Sunday, June 27, 2021
A Call for Statistical Information about Nondiscrimination & Private Schools: Numbers Don’t Lie
In a 2000 EO CPE article entitled Private Schools, the Service stated, “private schools have long been of concern to the Service.” As stated therein, the Service’s determinations of whether private schools qualify for exemption under IRC 501(c)(3) were addressed in many of the CPE texts from 1979 through 1989. In Private Schools, the Service provided an important historical review, a discussion on the requirements of Rev. Proc. 75-50, 1975-2 C.B. 587, and a summary of the various filing requirements that apply to private schools.
In recounting the history of this problem, the CPE article notes the background and current status of an injunction (still in effect) that requires the Service to deny tax-exempt status to racially discriminatory private schools in Mississippi. The injunction resulted from a 1970 class action filed to prevent the Service from recognizing the tax-exempt status of or allowing IRC 170 deductions to private schools that engage in racial discrimination against black students. See Green v. Connally, 330 F. Supp. 1150 (D. D.C. 1971), aff'd sub nom., Coit v. Green, 404 U.S. 997 (1971). It is interesting to examine the injunction in place for Mississippi in considering how to handle the systemic problem of racially discriminatory private schools today. The CPE article states the following regarding Mississippi private schools:
These so-called “Paragraph (1) Schools” must demonstrate that they have adopted and published a nondiscriminatory policy. They must also provide certain statistical and other information to the Service to establish that they are operated in a nondiscriminatory manner. Most importantly, they must overcome an inference of discrimination against blacks.
As of now, the injunction from Green only applies to Mississippi schools. Clearly, Green provides a model for how to implement the restriction against private schools’ engaging in racial discrimination. The focus on “statistical” information is really the key. As we all know, numbers do not lie. If private schools were free and open to all, the student body at private schools would not be 90% or more white. The same is true regarding the bleak number of black teachers at private schools. The injunction from Green could cure some of the prevalent and pervasive problems of racial discrimination in private schools throughout the South.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
June 27, 2021 in Current Affairs, Federal – Executive, Federal – Judicial, State – Judicial | Permalink
Saturday, June 26, 2021
School Choice Programs & Subsidizing Segregation
Last month, Forbes published an article entitled The Racist History of “School Choice.” The article underscores yet another way that racially discriminatory private schools are subsidized. Raymond Pierce points out that for equitable education to exist, public schools need true reform, such as more funding for faculty development and other support systems necessary for nurturing high-quality learning environments. Given the need for greater investment into public schools, the last thing that should be done is to take money from public schools that are struggling and give it to largely segregated private schools, but that is what is happening under a common practice referred to as “school choice.” Not surprisingly, “school choice” has its underpinnings in a racist history. Pierce states, “We are less than six months into 2021, and to date, ‘school choice’ legislation has been introduced in at least 20 states, half of which are in the South.” Generally, the legislation involves tax credits, school vouchers, or “education savings accounts.” A common thread is that these bills take money from “underfunded, under-resourced public schools” and give it to private schools. While some proponents maintain that the bills will provide better education opportunities for Black and Brown students and those from low-income families, the reality is they do not according to Pierce.
The article traces the roots of “school choice” legislation to a history of racism and school segregation that is important to understand. Interestingly, public education in the South emerged during Reconstruction. When the Fourteenth Amendment was passed, education in the South was mostly privatized and available only to white children from wealthy families. Black children and poor white children typically were not educated at all. The Southern Education Foundation (SEF), which was featured in the June 21, 2021 post, was one of the first proponents of public education. The Peabody Fund (which preceded SEF), provided funding as well as drafted and promoted legislation calling for funding of public education through taxes. Former slaves strongly supported public education initiatives because they viewed education as essential to true freedom and had a strong desire to have their children educated. As a result of public schools, literacy among both Black and white students increased tremendously. Additionally, starting in 1913, the Anna T. Jeanes Fund (another precursor of SEF), supported “Jeanes Teachers” who traveled across the South to strengthen curriculum and instruction in rural schools that Black students attended. They taught students and community members how to excel independently and economically and how to overcome the challenges of the Jim Crow South. From 1910 through 1940, public education in the South grew dramatically.
However, in the 1940’s, Southern white students began leaving public schools to attend private schools to avoid integration after it was clear that the “separate but equal doctrine” from the 1896 Plessy v. Ferguson Supreme Court ruling would be dismantled. After the Supreme Court’s landmark decision in Brown v. Board of Education in 1954, segregation was no longer constitutional, and school vouchers became a means for subverting integration. During the 1950’s, Southern politicians passed legislation establishing tuition voucher or grant programs that were used to annihilate completely the public school systems, instead of desegregate. Pierce goes on to provide an illustrative example from Prince Edward County, Virginia where public schools were closed for five years until the Supreme Court intervened. Ultimately, the Supreme Court ruled in Griffin v. School Board of Prince Edward County that the county’s transferring of public funds to private white schools, instead of supporting public schools, was a violation of the equal protection clause of the Constitution. The Court stated that private school tuition assistance covered up as “school choice” was a tool to “systematically exclude Black children from the educational process.”
Despite the prohibition against this approach, Southern legislatures used it as a “blueprint” in an attempt to circumvent integration. From 1954 to 1964, Southern legislatures passed at least 450 laws and resolutions to prevent public school desegregation, many of which permitted the transfer of public funds to private schools. From 1958 to 1980, private school enrollment in the South increased by over half-a-million students. Indeed, hundreds of private segregated schools were established. At the same time, schemes to fund private schools at the expense of public schools, by using vouchers or tax credits to cover large portions of student tuition and operating costs, also increased. By the 1980’s, the 11 states that made up the former Confederacy had enrolled 675,000 - 750,000 white students. Of these students, 65 to 75% attended schools where 90% or more of the student body was white.
Today, school vouchers still are used to support segregated private schools and to continue de facto segregation. The numbers speak for themselves. In the United States, public schools have a student body that is comprised of 51 % white children and 48.3% children of color (mainly Black and Latino). In stark contrast, almost three out of every four private school students are white. As Pierce notes, this is part of a historical pattern.
The question becomes whether tax funding and subsidizing of a directed, intentional system of inequality, namely segregation, should be tolerated. As I recounted in the June 22, 2021 post, private schools are required to publicize their policies disavowing racially discriminatory practices. However, the numbers show that there are unspoken policies and practices that are being used to perpetuate both segregation and unfair treatment. One solution is to develop a better way of reporting racially discriminatory treatment so that private schools engaging in such practices would lose their tax-exempt status. Another solution is to re-examine the concept of “school choice” programs and school vouchers in their proper historical context and to require some form of accountability for the low numbers of minority enrollment in the private schools benefiting from these programs.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
June 26, 2021 in Current Affairs, Federal – Executive, Federal – Judicial, In the News, State – Legislative | Permalink
Wednesday, June 23, 2021
Private Schools, P.P.P. Loans, and Racial Discrimination
Historically, since private schools have not received federal funds, they have not been subject to civil rights laws, including Title VI of the Civil Rights Act of 1964 (“Title VI”), which prohibits discrimination on the basis of race, color, or national origin. However, loans associated with the Paycheck Protection Program (“P.P.P. loans”) have changed this landscape. The $659 billion program was intended to help, among others, nonprofits who needed assistance with making payroll by using loans backed by the Small Business Administration. Perhaps surprisingly, in the words of The New York Times, it was private schools who “cashed in” on the P.P.P. loans. See Private Schools Cashed in on P.P.P. Funding.
While public schools were ineligible for P.P.P. loans, private and charter schools could and did apply for loans, despite their multi-million dollar endowments. When P.P.P. funding dissipated quickly, the Small Business Administration revised its guidelines to clarify that those with other financing options should stop submitting applications. Yet, in order to stem the tide, additional rule tightening was required. Minority focused lenders and watchdog organizations raised concerns about equity and loopholes in terms of the loans.
Nevertheless, there may be a silver lining to private schools’ cashing in on P.P.P. loans. Perhaps unknowingly, the private schools have made themselves subject to Title VI requirements by virtue of receiving federal funds. The P.P.P. loan application specifically states that borrowers must comply with several civil rights laws, such as Title VI. As noted above, Title VI prohibits discrimination on the basis of race, color, or national origin. This means that private schools cannot engage in racial discrimination against employees, students, parents, or other participants. This includes in terms of employment, admissions, enrollment, and other treatment.
An interesting question is whether Title VI imposes prohibitions against racial discrimination not covered by section 501(c)(3). One definite difference is that private schools who have accepted P.P.P. loans now may have to pay compensatory damages to individuals who prove intentional discrimination in lawsuits against the schools. In addition, injunctive relief may be awarded to such individuals. At the very least, due to the receipt of P.P.P. loans, some private schools now are subject to causes of action from individuals and families who have faced racial discrimination at their hands. Over the years, organizations such as the ACLU have despaired that no such actions were possible, but that has now changed.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
June 23, 2021 in Federal – Executive, In the News, Studies and Reports | Permalink
Tuesday, June 22, 2021
Reporting Racism in Private Schools to the IRS
Tax-exempt private schools are required to have and to publish a racially nondiscriminatory policy. In 2019, the IRS released Rev. Proc. 2019-22, which allows private schools to use their Internet websites to publicize such policies, a requirement for exemption under section 501(c)(3) of the Internal Revenue Code. By way of background, Rev. Proc. 75-50 outlines the guidelines and recordkeeping requirements for determining whether a private school has a racially nondiscriminatory policy and in fact operates in accordance with such policy. Rev. Proc. 75-50 applies to private schools that are applying for tax-exemption and to private schools that already are tax-exempt.
Specifically, Rev. Proc. 75-50 requires, inter alia, a private school to include a statement acknowledging it has a racially nondiscriminatory policy “and therefore does not discriminate against applicants and students on the basis of race, color, and national or ethnic origin.” The statement must be included in one of the listed governing documents and in its brochures, catalogues, and other written ads for prospective students. Moreover, the school must make the policy “known to all segments of the general community served by the school.” Newspaper circulation and certain broadcast media are listed as acceptable means of doing so.
Rev. Proc. 2019-22 modified Rev. Proc. 75-50 by naming a third means of making a racially nondiscriminatory policy known in the manner prescribed: the school’s Internet homepage. Generally, the policy must be displayed on the school’s publicly accessible Internet homepage throughout the taxable year. Rev. Proc. 2019-22 even sets forth a sample notice for a private school’s homepage:
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.
There are also enumerated factors used to determine whether the notice is “reasonably expected to be noticed” by homepage viewers, such as the size, color, and graphics used; whether the notice is unavoidable, etc.
Form 1023 is used to apply for tax-exemption under section 501(c)(3). Schedule B pertains to Schools, Colleges, and Universities. On Form 1023, there are a number of questions concerning the requirement of a racially nondiscriminatory policy for private schools. Moreover, private schools applying for tax-exemption are informed that they will need to file an annual certification regarding their policy. (Interestingly, there are also a number of questions under Schedule B that deal with racial discrimination, including whether the private school was established to subvert integration and the racial composition of the student body, faculty, and administrative staff).
Generally, tax-exempt organizations, including numerous private schools, must file an annual reporting return (Form 990 or 990-EZ). The return includes a question allowing private schools to satisfy the aforementioned annual certification requirement. Many of the other questions permit a private school to self-report and answer “yes” or “no” in regard to whether it maintains records regarding racial composition, engages in discriminatory practices in terms of admission policies and scholarships, etc. This comes as no surprise since our tax system is based largely on self-reporting. However, self-reporting depends on the overall honesty of taxpayers. Every year a tax student asks the inevitable question midway through the material on gross income (or sometimes earlier during the Cesarini/treasure trove lecture): How would anyone ever know? I respond by saying that I am there to teach them what the law says and how to abide by the law, and then I remind them that God will know. Many students who are facing or who have faced racial discrimination at private schools undoubtedly ask whether anyone will ever know about the systemic challenges they face in applying or almost daily while engaging in the necessary and noble pursuit of acquiring an education.
Perhaps one way the IRS could gain valuable insight into the true encounters of racial discrimination is to require private schools also to publish on their Internet homepages a number or a link to a nonprofit organization that would report such incidents to the IRS once a threshold number was reached. If amendable, the National Association of Independent Schools (NAIS) could serve in this role as it has already publicly announced that it plans to release initiatives to stop systemic racism. See NAIS Statement on Addressing Anti-Blackness and Systemic Racism.
Hoffman Fuller Professor Tax Law
Tulane Law School
June 22, 2021 in Current Affairs, Federal – Executive | Permalink | Comments (0)
Monday, June 21, 2021
Racially Discriminatory Private Schools and Tax-Exempt Status
It is widely known that private schools in the South were used during the later part of the 20th century as a way to escape mandatory desegregation mandates. However, it may come as a surprise that many private schools in the South and across the country continue to engage in racially discriminatory practices today and still benefit from federal tax-exemption. In other words, as two of my tax colleagues pointed in their article “Subsidized Injustice,” tax money is used to subsidize or fund these discriminatory schools. If such schools faced the loss of tax-exemption for racially discriminatory policies and practices, the two-fold fall out effect would require them to change their harmful ways. First, a loss of tax-exemption would mean the schools would have to pay tax on their net income for a given year. Many private schools cost on average over $20,000 per student per year. At the same time, they tend to have numerous business deductions, including salaries, which would decrease their overall tax liability. Second, a loss of tax-exemption would mean such schools could no longer provide donors with a tax deduction for their contributions. Most private schools rely on donations from affiliated families and board members to support their programs. In addition, as observers have noted, a loss of tax-exempt status would "signal" to potential applicants and current families that a private school was engaging in racially discriminatory practices.
It is important to observe the history of private schools in the South, as it provides important insight as to the continued racially discriminatory practices today and how tax law can provide a solution. As the Southern Education Foundation explains, a large-scale exodus from public schools in the South started in the 1940’s, which resulted in an approximately 43% increase in private school enrollment. This exodus from public schools began in the 1940s, after US Supreme Court decisions forbidding segregation in graduate and professional schools in the South. Even though the Supreme Court decisions only dealt with higher education, they were a signal to Southern families that public elementary and secondary schools were next.
Once the Supreme Court destroyed the “separate but equal” doctrine, another road to staying “separate” emerged in the form of private school migration. Notably, from 1950-1965, private school enrollment grew at rapid rates across America, with the South having the highest rates. According to the Southern Education Foundation, by 1958, private school enrollment in the South increased by over $250,000 in an eight-year period, resulting in one million students by 1965.
To bolster this migration, Southern state legislatures enacted approximately 450 laws and resolutions between 1954 and 1964 to subvert desegregation, including by specifically authorizing the systematic transfer of public assets and monies to private schools. Although ultimately federal courts invalidated these laws, which also caused some Southern states to recant, many private schools still found more secretive ways to funnel public funds to private schools.
During the next wave of migration from the mid-1960s to 1980, as public schools in the Deep South began to slowly desegregate due to federal court orders, private schools increased their enrollment by more than 200,000 students. Approximately 67% of the growth occurred in the following six states: Alabama, Georgia, Louisiana, Mississippi, North Carolina, and South Carolina. At the same time, the issue of federal tax exemption for segregated private schools came to the forefront. In the early 1960s, the IRS temporarily suspended applications of self-professed “segregation academies” given the pressure from civil rights organizations. In 1970, the IRS announced a non-discrimination policy applicable to private schools, which due to continued resistance took eight years to implement.
Meanwhile, private school enrollment in the South grew at an alarming rate. During the beginning of the 1980’s, the eleven Southern states that had made up the Confederacy enrolled around 675,000 and 750,000 white students. The racial composition of these schools was startling, with an estimated 65 to 75 percent of enrolled students attending schools having a student body that was 90 percent or more white.
In the end, the IRS was successful in implementing its new policies, but faced criticism from religious private schools in the South. Eventually, this controversy led to the landmark 1983 case, Bob Jones University v. United States, 461 U.S. 574 (1983). In Bob Jones, the Supreme Court held that the Internal Revenue Service (IRS) may deny tax-exempt status to schools with racially discriminatory policies. Such policies were denounced as “contrary to established public policy,” despite allegedly being based on religious beliefs.
Due to the new IRS rules and the Bob Jones case, all private schools in the South adopted statements of non-discrimination in admission and began admitting at least a small number of black students and other students of color. The story should have ended back in 1983 of federally funded segregation in private schools and a new story of integration and opportunity should have started. Unfortunately, the racist practices in private schools simply took on more covert forms in the South and in other areas, and private schools have continued to reap the benefits of tax exemption.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
June 21, 2021 in Federal – Judicial, Federal – Legislative | Permalink
Thursday, June 17, 2021
Suicide Prevention Overnight Fundraiser Goes Virtual
This year's American Foundation for Suicide Prevention’s overnight fundraising event will be virtual. The Overnight Virtual Experience, an online event which will take place the night of June 26 through the morning of June 27, is a culmination of a month-long physical movement and self-care activities drive.
According to a report in the NonProfit Times,
The lead-up activities to June 26 consist of four components: physical activities, including walking at least 16 miles or other actions; social engagement, including guidance on using social media to share experiences and spread information online; fundraising milestones, with a variety of tiered rewards; and, programming on June 26, including time to honor loved ones, connect with the community and, for those who need it, healing activities. All participants will receive a luminaria they can decorate as they wish, including to honor those loved and lost, and which they can share via an app during the June 26 virtual event.
The Times continues:
The 2021 Overnight Virtual Experience marks the second year in a row the event will be held virtually. In 2020, the roughly 3,300 participants raised more than $1.6 million. Last year’s event was initially planned as an overnight walk, but was recast as a virtual experience in April 2020. At that time, a fundraising minimum of $1,000 per participant was waived.
This year’s virtual event similarly does not have a fundraising minimum, although participants who reached multi-tiered levels of fundraising by May 31 were given a variety of premiums. As of June 11, pledges totaled just less than $700,000, but American Foundation for Suicide Prevention Public Relations Director Alexis O’Brien was optimistic final totals would exceed $750,000.
According to the Times, some aspects of the fundraiser have carried over to 2021. As in the past, "each participant is paired with a Walker Coach who provides guidance and encouragement regarding reaching fundraising milestones, and who helps measure impact as participants disseminate information regarding mental health and suicide among their communities."
Unfortunately, the organization expects the 2021 fundraising level to fall short of what the organization realized during two in-person events in 2019. That year, more than 1,400 participants in San Francisco raised over $1.6 million, while a Boston event that boasted 2,400 participants brought in more than $2.7 million.
According to O'Brien, the Overnight should return to an in-person event in 2022.
Prof. Vaughn E. James, Texas Tech University School of Law
June 17, 2021 in Current Affairs, In the News, Other | Permalink | Comments (0)
JPMorgan Chase Commits to Closing Housing Affordability Gap for Black and Latinx Households
In a press release issued yesterday, June 16, JPMorgan Chase announced new steps to addressing the housing affordability gap as part of its $30 billion commitment to help advance racial equity and drive an inclusive recovery. To that end, Chase will work with the Urban Institute to identify, test, and scale innovative affordable housing solutions and collaborate with the Center for Community Investment at the Lincoln Institute of Land Policy to address the affordability of existing homes and expand community ownership models in Chicago, Los Angeles, Miami, New Orleans, Seattle, and Washington, D.C. In addition, in response to the economic crisis resulting from the COVID-19 pandemic, the firm will assist nonprofits that fund foreclosure and eviction programs, provide liquidity to nonprofit providers that offer affordable housing as well as to landlords facing their own financial strains, and advance housing preservation models to maintain existing affordable units.
Along with its financial commitment, JPMorgan Chase will work to establish new paths to affordable and sustainable homeownership opportunities including product expansion and policy reform, and partner with policy makers and community leaders to advance data- and evidence-based solutions to tackle housing challenges.
The press release quotes JPMorgan Chase Chairman and CEO, Jamie Dimon, as saying: “We’re trying to address some of the barriers to affordable housing and homeownership to help provide family stability and build generational wealth for Black and Latinx families. Whether you rent or own your home, more families deserve fair, sustainable and accessible options and businesses have a responsibility to develop housing solutions for those who lack access to opportunity.”
The firm's view of and commitment to this undertaking are well articulated by Heather Higginbottom, President, JPMorgan Chase PolicyCenter and Co-Head of Global Philanthropy: “Businesses, community leaders and policymakers need to work together to advance solutions that address housing instability and bring foundational change to the housing market. These data-driven policy reforms will help families across the country who have previously been locked out of stable, affordable housing.”
Prof. Vaughn E. James, Texas Tech University School of Law
June 17, 2021 in Current Affairs, In the News | Permalink | Comments (0)
Tuesday, June 15, 2021
Baylor "Give Light" Campaign Passes $1 Billion Mark
Today's NonProfit Times is reporting that Baylor University, a private Baptist university based in Waco, Texas, has raised $1 billion toward the $1.1 billion goal of its Give Light Campaign. The campaign is a capital improvement effort geared toward improving all aspects of campus life, including academics, athletics, service learning and student life.
According to the Times report, the campaign went over the $1 billion mark with a $7-million donation from philanthropist Paula Hurd. This $7 million gift, the most recent from Hurd and her late husband Mark, will be put toward the Baylor Basketball Pavilion, which will house Baylor’s men’s and women’s basketball program. Baylor will recognize the most recent gift by naming one level of the pavilion the Mark and Paula Hurd Floor at the Baylor Basketball Pavilion. Sports lovers may recall that earlier this year, Baylor’s men’s basketball team won its first NCAA Basketball Championship.
Baylor University states that the Give Light Campaign seeks to further activities that provide an “unambiguously Christian education environment;” create transformational undergraduate education experiences; boost the impact and visibility of Baylor’s research and scholarship; and foster nationally recognized arts and athletics programs.
The NonProfit Times continues in its report:
The Hurds had kicked off the Give Light Campaign in November 2018 with a gift of an undisclosed amount. The Hurds’ inaugural gift for the Give Light Campaign followed a silent fundraising phase started in May 2014. That phase raised $540 million toward the overall $1.1 billion goal. The November 2018 gift was large enough to give the Hurds naming rights to the Mark and Paula Hurd Welcome Center, a $60 million project that broke ground in February 2020. It also funded the Baylor Basketball Pavilion and the Football Operations Center.
Construction on the Welcome Center is scheduled to begin this month, and is targeted to be finished by May 2023. In addition to substantial infrastructure investment, Baylor has created more than 582 scholarship funds as part of the campaign since its beginning.
Paula Hurd is a graduate of the University of Texas; her late husband, Mark Hurd, attended Baylor on a tennis scholarship and earned his Bachelor of Business Administration in 1979. Mr. Hurd died in 2019 at age 62.
Prof. Vaughn E. James, Texas Tech University School of Law
June 15, 2021 in Current Affairs, In the News | Permalink | Comments (0)
Thursday, June 3, 2021
Funding Performing Arts
Over the last year and a half or so, one of my big interests has been in how the performing arts have been funded during a period when they can't actually perform. And there have been some creative solutions: a year ago I wrote about federal aid to performing arts as well as a public-private partnership in Illinois. Over the last couple months I discovered (as, I suspect many did) Emmet Cohen and his Live From Emmet's Place series, streamed with support of individuals and a couple nonprofits, including the Center for Performing Arts at Penn and the Lied Center of Kansas. (An aside: Live From Emmet's place is the most wonderful, joyful place to spend a couple hours a week, and this may be the most spectacular musical performance I've ever seen.)
So I was interested in this story from the New York Times talking about the Alphadyne Foundation. In short, a new (and secretive) foundation has provided about $6 million in grants to a number of performing arts organizations in New York so that they can put on performances and pay their performers. (It has also given money to charities trying to alleviate poverty, among other things.)
June 3, 2021 in Current Affairs | Permalink | Comments (0)
Tuesday, June 1, 2021
Checking in With the Boy Scouts
One of the biggest recent nonprofit stories has to be the Boy Scout bankruptcy. A lot of the issues are beyond my expertise; like most (I suspect) tax and nonprofit people, I'm not an expert in bankruptcy. And since BSA is a federally-chartered nonprofit, I've been told the issues it faces are somewhat unique.
But they're not entirely unique; in large part, its creditors (who in this case are victims of sexual abuse) are trying to maximize their recovery. In the interest of doing so, about a week ago the creditors sent a letter to the judge trying to resolve a discovery issue. Bloomberg Law has a discussion of the letter here. But a quick summary:
Basically, on of the Boy Scouts' main assets to pay victims' claims is its insurance. A number of the claims are covered by the Insurance Company of North America. The Insurance Company of North America restructured in the 1990s, though. While the surviving companies still have to pay, they claim they lack the ability to fully (or, it appears, even substantially) pay the necessary claims.
This has ripple effects in excess of merely reducing the pot paid by the restructured insurance company. If the survivors reduce their settlement with the Insurance Company of North America for less than $1.3 billion, it will reduce the amount another insurance company has to pay by 50 cents for every dollar below $1.3 billion.
Samuel D. Brunson
June 1, 2021 in Current Affairs | Permalink | Comments (0)