Tuesday, April 6, 2021

NRA Trial Begins

The virtual bankruptcy trial of the NRA filed in Texas kicked off yesterday with opening statements.

The NRA filed for bankruptcy in January in an apparent attempt to escape the jurisdiction of the NY Attorney General who filed to dissolve the firm in New York, where it is organized, in August 2020.

As pointed out by Danny Hakim, one of the most interesting points that came out of the trial on day one is that CFO, Craig Spray, refused to sign the organization’s most recent tax form (Form 990) and was dismissed soon afterwards. 

The WSJ describes the salient features of the first day: 

"National Rifle Association leader Wayne LaPierre put the gun-rights group into chapter 11 to try to evade accountability for spending abuses, a New York attorney general's office lawyer told a judge on Monday, an allegation the NRA denied and said won't be supported by evidence presented at a bankruptcy trial.

"Those who do not go along with the 'Wayne says' policies of the NRA face retribution," said New York Assistant Attorney General Monica Connell, who argued that Mr. LaPierre put the NRA into bankruptcy largely by himself and kept his plan from the group's board as well as its general counsel and treasurer at the time.

NRA lawyer Greg Garman told Judge Harlin Hale of the U.S. Bankruptcy Court in Dallas that Mr. LaPierre had acted honorably and appropriately in leading the NRA. Mr. LaPierre made the decision to put the group into chapter 11 to prevent New York authorities from potentially putting the NRA into receivership, Mr. Garman said.

"[Mr. LaPierre] is the greatest asset which the board demands to protect," Mr. Garman said, referring to Mr. LaPierre's fundraising skills for the organization."

Philip Hackney

April 6, 2021 in Current Affairs, Federal – Judicial | Permalink | Comments (0)

Wednesday, March 17, 2021

Treasury and IRS Extend 2020 Tax Filing and Payment Deadline to May 17, 2021

You might have already heard about this, but in case you have not, here is some very important news:

The Treasury Department and Internal Revenue Service announced late today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS stated that it will be providing formal guidance in the coming days.

"This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities," said IRS Commissioner Chuck Rettig. "Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to."

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income is not subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

Prof. Vaughn E. James, Texas Tech University School of Law

March 17, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Mayo Clinic Receives $60 Million Gift for Patient Tower

Today's Philanthropy News Digest is reporting that the Mayo Clinic in Rochester, Minnesota, has announced a $60 million gift from philanthropist Helene Houle in support of efforts to transform the delivery of health care in Minnesota.

In honor of the gift, the recently completed 430,000-square-foot tower at Mayo Clinic Hospital -- Rochester, Saint Mary's Campus, will be named after Houle's husband, John Nasseff, who died in 2018 on his ninety-fourth birthday.

According to the Digest

The family are longtime supporters of the medical center. Nasseff's youngest son, Arthur, had lifesaving surgery at Saint Mary's Hospital as a teenager in the 1960s, and over the years Nasseff and Houle made several gifts to Mayo in honor of his surgeon, Burton Onofrio, as well as other physicians who have cared for the family.

Reacting to the gift, Mayo President and CEO, Gianrico Farrugia, said, "John Nasseff and Helene Houle have had a significant impact on Mayo Clinic over the decades of their support. We are incredibly grateful to Ms. Houle for this generous gift, and we cannot think of a more fitting way to honor Mr. Nasseff."

Helene Houle added: "When I go to Mayo, I know I'm going to receive the best care possible. There's a special human touch that gives you confidence in knowing you are getting the answers you can trust.”

Prof. Vaughn E. James, Texas Tech University School of Law

March 17, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Tuesday, March 16, 2021

Educational Philanthropy Gets Ethical Update

Today's NonProfitTimes is reporting that the standards, guidelines and definitions for reporting the results of educational philanthropy have been updated with new guidance on gift counting, a new definition of educational philanthropy and for the first time, a statement on ethics.

According to the Times, the Council for Advancement and Support of Education (CASE) recently released the CASE Global Reporting Standards. For the first time since its initial publication in 1982, the standards offer a digital subscription and six-country supplement.

Previously referred to as the CASE Reporting Standards and Management Guidelines, the CASE Global Reporting Standards is a common set of standards, guidelines and definitions for reporting the results of educational philanthropy activities at schools, colleges and universities across the globe.

The guidelines underpin CASE’s ongoing work to guide the profession, ensure integrity and consistency in educational advancement work, and to support CASE’s own work in data collection and reporting with its AMAtlas suite of tools such as the recently released Voluntary Support of Education (VSE) survey results.

The Times notes three key changes within the standards this year:

  • Updated guidance around gift counting, funds received, new funds committed, and donor control and influence.
  • For the first time, the CASE Global Reporting Standards added the CASE Statement on Ethics to the front of the book and adds the CASE Principles of Practice for the advancement disciplines, all recently updated by the CASE Commissions for Philanthropy, Communications and Marketing, and Alumni Relations and approved by the CASE Board of Trustees. The CASE Principles of Practice provide global guidelines for those professions and represent the community-derived foundations on which the advancement profession stands.
  • A new definition for educational philanthropy: Voluntary act of providing private financial support to nonprofit educational institutions. To be categorized as philanthropy in keeping with CASE standards, such financial support must be provided for the sole purpose of benefiting the institution’s mission and its social impact, without the expressed or implied expectation that the donor will receive anything more than recognition and stewardship as the result of such support. 

Announcing the new guidelines via a press release, CASE President & CEO Sue Cunningham stated, “The CASE Global Reporting Standards have at their core the CASE Ethics Statement and Principles of Practice for the profession. As institutional funding has evolved and created increasing expectations for philanthropic support, the need for clear guidance is paramount.”

The standards were reviewed and updated under the leadership of the CASE Reporting Standards and Management Guidelines Working Group. The group is comprised of 19 CASE volunteers and staff, co-chaired by Matthew Eynon, Vice President for College Advancement at Franklin & Marshall College in Lancaster, Pennsylvania, and Brian Hastings, President and CEO of the University of Nebraska Foundation in Lincoln, Nebraska. Six groups of regional volunteers also provided guidance on the new regional supplements for Australia/New Zealand, Canada, Mexico, Singapore, the United Kingdom, and the United States, including text in Spanish and French.

Commenting on the project, Enyon had this to say: “In developing the first global reporting standards for the advancement profession, CASE has decided to make a statement about the power, impact and importance of philanthropy around the world. The working group members represented many of the leading advancement programs in the world, and their efforts helped to ensure we defined standards which represent excellence in our profession.” 

Hastings added: “The standards are an essential element of upholding the integrity of our profession on a global scale. By reporting and benchmarking annual and campaign results consistent with the standards, all CASE member institutions can compare results with a greater level of confidence and understanding.”

Print copies and digital subscriptions of the Global Reporting Standards are available with a CASE membership discount from the CASE bookstore.

Prof. Vaughn E. James, Texas Tech University School of Law

 

 

March 16, 2021 in Current Affairs, In the News, International, Other | Permalink | Comments (0)

Friday, March 12, 2021

National Council of Nonprofits calls for change in use of Form 1023-EZ

In January of this year, the National Council of Nonprofits issued a statement containing a number of criticisms of recent Internal Revenue Service policy. Among these criticisms was a call for the immediate withdrawal of IRS Form 1023-EZ. The NCN feels that this is a necessary step because the Form, in its current form, is particularly vulnerable to abuse by entities falsely claiming to be charitable organization. The Council points to some startling statistics in defense of its assertions: first it notes that “virtually every entity that applies using the Form 1023-EZ receives tax-exempt status regardless of eligibility,” followed shortly by the damning pronouncement that the IRS’ “erroneous approval rate [of 1023-EZ applications] was found to be 46 percent.” It should be noted that the Council is not relying on its own findings when issuing these statements: all of its cited statistics come from the Taxpayer Advocate, which is itself a governmental entity existing in close proximity to the Internal Revenue Service.

To view the Council’s open letter in its entirety, see here

David Brennen, Professor of Law at the University of Kentucky

March 12, 2021 in Current Affairs | Permalink | Comments (1)

Thursday, March 11, 2021

The House passes For the People Act

Earlier this year, this blog discussed legislative attacks on ‘dark money’ and the IRS regulations that allow shadowy donors of significant monetary amounts to 501(c)(3) organizations to cloak their identity. That battle is continuing among federal lawmakers as last week the For the People Act (H.R.1) passed in the House by a narrow ten vote margin and now advances to the Senate where it will quite possibly be similarly contested. The For the People Act, among other measures, seeks to repeal 2020 IRS regulations that ended the practice of collecting identifying information of donors to nonprofit organizations. The IRS maintained that requiring nonprofits to simply keep records of the amounts of donations made to their causes would be sufficient for the purposes of administering the tax code: in the wake of an especially tumultuous election, democratic legislators argue that more stringent record-keeping rules are necessary to promote transparency of organizations exercising political influence through donations. H.R. 1 passed largely along party lines in the House: it remains to be seen how the proposed law will fare in the Senate.

For this blog’s earlier post on the Spotlight Act, see here

The House’s For the People Act can be perused in its entirety here

David Brennen, Professor of Law at the University of Kentucky

March 11, 2021 in Current Affairs, Federal – Legislative | Permalink | Comments (0)

Wednesday, March 10, 2021

Israeli public interest group accused of improper political activity

    A large nonprofit donor to progressive causes in Israel is facing what will likely be a costly litigation disputing its financial activities in Israel. The New Israel Fund is being sued by the Zionist Advocacy Center, a fellow Israel public interest group that alleges the NIF engaged in political activities by funneling money to organizations opposed to Israeli prime minister Benjamin Natanyahu. Per the strictures of 501(c)(3) the NIF, as a nonprofit organization, is prohibited from lending its support to political candidates. At the current phase of the lawsuit, the NIF is appealing District Court Judge Woods’ decision to not dismiss the case against them: Judge Woods ruled that the plaintiff has argued sufficiently that the NIF may have taken the actions alleged in the lawsuit to allow the action to proceed. It remains to be seen if the NIF will have better luck arguing in their Second Circuit appeal that allowing discovery to proceed would constitute a pointless expenditure.

For more information, see the Law360 article on the subject by David Hansen: https://www.law360.com/tax/articles/1360859/ny-israeli-group-seeks-appeal-of-challenge-to-tax-exemption

 

By David Brennen, Professor of Law at the University of Kentucky

March 10, 2021 in Current Affairs | Permalink | Comments (0)

Tuesday, March 9, 2021

HBCU's of Maryland may win big with upcoming legislation

    This year may well prove to be one of exciting developments for historically black colleges in Maryland: a pair of bills currently undergoing the legislative process in the state stand to bring nearly six hundred million dollars to Morgan State University, Coppin State University, Bowie State University and the University of Maryland Eastern Shore (all of which are public universities). These funds are being pursued as settlement in a lawsuit dating back to 2006: this action alleges decades of discriminatory funding allocation by the state’s funding entities in favor of Maryland’s predominantly white educational institutions. Despite more than a decade of litigation and a veto by the state’s governor last year in the midst of the pandemic, it appears that supporters for the bill’s passage have amassed sufficiently overwhelming bipartisan support to assure the bill’s passage. Quite possibly the problems identified by this lawsuit are not unique to Maryland’s educational structure: perhaps the next decade will see similar actions in other states across the country.

For more information on the lawsuit and the legislative battle for the passage of this bill, see the attached Baltimore Sun article by Bryn Stole: https://www.baltimoresun.com/politics/bs-md-pol-hbcu-lawsuit-20210119-hkwjten5pzdybcem7pj5r5ppji-story.html

For information regarding Michael Jones, one of the Maryland lawyers spearheading the lawsuit on behalf of the plaintiffs, see yesterday’s Law360 article by Sameer Rao: https://www.law360.com/articles/1360192/a-kirkland-partner-s-journey-to-a-historic-hbcu-settlement

By David Brennen, Professor of Law at the University of Kentucky

March 9, 2021 in Current Affairs, State – Legislative | Permalink | Comments (0)

Friday, February 5, 2021

Congress Members Reintroduce Spotlight Act Dealing with Dark Money Disclosure

U.S. Senators and Representatives reintroduced the Spotlight Act again to repeal the regulations issued by Treasury and the IRS in 2020 that eliminated the requirement for many tax exempt organizations to have to disclose substantial donor names and addresses.

"U.S. Senators Jon Tester (D-Mont.) and Ron Wyden (D-Ore.) along with U.S. Rep. David Price (D-N.C.) today are reintroducing their Spotlight Act to shine a light on dark money political donors and hold the government accountable to enforce our nation's campaign finance laws. This legislation is also supported by Senators Bennet, Carper, Whitehouse, Blumenthal, Murray, Van Hollen, Merkley, Klobuchar, Hirono, King, Brown, Cortez Masto, Booker, Menendez, Casey, Warren and Baldwin.

The Spotlight Act would require certain political non-profit organizations to disclose their donors to the Internal Revenue Service (IRS), reversing a Trump-era rule that eliminated the requirement and allowed such organizations to keep their donors secret."

You can find the Act here.

Philip Hackney

February 5, 2021 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (1)

Wednesday, February 3, 2021

Activist Group Guerrilla Girls Put Pressure on MOMA Over Chair of Board, Leon Black

Fascinating collision of art and activism with an art museum's brand attached to the chairman of its board of trustees. The Activist artist group the Guerrilla Girls have posted a prominent ad outside the Modern Museum of Art calling for it to end its relationship with Leon Black as a board member because of his strong connection to Jeffrey Epsten.

"The Museum of Modern Art (MoMA) in New York is facing increasing pressure to part ways with the chairman of its board of trustees, Leon Black, following revelations about the billionaire’s close ties with convicted sex offender Jeffery Epstein. The activist group Guerrilla Girls, which has been voicing this demand since 2019, revealed that it had canceled a book contract with Phaidon Press that same year after realizing the art publisher is owned by Black.

Guerrilla Girls claim that they contracted with Phaidon Press in 2018 to publish a book that surveys their activism since 1985. In a report by the New York Times, the group first revealed that it broke the contract a year later after news surfaced about Black’s relationship with Epstein. Instead, the group published Guerrilla Girls: The Art of Behaving Badly with Chronicle Books in 2020."

Philip Hackney

 

February 3, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Thursday, January 21, 2021

Law and Religion: Catholic Bishops Split on How to Deal with President Biden

The Washington Post reports that Joseph Biden, the second-ever Roman Catholic U.S. president, was greeted on his Inauguration Day with contrasting messages from his church: A warm blessing from Pope Francis — and a statement by the president of the U.S. Conference of Catholic Bishops saying that Biden “will advance moral evils,” including contraception, abortion and same-sex marriage.

The statement by Los Angeles Archbishop José Gomez immediately set off a debate among U.S. bishops, who, like U.S. Catholics, are bitterly divided on the direction of their extensive denomination and its entanglement with partisan politics. Those divisions are coming to a head in the figure of Biden, who makes it clear with his weekly churchgoing, his frequent references to Catholic teachings and culture, and his use of Catholic symbols that he is indeed a part of the church. 

The current dispute over how to contend with the new president features dueling comments from leading bishops.

On one hand, Archbishop Gomez stated:

In a time of growing and aggressive secularism in American culture, when religious believers face many challenges, it will be refreshing to engage with a President who clearly understands, in a deep and personal way, the importance of religious faith and institutions. I must point out that our new President has pledged to pursue certain policies that would advance moral evils and threaten human life and dignity, most seriously in the areas of abortion, contraception, marriage, and gender. Of deep concern is the liberty of the Church and the freedom of believers to live according to their consciences.

Cardinal Blase J. Cupich, rejects this thinking:

Today, the United States Conference of Catholic Bishops issued an ill-considered statement on the day of President Biden’s inauguration. Aside from the fact that there is seemingly no precedent for doing so, the statement, critical of President Biden came as a surprise to many bishops, who received it just hours before it was released. The internal institutional failures involved must be addressed, and I look forward to contributing to all efforts to that end, so that, inspired by the Gospel, we can build up the unity of the Church, and together take up the work of healing our nation in this moment of crisis.

The Catholic Bishops have in the past taken a more positive and collaborative tone towards new presidents. For example, in 2016, the conference put out a statement congratulating Donald Trump, saying it “looks forward to working with President-elect Trump to protect human life from its most vulnerable beginning to its natural end.”

San Diego Bishop Robert W. McElroy said he was “echoing Pope Francis’ message to President Biden and calling for dialogue, not judgment; collaboration, not isolation; truth in charity, not harshness. … It is a pathway of reconciliation that places the healing of our society ahead of any specific policy issue, in the recognition that repairing the soul of our country is the pre-requisite for any sustainable effort to advance the common good. … Most importantly of all, Pope Francis’ message to President Biden fundamentally speaks to him in his humanity, a man of Catholic faith striving to serve his nation and his God.”

On Wednesday morning, President Biden received a message from the Pope: “Under your leadership, may the American people continue to draw strength from the lofty political, ethical and religious values that have inspired the nation since its founding,” said Francis, who had called Biden on Nov. 12 to offer his congratulations and to discuss working together on issues including poverty, climate change and integrating immigrants and refugees.

Thursday morning, the USCCB put out four statements — an unusually busy morning for the Conference — praising actions Biden took the day before, including lifting the Muslim ban, and fortifying the “Dreamers” program that allows young immigrants to stay in the U.S. for work and school.

Prof. Vaughn E. James, Texas Tech University

January 21, 2021 in Church and State, Current Affairs, In the News, Religion | Permalink | Comments (0)

Metroplitan Museum of Art Receives Endowment for Directorship

The Metropolitan Museum of Art in New York City (The Met) on Tuesday announced that it has received a gift from trustee Marina Kellen French to endow the museum's directorship position. 

The gift is being awarded through the Marina Kellen French Trust Foundation and the Anna-Maria and Stephen Kellen French Foundation. The gift will also provide support for general operating expenses. In recognition of the gift, the director's position, which has been held by Max Hollein since 2018, will be renamed the Marina Kellen French Director.

According to a January 19 press release from The Met,

The Director is responsible for the vision and leadership of the Museum and its encyclopedic collection of nearly 2 million objects spanning 5,000 years. The Director’s responsibilities include oversight of the Museum’s curatorial, conservation, and scientific research departments; its exhibition and acquisition activities; education and public outreach; and other mission-oriented areas, including the libraries, digital initiatives, publications, imaging, the registrar, and design.

The release also quoted Daniel H. Weiss, President and CEO of The Met, as saying,

We are immensely grateful to Marina Kellen French for this remarkable gift, which helps ensure the Museum’s strong artistic leadership for many years to come. For more than 70 years—almost half of The Met’s history—her family has championed the arts and enabled the Museum to become a global leader in the cultural sphere.

French previously endowed The Met's Department of European Sculpture and Decorative Arts' Marina Kellen French Curatorship and helped pioneer the museum's Executive Leadership Program.  

Prof. Vaughn E. James, Texas Tech University 

 

January 21, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Wednesday, January 20, 2021

University of Southern California Study: COVID-19 Has Reduced U.S. Life Expectancy

A recent press release from the University of Southern California reveals that research conducted by the University of Southern California and Princeton University has concluded that the COVID-19 pandemic has significantly reduced life expectancy in the United States, with Black and Latinx Americans disproportionately impacted.  

Based on estimates of deaths under four scenarios — one in which the pandemic had not occurred and three that include COVID-19 mortality projections — by the Institute for Health Metrics and Evaluation, the report, Reductions in 2020 US Life Expectancy due to COVID-19 and the Disproportionate Impact on the Black and Latino Populations, found that as a result of pandemic deaths in 2020, Americans' overall life expectancy will fall 1.13 years, to 77.48 years — the single largest decline in at least forty years and the lowest number since 2003. 

The study also identified significant disparities by race, with researchers projecting that life expectancy for African Americans will fall 2.1 years, to 72.78 years; by 3.05 years, to 78.77 years, for Latinx individuals; and by 0.68 years, to 77.84 years, for white Americans.

Reporting on the projections, today's Philanthropy News Digest quotes Theresa Andrasfay, a postdoctoral fellow at the USC Leonard Davis School of Gerontology and co-author of the report as stating: "While the arrival of effective vaccines is hopeful, the U.S. is currently experiencing more daily COVID-19 deaths than at any other point in the pandemic. Because of that, and because we expect there will be long-term health and economic effects that may result in worse mortality for many years to come, we expect there will be lingering effects on life expectancy in 2021. That said, no cohort may ever experience a reduction in life expectancy of the magnitude attributed to COVID-19 in 2020."

As an African American, I dare say the result of this study does not make me too happy.

Vaughn E. James, Texas Tech University 

 

 

January 20, 2021 in Current Affairs, In the News, Studies and Reports | Permalink | Comments (0)

Monday, January 18, 2021

A ray of hope for nonprofits in the arts

While nonprofits of many hues have suffered greatly during the COVID epidemic, perhaps among those most terribly affected are 501(c)(3) organizations operating theaters and other performance-based venues. In a recent poll done by Nonprofit Quarterly, representatives of organizations from a variety of corners in the nonprofit industry were polled on how badly the ongoing global crisis has impacted their revenue: a majority of arts-oriented organizations reported above 16% reductions in their revenue.

The data tells an unsurprising tale: when your business relies upon drawing large crowds of people into confined spaces so that they can be entertained by your staff, a worldwide virus running rampant and corresponding countermeasures by harried governments adds up to hard times ahead. However the United States legislature seems to be cognizant of this at-risk industry: included in December’s coronavirus bill was $15 billion set aside especially for theaters, concert halls, museums and others which have more than a 25% loss in gross revenues in 2020. Naturally a number of restrictions apply on which organizations (strip clubs are for, example, disqualified) can apply for a grant under the Save Our Stages section of the relief bill, this legislation indicates that the country’s lawmakers are considering particular industries which have been especially injured by the epidemic and aiming to lend financial support when it is most needed.

For a more thorough explanation of the Save Our Stages section as well as testimony from a number of nonprofit leaders in the aforementioned affected industry, see the Nonprofit Quarterly publication on the subject at https://nonprofitquarterly.org/save-our-stages-provides-a-lifeline-for-nonprofit-museums-and-theaters/

David Brennen, University of Kentucky College of Law

January 18, 2021 in Current Affairs | Permalink | Comments (0)

Thursday, January 14, 2021

The next stage of resolving Boy Scouts sexual abuse allegations

Further developments arose for the scandal-beset Boy Scouts of America toward the end of 2020. Along with suffering significant financial setbacks like many other businesses due to the COVID epidemic, this year the BSA has also had to contend with both filing for bankruptcy and the consequences of mounting accusations of sexual abuse within its ranks. As part of its bankruptcy filing early in the year, BSA was required to create a trust fund for persons sexually abused by Scout personnel and to provide a deadline by which the victims should bring forward a case. That deadline passed in November and the total number of cases currently up for consideration is staggering: nearly 100,000 people have come forward stating that they were abused by the organization.

What remains to be seen is whether the national BSA organization will manage to successfully stay financially afloat during its bankruptcy as well as shield the assets of local Boy Scout councils from claims: currently, only the national organization’s $1 billion in assets are certainly under threat.

David Brennen, University of Kentucky College of Law

For the full story read the Washington Post article on the subject: https://www.washingtonpost.com/dc-md-va/2020/11/19/boy-scouts-bankruptcy-abuse/

January 14, 2021 in Current Affairs | Permalink | Comments (1)

Parking lot tax refunds available to nonprofits

2020 was undoubtedly an unkind year to nonprofits in America, but there were at least a couple of positive developments for the industry: one of these was the IRS granting retroactive refunds for taxes nonprofit organizations paid for the “parking lot tax” which the legislature repealed in 2019. This tax, included in the 2017 Tax Cuts and Jobs Act, imposed a sizable unrelated business income tax on subsidized parking offered by these organizations to their employees. Many in the nonprofit industry objected to the parking lot tax on the grounds that it went too far in expanding the unrelated business income tax and placed an unfair burden on the often slim resources of nonprofit organizations. While the relevant legislation went into effect in 2019, the IRS has been issuing and updating guidance about getting a refund for parking lot taxes paid in prior years throughout 2020: for the IRS’s official statement, see https://www.irs.gov/forms-pubs/how-to-claim-a-refund-or-credit-of-unrelated-business-income-tax-ubit-or-adjust-form-990-t-for-qualified-transportation-fringe-amounts.

For additional reading on this topic see https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/irs-authorizes-parking-benefit-tax-refunds-for-nonprofits.aspx.

David Brennen, University of Kentucky College of Law

January 14, 2021 in Current Affairs, Federal – Legislative | Permalink | Comments (0)

Tuesday, January 12, 2021

The changing face of policing nonprofits

An article written by Joshua Rosenberg of Law360 last month provides interesting insight for persons not intimately familiar with the oftentimes intricate subject area of tax-exempt organization regulation. Where once the IRS led the way in prosecuting potential tax infractions by nonprofit organizations, it now seems that state governments have stepped to the fore in that arena. As illustration, Rosenberg points to events such as the recent victory by New York’s attorney general in bringing a case against the National Rifle Association which made headlines nationwide last year. Developments such as this, says the article author, “have set the tone at the state level for policing charities, even though they’re unable to directly adjudicate the tax-exempt status of those organizations.”

Balanced against this upswing in the vigilance of state governments is a certain amount of apathy by the Internal Revenue Service in policing nonprofit organizations. This is likely due in no small part to dramatic funding cuts in 2013 when the Agency faced criticism (and indeed was ultimately found liable in the matter) for subjecting to strict scrutiny a number of conservative groups applying for charitable organization status 

For Rosenberg’s succinct and informative discussion of the topic including what this means for nonprofit tax infraction enforcement moving forward, see: https://www-law360-com.ezproxy.law.uky.edu/articles/1336984/states-not-irs-lead-in-policing-tax-exempt-organizations

David Brennen, University of Kentucky College of Law

January 12, 2021 in Current Affairs, In the News, Publications – Articles | Permalink | Comments (1)

Friday, January 8, 2021

Watchdog Group Lists Nonprofits That Supported Save America March

Download (1)The watchdog group Documented reports that a number of nonprofits were listed on the March to Save America website as supporting Wednesday's Save America March that led to the attack on Congress. The link to that website provided in the article no longer shows the list, but the article names eleven groups, including the following eight ones I have verified are tax-exempt nonprofits using the IRS Exempt Organization Search feature:

  • Peaceably Gather (501(c)(3) if, as appears, its legal name is First Liberty Institute)
  • Phyllis Schlafly Eagles (501(c)(3) if, as appears, its legal name is the Eagle Forum Education & Legal Defense Fund)

The article notes that the Rule of Law Defense Fund, which states on its website that it is "the public policy organization for issues relevant to the nation’s conservative attorneys general," is the 501(c)(4) arm of the Republican Attorneys General Association.

So far only one of these groups (Women for America First) has posted on its website a statement condemning the violence.

Lloyd Mayer

January 8, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Thursday, January 7, 2021

501(c)(3)s and Post-Election Activities

5f752f9926650.imageThere are no indications that any nonprofits, including 501(c)(3)s, were involved in yesterday's shocking riot at the Capital Building. (UPDATE: But nonprofits were apparently involved in supporting the Save America March that turned into the riot.) This is not surprising, in part because of the longstanding prohibition on 501(c)(3)s and other types of tax-exempt nonprofits promoting illegal activity of any type. But a number of 501(c)(3)s have been involved in the legal challenges to the election of President Biden and Vice President Harris, raising questions about if and when such post-election activity constitutes prohibited political campaign intervention.

For example, the Washington Post reported that the 501(c)(3) Thomas More Society recent expanded its religious liberty mission to include "election integrity" work and launched "the Amistad Project" to file lawsuits alleging election problems in several battleground states both before and after the election. Its role came to light in part because of its ties to President Trump's legal adviser Jenna Ellis, who is special counsel to the organization. Fellow blogger Philip Hackney is cited as noting that the Society was "putting its tax-exempt status at risk" by working with partisan figures on these activities, although he also cautioned that the IRS would find it difficult to challenge the Society's claims that it was acting in the wider public interest and so not attempting to intervene in a political campaign. 

In another example, the Houston Chronicle reported that a prominent donor to President Trump's campaign is now suing 501(c)(3) True the Vote for allegedly promising to use $2.5 million in donations to expose election fraud only to drop its post-election lawsuits after consulting with counsel for the Trump campaign. While the success of the lawsuit will turn on Texas law relating to charitable gifts, the alleged coordination with the Trump campaign raises questions about whether True the Vote engaged in political campaign intervention by seeking to support President Trump's reelection. (It also could raise questions about whether True the Vote made in-kind contributions to the Trump campaign that would be illegal under federal election law.) But as with the Thomas More Society, True the Vote presumably would argue its goal is to protect election integrity more broadly, a claim bolstered by its longstanding involvement with this issue (as reflected in its name).

There have also been reports of broader, election-related activities involving tax-exempt nonprofits. For example, Politico recently published "In final years of Liberty [University], Falwell spent millions on pro-Trump causes," including raising concerns about a university-funded "think tank" that ran pro-Trump ads, hired Trump allies as fellows,  and promoted Trump's false claims of election fraud.  And non-501(c)(3)s were also heavily involved in the 2020 election, and not only on the conversative side. For example, Politico published "Liberal dark-money behemoth raised nearly $140M last year," describing the issue advocacy, legislative, and election-related activities of the Sixteen Thirty Fund, a section 501(c)(4) social welfare organization. (Hat tip for both stories: EO Tax Journal.)

Lloyd Mayer

 

January 7, 2021 in Current Affairs, In the News | Permalink | Comments (1)

Friday, December 11, 2020

CA Counters US Call for SCOTUS to Grant Cert in CA Sched B Disclosure Case

In Americans For Prosperity Foundation v. Becerra, California recently filed a Supplemental Brief countering the US brief in the case, which argued that while the US Schedule B requiring donor disclosure of charitable organizations was constitutional, the California version was unconstitutional:

"1. The United States principally contends that the court of appeals applied the wrong standard of scrutiny. U.S. Br. 8-19. But it is difficult to see any material difference between the standard embraced by the United States and the one applied below. According to the United States, “compelled disclosures that carry a reasonable probability of harassment, reprisals, and similar harms are subject to exacting scrutiny.” Id. at7. Exacting scrutiny, in turn, calls for “a form of narrow tailoring” (id.) that requires “‘the strength of the governmental interest [to] reflect the seriousness of the actual burden on First Amendment rights’” (id. at 9); that dem ands a means-ends fit that is “‘reasonable’” but not “‘perfect’” (id. at 16); and that ensures that the compelled disclosure does “not sweep significantly more broadly than necessary to achieve [a] substantial governmental interest” (id. at 12). See also id. at 9 (compelled disclosure requirements are valid where “the public interest in disclosure outweighs the harm”) (internal quotation marks and ellipses omitted). The United States also asserts that “narrow tailoring is to  some degree implicit in the requirement that the governmental interest in the compelled disclosure be ‘legitimate and substantial’” because “it is difficult to demonstrate a ‘substantial’ interest in a broad disclosure scheme when narrower disclosures would be sufficient.” Id. at 10-11.

The court of appeals held that California’s Schedule B filing requirement is subject to “‘exacting scrutiny,’” and it understood exacting scrutiny in the same way as the United States. Pet. App. 15a.1 It recognized that the “strength of the governmental interest must reflect the seriousness of the actual burden on First Amendment rights.” Id. (internal quotation marks omitted). It examined whether the State’s chosen approach swept too broadly. See id. at 19a-23a, 29a. And it determined that concerns about overly broad regulation are part and parcel of the substantial-relationship test. See id. at 15a-16a (requirement “that the State employ means ‘narrowly drawn’ to  avoid needlessly stifling expressive association” is not “distinguishable from the ordinary ‘substantial relation’ standard”).

The United States ignores the overlap between the court of appeals’ approach and its own and asserts that the lower court erred in declining to require an adequate means-ends fit. U.S. Br. 16. But what the court of appeals declined to adopt was “the kind of ‘narrow tailoring’ traditionally required in the context of strict scrutiny,” including the requirement that “the state . . . choose the least restrictive means of accomplishing its purposes.” Pet. App. 16a; see also Opp. 6, 14-15. And the United States itself agrees that strict scrutiny and its “particularly stringent form of narrow tailoring” do not apply to information-reporting requirements like the one at issue here. See U.S. Br. 16."

Philip Hackney

December 11, 2020 in Current Affairs, Federal – Judicial, State – Executive | Permalink | Comments (0)