Nonprofit Law Prof Blog

Montana Federal Court Invalidates Revenue Procedure 2018-38 (eliminating donor disclosure requirements for 501(c)(4) donors)

A news release from New Jersey Attorney General Gurbir S. Grewal, dated July 31, 2019:

TRENTON – Attorney General Gurbir S. Grewal announced that a federal court ruled on Tuesday night that the Internal Revenue Service (IRS) and U.S. Department of the Treasury violated federal law last year when they abandoned a fifty-year-old policy requiring “dark money” groups and other non-profit organizations to report information about their major donors to the federal government.

The court’s ruling handed a win to the State of New Jersey, which joined Montana Governor Stephen C. Bullock and the Montana Department of Revenue in a lawsuit www.nj.gov/oag/newsreleases19/pr20190314a.html challenging the federal government’s policy change.  In yesterday’s decision, U.S. District Court Judge Brian Morris from Montana ruled that the IRS acted unlawfully when it changed its policy after powerful advocacy organizations had requested the change and without seeking public comment. According to the court, the IRS “attempt[ed] to evade” seeking the public input required by law when it adopted a new rule that “explicitly upends” fifty years of practice requiring donor reporting by dark money groups.  “This decision is a big win for democracy and for the rule of law,” said Attorney General Grewal. “Not only did the IRS try to make it easier for dark money groups to hide their funding sources, it did so behind closed doors, without seeking public input. By setting the IRS’s decision aside, the court has ensured that the IRS will be held accountable for its actions – and dark money groups can be held accountable for theirs.”

In addition to filing a lawsuit to challenge the IRS’s elimination of the federal donor reporting requirement for dark money groups, New Jersey has clarified its own charitable organization reporting requirements www.nj.gov/oag/newsreleases19/pr20190513a.html to ensure that they continue to report their donor information to the Division of Consumer Affairs’ Charities Registration Section regardless of any changes in federal law.

The case is Stephen C. Bullock v. Internal Revenue Service.  Thanks to Professor Ellen P. Aprill and the folks at the Election Law Blog for providing the link.  Forbes has a summary of the opinion.  For previous coverage of Revenue Procedure 2018-38 see this post.  

 

Darryll K. Jones

 

The Worst Exempt Organization Case Award: Giving Hearts, Inc. v. Commissioner

Giving Hearts, Inc. v. Commissioner, a TCM opinion issued Monday wins the award for the worst exempt organizations case of the year, if not the decade.  Not because it was wrongly decided or the opinion is muddled or something like that.  But because it really makes you wonder whether some people just have extra time and money to burn!  The petitioner's position is so obviously ridiculous that it never should have been litigated!  I mean, does the Tax Court have authority to sanction extremely stupid positions?

So here are the facts.  A Window Replacement Company got most of its sales leads and customers using those irritating phone calls made by some auto-dialer right when you are sitting down to dinner or about to watch a good game.  After the "do not call" law came out, the  Window Company lost quite a bit of revenue because it could not longer make those unsolicited calls to people who had placed their name on the National Do Not Call registry.  The Do Not Call law does not apply to charitable solicitations.  Realizing this, the owner of the Window Company had the bright idea to establish a charity for the purpose of receiving donations and disbursing them to other bona fide charities.  Here is where it really gets good.  The charity, set up by the owner of the Window Replacement Company, enters into "sponsorship agreements."  The opinion indicates that the only sponsorship agreement was with the Window Company.  Remember, charitable solicitation is not covered by the Do Not Call law.  So in an effort to reach customers otherwise off limits because of the Do Not Call list, the Charity hires  the Window Company solicitors to conduct fundraising for the Charity.  And on top of that, the donors to be solicited under the sponsorship agreement were limited to people on the Do Not Call List that the Window Company was otherwise prohibited from calling.  Here is the fundraising script the commercial solicitors -- really, the only solicitor was the Window Company -- were to use.  

Hello this is _______________ calling on behalf of Giving Hearts. We are a non-profit organization helping to fund local children’s charities. We have sponsored the Window Plus company for the purpose of fund raising. For every home owner that accepts a product demonstration and free estimate our charity [Giving Heart] will receive a donation from Window Plus.   

Well, for a limited time Window Plus is offering a onetime special offer of 30% off their triple-pane insulated replacement window which is guaranteed in writing to save a minimum of 40% on your annual heating cost. 

Not only will you be helping a charity receive a donation, you’ll also be getting the right advice and the right price on energy efficient products that will help save the planet while saving money off your ever increasing monthly utility bills. A Window Plus representative will leave you with a free estimate that is good for one full year. Please understand that you are under no obligation to purchase anything. They just want to show you their products and get you that free estimate so in the future if you decide to replace any windows, you’ll get back in touch with them. So, with this in mind, I will have the representative stop by DAY and TIME.

Ok, do I really need to relate how the court ruled on the Service's revocation of the charity's tax exempt status (on private benefit grounds)?  A video short, I think, says it better than I can relate it, but you can read the opinion if you want the technical details:

 

 

Darryll K. Jones

 

HistPhil on the Dartmouth College Case

Histphil (@HistPhil) has been running a symposium of thoughtful posts over the last few days about the Dartmouth College case and its historical significance. Definitely worth a read:

John Thelin, More Lore than Law: The Dartmouth College Case and the Myth of the Purely Private College

Jane Manners, Not Just a Contract case: Dartmouth College v. Woodward’s Law-of-the-Land Legacy

Mark D. McGarvie, The Dartmouth College Case, the Contract Clause, and the Creation of the Private Sector

Evelyn Atkinson, From Public Servant to Private Business: Dartmouth College and the Transformation of the Corporation

Robert Bonner, How Dartmouth College Commemorated the Bicentennial of the Dartmouth College Case

Naomi Lamoreaux, The Dartmouth College Decision as a Pillar of the Regulatory State

Johann Neem, Public Men and Private Corporations: Dartmouth v Woodward and the Development of U.S. Civil Society

@JosephWMead

California sues military support charity for private inurement, private benefit, misleading donors, and campaign intervention

Last week, California filed a 25 page complaint against Move America Forward, a California based charity, accusing the charity of engaging in activities that would amount to private inurement, private benefit, improper campaign activities and violation of state laws relating to charitable solicitation.  Here is an excerpt from the AG's office:  

In the lawsuit, Attorney General Becerra argues that charity directors Salvatore Russo and Shawn Callahan operated separate for-profit entities that charged fees for services provided to Move America Forward and did not comply with California’s Corporations Code guidelines for self-dealing transactions. Russo’s companies were paid an estimated $1,818,000 as a result of these transactions. The complaint further alleges that the nonprofit also invaded the privacy of injured veterans by using their names and stories to solicit donations without their permission. Move America Forward also plagiarized images, quotes, and information from other organizations to mislead donors and falsely inflate its effectiveness in executing its mission. Additionally, Move America Forward improperly shared its resources by providing free office space for the political action committees Move America Forward PAC and the Tea Party Express. The charity also used its charitable assets to support two political campaigns endorsed by those political action committees. Under United States Treasury rules, charities are prohibited from candidate electioneering, and their lobbying capabilities are strictly limited.  The lawsuit seeks the removal of defendants Russo and Callahan as directors of Move America Forward for abusing their authority. It also seeks to ban the defendants from operating charities and from soliciting charitable donations in California. The Attorney General’s Office will pursue further penalties.

Move America Forward, which operates to support the military on foreign deployments responded with its own strongly worded presser:

The attacks on Move America Forward began when we criticized Illinois Senator Dick Durbin for comparing US troops in Iraq to Nazi concentration camp and Soviet gulag guards, an outrageous statement.  Instead of just apologizing, Senator Durbin, joined by several other Democrats, wrote a letter to the IRS demanding a tax audit.  MAF was then subject to two IRS audits, which we passed with flying colors.  But the assault on Move America Forward and its founders has continued in the left-wing press, whose articles spurred on the investigation by left-wing Attorney General Becerra.  AG Becerra then implied that this is a recent action cracking down on military charities, but the truth is that this harassment had been going on for five years.  Despite pointing out, item by item, the inaccuracies in the reports, MAF has been subject to almost 5 years of harassment in the guise of investigations and discovery, wasting our time and resources.  All of the accusations have been TOTALLY FALSE and misrepresent the truth. . . .Now, the AG has resorted to a politically motivated and highly negative public relations campaign to demean and destroy an organization that has sent over 450 tons of care packages to the troops in harm’s way throughout the world and into the war zones of Iraq and Afghanistan. We have invited the AG to come to our office and review all of the relevant documents, much like the IRS did to give us a clean bill of health, but they have refused.

Darryll K. Jones

 

Taxonomy of Public Charities and Private Foundations

Courtesy of Hurwit & Associates, a firm specializing in Philanthropy Law and whose webpage has lots of good resources.

 

Darryll K. Jones

A Look at the Universe of US Exempt Organizations (and non-exempt split-interest trusts)

 

Darryll K. Jones

ProPublica Reports on "Scam Pacs"

ProPublica and Politico have jointly published a report  entitled "How Fundraisers Convinced Conservatives to Donate $10 Million -- Then Kept Almost All of it."  Here is a brief snippet:

After recruiting thousands of donors for the American Conservative Union — the powerful organization behind the annual CPAC conference — a Republican political operative pushed the same contributors to give millions to a PAC that promised to go after then-President Barack Obama, but then steered much of their donations to himself and his partners.

The PAC, called the Conservative Majority Fund, has raised nearly $10 million since mid-2012 and continues to solicit funds to this day, primarily from thousands of steadfast contributors to conservative causes, many of them senior citizens. But it has made just $48,400 in political contributions to candidates and committees. Public records indicate its main beneficiaries are the operative Kelley Rogers, who has a history of disputes over allegedly unethical fundraising, and one of the largest conservative fundraising companies, InfoCision Management Corp., which charged millions of dollars in fundraising fees.

The saga of how politically connected fundraisers used one of the nation’s leading conservative organizations as a springboard for fundraising that mainly benefited the fundraisers themselves sheds light on the growing problem of so-called scam PACs — organizations that take advantage of loosened campaign finance laws to reap windfalls for insiders while directing only a small portion of receipts to actual political advocacy.

The article discusses the FEC's lack of sufficient enforcement authority.  It does not mention the IRS and I am no expert on Political Action Committees.  So any readers who want to provide a primer on tax law and PACs in the comment section would be greatly appreciated.  

 

Darryll K. Jones

IRS Updates Bob Jones Revenue Procedure: Rev. Proc. 2019-22

Flash!  After Bob Jones, the Service issued Revenue Procedure 75-50, explaining that private schools seeking to acquire or maintain charitable tax exemption must have and publicize a racially nondiscriminatory policy as to students, and that policy must be stated in its "charter, bylaws . . . or in a resolution of its governing body."  Revenue Procedure 75-50 stated that the policy could be publicized in print or broadcast media.  Well, nearly 40 years after the invention of the internet, Rev. Proc.  2019-22 clarifies that publication can be made via that very same technological miracle:  

Section 4.03 is modified by adding new subsection 1(c) to read as follows:

(c) The school may display a notice of its racially nondiscriminatory policy on its primary publicly accessible Internet homepage at all times during its taxable
year (excluding temporary outages due to website maintenance or technical problems) in a manner reasonably expected to be noticed by visitors to the
homepage.

 

The notice should state the following:

NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS

The M school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

[In breathless tone] Don't turn that dial.  Stay tuned to this channel for further updates as they occur!

 

Darryll K. Jones

Exempt Hospital's Ambulatory Surgical Center Does Not Qualify for Exemption, Pennsylvania Court Rules

An interesting state property tax opinion released last week.  In Latrobe, Pennsylvania, the Latrobe Area Hospital, a tax exempt entity, performs outpatient surgery procedures.  Some are performed in the hospital, which enjoys state property tax exemption for the same reason it is tax exempt under IRC 501(c)(3).  It also owns an outpatient ambulatory surgical center (ASC)  7 miles from the main hospital.  The ASC performs the same surgical procedures as those performed in the hospital under the same policies applicable to the in house surgical center.  Still, a Pennsylvania appellate court ruled that the separate outpatient surgical center is not entitled to property tax exemption even though, presumably, the ambulatory surgical center qualifies for federal tax exemption under IRC 501(c)(3) if not on its own, than under the integral part doctrine. What I found really curious about the opinion though is the Court's reliance on a rather counter-intuitive (IMHO) definition of "hospital."  To enjoy property tax exemption under Pennsylvania law, the provision of health care must be from a "hospital" but the authorizing statute does not define "hospital" so the court fashioned one:

The Law does not define “hospital.” The general rule is that when a statute does not define a term, Section 1903(a) of the Statutory Construction Act, 1 Pa. C.S. §1903(a), requires it to be construed according to its common and approved usage. Mosaica Education, Inc. v. Pennsylvania Prevailing Wage Act, 925 A.2d 176, 183 n.13 (Pa. Cmwlth. 2007). Additionally, where the words of a statute are not explicit, the General Assembly’s intent may be ascertained by considering other statutes concerning the same or similar subjects. See Section 1921(c)(5) of the Statutory Construction Act of 1972, 1 Pa. C.S. §1921(c)(5); Worobec v. Unemployment Compensation Board of Review, 536 A.2d 467 (Pa. Cmwlth. 1986) (considering the definitions in Section 903 of the Agricultural Area Security Law, Act of June 30, 1981, P.L. 128, as amended, 3 P.S. §903, to determine that the term “agricultural labor” includes working with horses). Webster’s Third New International Dictionary 1033 (1986) (emphasis added) defines “hospital” as: “a charitable institution for the needy, aged, infirm, or young” and “an institution or place where sick or injured persons are given medical or surgical care[.]” Stedman’s Medical Dictionary 726 (25th ed. 1990) defines “hospital” as an “institution for the treatment, care, and cure of the sick and wounded, for the study of disease, and for the training of physicians, nurses, and allied health personnel.” As the Board previously noted, Section 802.1 of the Health Care Facilities Act, 35 P.S. §448.802a (emphasis added), defines “hospital” as an “institution . . . established for the purpose of providing to inpatients . . . diagnostic and therapeutic services for the care of persons who are injured, disabled, pregnant, diseased, sick or mentally ill . . . .” Each of these sources defines hospital as an institution providing more than ambulatory outpatient surgery.  Furthermore, while we agree with the trial court that the provisions of the Health Care Facilities Act are not dispositive, we must acknowledge that its definition of hospital is consistent with the word’s common and approved usage.  As the term is commonly understood, a hospital’s distinguishing features include the availability of medical care around the clock, seven days a week, 365 days a year. Another distinctive feature is the existence of multiple departments; common examples include emergency medicine, critical care, medical laboratory, diagnostic imaging, general surgery, outpatient surgery, oncology, maternity, cardiology, neurology, occupational therapy, pharmacy, admissions, records, and housekeeping.

I'd say its pretty clear that state courts, especially in Pennsylvania, are tangling themselves into knots in an effort to reel in the spread of tax exemption to hospitals.  At the federal level most of that effort is based more on the extent to which hospitals provide free or uncompensated care, as we discussed in this post.  

Darryll K. Jones  

AALS SECTION ON NONPROFIT AND PHILANTHROPY LAW: CALL FOR PAPERS

Nonprofits & Philanthropy

The AALS Section on Nonprofit and Philanthropy Law announces a call for papers to be presented as works-in-progress in our committee session at the 2020 AALS Annual Meeting in Washington DC from January 2-5, 2020. The panel will be held on Sunday, January 5, 2020 from 10:30-12:00.  The Section seeks submissions on a variety of topics and methodological approaches related to Nonprofit and Philanthropy Law. We are especially interested in receiving submissions from new and junior academics or scholars who have not previously written in the field.

Eligibility: Scholars teaching at AALS member or nonmember fee-paid schools

Due Date: Friday, September 13, 2020 (extended from August 19^th)

Form and Content of Submission: Submissions may range from early drafts to articles that have been submitted for publication, but not articles that will have already been published by January 6, 2020.  

Submission Method: please submit papers electronically in Microsoft Word format to leslie@yu.edu "AALS Nonprofit and Philanthropy Law Submission" in the email subject line.

Submission Review: Papers will be selected for inclusion in the program after review by members of the AALS Nonprofit and Philanthropy Law.

Additional Information: Unfortunately, the section is not able to provide any funding to presenters, who will be responsible for their own expenses. If you have any questions, please contact Melanie Leslie at Leslie@yu.edu.

 

Darryll K. Jones

Charity Tax Commission (UK) Issues Report: "Reforming Charity Taxation -- Towards a Stronger Civil Society"

The Charity Tax Commission, a group set up by the National Council for Voluntary Organisations (NCVO) issued a report this month entitled Reforming Charity Taxation -- Towards a Stronger Civil Society.  The report focuses on UK's tax policy as it relates to charitable organizations.  Here is the executive summary:

A healthy civil society and charity sector are a crucial part of a good society. Charitable tax reliefs are currently worth around £5 billion a year. The Charity Tax Commission has looked at how this is distributed and set out to establish whether the current approach was the best way to support the sector, and whether it met public expectations. There is some urgency here. It has been over 20 years since charity taxation was last reviewed. New technology is changing the ways the sector evolves, and new forms of charity are emerging. The country itself seems divided, with certain geographic areas feeling ‘left behind’, while relatively tight fiscal policy necessitates every pound of tax relief to be targeted as well as it can be. Evaluating and analysing the tax treatment of charities. To help steer and shape our thinking, the Commission developed a set of principles by which we believe the tax treatment of charities should be judged. We propose that charitable tax reliefs should, taken together, be designed to support:  1.functional activity towards a particular social good or public benefit; 2. individual donations to, participation in, and support of charitable activity; and 3. avoiding disincentives and ideally encouraging charities to increase efficiency and effectiveness, and to innovate and collaborate. 

We have aimed to strike a balance between these principles, principally focussing on the three largest reliefs that charities receive: Gift Aid, business rates relief and VAT, along with other suggestions for incentivising giving and philanthropy.  Our proposals aim to discourage too much ad hoc political intervention, so that charities can plan with certainty; promote and buttress the democratic nature of individual giving; and address barriers and systemic anomalies that impede efficiency and fairness.  In addition to where immediate improvements are both needed and possible, there are areas where we feel we cannot propose immediate solutions. This is predominantly because of a lack of adequate data and robust research that would allow us to understand the consequences of various possible changes. However, we believe that bold and ambitious thinking is needed in several of these areas and have highlighted these so that they can become the focus of future research and debate.

Here are the "Short-term reforms" the Commission recommends:

Part A: Short-term reforms

GIFT AID

Redirect higher-rate relief to charities The value of higher-rate and additional-rate relief should be redirected to charities on top of the basic-rate relief they already receive, with an opt-out from this if donors specifically requested it.  This change should be preceded by research to determine how best to overcome the administrative issues that this raises.

Universal Gift Aid Declaration Database

Allowing donors to complete a single, enduring universal declaration covering all their subsequent gifts to charities, a Universal Gift Aid Declaration Database (UGADD) would simplify the administrative requirements for Gift Aid. Charities could then access the database in order to see whether a given donation has a Gift Aid declaration against it. It would also help address HMRC’s concerns about the tax gap2 and ineligible Gift Aid claims. Government should therefore re-explore the feasibility of a UGADD, including how its operation would potentially impact on charities of all types and sizes. This would help future-proof Gift Aid at a time when donors are becoming more mobile and cash transactions are increasingly digital.

BUSINESS RATES RELIEF

Consult on extending rates relief to wholly-owned charity trading subsidiary companies.  Many charities set up a trading subsidiary company in order to comply with the rules on charitable trading. However, this can lead to the loss of mandatory and/or discretionary charity relief when the trading subsidiary is separately assessed for business rates. However, the primary goal of raising money for charity remains the same. Government should therefore consult on whether to roll out rate relief to all wholly-owned charity subsidiaries.

VAT

Review VAT rules for shared facilities

Current VAT rules on the sharing of facilities, equipment and buildings create irrecoverable VAT for charities and restrict collaborative working and cost saving efficiencies between charities and partners, particularly research institutions.  VAT rules for charities using shared resources should be reviewed to support collaboration. This would help innovative public and private sector collaboration with charity research institutions and help the Government achieve its commitment to raise UK investment in research and development.

Require public bodies to provide the VAT status of funding

Whether the funding a charity receives is deemed to be a contract or a grant for VAT purposes can be highly subjective and open to interpretation. Charities consequently spend significant resources trying to determine whether some funding is within the scope of VAT.

Public bodies should be required to provide the VAT status of any funding, using clear guidance provided by HMRC on how to decide when income from a funding offer or tender is or is not subject to VAT. HMRC should work with the voluntary sector to develop this guidance to ensure public bodies do not automatically adopt risk-averse behaviour to the detriment of charities’ beneficiaries.

INCENTIVISING GIVING

Make it mandatory for employers to offer a Payroll Giving scheme

Payroll Giving is an effective way of giving for donors, as donations are taken out of pretax income (enabling tax liabilities to be reduced by the amount donated), yet it remains a small part of the overall charitable giving landscape.  To increase take-up, the Government should make it mandatory for employers to offer a Payroll Giving scheme to employees. This could match the rules on pension autoenrolment, although a minimum size of employer might need to be considered.

IMPROVED DATA AND OPENNESS

The need for better government data

Knowing how tax reliefs are distributed is important for understanding how far they influence public and charity behaviour and deliver their intended social or economic objectives. However, it is currently difficult to determine with any degree of accuracy where most charitable tax reliefs are targeted or the public benefit they support.  The Government should improve the quality of its published statistics on how much tax relief individual charities receive, broken down by type of relief. While changing long-standing rules designed to protect both individual and corporate taxpayers could create unacceptable risks, there is a strong case for internal HMRC guidance to make it clearer to staff that openness which does not breach these rules is itself an imperative.  Local authorities should also publish their business rates registers as open data in a standardised format.

Greater openness from charities

Better data from government would show which charities are receiving tax reliefs but reveal little about how charities convert this support into delivering public benefit.  Charities with revenue of over £1 million per annum should publish detailed information in their annual reports about the amount of money they receive from Gift Aid, business rates relief, and where possible, VAT relief. 

 

Darryll K. Jones

Post-TJCA Charitable Deductions

Yesterday, the Chronicle of Philanthropy reported that both the number of taxpayers who took the charitable deduction and the amount of charitable deduction claimed dropped precipitously from 2017 to 2018. Specifically, in 2017, about 24 percent of taxpayers claimed charitable deductions (for a total of about $147.3 billion). In 2018, the percentage of taxpayers deducting their charitable contributions dropped to 8.5 percent, for a total deducted amount of $93 billion.

I'll note here that this doesn't mean that charitable giving dropped 27%. In fact, according to Giving USA, charitable giving in 2018 rose 0.7% in current dollars over giving in 2017 (though it dropped 1.7% when adjusted for inflation). It just means that where, in 2017, 35% of charitable giving was deducted, in 2018, only about 22% was deducted.

The Chronicle reported on the general decrease in taxpayers taking itemized deductions at every income level. I thought I'd look at how post-TCJA charitable deductions compared to pre=TCJA charitable deductions at five different income ranges.

I used the IRS's Late-May Filing Season Statistics by AGI for 2018 and 2019. Remember, the top-line numbers are that in 2017, 23.73% of tax returns took deductions for charitable giving. In 2018, that dropped to 8.43%.

For taxpayers with less than $50,000 in AGI, deductions dropped from 7.2% in 2017 to 1.82% in 2018.

Between $50,000 and $100,000, the decline was from 33.43% to 10.04%.

Between $100,000 and $250,000, the decline was from 66.96% to 23.81%.

Between $250,000 and $1 million, the decline was from 87.43% to 49.75%.

And above $1 million, the decline was from 86.8% to 67.75%.

Samuel D. Brunson

The Parsonage Allowance: Back to Court(?)

Over the past several years, the Freedom From Religion Foundation has been litigating over the constitutionality of the parsonage allowance. (The parsonage allowance, codified in section 107 of the Code, provides that "ministers of the gospel" can exclude in-kind housing or cash housing allowances from their income.)

In March, the Seventh Circuit ruled against FFRF, holding that tax-free housing allowances available exclusively to clergy didn't violate the Establishment Clause. Then, a month ago or so, FFRF announced that it wouldn't seek review by the Supreme Court.

But the battle isn't over, it turns out. Last week, the Humanist Society of Greater Phoenix announced that it was going to challenge the constitutionality of the parsonage allowance.

The article doesn't provide a ton of details, but it looks to me like it's going to follow the FFRF's playbook by designating a portion of its executives' salary as a housing allowance. (Note that, contrary to its assertion, the Humanist Society wouldn't claim any kind of exemption: the exemption belongs to the minister.) Because the Humanist Society is both a nonprofit and tax-exempt, it's in a similar position to FFRF vis-à-vis the parsonage allowance.

I assume that it believes that the IRS will reject the claim, giving it standing to challenge the provision's constitutionality in court.

I've said before that I'm not completely convinced that this grants standing, the Seventh Circuit notwithstanding. Even if it does, though, the Humanist Society may face hurdles not faced by the FFRF. Specifically, according to the article, leaders of the Humanist Society are broadly recognized as clergy. By contrast, the FFRF expressly denied by religious or quasi-religious, and rejected the IRS's assertion that maybe its executives were clergy. Because the Humanist executives are recognized as clergy, it's not clear to me that they don't qualify as "ministers of the gospel" for purposes of section 107. And, if they qualify as clergy, they're going to have a hard time getting standing to challenge the allowance.

Samuel D. Brunson

Aren't donations to charities intended for crime victim compensation charitable contributions? Whose Advising the Virginia Governor otherwise?

 

Do organizations set up to collect and distribute donations to victims and victim families of mass shootings qualify for tax exempt status under IRC 501(c)(3)?  And if so, are contributions to those organizations deductible under IRC 170?  Of course, right?  What could be more charitable?  Sadly, mass shootings are becoming . . . well . . . ubiquitous.  As the map above shows, one of the latest mass shootings happened in Virginia Beach on May 31, when a gunman killed 11 people, wounding 4, before being killed himself in a hail of police gunfire.   So I am not quite sure why the Virginia Governor had to certify that a 501(c)(3)  doing just that -- collecting and donating funds to victim and victim families -- is performing "an essential government function."  His staff apparently thinks that without that designation, donations to the organization may not be deductible under IRC 170.  Here is the Governor's July 16 press release:

RICHMOND—Governor Ralph Northam today issued a proclamation recognizing that the Virginia Beach Tragedy Fund (Fund) seeks to perform an essential government function and urged the Internal Revenue Service (IRS) to follow suit. The Fund, which was established by United Way of South Hampton Roads in partnership with the City of Virginia Beach, must receive this designation in order to confirm that donations to the Fund will be tax deductible.

“Members of my administration have been in close and frequent contact with officials from the City of Virginia Beach and have offered to assist the victims and families affected by this senseless tragedy,” said Governor Northam. “As a result, I am issuing a proclamation that the Virginia Beach Tragedy Fund seeks to perform an essential government function, and I urge the Internal Revenue Service to find the same. The families of the victims and those injured in the tragic shooting in Virginia Beach rely upon this critical financial assistance and we must ensure they are receiving the support they deserve.”

Current IRS guidelines establish that donations to victim assistance funds are generally considered personal gifts and therefore are not guaranteed to be tax deductible. In June, the IRS confirmed that families of the victims and those injured are exempt from paying taxes on money they receive from the Fund. But the IRS has not yet certified that contributions to the Fund, which have come from thousands of individuals, reaching more than $3 million, will be tax deductible.

Here is the Governor's July 16, 2019 proclamation regarding the "Virginia Beach Tragedy Fund: 

Virginia Beach Tragedy Fund

WHEREAS, on May 31, 2019, 12 people were killed and four people were wounded in a mass shooting at a municipal building in the City of Virginia Beach, Virginia; and

WHEREAS, the shootings were horrific, jarring, and heartbreaking; and

WHEREAS, the victims and their families incurred medical, funeral, and other expenses as a result of this tragedy; and

WHEREAS, after this terrible tragedy, there was an outpouring of generosity by people and businesses offering monetary donations to help the victims of the mass shooting and their families; and

WHEREAS, the United Way of South Hampton Roads, a nonprofit §501(c)(3) organization, and the City of Virginia Beach created the Virginia Beach Tragedy Fund (Fund); and

WHEREAS, through the Fund, the City of Virginia Beach and the United Way of South Hampton Roads are working to ensure that monetary donations are used to provide financial assistance to the victims of the mass shooting and their families; and

WHEREAS, the Fund seeks to address the loss suffered by victims and their families, memorialize the heroism of first responders and community members, and assist the victims, their families, and the community in recovering from this tragedy.  Such services lessen the burdens of government;

NOW, THEREFORE, I, Ralph S. Northam, do hereby recognize that the Fund seeks to perform an essential government function with respect to the Virginia Beach mass shooting by lessening the burdens of government and promoting the health, welfare, and recovery of the victims, their families, and the Virginia Beach community.

 

The United Way South Hampton Roads website states "[p]lease note, donations given to victim assistance funds are generally considered personal gifts and are not guaranteed to be tax deductible so you will not be receiving a tax donation receipt."  Apparently, it is this qualifier that motivates the Governor's lawyers to have the fund designated as something that performs an "essential government function." But it seems to me that this approach is like that old game "Twister," (often played on that corny show, "The Brady Bunch").  I mean, why go through all these contortions?  United Way is definitely a 501(c)(3), contributions to which are tax deductible.  It has set up a fund to help crime victims and donations for that purpose, just like donations to assist victims of natural disasters -- are surely deductible, n'est-ce pa?  What am I missing here?  Why go through the trouble of proclaiming that the fund is performing an "essential government function," which by the way is a phrase nowhere found in IRC 170 and seemingly has nothing to do with charitable contributions.  Instead it is found in IRC 115 and, if applicable, would make the fund exempt from federal taxation.  Who thought doing so would resolve whatever charitable contribution uncertainty I am not seeing?   

Darryll K. Jones

 

 

NCAA Revokes Student Athletes' Scholarship After He Becomes YouTube Sensation

I saw a story on our local news last night that made my blood boil about the faux charity known as the NCAA.  Recall that the NCAA collects and pays millions to everyone except the players.  To do so, according to the argument laughingly rejected in the latest lawsuit challenging the rule against players sharing in the bounty, would destroy the alleged amateurism the NCAA is so bent on protecting.  Now, I am not an enemy of the NCAA.  One of my daughters is attending school on a golf scholarship, though the fact that she can play golf makes me wonder if she is really my kid because she definitely didn't inherit them skills from me.  Anyway, a kid named Donald De La Haye play[ed] kicker for the University Central Florida, a school one of my other daughters attends right down the street from my home.  The first remarkable thing about this story is . . . well, he is a kicker.  And while kickers are important and indispensable to a winning season, they come a dime a dozen.  They suit up just like everybody else but they are practically immune from getting hit by the rules of the game.  That they come a dime a dozen -- most recently from the ranks of those who play football as that term is used throughout the rest of the world -- is a point of relevance discussed below.  

Anyway, De La Haye has a YouTube channel that has become quite popular, with over 1.5 million subscribers.  His YouTube name is "Deestroying" and his videos seem pretty routine frat boy or jock cheesy humor.  Still, he has 1.5 million subscribers and counting.  I haven't watched any except the one in which he announces what the NCAA is doing to him (see below). Here is an excerpt from one of our local newspapers: 

Here’s a kid the NCAA ought to celebrate, living proof that college football programs don’t necessarily crank out dolts unprepared for the new economy. By his sophomore year, University of Central Florida kicker Donald De La Haye’s zany football-based performance art had attracted close to 1 million YouTube subscribers. Which provided Donald with “a modest amount of income from the ad revenue.”  Barely 20 years old, De La Haye, known as “Deestroying" to his followers, was an entrepreneur for the digital age. And a pretty damn good kick-off specialist to boot. Except the $14 billion-a-year cartel that controls college athletics won’t abide students cutting into the NCAA’s revenue stream. Once a kid agrees to an athletic scholarship, he must surrender economic rights to his name, to his very image.  Yet there was Deestroying, pretending his face belonged to him, not the university. Rather than risk NCAA sanctions, UCF revoked his scholarship.  Young De La Haye, whose family moved from Costa Rica to Port St. Lucie when he was seven, told the university that he’d stop accepting advertising revenue from his videos. Not good enough. The rules prohibit any videos “based on his athletics, reputation, prestige or ability.” All that belonged to the UCF and the NCAA.

"Every time I step into that [NCAA] compliance building, I hear nothing but bad news."  That's how the kid starts explaining the unexplainable on his YouTube Channel:  

The kid was actually given a choice.  Take down your Youtube channel, stop earning money from your own name and face -- "that's for us to do exclusively, you know the rules!" -- or lose the scholarship.  He chose to retain his personal autonomy, gave up his scholarship and left school.  I am not gonna preach about Nick Saban's salary or that of many other coaches, and Athletic Directors,  or the billions reaped by ESPN and the like from the charity known as the NCAA.  But for data-heads who want to know, check out "Madness, Inc. How everyone is getting rich off college sports -- except the players."

To see how entertaining the student's YouTube videos can be -- and how unrelated to the NCAA's business (I used that word intentionally) they are -- check this one out:

Now about his status as a kicker.  Having had my bell rung plenty of times as a kid playing football, I really don't think kickers are American football players.  If anything, they are European football players in pads.  But two things:  first, this kid is good enough that he now plays for the Toronto Argonauts in the Canadian Football League, an outfit that does pretty much the same thing as the NCAA but doesn't pretend to be charitable or amateurish.  Second, if this kid had been a 6'6 wide receiver with 4.3 speed or faster, attracting a whole buncha television viewers, you best believe the College woulda went for it on 4th and long to keep him on the team.  Trust me, they would have hired that Bond Schoeneck & King, a Kansas City firm that specializes in NCAA rules, and litigated this thing til the cows came home.  And that might not have been necessary.  Given his star power, the NCAA would have found a way to inject some sanity into the rule; they would have come up with a waiver.  He'd still be on YouTube and he would still be catching passes for UCF on ESPN TV, from which the NCAA gets paid billions.  He is a good kicker, but he is just a kicker!  Kickers are indispensable but they do not put butts in seats.  And just what does a student-athlete's posting on YouTube have to do with the sanctity of amateur sports, except that it might cut into practice time!

Anyway, its this kind of craziness that has led to calls to yank the NCAA's tax exempt status.  

Darryll K. Jones

 

Can Charity Completely Replace Taxation?

The Foundation for Economic Education (FEE), in today's online edition makes the case that charity can replace taxation altogether in the provision of charitable goods and services -- in this case, health care and education to the poor.  Here are the salient points of the argument along with my counterpoints:   

However, is publicization (of health care and education) through state activity the only or best way to provide those services to the poor? Do we have alternatives? How about charity? Couldn’t charity replace taxation?   It could—and with solid advantages.  There are four main reasons why this is the case: moral, political, financial, and psychological 

1.  The Moral Case.   Are taxes so different from charity? Well, pulling out our wallet to donate money to a non-government organization (responsible for offering health or education) is different than opening our pockets for the revenue guys who threaten us: “If you don’t pay your taxes, you will end up in prison!” We have here a strong moral difference between a forced act and a voluntary act: taxation is coercion, while charity is benevolence.

In fact, rich countries that adhere to a welfare state model and (of course) high taxation are not the most generous ones. According to rankings from the Organization for Economic Cooperation and Development (OECD), France has the highest tax-to-GDP ratio in the world (46.2 percent), followed by Denmark (46 percent) and Belgium (44.6 percent).  When we check the Charities Aid Foundation (CAF) World Giving Index, France is 72nd on the list of generosity, Denmark is 24th, and Belgium is 39th. On the other hand, Ireland’s tax-to-GDP ratio is 22.8 percent, and the United States is 27.1 percent. Ireland is fifth on the CAF World Giving Index, and the United States is fourth. Interesting, isn’t it?

Editor's response:  Maybe those who live in welfare states confidently expect that the state will take care of all health and education needs and thus feel no compunction to donate.  Ever think of that!?

2.  The Political Case.   There is an enormous risk in allowing the expansion of the state's forces, even when we are talking about areas as important as health care and education. Public education opens a highway to the imposition of cultural hegemony through indoctrination. If education is provided by several independent entities (sponsored by charity), it is harder to control it. The government gains the power to tell us what to eat and drink, how to ride or drive, what we can do or not, and more.  But when education is centralized in the state’s hands (afforded by taxes), it easily becomes an ideological apparatus, making the dreams of Antonio Gramsci and Louis Althusser come true.  Once public forces take the responsibility for providing health care, life is made subject to explicit calculations of state power, featuring what Michel Foucault and Giorgio Agamben called biopower or biopolitics: Life itself becomes an object of concern for power. As a result, individuals see the demise of any boundaries against public intervention in their lives. The government gains the power to tell us what to eat and drink, how to ride or drive, what we can do or not, and more.

Editor's response:  Now this might be a legitimate point but only for a small group.  There are a plenty of schools, a distinct minority to be sure,  that do not accept any federal funding "in order to preserve their liberty and independence . . . Government aid comes with government strings, whether it goes directly to a school or directly to its students. To avoid these strings, a school must decline aid both to itself and to its students. That is, it must decline to participate in government-sponsored student loan and grant programs.  Most of the schools on the list refuse not only federal but also state and local government aid."  But this small minority of schools hardly proves that the majority would forego taxpayer support in exchange for "liberty and independence" made possible by charitable donations.  For their part, hospitals are regulated in all sorts of ways, and not just in exchange for accepting medicare or medicaid payments.  They might eschew government financial support but health and safety concerns will always justify their lack of "liberty and independence."  

3.  The Financial Case. We will set here an audacious premise: Private entities sponsored by charity are normally more effective (they are cheaper or have a better cost-benefit profile) than public entities. They can do the same with fewer resources.  For example, in Brazil, we have public and private universities. Research shows that a student in a Brazilian private university costs 60 percent less than in a public university. Maybe poor countries could do more with less money if they invested in the private sector and thought about how to promote charity instead of relying only on public services and taxation.  Perhaps if the government demanded less (coercively), people would give more voluntarily.  The 2016 IUPUI survey asked wealthy people what they would do if taxes were eliminated. What do you think they said? Seventeen percent indicated they would increase the amount they give to charity, and 6 percent said they would dramatically increase (72 percent would stay the same, and just 5 percent would reduce the contribution). In 2013, the figures were even more in favor of charity: 47 percent would stay the same, 31 percent would increase, and 18 percent would dramatically increase.  Considering this—rich people would give more money and we can do more with less (investing the money donated in the private sector)—why can't we believe charity is a financially feasible alternative? As a famous politician’s slogan goes: Yes, we can!

Editor's response:  I almost stopped at the assertion that private charitable entities are cheaper and have better cost-benefit profiles.  We are talking about education and health care remember.  Private universities, at least in the United States, are pretty much out of reach for even upper middle class students without tax payer funding.  The people who cannot afford private schools can generally afford public schools.  Second, private charitable hospitals are just as expensive, if not more than for-profit hospitals.  And with the meshing of patient payment options, I am not sure there is any real price differentials between charitable and non-charitable hospitals.  See this post and this post from last week.  

4.  [The Psychological Case]  Several social psychologists, among them Elizabeth Dunn, argue that people who give money to charity are happier than those who don’t. And we can see the benefits of giving spike when people feel a real sense of connection to those they are helping and can easily envision the difference they are making in those individuals’ lives.  For example, UNICEF is such a big, broad charity (doesn’t it resemble the state?) that it can be hard to realize how our small donation will make a difference. What’s the matter? The  emotional return on investment is eliminated when people give money to UNICEF (imagine what happens when we “give” the money to the state). This suggests that just giving money to a worthwhile charity (or to the Leviathan) isn’t enough. We need to be able to envision how exactly our money is going to make a difference.  One could say we need to find a way to show the results of tax collection and make the state better at providing public services.  The IUPUI survey confirms this statement. Discussing the motivations for charitable giving, donors provided three main reasons: (1) they believed in the mission of the organization (54 percent); (2) they  believed their gift could make a difference (44 percent); (3) for personal satisfaction, enjoyment, or fulfillment (38 percent).  Furthermore, the study showed that people have the most confidence in individuals (87 percent reported either “some” or “a great deal”) and nonprofit organizations (86 percent reported “some” or “a great deal”) to solve societal or global problems. Sizeable proportions of interviewers held “hardly any” confidence in the legislative branch (58 percent), the executive branch (46 percent), and state or local governments (41 percent).  One could say we need to find a way to show the results of tax collection and make the state better at providing public services (in a cost-benefit analysis). Well, even with these improvements, what about the moral plea? Will we keep acting by force? And if one thinks people pay taxes voluntarily, what about the political plea? Will we keep making room for interventionism? Even though taxes defenders refuse to admit it, these questions remain without satisfactory answers.

Editor's response:  Hmmmmmm.  So people would be happier giving to charities because they could more easily track the use of their charitable dollars than they can with forced extractions through taxation.  Ok, so Hansmann's market failure theory to explain the nonprofit firm works to explain why some nonprofits are patronized even though the resulting public good may be incapable of measurement.  Does this mean we would end up having more willing donors than reluctant taxpayers though.  Free rider much?

This article is probably . . . well, a waste of time on a slow news day.  Or am I being too harsh?

 

Darryll K. Jones

Cherry: "Nonprofit Governance: Who Should Be Watching? A Look at State, Federal and Dual Regulation"

Jaclyn Fabean Cherry recently posted "Nonprofit Governance: Who Should Be Watching? A Look at State, Federal and Dual Regulation." 

Here is the abstract:  

Recent scandals in the nonprofit sector have once again called into question the issue of nonprofit governance. Who is governing these organizations and are they doing so appropriately? Who is regulating and what law applies — federal, state, or both? The one thing that is certain is that clarity is needed. True to form, the egregious behavior of some of those serving on the boards of directors of large organizations has brought these issues back into the spotlight, raising questions for regulators and the general public about the validity of these and other organizations and the truth of their stated missions. While most assume that clear laws dictate the behavior of those entrusted with the care of charitable nonprofit organizations, some scholars question just how clear these laws are and whether overstepping by the Internal Revenue Service in this area may be causing confusion. Some believe that while nonprofit governance was once the purview of the states alone, the federal government has inappropriately preempted oversight in this area. Charitable nonprofit organizations incorporate under state law and receive tax exemption in accordance with federal law, resulting in a system that has sometimes complicated legal matters. Yet, under both state and federal law, nonprofits must function to carry out their organizational missions for the good of the public.

Recently, the Trump Foundation, the Resnick Foundation (Wonderful Company) and Goodwill Omaha, all designated as charitable nonprofit organizations by the Internal Revenue Service, have been the focus of scandal and review. Taken together, they represent many of the challenges that are at the core of the governance issue. A review of the facts in these and other situations will help clarify this issue and focus on potential resolution.

This Article begins by discussing nonprofit governance, board of director fiduciary duty, and federal, state, and common law as they pertain to nonprofit governance. It sets out different theories for whether the IRS has in fact overstepped its authority in this area by regulating nonprofit governance matters and discusses whether there should be more cooperation between the IRS and states attorneys general. It then summarizes three recent situations as examples of this current dilemma.

More specifically, this Article reviews the claim by many scholars that by regulating nonprofit governance through IRS forms 1023 and 990, the IRS has overstepped its authority; it explores the theory that the IRS has gone even farther by regulating through the private benefit doctrine. It asks if the IRS has overstepped and, if it has, whether it has done so out of necessity because state attorneys general are overworked, understaffed, and generally unable to keep up in this area. It will also ask whether, as one scholar advocates, dual oversight is not only legal but actually more effective. Further, this Article compares similarities between nonprofit and for-profit governance regulation to glean any useful lessons, and explores policy considerations surrounding these governance issues. Finally, it suggests that perhaps dual jurisdiction with established roles and mandatory information sharing may work best given the many nuances in the sector and the political nature of the offices tasked with this oversight.

Darryll K. Jones

 

The Other Side of Hospital Financials: Fees, Debt and Charity Care

I just want to piggy-back quickly on the great blogging done by Darryll Jones on the hospital financials and pay issue - clearly, there is a lot of attention currently being paid to hospital expenses.   The hospital income part of the balance sheet has also been getting a great deal media attention as of late, as noted in Darryll's post on the ProPublica article below.  On June 26, the Wall Street Journal piled on with, "When Patients Can't Pay, Many Hospitals Sue," discussing the aggressive collection tactics of  nonprofit hospitals.   The article does mention that the Affordable Care Act included limitations regarding debt collections, but that lawmakers may be currently looking into additional debt collection or charity care limits, noting that

...Congressional and state lawmakers from both political parties say nonprofits hound low-income patients with aggressive collection efforts, even as they enjoy tax-exempt status and their senior executives bring in salaries that rival for-profit organizations....

While I am dubious that nonprofits should pay less in compensation because they are nonprofits (and I am absolutely not biased on this as a employee of a nonprofit LOL), the link between aggressive collection efforts and executive salaries is clear in the minds of the public and lawmakers.    For an interesting follow up on the article, the opinion page as of July 7 has the insights of a number of doctors as well.

EWW

 

 

Forbes: "Top U.S. Non-Profit Hospitals & CEOs Are Racking Up Huge Profits"

This must be the season of scrutiny for nonprofit hospitals.  A few days ago we blogged about one nonprofit hospital's particularly aggressive collection activities, including thousands of lawsuits against indigent patients the hospital agreed to treat in exchange for tax exemption.  Forbes online published an article last week discussing how "the top 82 nonprofit hospitals" are making billions and paying their Tophats millions.  Of course, the law pretty much allows nonprofit hospitals to accumulate mountains of money as they pursue their charitable purpose.  In other words, nonprofits can make money they just can't pay dividends.  The law also allows nonprofit hospitals to pay reasonable compensation determined by reference to similarly situated for- and non-profit hospitals.  That the top nonprofit hospitals have large, and sometimes fee-generated endowments, and pay their Tophats outrageous salaries is not necessarily indicative of a non-charitable purpose.  Academic hospitals, in particular, typically treat the sickest patients and the rarest diseases -- in part because doing so assists in their teaching and research mission -- and they cross-subsidize those activities from fees paid by non-indigent patients among other sources.  The theoretically ideal tax exempt hospital would probably need to accumulate a largess (if not from donations, then from paying patients I suppose) with which to "cross subsidize" (but not sue for payment) indigent care and find new cures and treatments.  I am not so sure I can say the same about outrageous salaries but that is a problem of corporate governance, whether for-profit or nonprofit, that has caused outcries for years.  And, in final defense of the regs (53.4958-4(b)(1)(ii)(A)) allowing nonprofits to pay for-profit market salaries, it should be remembered that nonprofits exist  within an amoral profit seeking market.  They don't normally get discounts on labor, supplies or other inputs just because they are the proverbial "good guys."  Still, the Forbes article is consistent with the trend towards alarm-ism with regard to the wealth of hospitals that pay no taxes and still put plenty of patients in the poorhouse through their fee structures:

Our auditors at OpenTheBooks.com looked at America’s healthcare system and found that so-called “non-profit” hospitals and their CEOs are getting richer while the American people are getting healthcare poorer.  Our new oversight report Investigating The Top 82 U.S. Non-Profit Hospitals, Quantifying Government Payments and Financial Assets specifically looked at large nonprofits organized as charities under IRS Section 501(c)3 with the mission of delivering affordable healthcare to their communities.   We found that these hospitals add billions of dollars annually to their bottom line, lavishly compensate their CEOs, and spend millions of dollars, which are generated by patient fees, lobbying government to defend the status quo.  Last year, patients spent 1 out of every 7 U.S. healthcare dollars within these powerful networks. Many are household names like Mayo Clinic* in Rochester, MN; Cleveland Clinic*, in Cleveland, OH; and Partners HealthCare in Massachusetts.  Here’s how executive compensation breaks down at the 82 largest non-profit hospitals using the IRS 990 informational returns and auditing the latest year available:

• • 13 organizations paid their top earner between $5 million and $21.6 million;
  • 61 organizations paid their top executive between $1 million and $5 million;
  • Only 8 organizations paid their top earner less than $1 million (which proves it’s possible).

This chart [see above] shows the income bands of top-paid executives in the 82 large charitable hospitals across America.

The article includes a link to a study -- it seems almost more like an advocacy piece, but that doesn't mean the facts are not real -- presented in a neat sort of YouTube-like format.  Anyway, here is the presser on the study:

 

FOR IMMEDIATE RELEASE:  

June 24, 2019

REPORT: Healthcare Charities Raking in Cash & Stockpiling Money

OpentheBooks.com Oversight Report – Top 82 U.S. Non-Profit Hospitals, Quantifying Government Payments & Financial Assets, studied the largest charitable healthcare providers where roughly 1 out of 7 U.S. healthcare dollars was spent last year.   

Senator Tom Coburn, "The problem in health care is not that markets have failed. The problem is they have never been tried. This report shows that hospitals and so-called health care ‘charities’ benefit handsomely from the status quo. The lack of price transparency in our health care system is driving up costs and reducing access and quality. Giving patients an honest look at health care economics is one of the best ways to drive reform."

Why are the salaries so high at these healthcare charities? Furthermore, net assets at these charities increased by 23.6% or $38.9 billion last year.

Salaries ran as high as $21.6 million. In fact, six CEO's made between $10 million and $21.6 million; seven CEO's made between $5 million and $9.99 million; 25 CEO's made between $2.5 million and $4.99 million; another 36 CEO's made over $1 million; and only 8 executives took a paycheck under $1 million.  Adam Andrzejewski, "America’s patients shouldn’t have to go on a scavenger hunt to discover prices for services. The lavish salaries for health care CEOs and rich endowments for charities may be one reason why the numbers are so elusive for patients. In every other area of the economy shoppers can see what things cost. It’s long past time to apply basic standards of transparency and price discovery to health care."  For more than 50 years, American presidents have been sounding the alarm about America’s healthcare system and rising costs. Hard data backs up this concern. In 1970, healthcare amounted to 7% of GDP and today is near 20%. 

BY THE NUMBERS:

• • $203.1 billion – the total of combined net assets of these 82 non-profit providers;
  • 23.6% – the percentage of growth in combine assets from $164.2 billion to $203.1 billion; 
  • $20,000 – the annual healthcare costs for the average American family; 
  • $21.6 million – Banner Health CEO earnings last year;
  • $26.4 million – Combined lobbying costs spent by the 82 hospital organizations spent last year.

 

For full report, click here.

 

Darryll K. Jones

Reflections on Legal Barriers to Cross-Border Philanthropy in Europe

Following up on my earlier post, I was fortunate enough to be able to discuss last week the various legal barriers to cross-border philanthropy in Europe with some of the leading practitioners, academics, and organization leaders from that continent in connection with the European Research Network on Philanthropy (ERNOP) biennial conference. My detailed reflections are available on the Alliance website, so I will just say here that it is a time of both threat and promise for European philanthropy. The threat is that some countries are enacting new laws targeting cross-border philanthropy, which add to existing barriers relating to legal form and taxation. The promise is that supporters of philanthropy have two new initiatives to rally around: the European Philanthropy Manifesto issued by the Donors and Foundations Networks  in Europe (DAFNE) and the European Foundation Centre (EFC) earlier this year; and the European Economic and Social Committee (EESC)'s recent opinion "European Philanthropy: an untapped potential" (the EESC is a consultative body of the European Union). Hopefully these developments, and opportunities such as the event I attended that provide an opportunity to discuss new developments, will help ensure a strong enabling environment for philanthropy in Europe for many years to come.

Lloyd Mayer