of European corporations such as Novo Nordisk, Ikea, Carlsberg, and Rolex, which are governed by enterprise foundations—nonprofits with charitable missions explicitly permitted to hold controlling stakes in businesses. In the U.S., nonprofit control is becoming more prominent due to recent legal developments, with companies like Patagonia and OpenAI now under nonprofit ownership. Despite this growing interest, the economic rationale behind nonprofit control remains poorly understood: why would nonprofits with social missions choose to control businesses that sell products and services?

We identify two primary models of nonprofit control. The income-generating for-profit is controlled by a nonprofit to generate funding for its charitable mission, ensuring steady long-term cash flows and mitigating systematic risk. The socially-oriented for-profit is controlled to ensure the operating business adheres to the nonprofit’s mission. Unlike simplistic accounts that treat all nonprofit-controlled businesses as uniformly purpose-driven, our analysis clarifies the benefits and risks of these models and provides a framework for evaluating legal regimes governing them.

Our comparative analysis of legal systems in Europe, the U.K., and the U.S. highlights significant differences in how nonprofit control is regulated. European and U.K. laws support income-generating for-profits through enterprise foundations and trading companies while incorporating oversight to ensure socially-oriented for-profits remain mission-driven. U.S. law, by contrast, imposes strict limits on private foundations while allowing other nonprofits to control businesses with few safeguards against outside investor influence.

We propose an optimal legal framework to facilitate income-generating for-profits where mission-drift risks are relatively low while imposing stronger safeguards on socially-oriented for-profits to prevent outside investors from undermining their social missions, as seen in the recent OpenAI controversy. Rather than focusing on independence from donors or founders, legal reforms should prioritize independence from investors with economic interests in the for-profit subsidiary. Our proposal ensures that nonprofit-owned businesses remain both financially sustainable and committed to their stated social purposes.

 

Jonesing

Political Alignments on Donor Disclosure/Privacy are Always Shifting

The Roots of Donor Disclosure Are Uglier Than We Knew

Most progressives, I imagine, favor rules requiring donor disclosure. They don’t like the darkness that obscures the public view of who is pulling political strings via ostensibly apolitical nonprofit organizations. Conservatives oppose donor disclosure requirements. They pretend to champion privacy and free association rights to hide the frequent fact that their fat cat donors who portray themselves as progressive or populist in public are actually the opposite in private.

But it hasn’t always been that way, and I predict it won’t always be that way again. The two sides have switched sides in the past and if things keep going the way they are, the two sides will switch sides again. Or they might even join forces in support of NAACP v. Alabama ex rel. Patterson. During the civil rights era and then again during the red scare, conservatives demanded to know who was donating to or just populating groups thought to be “outside agitators,” communists, or “communist sympathizers.” Progressives preferred – indeed depended on – donor privacy to protect themselves from lynchings, economic oppression, or getting hauled before some crazy Congressional committee and thereafter banished, by mere rumor and inuendo, from Hollywood and the rest of society.

As Trump continues his speech- and thought-based persecution of civil society, I bet progressives will increasingly reject calls for donor disclosure. Donor disclosure will be increasingly dangerous for progressive stakeholders – and eventually for all stakeholders. By the way, I include in the phrase “donor disclosure,” laws or regulations requiring the disclosure not only of those who fund Civil Society, but also those who are members of organizations composing civil society. But right now, conservatives are portraying themselves as the protectors of individual liberty and free association. Progressives not so much.

Earlier this week, the North Carolina legislature gave its final stamp of approval – on party line votes consistent with the current “Republicans for” and “Democrats against” status quo -- to a new donor privacy law. The lawmakers sent the bill to the Democratic Governor on Monday. Media reports give no indication whether Governor Stein will sign or veto the measure. Here is the gist of Senate Bill 416:

SECTION 4. Protections Afforded. – Notwithstanding any law, and subject to Section 5 of this act, a public agency shall not do any of the following:

(1) Require any person or nonprofit organization to provide the public agency with personal information or otherwise compel the release of personal information.

(2) Release, publicize, or otherwise publicly disclose personal information in possession of the public agency.

(3) Request or require a current or prospective contractor or grantee with the public agency to provide a list of nonprofit organizations to which the current or prospective contractor or grantee has provided financial or nonfinancial support.

Personal information is not a public record under Chapter 132 of the General Statutes.

“Personal information.” – Any list, record, register, registry, roll, roster, or other compilation of data of any kind that directly or indirectly identifies a person as a member, supporter, volunteer, or donor of financial or nonfinancial support to any nonprofit organization.

Democrats are opposed and Republicans are in favor. But that probably won’t last always.

 

Jonesing on Nonprofits

Fred Stokeld, 1963 - 2025

I never once met Fred Stokeld.  But I learned a lot from his reporting and even published in the journal he founded, "The Exempt Organization Tax Review."  Here is sad news from Tax Notes:

Fred Stokeld, chief correspondent and editor in chief of Tax Analysts’ Exempt Organization Tax Review, has died. He was 62. Fred wrote thousands of stories in his 32 years at Tax Analysts, and he remained grateful for the opportunity to be a journalist the entire time. 

It wasn’t his first choice of careers. After graduating from American University, Fred started down a path toward the politics and policy world. After unhappy stints working at a White House communications office and for Congress, he found that Tax Analysts was a better fit for his kind and gentle nature.

Fred began as a proofreader, but was soon recruited to be a reporter, allowing him to apply his skills to help educate readers about possible changes to tax policy.  He took the job seriously and worked to build relationships with his sources in the exempt organizations world.  When Fred was named editor in chief of the monthly product in 2002, he wrote in his opening letter to subscribers: “I want EOTR to be a magazine you look forward to receiving and on which you can depend.”

He meant it. Fred didn’t leap to conclusions, or even crawl. He didn’t read between the lines; he stuck to the facts to make sure he wasn’t allowing himself to insert opinions or inaccuracies in his stories. Fred said he wasn’t registered to vote. As a journalist, he didn’t want anyone to be able to say he favored any political party. Fred also eschewed opportunities to tease the IRS for the especially antiquated technology used in the exempt organizations division, saying he wasn’t comfortable with that sort of writing.

Paul Streckfus, a former Tax Notes editor who went on to start his own exempt organizations journal, said he admired Fred’s approach, and he looked forward to the times they spent together talking and comparing notes at conferences.  “The one thing I held against him is that he wasn’t a gossip,” Streckfus said. “I wanted to hear some dirt, but he was such a kind guy. That just completely went against the grain with him. He would never talk about anybody in even the slightest negative way.”

That kindness endeared him to his Tax Notes colleagues as well. Several staffers got their first reporting experience helping Fred, and he was known for offering encouraging feedback on their early work. It also helped that when Fred said, “Thank you,” it was expressed with a deep sincerity that could pierce the armor of the most jaded journalists. For those who worked with him, that feeling will be missed.

“There are a couple thousand people in this country who pretty much live in EO tax, and of that group, of course, maybe 100 are very active. It’s a rather tight community,” Streckfus said. “Everybody knew him. He was well liked and well respected. And he was totally objective in his writing. He was a true journalist.” Fred is survived by his sister, Amanda Stokeld Moroney, and his mother, Laura.

The good really do die young.  

darryll jones

DeSantis and Hope Florida 501(c)(3) Stumble Into Scandal

Read all about it today without a subscription on Jonesing on Nonprofits:

ABA Outstanding Nonprofit Lawyer Awards

The American Bar Association has announced its 2025 Outstanding Nonprofit Lawyer Award recipients. The NLPB's very own managing co-editor, prolific blogger, and academic extraordinaire Darryll Jones received the Outstanding Academic Award for "distinguished academic achievement in the nonprofit sector." Other award recipients are:

• Vanguard Award to Robert A. Wexler, Senior Counsel, Adler & Colvin
• Outstanding Attorney Award to Kimberly Lowe, Shareholder and Attorney, Avisen Legal
• Outstanding In-House Counsel Award to Joshua J. Mintz, Vice President, General Counsel, and Secretary, MacArthur Foundation
• Outstanding Young Lawyer Award to Amanda Reed, Of Counsel, Caplin & Drysdale

Congrats to all of the award recipients! 

-Joseph Mead

Senate Finance Releases One Big Beautiful Bill Act Text

A skeet on Bluesky yesterday alerted me to the fact that the Senate Finance Committee has released its version of the House's One Big Beautiful Bill Act. And the Senate's current version is much nicer to tax-exempt organizations than the House's was. I ran through the issues raised in the skeet, and based on my read (and Ctrl-F), here are a couple changes:

Transportation Fringes

In the House bill, section 112024 increased a tax-exempt organization's unrelated business taxable income by the amount of qualified transportation fringe it provided, the qualified parking it paid for, and the disallowed entertainment expenses it incurred. (The bill made an exception for church organizations.) The Senate bill seems to have dropped this altogether--I couldn't find any amendment to section 512.

Excise Tax on Investment Income of Private Colleges

The House bill, section 112021, imposes a tiered excise tax on college and university investment income. The rate starts at 1.4% on income between $500,000 and $750,000 and rises to 21% on income in excess of $2 million.

The Senate bill doesn't eliminate this tiered excise tax, but it reduces the rates. Under section 70415, while the rates would continue to start at 1.4%, they max out at 8% on income in excess of $2 million.

Nonitemizer Charitable Deduction   

The House bill, section 110112, takes the temporary $300 (or $600 for married taxpayers filing jointly) charitable deduction for nonitemizers and does two things to it. First, it halves the amount, but second, it extends the nonitemizer charitable deduction through 2028.

The Senate bill, section 70424, makes the deduction permanent. Oh, and also raises the amount to $1,000 ($2,000 for married taxpayers filing joint returns).

Samuel D. Brunson

The ABA and "President Trump’s Law Firm Intimidation Policy"

This morning, the American Bar Association filed a lawsuit against the Trump administration and what it terms "President Trump's Law Firm Intimidation Policy." In its suit (complaint here), the ABA, a nonprofit voluntary association of attorneys, argues that Trump's attacks on law firms not only hurt those firms, but jeopardize the legal profession and the rule of law itself. The ABA's mission impels it to act and the utterly unprecedented nature of the threat--"Never before has there been as urgent a need for the ABA to defend its members, their profession, and the rule of law itself"--leads to the similarly unprecedented need for this suit.

Given the existential threat the Trump policies impose on the rule of law and the ability of the judiciary to check Executive overreach, the nonprofit ABA has chosen to interpose itself, representing law firms that have not yet been targeted.

Ultimately, the ABA says, Trump's Law Firm Intimidation Policy violates the First Amendment in at least five ways, and also violates the separation of powers. It requests a declaration that the various acts outlined in the Policy are unconstitutional and an injunction against those policies.

Samuel D. Brunson

Brennen, The Chilling Effect of SFFA v. UNC/Harvard on Race-Based Affirmation by Tax-Exempt Charities

David A. Brennen (Kentucky) has posted The Chilling Effect of SFFA v. UNC/Harvard on Race-Based Affirmation by Tax-Exempt Charities, Fla. Tax Rev. (forthcoming 2025). Here is the abstract:

In 2023, the Supreme Court decided in SFFA v. Harvard/UNC that colleges and universities are significantly restricted in their ability to engage in race-based affirmative action when making admissions decisions. Post-SFFA, many have wrongly suggested that the SFFA opinion means that race may never be considered in admissions decisions or in decisions–whether by colleges or others–concerning related matters like awarding scholarships or in employment.  This Article asserts that this expansive view of SFFA is inappropriate and leads to a chilling effect on affirmative action in higher education and related areas. However, instead of simply asserting that SFFA, when it applies, permits some considerations of race in admission, this Article goes further by arguing that the SFFA restrictions do not even apply to admissions decisions by some private colleges. For instance, private colleges like Harvard, as a recipient of federal financial assistance, must abide by SFFA because they are subject to Title VI, which is often equated to also being subject to the Equal Protection Clause. But what if Harvard, or any other private tax-exempt actor, decided to forego receiving federal financial assistance, which is a legal requirement before Title VI can apply? Could such private actor then lawfully engage in the type of race-based affirmation action that SFFA otherwise restricts? More directly, do the prohibitions of SFFA apply to private tax-exempt actors who do not accept any form of federal financial assistance? 

Part I of this Article examines the impact of SFFA on the ability of private and public actors–both colleges and non-colleges–to engage in race-based affirmative action when making admissions or admissions-adjacent decisions. Part II outlines the chilling effect that SFFA has had on affirmative action efforts in higher education and related areas, stemming primarily from, at best, a misunderstanding of the limits of the opinion or, at worst, an intentional recharacterization of it. Part III examines whether Section 501(c)(3) tax-exempt status itself could be viewed as a type of federal financial assistance for purposes of applying federal civil rights statutes that are premised on the private actor being a “recipient of federal financial assistance.” Part IV examines whether engaging in race-based affirmative action could be viewed as a violation of established public policy.  Finally, the Article concludes that, despite the limits imposed by SFFA on public colleges (and private ones that receive federal financial assistance) to engage in race-based affirmative action, colleges may continue to consider race in the admissions context to a limited extent. Further, the Article concludes that, even after SFFA, private tax-exempt charities that are not recipients of federal financial assistance are not subject to the restrictions of SFFA. Thus, these private charities may engage in race-based affirmative action when making admissions or admissions adjacent decisions–even if such engagement goes beyond the permitted use of race outlined in SFFA.

Lloyd Mayer

Brunson, Enumerating Environmental Exemptions in Section 501(c)(3)

Samuel D. Brunson (Loyola Chicago) has posted Enumerating Environmental Exemptions in Section 501(c)(3). Here is the abstract:

The United States has tens of thousands of environmental charities. These charities operate to “preserve, protect, and improve the environment.” Roughly half of the revenue of environmental charities directly from the public. These public donations depend, at least in part, on the organizations’ tax-exempt status, which allows donors to deduct their donations for tax purposes. Because donors take into account the after-tax cost of their donations, an environmental charity’s tax exemption increases the amount of donations it receives in comparison with a similar environmental organization that is not tax-exempt.

The tax-exempt status of environmental organizations is tenuous and contingent, though. The Internal Revenue Code lists seven tax-exempt purposes, none of which is environmental. Environmental organizations’ exemption arrives not through legislation but through administrative action—the IRS announced that environmental organizations fit under the exempt umbrella of “charitable" organizations, a pre-existing statutory category of qualifying tax-exempt organizations.

In addition, the value of the tax law is not limited to its substance: tax law also serves an expressive function. In its expressive function, it can encourage and discourage certain behaviors. It can (implicitly or explicitly) put the weight of government approbation behind certain organizations and classes of organizations.

Tax exemption may, in fact, be more powerfully expressive than much of tax law. While much of the tax law opaque—or even scary—to the general public, section 501(c)(3) is salient, and arguably hypersalient, to the public. Climate change has evolved into a critical and pressing issue.

That organizations that work to reduce climate change can avoid taxes and receive tax-deductible donations is good. But if the government truly wants to both signal its support for efforts to preserve the environment and ensure that environmental organizations continue to qualify for tax exemption, it must amend section 501(c)(3) to expressly allow environmental organizations to qualify. Moreover, because organizations already qualify for exemption, it also offers the government a low-cost path toward disseminating its support for environmental priorities.

Lloyd Mayer

Colinvaux, Associational Rights Versus Nonprofit Transparency

Roger Colinvaux (Catholic) has posted Associational Rights Versus Nonprofit Transparency: Information Reporting in the Internet Age, 2025 Ill. L. Rev. (forthcoming). Here is the abtract:

For decades, the nation’s charitable and nonprofit organizations have been required to file an information return, known as the Form 990, with the Internal Revenue Service. Congress mandates that the return be made publicly available. Such information reporting, both to the IRS and to the public, is the cornerstone of the federal government’s approach to assuring that nonprofit organizations are legally compliant. The Supreme Court’s decision in Americans for Prosperity Foundation v. Bonta (APF), however, casts a shadow on the constitutionality of nonprofit reporting requirements. In APF, the Court held unconstitutional California’s effort to require charities to disclose their major donors, finding that compelled disclosure rules presumptively impose a burden on First Amendment associational rights, even for confidential disclosures to the government. The Court also said that compelled disclosure rules are subject to exacting scrutiny and narrow tailoring. The federal nonprofit reporting regime therefore, post-APF, must undergo exacting scrutiny for the first time and may fail under the First Amendment.

After the Introduction to the Article, Part II summarizes the development of the First Amendment compelled disclosure cases alongside Congress’s steady enactment of nonprofit disclosure rules and the Form 990, from 1941 to the present day. These two tracks of law, once parallel, now intersect, with APF posing a presumptive challenge to the constitutionality of Form 990 reporting. Part III discusses APF and critiques the Court’s new exacting scrutiny standard as unworkable in other contexts and of limited precedential value. Part IV applies APF’s exacting scrutiny to the hundreds of items of information on the Form 990, first on a confidential basis to the IRS and then on a public basis. The Part provides a new framework, consistent with APF, to assess the constitutionality of compelled disclosures rules based on their impact on expressive association. Using this framework, the Part reasons that most compelled information on the Form 990 relating to charitable nonprofits should survive a constitutional challenge, whether on a public or nonpublic basis, because of the government’s strong and vital interests in oversight and transparency, even information that is closely related to expressive association. As discussed in this Part, publicity and comprehensive information reporting are instrumental to any credible compliance for charitable nonprofits. Disclosures about noncharitable nonprofits (such as 501(c)(4) social welfare organizations), however, are constitutionally vulnerable given the breadth of the disclosure requirement and the comparatively weaker governmental interests in transparency and oversight for noncharitable nonprofits as a class. Governance-related disclosures are also vulnerable. The Article concludes that regardless of the ultimate verdict on the constitutionality of nonprofit compelled disclosure rules, Congress, the IRS, and nonprofit stakeholders should take up the challenge presented by APF and update information reporting for the Internet age in light of associational concerns while maintaining a strong commitment to transparency.

Lloyd Mayer

Galston, Hate Groups and the Charitable Tax Exemption

Miriam Galston (George Washington) has published Hate Groups and the Charitable Tax Exemption, 52 Hastings Const. L.Q. 161 (2025). From the introduction:

This article wrestles with the issues raised by tax-exempt hate groups by analyzing federal tax law, public policy both internal and external to tax law, and constitutional jurisprudence, particularly as it bears on freedom of speech and association and on viewpoint discrimination. These sources exhibit competing visions of the role that groups animated by unconventional, and even repugnant ideas play in civil society. The article concludes that, although the outcome is uncertain, these sources favor permitting the subset of hate groups operating like think tanks and other educational entities to have tax exemption as educational section 501(c)(3) organizations because of the First Amendment and the commitment to pluralism underlying the nonprofit sector. In addition, the practical difficulties of requiring the IRS to identify which organizations should be labeled hate groups when experts cannot agree on the scope of this classification reinforce the conclusion reached based upon legal doctrines and public policy constraints that favor allowing such groups to qualify as exempt.

Lloyd Mayer

Libby, Theories of University Endowment Taxation

Lauren Libby, (Yale Ph.D. in Law candidate) ahs posted Theories of University Endowment Taxation, 103 Wash. U. L. Rev. (forthcoming). Here is the abstract:

University endowment taxation is now one of the most significant issues in U.S. federal tax policy, and it only promises to grow in prominence over the next four years. Yet while growing criticism of university wealth has precipitated a wave of proposed tax legislation, policymakers and scholars have largely avoided engaging with the deeper political questions that lurk behind this new trend in federal tax policy. Instead, discussions about I.R.C. § 4968—the Code’s current “endowment tax”—are either dominated by antagonistic rhetoric or concerns about administrative feasibility, revenue generation, and the potential for tax-avoidance. And although President Donald Trump and Vice President JD Vance seem eager to make the endowment tax a central part of their executive agenda, no one has meaningfully or systematically assessed the normative issues at the heart of § 4968 and proposals for its reform.

This Article provides the first conceptual framework for addressing the fundamental political questions implicated in the endowment tax debate. Calls for and against taxing university endowments directly challenge the political status of private American universities. They reflect a growing desire to redefine these institutions’ obligations to the public and their relationship with the state. And unfortunately, the prevailing discourse on the Code’s current endowment tax has obscured these broader ideological stakes. This Article aims to correct for this oversight by identifying the core political concepts that structure and influence the network of federal tax laws responsible for recognizing and governing private universities and their financial practices. Drawing on scholarship on political theory and corporate governance, this Article constructs a framework for evaluating and comparing the most recently introduced proposals for reforming the federal endowment tax, and in turn assesses how different approaches to endowment taxation reflect and reinforce competing visions of the university’s role in American society.

By reframing discussions about endowment taxation in terms of first principles, this Article suggests new ways of thinking about some of the most recent and popular endowment tax reforms. Importantly, it cautions against proposals for expanding the scope of § 4968, arguing that the political ideals that typically motivate such amendments are easily manipulated to serve undesirable social ends.. At the same time, this Article urges those in favor of repealing the endowment tax to clearly articulate their ideal vision of society and the university’s role within it. It also challenges universities and their allies to reconsider whether repealing § 4968 truly advances their political objectives. Finally, the Article argues that a more radical reform strategy may be necessary to secure a resolution to the endowment tax debate that is both legitimate and broadly accepted by the American public.

Lloyd Mayer

Silber, Law Reform and the Politicization of Charity

Norman I. Silber (Hofstra) has posted Law Reform and the Politicization of Charity. Here is the abstract:

It is conventional to believe that neutrally framed statutes emerging from bipartisan adoption processes do not produce partisan political results. This springs from our inclination to focus on the language and legislative history of the statutes themselves, in isolation from the larger context of their development. The reality is sometimes different: the process of creating a piece of legislation will affect participants differently, and they take away divergent perspectives about what the new statutory scheme allows. This is what happened during the overhaul of the Tax Reform Act of 1969 (TRA69), the statute that governs, among other things, the ability of foundations to engage in political activity. Purporting to tamp down on political influence by tax-subsidized foundations and charitable organizations, TRA69 did the opposite-it opened the door wider to interference.

Lloyd Mayer

Ward, Grasse & Lecy, Examining the Association Between State Lobbying Regulations and Nonprofit Lobbying Expenditures

Kevin D. Ward (Seattle), Nathan Grasse (Carleton), and Jesse Lecy (Arizona State)  have published Examining the Association Between State Lobbying Regulations and Nonprofit Lobbying Expenditures, Nonprofit & Voluntary Sector Quarterly (2025). Here is the abstract:

Newly released data on 501(c)(3) nonprofit organizations’ lobbying expenditures shows that these organizations have increasingly engaged in lobbying over the past several decades. However, over roughly the same period, states have adopted increasingly stringent lobbying regulations. While often promoted as a way to curb the influence of private interests in public policy, lobbying regulations apply equally to for-profit firms and nonprofit organizations. This article employs two measures of state-level lobbying stringency to examine how traditional direct legislative and grassroots lobbying vary in different regulatory environments. We find that nonprofits reduce expenditures on direct lobbying and increase those on indirect or grassroots lobbying in more stringent regulatory environments. These findings are important because nonprofit organizations typically advocate on behalf of their constituencies, and state regulations appear to influence their lobbying activity.

Lloyd Mayer

Wilson, The Hidden Cost of State Income Tax Repeal

Elaine Waterhouse Wilson (West Virginia) has published The Hidden Cost of State Income Tax Repeal: A Case Study of the West Virginia Neighborhood Investment Program Credit, 127 W.Va. L. Rev. 303 (2025). Here is the abstract:

In March 2023, West Virginia significantly cut its personal income tax rates and paved a path toward the full repeal of the personal income tax. This repeal would directly impact West Virginia’s nonprofit sector and reduce charitable giving because it would render West Virginia’s Neighborhood Investment Program (“NIP”) tax credit ineffective. NIP tax credits have been the primary charitable tax incentive in the state’s income tax code and have been widely supported by nonprofits. This Article argues that if the NIP credit program incentivizes charitable giving, then state income tax repeal comes with a hidden cost—the cost of lost revenues to private charities increasingly tasked with providing vital social services.

Following the introduction in Part I, Part II looks at West Virginia’s state personal income tax repeal and similar repeal proposals under consideration in other states. Part III reviews state level charitable giving incentives and their interplay with the Federal charitable deduction, using the NIP credit in West Virginia as a case study. Part IV introduces Professor Paul McDaniel’s federal charitable matching grant proposal, first introduced in 1972, which was developed in response to changes in the federal charitable income tax deduction and a growing concern about the role of tax expenditures. The Article proposes that Professor McDaniel’s federal matching grant program could be adapted by those states that have repealed (or are considering repealing) their personal income tax but still wish to incentivize charitable giving on the state level. Part V specifically demonstrates how Professor McDaniel’s grant program overlaps considerably with the structure of West Virginia’s NIP tax credit and could be easily amended to replace the credit in the event of full personal income tax repeal. The Article concludes by urging West Virginia to be a leader among the states considering income tax repeal by demonstrating the manner in which a matching grants program could replace charitable tax incentives.

Lloyd Mayer

Florida Prohibits Charitable Solicitation of Contributions From Foreign Countries "of Concern"

As many readers of this blog likely know, charitable solicitation in Florida is regulated under the Department of Agriculture and Consumer Services. That is apparently why a new state restriction on charitable solicitations in that state that will be effective as of July 1, 2025 was included in a recently passed Florida farm bill.

SB700 prohibits charitable solicitations or the acceptance of contributions from "a foreign source of concern," defined as is a government entity or official, political party, or other legal entity or individual, who is from a "foreign country of concern." Existing Florida state law defines a "foreign country of concern" as "the People’s Republic of China, the Russian Federation, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Republic of Cuba, the Venezuelan regime of Nicolás Maduro, or the Syrian Arab Republic." 

Here is the key text of what is prohibited from SB700, now codified at 496.515(20): 

Solicit or accept contributions or anything of value from a foreign source of concern.

(a) For a first violation of this subsection, this prohibited act is considered involuntary, and shall result in no punitive action from the department if the charitable organization satisfies all of the following requirements:

    1. Provides the department with a solicitation or 1775 contribution form containing an attestation from such foreign source or country of concern in which the person, country, or entity falsely certifies that they are not a foreign country of concern as defined in s. 496.404(13) or a foreign source of concern as defined in s. 496.404(14); 1780

    2. Provides the department with a copy of a refund to the foreign source or country of concern within 30 days after notification by the department of the prohibited act; and

    3. Provides the department with a plan of action to prevent the acceptance of contributions from a foreign country or source of concern in future solicitation activities by the charitable organization.

(b) A second or subsequent violation of this subsection is considered voluntary, and the charitable organization or sponsor is subject to the penalties specified in s. 496.419(5) at the discretion of the department.

Coverage: Venable.

Lloyd Mayer