Nonprofit Law Prof Blog

Shlomit Azgad-Tromer on Corporate Social Responsibility

Shlomit Azgad-Tromer has posted The Virtuous Corporation: On Corporate Social Motivation and Law on SSRN with the following abstract:

Above and beyond their traditional financial roles, contemporary corporations are increasingly assuming a normative role, promoting social agendas. The myriad normative roles assumed by the corporation, from profit-centered corporate goodness, to environmental and human rights corporate agendas and to corporate philanthropy, comprise an emerging corporate social identity. This article asks what induces corporations to pursue social agendas and provides an initial taxonomy for corporate social motivation, showing that the incentives to normative corporate conduct are often rooted in the business purpose itself. Central policy challenges are discussed, outlining the promise and the peril of emerging corporate social identities.

--Eric Chaffee

Butera & Houser on Charitable Giving

Luigi Butera and Daniel Houser have posted Delegating Altruism: Toward an Understanding of Agency in Charitable Giving on SSRN with the following abstract:

Philanthropy, and particularly ensuring that one’s giving is effective, can require substantial time and effort. One way to reduce these costs, and thus encourage greater giving, could be to encourage delegation of giving decisions to better-informed others. At the same time, because it involves a loss of agency, delegating these decisions may produce less warm-glow and thus reduce one’s charitable impulse. Unfortunately, the importance of agency in charitable decisions remains largely unexplored. In this paper, using a laboratory experiment with real donations, we shed light on this issue. Our main finding is that agency, while it does correlate with self-reported warm-glow, nevertheless seems to play a small role in encouraging giving. In particular, people do not reduce donations when giving decisions are made by algorithms that guarantee efficient recipients but limit donors’ control over giving allocations. Moreover, we find participating in giving groups − a weaker form of delegation − is also effective in that they are appealing to donors who would not otherwise make informed donations, and thus improves overall effective giving. Our results suggest that one path to promoting effective giving may be to create institutions that facilitate delegated generosity.

--Eric Chaffee

Rushton on Nonprofit Museums

Michael J. Rushton (Indiana University Bloomington - School of Public & Environmental Affairs) has posted Should Public and Nonprofit Museums Have Free Admission? on SSRN with the following abstract:

A common pricing structure for American art museums is to offer a choice between an admission fee for a single visit, and the purchase of an annual membership that would allow the member an unlimited number of visits with no additional charge. This paper evaluates this particular method of museum pricing in terms of efficiency and equity. It concludes, drawing from the economic analysis of two-part pricing, that there is a strong rationale for the membership model, and that this is so even in cases where the museum experiences an increase in unrestricted endowment such that “free” membership would be financially sustainable.

--Eric C. Chaffee

Clinton v. Trump Foundations Under the Tax Law (CNN Op Ed)

I just wrote this CNN Op Ed comparing the two foundations. It begins:

Journalists and commentators across the political spectrum have subjected both the Bill, Hillary & Chelsea Clinton Foundation and the Donald J. Trump Foundation to a withering barrage of criticisms. Without a doubt, both foundations and their managers, including Ms. Clinton and Mr. Trump, have made mistakes. The critical question, however, is whether those mistakes are illegal.

Lloyd Mayer

Fei, Hines, Horwitz: Are PILOTs Property Taxes for Nonprofits?

Fan Fei (Michigan), James R. Hines Jr. (Michigan), and Jill R. Horwitz (UCLA) have published Are PILOTs Property Taxes for Nonprofits?, 94 Journal of Urban Economics 109 (2016). This is a significantly revised version of the paper with the same title that they posted on SSRN last year. Here is the abstract:

Nonprofit charitable organizations are exempt from most taxes, including local property taxes, but U.S. cities and towns increasingly request that nonprofits make payments in lieu of taxes (known as PILOTs). Strictly speaking, PILOTs are voluntary, though nonprofits may feel pressure to make them, particularly in high-tax communities. Evidence from Massachusetts indicates that PILOT rates, measured as ratios of payments to the value of local tax-exempt property, are higher in towns with higher property tax rates: a one percentage point higher property tax rate is associated with a 0.2 percentage point higher PILOT rate. PILOTs appear to discourage nonprofit activity: a one percentage point higher PILOT rate is associated with 0.8% lower real property ownership by local nonprofits, 0.2% lower total assets, and 0.2% lower revenues of local nonprofits. These patterns are consistent with voluntary PILOTs acting in a manner similar to low-rate, compulsory real estate taxes.

Lloyd Mayer

Chicago-Kent Law Review Publishes Symposium: Nonprofit Oversight Under Siege

The Chicago-Kent Law Review has posted its Symposium Issue on Nonprofit Oversight Under Siege:

Introduction
Dana Brakman Reiser, Brooklyn Law School
91 Chi.-Kent. L. Rev. 843 (2016).

Exile to Main Street: The I.R.S.’s Diminished Role in Overseeing Tax-Exempt Organizations
Evelyn Brody, IIT Chicago-Kent College of Law
Marcus Owens
91 Chi.-Kent. L. Rev. 859 (2016).

Politics, Disclosure, and State Law Solutions for 501(c)(4) Organizations
Linda Sugin, Fordham Law School
91 Chi.-Kent. L. Rev. 895 (2016).

Fragmented Oversight of Nonprofits in the United States: Does it Work? Can it Work?
Lloyd Hitoshi Mayer, Notre Dame Law School
91 Chi.-Kent. L. Rev. 937 (2016).

The Charity Commission for England and Wales: A Fine Example or Another Fine Mess?
Debra Morris, School of Law and Social Justice, Liverpool
91 Chi.-Kent. L. Rev. 965 (2016)

European Non-profit Oversight: The Case for Regulating From the Outside In
Oonagh B. Breen, Sutherland School of Law
91 Chi.-Kent. L. Rev. 991 (2016).

Australia – Two Political Narratives and One Charity Regulator Caught in the Middle
Myles McGregor-Lowndes, Queensland University of Technology
91 Chi.-Kent. L. Rev. 1021 (2016).

Reforming the Regulation of Political Advocacy by Charities: From Charity Under Siege to Charity Under Rescue?
Adam Parachin, Western University
91 Chi.-Kent. L. Rev. 1047 (2016).

Does Work Law Have a Future if the Labor Market Does Not?
Noah D. Zatz, UCLA School of Law
91 Chi.-Kent. L. Rev. 1081 (2016).

Looks like a fascinating set of articles and outstanding group of authors (including our own Lloyd Mayer)!

-JosephWMead

NY AG investigates Trump Foundation

Eric Schneiderman, Attorney General of New York, indicated that he has started an investigation into the Trump Foundation:

In a CNN interview on Tuesday, Schneiderman said his office had now brought Trump's charitable foundation under scrutiny.

"My interest in this issue really is in my capacity as regulator of nonprofits in New York state. And we have been concerned that the Trump Foundation may have engaged in some impropriety from that point of view," the elected Democratic official said.

He added: "We have been looking into the Trump Foundation to make sure it's complying with the laws that govern charities in New York." He did not elaborate on what wrongdoing Trump's nonprofit might have committed.

 

http://www.reuters.com/article/us-usa-election-trump-investigation-idUSKCN11J2SY

Here's hoping that this election season doesn't completely destroy the public's confidence in our sector.

@JosephWMead

Donations to Wounded Warrior Project Down 25%

Nonprofit Quarterly reports that Wounded Warrior Project, America's largest veterans charity, has lost $90 million to $100 million in donations, or 25 percent of its donations revenue, following reports of extravagant spending on overhead and Senate Judiciary Committee investigation earlier this year.

While the organization’s board was still in denial mode, donors began to express their disappointment, with some declaring that they would not give themselves and that they would no longer organize others to give. It was inevitable that there would be some loss, but $100 million is a lot of donations. It would clearly take a big shift to recapture the trust of donors, and Linnington seems to be all about making radical moves to refocus and rebalance the organization.

Current cost-cutting measures include about 85 people (15 percent of the agency’s workforce) being laid off, including 50 percent of its executive staff, and the closing of nine satellite offices.

TLH

Frugal Librarian Leaves Unexpected $4 Million Gift to University of New Hampshire

The Boston Globe reports the story of a longtime librarian at the University of New Hampshire who lived a frugal lifestyle and left his $4 million estate to the university:

Robert Morin worked nearly 50 years at the University of New Hampshire library and never seemed to spend any money.

He lived alone, rarely bought clothes, had Fritos and soda for breakfast, drove a 1992 Plymouth, and spent spare time reading almost every book — in chronological order — that had been published in the United States from 1930 to 1938.

Now, more than a year after his death at age 77, a lifetime of frugality has become UNH’s unexpected gift: Morin left his alma mater his entire estate of $4 million — a gold-plated nest egg that few people knew he had.

While a gift of this size may have allowed Morin to require that a building or other area on campus bear his name, Morin's restrictions imposed on the use of the gift by the university were as modest as his lifestyle.

The university will use $2.5 million from the estate on an expanded career center and $1 million for a new video scoreboard at the football stadium. An additional $100,000 will go to the university’s Dimond Library, the only gift specified by the will.

 [Morin's financial advisor,] Mullen said he spoke with Morin about using some of the money to fund a scholarship related to library science but said his client wanted UNH to spend almost all of the gift in any way it chose.

TLH

In Remembrance: September 11, 2001

Thirty Years of Nonprofit Research: Scaling the Knowledge of the Field 1986-2015

Ji Ma (PhD student) and Assistant Professor Sara Konrath, both of Indiana University-Purdue University Indianapolis (IUPUI) - Center on Philanthropy, have posted their research paper, Thirty Years of Nonprofit Research: Scaling the Knowledge of the Field 1986-2015, to SSRN.  Below is the abstract for their paper:

This empirical study examines knowledge production between 1986 and 2015 in the research field of nonprofit and philanthropic studies using science mapping and network analysis. This is essential to understand the “Third Sector” better, which along with the business sector and government, forms and underpins the function of society at large.

Results suggest that scholars in this field have been actively generating a considerable amount of literature. The rapidly growing intellectual base suggests a solid backing for continuing development of this field as a new discipline. Knowledge produced in this field is not only growing in number, but also forming several main themes which have been actively developed since the mid-1980s – a signal of knowledge cohesion. Our findings are significant from numerous perspectives. The study provides empirical evidence for this field developing into a new discipline, and its future advancement faces a critical challenge: the lack of geographic and cultural diversity resulting from the domination of research taking place in the “Anglosphere.” This study also emphasizes the importance of new paradigms in mitigating the tension between theory and practice – a challenge commonly faced by academic disciplines.

Methodologically, our paper provides an example of applying network analysis and science mapping in studying the knowledge of a new social science field. Pedagogical implications, limitations, and future directions are also discussed.

TLH