Nonprofit Law Prof Blog

Big Hospitals, Big Cash, Big Business

I just can't go through a week of blogging without at least one story about nonprofit hospitals, and this one from the Chicago Tribune once again underscores the point I've made before: many nonprofit hospitals (not all, I admit) these days operate simply as big businesses, and the notion they are charities is frankly absurd.  

There's really not much to say when Advocate Health Care salts away a $2 billion cash reserve and Rush Memorial spends $1 billion to renovate its west side campus.  Not much, that is, other than to wonder why we continue to grant these organizations property and income tax exemptions . . . 

JDC

Pittsburgh Mayor Reaches Deal with Nonprofits

Darryll Jones recently blogged about the efforts of Pittsburgh's mayor to impose a 1% "tuition tax" on students attending one of Pittsburgh's tax-exempt universities.  But according to this story in the NY Times, the mayor has reached an agreement for "voluntary" payments from the colleges and universities in question to contribute as much as $15 million annually to Pittsburgh's coffers.

Now I know Darryll isn't too fond of PILOTs (Payments in Lieu of Taxes) foisted on nonprofits by (usually) large metropolitan areas such as Boston and now Pittsburgh.  But there is another side to this debate. Universities (both public and private) have raised student tuition to the stratosphere arguing that they need the money to maintain a quality education, while at the same time salting away billions in endowment funds (which admittedly took a hit in the stock market crash, but which have now recovered pretty nicely).  The tuition and fees at Carnegie Mellon University (one of the universities that Pittsburgh put the squeeze on) runs over $53,000 per year.  No, that's not a typo: $53,000 (here's the link).  Meanwhile, major research universities across the country are entering into private research deals with corporations, building hotels and office parks with real estate developers, and generally beginning to act more like large corporate conglomerates than the ivory towers they are often accused of being.  So I ask you: is Carnegie Mellon a charity providing a public good?  Or is it akin to Rolls Royce or Gucci or Tiffany's, selling a premium product at a premium price to those than can pay for it (and yes, I'm aware that the top private universities provide a great deal of financial aid to less wealthy students; so perhaps we should subject them to the corporate income tax and local property tax and let them take a deduction for the "charity" that they actually provide).

Though I argued in a paper I delivered this past October at the National Center on Philanthropy and the Law that limiting tax exemption to organizations that provide relief to the poor is a bad idea (and I still believe that to be the case), I really don't have a great deal of sympathy for Carnegie Mellon and its siblings when they whine about being asked to contribute to the cost of city services.  I'm sure they provide many benefits to the city of Pittsburgh, but so does Microsoft to the Seattle metro area, and the last time I checked, Microsoft was paying local property taxes.  I'm also sure that the 2010 freshman class at Carnegie Mellon ultimately will absorb this blow - anyone want to bet that the tuition/fees number goes up to, say, $55,000 and that Carnegie Mellon blames it in part on the "forced" contributions to the city of Pittsburgh?  Seems like a sucker bet to me, and if you want to take the "no they won't" side, e-mail me.  I could use the money to put my own kid through college.

JDC

Philippines Legal Matrix Published

The Legal Matrix for the NGO sector in the Republic of the Philippines has been published in the ICCSL Documentation Center.  It was prepared in conjunction with the Study Tour ICCSL conducted to the Philippines for the Aga Khan Foundation in November, 2009.  The Study Tour involved taking delegations from Pakistan and Afghanistan to Manila to visit legal offices and government-NGO partnership sites; more information on the Study Tour is available on the website.

Another Take on College Athletics and Tax Exemption

I've read a lot of articles and blog postings by reporters and talking-heads on the issues of tax-exemption and the UBIT as they relate to college athletics (probably over 1000), but this article in the Austin Texas American-Statesman done by Eric Dexheimer is by far the best in terms of its depth and consideration of the issues (and I'm not saying that just because he quotes me at several points, though it probably doesn't hurt any).  Eric's thoughtful insight on this, which even I hadn't focused on before, is that big-time college football coaches aren't just coaches - they are among the highest paid nonprofit executives in the country.  An interesting viewpoint, though it ultimately seems to lead us back to the same place, which is whether big-time college athletics is in fact a charitable enterprise at all, and if not, then what (if anything) should we do about it?

My views on this are pretty clear - no, big-time college sports is not a charitable activity.  It's just a big commercial business.  Much like nonprofit hospitals have morphed from homeless shelters to multi-billion-dollar business enterprises, amateur college athletics, at least at the NCAA Division I/Football Bowl Subdivision (formerly Division I-A) level, has morphed from the Greek ideal of competition as part of a liberal education to well-oiled entertainment machines and minor leagues for the pros.

As for the what to do about it part, I've suggested that if Congress is really interested in doing something about the arms race in big-time college sports, the way to attack this is by focusing on the underlying tax exemption and donation deductibility of the university as a whole.  We can't get anywhere by subjecting athletic programs to the UBIT; that's a paper tiger that won't bother sponsoring universities in the least, nor get the kinds of financial and educational disclosure reformers want.  Instead, any serious regulatory efforts through the tax laws simply must focus on the exempt status and deductible contributions for the underlying entity as a whole.  Tell a university that if it doesn't shape up, its athletic programs will be subject to the UBIT, and all you're likely to get is a snigger.  Tell them that the university as a whole will lose its overall tax exempt status and/or its ability to get tax deductible donations unless it follows specific guidelines regarding athletic expenditures and disclosure, and you'll get someone's serious attention.

You can read a draft of my forthcoming article on this subject here (download from SSRN) or get a shorthand version from my comments to the Knight Commission on Intercollegiate Athletics here.

JDC

China Updates

After several tries to copy a document into this posting, I have given up.  There are two interesting updates on China featured in the IJCSL Newsletter for January and at the ICCSL site. The first concerns the development of a trade associations law.  The second gives to links to the translations of the two new income tax rulings (one regarding income tax exemption and the other regarding deductibility.  The documents are in the ICCSL Documentation Center.

Is Yoga Religion or Exercise?

This story from the National Post raises one of the most difficult questions of tax-exemption law (and a particularly timely one for the season): what is a religion?  In this case, the state of Missouri has decided that yoga is exercise or entertainment, not religion, and subject to sales tax in the state, although apparently the classification depends in part on where one practices yoga: if in a Hindu temple, then apparently yoga is a religion; if it is in a gym, it is recreation.

The definition of a religious organization in federal tax exemption law requires two elements: (1) a set of beliefs (2) that are sincerely held.  That's it.  If a group sincerely believes that concrete swimming pools have special properties that elevate one's spirituality, then you have a religious organization for federal exemption purposes (note, however, that it would be the organization that is tax-exempt, not the individual members).

The reason for this state of affairs is not hard to discern.  It is probably constitutionally prohibited for the federal government to attempt any serious definition of "religion" for tax purposes.  Such an attempt also would simply be impossible - a quick search of the web will reveal hundreds of religions that are taken very seriously by their participants, even if yours truly might find them a bit weird (try this page if you are looking for a sample, or go directly to the home page for the Church of Body Modification).  And let's be honest - I suspect Romans 2000 years ago would have found the notion of a Jewish guy rising from the dead to be equally bizarre.

Of course, this doesn't leave the IRS impotent when dealing with questions of exemption for religious organizations.  There are plenty of wrenches in the IRS's toolbox to attack religious organizations (and other charities) that may be more interested in individual members' comfort or financial well-being than prosyletizing: the private inurement doctrine, the private benefit doctrine, limits on political activity and lobbying, even the sincerity of the beliefs at issue are all fair game.  And the IRS has successfully used these tools to attack exemption for the "personal church" scams that have come and gone over the years.

So is yoga a religion or simply recreational exercise?  I'll let you decide.  But if Scientology and a witches' coven both qualify (which they do), then why not yoga?

JDC

IRS Releases Governance Check Sheet to be Used by EO Exam Agents

The Internal Revenue Service recently released a Governance Check Sheet that its examination agents will use when examining charitable organizations other than private foundations, along with a Guide Sheet providing instructions on how to complete the Check Sheet.  According to the IRS's webpage for tax-exempt organization governance issues, the Check Sheet "will be used by IRS’ Exempt Organizations Examination agents to capture data about governance practices and the related internal controls of organizations being examined. The data will be included in a long-term study to gain a better understanding of the intersection between governance practices and tax compliance."  These materials supplement the governance training materials previously released by the IRS.

It will be interesting to see whether IRS agents understand and communicate to charities under examination that questions relating to the Check Sheet are for data collection purposes and do not (at least as of yet) represent federal tax law requirements.  Among items listed on the Check Sheet are whether certain written documents exist (mission statement, conflict of interest policy, financial reports, independent accountant's report and management letter, document retention policy, and board minutes), whether compensation for board members and senior staff is set through a process that meets the intermediate sanctions (Internal Revenue Code section 4958) rebuttable presumption procedure, and how many family and outside business relationships exist among board members.  The Check Sheet also includes a number of questions relating to board activities, including the number of board meetings and whether the board reviews financial reports, the independent accountant's report and management letter, and the charity's Form 990.

LHM

Former Detroit Mayor Kwame Kilpatrick May Face Intermediate Sanctions

 According to a December 16, 2009 story in the Detroit News, the Kilpatrick Civic Fund and former Detroit mayor Kwame Kilpatrick are under investigation for improper use of the 501(c)(4)'s money to fund

"romantic getaways for [Kilpatrick] and his then-mistress his then-mistress; the services of at least two political consultants; a trip to a California resort for the mayor and his family; and more than $25,000 in Kilpatrick rent and moving expenses around the time the mayor was freed from the Wayne County Jail and headed for Texas.

If true, the case presents a rather obvious occasion for imposition of intermediate sanctions under IRC 4958.  The case is so obvious it would not even make a good exam hypothetical.  The (c)(4)'s board, by the way, is populated by the Mayor's sister Ayana, and his former mistresses sister, according to the report. 

dkj

Hill Street Blues: Pittsburgh Set to Tax Tuition as End Run Around University Tax Exemptions

Local government's have often played hard ball with large tax exempt entites within their jurisdictions.  Payments in Lieu of Taxes, or PILOTS, are often thinly disguised extortion payments extracted from tax exempt organizations, in my opinion.  In essence, a city or county government will "suggest" that a university or hospital make a so called "voluntary" payment to the local government to help with municipal services.  Usually implicit in the request is that if the PILOT is not made, the local government may challenge the college or university's tax exemption in court.  Pennsylvania has been particularly aggressive in extracting taxes by another name from tax exempt organizations.  Large tax exempt organizations in Pittsburgh have been equally vociferous in exposing what amounts to a protection racket.  For example in The Hospital Council of Western Pennsylvania v. Pittsburgh, 949 F.2d 83 (W.D. PA, 1991) a group of nonprofits complained that: 

the defendant governmental units had attempted and were attempting to "coerce" or "force" tax-exempt member hospitals to make payments in lieu of taxes by "indicating that those [hospitals] which [did] not agree to such payments and/or agreements 'in lieu of taxes' [would] have their tax exempt status challenged, [would] be likely to run into difficulties in [**3]  obtaining zoning approvals, and [would] not be offered the opportunity to provide services to the taxing authority.

The City of Pittsburgh, home of my beloved yet beleagured Steelers, has stooped to a new low in my opinion.  It recently asked local universities to pony up $5 million annually and if they didn't, the City would impose a 1 percent "tuition tax" on students attending one of the city's many tax exempt colleges and universities.  PILOT extortion demands are usualy accompanied by negative PR designed to shame large local nonprofits into forking over the cash.  For example, Pittsburgh Mayor Ravenstahl is quoted in the New York Times as stating: 

“Our colleges and universities are giving less and less while they increase tuition and executive pay and expand their campuses, removing high-value land from the tax rolls. The cost to provide public safety and public works services continues to increase, but our revenue continues to decrease.”

Colleges, universities and large nonprofit hospitals are being far too passive in this debate, not realizing that what happens in Pittsburgh is unlikely to stay in Pittsburgh:

Pittsburgh’s plan to adopt the nation’s first tuition tax on college students was postponed Wednesday, with the mayor holding out hope that the city’s 10 colleges and universities will agree to provide economic help voluntarily.

For more on Pittsburgh's efforts to surreptitiously repeal state granted tax exemptions see this December 16, 2009 New York Times article.

dkj

 

'Tis the Season . . . For Charitable Solicitation Reports?

Piggy backing on the surge in appeals and charitable giving that occurs at the end of the year, at least four states have recently issued reports on paid fundraising targeting their residents.  We previously blogged about the annual New York Attorney General's report "Pennies for Charity" issued last month.  Now the Attorneys General of Massachusetts and Vermont, along with Washington's Secretary of State have issued similar reports.  Not surprisingly, the reports highlight that fundraising involving paid or commercial fundraisers returns on average 42 percent or less to the participating charities, but they also note that the percentage going to charities varies enormously, ranging from over 90 percent to less than 10 percent.  Interestingly, the Vermont AG's report provides some of the most detailed data, including breakdowns by types of fundraising methods used.

These and similar reports by other state officials raise several important questions, including:

*  Is the amount of attention paid by state officials to the activities of paid fundraisers too much or too little as compared to resources devoted to other types of charity oversight?

*  Does the information provided in these reports actually change donor behavior, particularly when contacted by a paid fundraiser?

*  Do such reports draw too much attention to fundraising ratios as compared to other measures of a charity's worthiness (even though the reports are usually careful to note that fundraising ratios do not tell the whole story about a charity's merit)?

LHM

NYT: Charities Rise, Costing U.S. Billions in Tax Breaks

The New York Times recently reported that the IRS approves nearly all applications for recognition of tax-exempt status as a charitable organization under Internal Revenue Code section 501(c)(3), including some rather unusual groups.  The article is based on a Stanford University study that looked at 2008 applications.  What the article fails to note, however, is that over 30 percent of all applications are withdrawn, never completed, or not processed because of a lack of the required filing fee (a point the study notes both in footnote 7 and in its concluding points).  My personal, anecdotal experience from nine years of practice is that most such applications are not pursued to completion because the IRS starts asking hard questions and the applicant realizes it faces an inevitable denial or must significantly change its planned activities to obtain IRS approval, resulting in an effective denial if not a formal one.  Moreover, those applicants who pursue the process to completion often adjust their planned activities in response to IRS demands, which may in part explain the high (98 percent in 2008) approval rate for completed applications.

LHM

Federal Government Settles 13 Years-Long Class Action Lawsuit Filed by American Indians

        The National Law Journal reports that the Cobell Litigation started 13 years ago (on June 10, 1996) has settled.  The lead plaintiff, Elouise Cobell, initiated the class action lawsuit to force the federal government to account for what she (and others) argued were billions of mismanaged dollars supposedly held in trust for American Indians.  The trust funds were initially set up under the controversial Dawes Act of 1887 (also known, as the General Allotment Act), a law dating back more than 100 hundred years.  Historically, the Act was responsible for substantial land loss by American Indians.  More than two-thirds of the land held in 1887 by American Indians was transferred to whites during the 47-year history of the Act.  The Act was designed to de-emphasize communal ownership of land and to assimilate American Indians into individual land ownership.  The Act, in relevant part, required that the federal government hold lands alloted to individual American Indians in trust (unless, the American Indian was deemed competent to self-manage the land) and to account for funds generated by the lease of those lands for grazing and the extraction of oil, mineral and timber.  Under the paternalistic law (its amendments and successor legislation), the federal government is to act as a fiduciary for the benefit of hundreds of thousands of American Indians. This summer the U.S. Court of Appeals for the District of Columbia Circuit vacated a trial court decision entered in the U.S. District Court for the District of Columbia by Judge James Robertson that held that it was "impossible" to account for these funds, awarding the arbitrary sum of $455 million to the plaintiffs.  The plaintiffs were suing for billions. 

        U.S. Attorney General Eric Holder, standing with Interior Secretary Kenneth Salazar, remarked before reporters at the Department of the Interior on Tuesday, December 8, that, "settlement talks [had] failed repeatedly over 13 years, '[b]ut today, we turn the page.'" Secretary Salazar wasted no time; he issued a departmental order yesterday, December 9, implementing the first phases of the settlement (click here).  President Obama is said to have "urged Congress to 'act swiftly to correct this long-standing injustice and to remember that no special appropriations are required.'"

        The story is excerpted below.

Capping more than 13 years of litigation, the Obama administration said Tuesday the government will pay $1.4 billion to settle a class action accusing the United States of mismanaging billions of dollars held in trust for American Indians.

The settlement would resolve the plaintiffs' claims for an accounting of the trust fund, set up more than a century ago for the collection and dispersal of royalties from oil, gas, timber and other companies that leased Indian land. The agreement requires legislative and judicial approval.

Filed in the U.S. District Court for the District of Columbia in 1996 by Elouise Cobell, the class is one of the largest-ever in the nation's history. The $1.4 billion, which includes attorney fees, would be dispersed to the more than 300,000 American Indians who comprise the class. The settlement also creates a $2 billion fund for the voluntary buyback and consolidation of what government officials called "fractionated" land interests. Individual Indians will have the chance to receive payment for divided interest in land. The government would terminate the administrative costs associated with managing the fractioned land.

Attorney General Eric Holder Jr., addressing reporters at the Interior Department on Tuesday, said settlement talks failed repeatedly over 13 years, "But today, we turn the page." Holder appeared alongside Interior Secretary Ken Salazar.

.  .  .

Settlement talks ramped up after a ruling in July in the U.S. Court of Appeals for the D.C. Circuit put the case back before the trial court. At issue on appeal was whether the government could ever adequately perform a historical accounting of the money held in trust for more than a century. Last year, Judge James Robertson of the federal trial court in Washington ruled such an accounting was impossible. He ordered the government to pay $455 million to the plaintiffs, an amount that was a far cry from the billions the plaintiffs had been seeking. A three-judge appellate panel vacated Robertson's decision.

"While we vacate the district court's orders, including its holding of impossibility, we do so with substantial sympathy, recognizing that our precedents do not clearly point to any exit from this complicated legal morass," D.C. Circuit Chief Judge David Sentelle wrote in the July 24 appellate opinion.

For the full story, please click here.  Here is a link to key litigation documents, please click here.

        In addition to the $1.4 billion settlement to be paid out to individuals and the $2 billion fund for voluntary buyback and consolidation of fractionated land interests, the settlement also provides for the creation of an Indian Education Scholarship fund of up to $60 million to improve access to higher education for American Indians.

AMT 

Survey Reveals that 93 percent of Charities feel Negative Impact of Recession

The Chronicle of Philanthropy recently reported that the nonprofit consulting group, Bridgespan Group, a Boston 501(c)(3) nonprofit that helps other nonprofits develop strategies for sustained growth updated a 2008 study and released its findings providing that 93 percent of charities report feeling the negative impact of the recession.  The story is excerpted below:

The stock market may be rebounding, but for charities the negative impact of the recession has only deepened over the past year, according to a survey released by the Bridgespan Group, a nonprofit consulting group in Boston, The Chronicle of Philanthropy reports.

For the full story, please click here.

Researchers Advocate Direct Donations to Extended Families Caring for Orphaned Children in African Nation

The New York Times recently reported that researchers at Boston University are studying the effectiveness of making direct donations to extended family members willing to care for orphaned children in their homes instead of removing these children to orphanages.  Some experts and advocates suggest that the orphanages are expensive and potentially harmful for children because the children are separated from their extended families.  Some advocates even claim that the orphanages are being built to lure financial donations from around the world.  "Researchers say donors need to weed out ineffective, misconceived programs, scrutinizing those that are managed by international nongovernmental organizations or governments but reliant on volunteers in villages to do the work."

The story reports that a study of African households reveals that the vast majority of orphaned African children are being cared for by extended families, and that these families receive no help.  The story is partially excerpted below:

The Home of Hopeorphanage provides Chikodano Lupanga, 15, with three nutritious meals a day, new school uniforms, sensible black shoes and a decent education.

Her orphaned cousin Jean, 11, who balked at entering the orphanage and lives with her grown sister, has no shoes, raggedy clothes and an often-empty belly. Repeating third grade for the third time, Jean said she bitterly regretted that she did not grow up in the orphanage where Madonna adopted a boy. Had she stayed, she whispered, “I would have learned to read.”

In a country as desperately poor as Malawi, children placed in institutions are often seen as the lucky ones. But even as orphanages have sprung up across Africa with donations from Western churches and charities, the families who care for the vast majority of the continent’s orphans have gotten no help at all, household surveys show.

Researchers now say a far better way to assist these bereft children is with simple allocations of cash — $4 to $20 a month in an experimental program under way here in Malawi — given directly to the destitute extended families who take them in. That program could provide grants to eight families looking after some two dozen children for the $1,500 a year it costs to sponsor one child at the Home of Hope, estimated Candace M. Miller, a Boston University professor and a lead researcher in the project.

Experts and child advocates maintain that orphanages are expensive and often harm children’s development by separating them from their families. Most of the children living in institutions around the world have a surviving parent or close relative, and they most commonly entered orphanages because of poverty, according to new reports by Unicef and Save the Children.

“Because there’s money in orphanages, people are creating them and getting children in them,” said Dr. Biziwick Mwale, executive director of Malawi’s National AIDS Commission.

For the full story, please click here.

AMT 

Charity Governance Squabble in the News

The Boston Globe recently reported in an article entitled, Nightmare at the Museum, that the director of a prominent museum, The Rhode Island School of Design Museum of Art,resigned (or was ousted, it depends on who you talk to) from her position as director of the museum.  It is reported that John Maeda, the new president of the affiliated school of the same name, The Rhode Island School of Design, seemingly clashed with the outgoing director.  The squabble raises the question of the role charity governance  and the board of trustees play in quelling such disputes before donor relations are disrupted, organizational missions are compromised and public loyalties wane.  The story is excerpted below, in relevant part:

They were 200 of this city’s biggest names in arts and philanthropy, gathered on an early fall night to celebrate Hope Alswang, the departing head of the Rhode Island School of Design Museum of Art.

.  .  .

After all, Alswang was leaving after a feud with the new president - a tense battle that left them both smarting, and many more, on campus and off, wondering how things got out of hand so quickly and what it all means for one of the cultural jewels of the city and region.

.  .  .

Few there knew what had really happened between Maeda, who started at RISD last year, and Alswang, who had been at the museum for four years. Her public resignation occurred only weeks after a private letter from the president labeled “final warning.’’ At the tribute dinner, held at a historic venue called, as it happens, the Hope Club, observers wondered whether Maeda understood how many people would be upset by the loss.

.  .  .

The new president had taken office at RISD on a wave of positive buzz, a daring and exciting choice. Proudly declaring in interviews that he did not own a suit, Maeda, then 42, had a Mensa-worthy résumé, capped by a stint as associate director of research at the prestigious MIT Media Lab. Esquire magazine had named him one of the 75 most influential people of the 21st century.

But Maeda and his museum director clashed from the start; their personal styles could not have been more discordant. Alswang, tough and sarcastic, knew how to work a cocktail party. Maeda, slight and cerebral, seemed more comfortable Tweeting than speaking.

.  .  .

Indeed, tension between the museum and school didn’t start with these leaders. Some professors were pleased that Maeda was taking a harder line with the museum.

“We have a new museum building on our campus that cost a hell of a lot of money and that took the attention away from maintaining buildings and raising money for financial aid,’’ said Henry Ferreira, printmaking professor and president of the faculty association.

But the blowup between Maeda and Alswang seems to be as much about personal temperament as professional mission.

.  .  .

“It came to the point where they just couldn’t get along and the disagreements weren’t helping anyone,’’ said Paula Granoff, a museum donor who has served on RISD’s board of trustees and currently is a member of the museum’s board of governors.

.  .  .

Her supporters say the rift with Maeda went beyond personality and stemmed, in part, from the school’s financial crisis.

The financial meltdown hit RISD’s endowment hard, and Alswang believed Maeda wanted to cut disproportionately from the museum, according to a museum staff member speaking anonymously because the staff had been ordered by RISD not to discuss Alswang.

In the end, this staff member said, Alswang fought to reduce the amount cut from the museum’s budget, though ultimately it had to close for all of August to save money.

For the full story, please click here.

AMT 

UCLA Medical School Professor Settles Lawsuit and Agrees to Repay Charity

The Los Angeles Times reported on December 4, 2009 that "[a] UCLA School of Medicine professor of cardiothoracic surgery has settled a lawsuit brought by the state attorney general forcing him to repay $140,000 to a research charity he founded and removing him from multiple positions he held within the charity."

For the full story, please click here.

AMT

Kenya—Harmonized Draft Constitution Recognizes Broad Freedom of Association Rights

A long-awaited draft constitution has been released in Kenya, the first step in a full review of a document which many Kenyans say gives the president nearly unchecked power over state affairs.  Kenyans have been calling for a new constitution since the early 1990s to replace one dating back to the eve of independence from Britain in 1963, which critics say encourages corruption and tribalism because of the president's immense powers.  The public will have 30 days to scrutinize the draft and forward proposal and amendments to their respective Members of Parliament.  A referendum on the Constitution is expected to be held in 2010 to determine whether the new constitution is acceptable.  Article 53, which provides for freedom of association, deals not only with the basic requirements of freedom of associations for individuals, but also addresses the need to provide ease of registration for civil society organizations.  The text is available in the ICCSL Documentation Center.

 

kws

European Philanthropists Help Charities Become More Entrepreneurial

The Wall Street Journal recently reported that a growing number of European philanthropists are encouraging the charities they support to run more like a businesses during these recessionary times in order to garner their support.

Philanthropic endeavours are usually one of the first things to fall by the wayside when the wealthy are faced with tougher times.

There are no Europewide statistics on philanthropic giving. But trends are likely to mirror what has being happening in the U.S., experts say -- and the picture there isn't good. The American Philanthropic Giving Index, produced by the Center on Philanthropy at Indiana University, revealed giving fell dramatically in the first half of the year. The PGI, similar to a Consumer Confidence Index for charitable giving, is now 64.8, a 21.7% decrease from just six months ago and a 27% decrease since December 2007. The index found that fundraisers' assessment of the current giving environment fell to its lowest level since records began in 1998.

Lena Schreiber, a senior consultant at the London-based consultancy New Philanthropy Capital, believes that the fall in giving has moved across the Atlantic. "Professional advisers tell us that wealthy individuals who may have intended to set up philanthropic foundations are delaying this decision, along with other decisions about their wealth management," she says.

Still, it's not all doom and gloom. Those at the forefront of the industry say many of the wealthy continue to give, but are often looking for a more hands-on approach, demanding greater transparency and a return on their money. Outright giving is being replaced by social investing, and philanthropy is becoming more efficient and entrepreneurial as a consequence.

For the full story, please click here.

AMT 

The House Passes Bill To Retain 2009 Estate Tax Levels Permanently

On December 3, 2009, The Chronicle of Philanthropy reported that the U.S. House of Representatives passed a bill to retain 2009 estate tax levels permanently.

The House of Representatives has passed a bill that would permanently keep the estate tax at levels that are in effect this year.

The approach is one that many charities have been seeking because they say it will help them appeal to donors.

The Senate has not yet voted on estate-tax legislation.

Under the current estate-tax law, heirs in 2009 can exempt $3.5-million from taxes ($7-million for couples), with amounts above that taxed at 45 percent.

For the full story, please click the link above.

AMT

 

ICCSL Publishes December Newsletter

ICCSL has published the December IJCSL Newsletter, which is available at http://www.iccsl.org/pubs/09-12_IJCSL-N.pdf.  You can subscribe to the Newsletter to receive all the latest updates on laws affecting civil society around the world.

kws