Friday, September 15, 2017

The DAFs Strike Back

As the use of donor advised funds grows, so does the legal attention to donor advised funds.   All of this attention started in (what seems like forever ago…) 2006, with the passage of the Pension Protection Act.   Since that time, we have seen the PPA-mandated Treasury study released in 2011, as well as a Congressional Research Service study on DAFs in 2012.   In addition, the National Philanthropic Trust releases an annual DAF report, the 2016 version of which can be found here.   Information and opinions abound, and yet, we still wait patiently for regulations under the donor advised fund excise taxes passed in 2006.  I’m quite certain those regulations will be arriving Soon.™ 

In the latest installment in the DAF oversight drama, Congress may now be considering mandatory payouts from DAFs as part of a larger tax reform effort.   Earlier this summer, Professors Ray Madoff of Boston College and Roger Colinvaux of Catholic University wrote to the Senate Finance committee to suggest a number of DAF reforms, including a mandatory payout proposal for DAFS (the Madoff/Colinvaux letter can be found here).

This week, the DAFs responded.  In their own letter to Senate Finance, a number of DAF sponsors set out the arguments in opposition to a mandatory DAF payout. has a good summary of the DAF executive letter here, although I admit I can’t yet find a copy of the letter itself (if anyone has it ... please share if you can!)   

Personally, I think that the term “DAF” covers such a wide variety of accounts that a mandatory proposal might be harmful for some and yet not enough regulation for others.   But that’s another blog post, or maybe an article ….


September 15, 2017 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (1)

Thursday, September 14, 2017

2017 Guidestar Compensation Report

The 2017 Guidestar Compensation report is now available for purchase, although Guidestar does provide a sample of the report here.   Summaries highlight two issues:

    -    Nonprofit compensation has gone up over the last year, returning to pre-recession levels; and

    -    A gender gap persists in nonprofit compensation (not that that is particularly shocking to anyone in the sector, but it is nice to have some evidence to that effect)



September 14, 2017 in Current Affairs, In the News, Studies and Reports | Permalink | Comments (0)

Tuesday, September 12, 2017

Aprill, "Religious Organizations, Refuge for Undocumented Immigrants, and Tax Exemption"

The abstract from SSRN:

The Trump Administration plans for aggressive enforcement of immigration laws have caused many houses of worship and other religious organizations to consider whether their beliefs call upon them to grant refuge or so-called sanctuary to undocumented immigrants. This brief essay considers whether these organizations would risk their tax-exempt status were they to do so. It reviews relevant judicial and IRS guidance. It concludes that IRS action to revoke exemption is unlikely, but that any house of worship or other religious organization deciding to act in this way should know that such a decision is not without some risk


September 12, 2017 | Permalink | Comments (0)

Sunday, September 10, 2017

Nonprofit Radio: Your Nonprofit in Politics

By: Emily Chen

Date: 12/6/2011

In this article, Emily Chen, highlights main points from her interview with Tony Martignetti. She starts off talking about the Internal Revenue Code Section 501(c)(3) Prohibition on Electioneering. She explains that nonprofit organizations are barred from making contributions to candidates running for election. They first talk about the consequences of nonprofits breaking these rules. “The penalty for violating this prohibition is revocation of tax-exempt status. The IRS does however have the option to impose intermediate sanctions; the intermediate sanctions are excise on taxes on the political expenditure with an initial 10% on the organization and a 2.5% on an organizational manager who knowingly approved the political expenditure.” To read more about the interview and how nonprofits are involved in politics click here:



September 10, 2017 | Permalink | Comments (0)

Saturday, September 9, 2017

Political Campaign Activities-Risks to Tax-Exempt Status

National Council of Nonprofits

February 2017

            This article explores how nonprofits can get involved in politics if they remain nonpartisan, and do not endorse or oppose a candidate running for office. It starts off by explaining that nonprofits cannot participate in “political campaign activities” without losing their tax-exempt status. However, can participate in politics through voter registration and voter engagement activities, and lobbying, or legislative activities, while maintaining its tax-exempt status. The article then explains why lobbying is essential to nonprofit survival: lobbying prevents loss of nonprofit resources, sheds light on real issues in communities, and it expands access to important services. To learn more click here:



September 9, 2017 | Permalink | Comments (0)

Friday, September 8, 2017

Conversions of the Status of Section 501(C)(3) Organizations

Douglas M. Mancino
29 Tax’n Exempts 3
July/August 2017

           In this article, Douglas Mancino, explains the different types of conversions nonprofit companies go through to become for-profit organizations. He starts off the article by listing the reasons that nonprofits wish to convert to for-profit companies: “the need to access capital, have the ability to issue stock to public and private investors, enhance the corporation’s ability to diversify into otherwise taxable lines of business, provide a means whereby the corporation can offer stock options, enable the corporation to adopt an employee stock ownership plan, and to avoid the limiting effects of tax rules.” He then starts in on his explanation of the different type of conversions. He explains that there are four different types of conversions: (1) Conversion in place, (2) asset sales, (3) mergers, and (4) drop-down conversion. Unfortunately, the full article can only be accessed with a Westlaw account. If you want to learn more about the different types of conversions click here: 



September 8, 2017 | Permalink | Comments (0)

Thursday, September 7, 2017

Employee, Volunteer, or Neither? Proposing a Tax-Based Exception to FLSA Wage Requirements for Nonprofit Interns After Glatt v. Fox Searchlight

By: Jane Pryjmak

92 Wash. L. Rev 1071

June, 2017

            In Glatt v. Fox Searchlight, the second circuit ruled that for purposes of for-profit organizations, interns were employees if the employer received the “primary benefit” from the relationship. This means that for-profit organizations are required to pay interns a fair wage. The Fox Searchlight case did not address the issue of unpaid nonprofit internships. There is debate on whether nonprofits are or should be exempt from this definition. Some scholars believe that the second circuit’s logic extends to nonprofits resulting in them not being exempt for public policy reasons. In her article, Jane Pryjmak, argues that certain nonprofits should be exempt in regards to the internships depending on the nonprofit’s budget the role the play in society. She proposes three exceptions: “one for interns supporting exempt purpose activities; another for interns working at organizations classified as public charities; and the last for interns at small nonprofits, as determined by their annual tax filing.” To read more about her interesting proposal click here:



September 7, 2017 | Permalink | Comments (0)

Wednesday, September 6, 2017

What Qualifies as a Nonprofit for Tax Exemption

What Qualifies a Nonprofit for Tax Exemption?

Joanne Fritz

            In an article on, Joanne Fritz explains what qualifications a nonprofit must have in order to reach 501c(3) status. She starts off her article by explaining that tax-exempt means that nonprofits do not pay most federal income taxes and some state taxes, as well as their donors getting a tax deduction when they donate to the nonprofit organizations. She then goes onto explain that there are 29 types of nonprofit organizations, each being exempt from different kinds of taxes. Then she explains the different tests an organization must pass to become a nonprofit organization. These tests include: (1) the organizational test, (2) the political test, or (3) the asset test. To learn more about what gives a nonprofit their tax-exempt status click here:




September 6, 2017 | Permalink | Comments (0)

Tuesday, September 5, 2017

Sanders, Practical Issues Facing Nonprofits Structuring New Market Tax Credit Deals

Michael Sanders has published Practical Issues Facing Nonprofits Structuring New Market Tax Credit Deal, 29 Tax'n Exempts (2017).

    In this article, Michael Sanders explores a new solution to the lack of funding problem plaguing many nonprofit organizations today. These nonprofits have created a new business model by partnering with for-profit companies in order to raise their much-needed funds. Consequently, the IRS has updated its guidelines to govern these new partnerships. The nonprofit’s tax exemption status will not be in jeopardy as long as “they have sufficient control to ensure that the venture will further the nonprofit’s exempt purposes and there will be no impermissible private benefit or inurement.” One of the best examples of these joint ventures is the New Market Tax Credit program, where “for-profit investors subsidize development in distressed communities with high poverty or unemployment to generate economic growth and opportunity.” In return for their funding the for-profit organizations will receive a 39% tax credit.  Read more about this exciting innovation at:



September 5, 2017 | Permalink | Comments (0)

Public Interests, Private Institutions? Public Policy Challenges to Tax-Free Universities

Public Interests, Private Institutions? Public Policy Challenges to Tax-Free Universities

By: Wally Hilke and Amit Jain

127 Yale L.J. Forum 94

June 2, 2017

    It is no secret that students believe college is too expensive, and many blame the high costs of university on their tax-exempt status. In 2008, Senator Charles Grassley, as well as other politicians from both sides, criticized universities for “hoarding assets at taxpayer expense.” Universities have responded to this criticism by arguing that constitutional provisions protect their assets and property from taxation. This article explores the tax-exempt status of universities and specifically considers Yale University’s exemptions, since legislators can tax certain property owned by Yale. The article ends with examples of cities and states who can benefit from a similar strategy. For more information on this topic see:



September 5, 2017 | Permalink | Comments (0)