Thursday, September 22, 2022
Today's Religious News Service presents an interesting analysis of the new British monarch's task of making the country's rapidly expanding numbers of nonbelievers feel included. The analysis begins by noting that the recently deceased Queen Elizabeth II's funeral was not entirely representative of Britain’s increasingly secular population. The funeral service was held in Westminster Abbey. According to RNS, the "medieval abbey, the sublime music and military processions were all a visual and aural feast, but the event was at its heart a Christian ceremony, with the coffin placed in front of the altar and presided over by robed clergymen."
With this in mind, RNS continues, the Queen's funeral "was not entirely representative of Britain’s increasingly secular population. Even its believers are less likely to be Christian than at the start of Elizabeth’s reign, with 2.7 million Muslims, 800,000 Hindus and a half-million Sikhs, among many other faiths. Christians, who once consisted mostly of various Protestants — chiefly members of the Church of England, the Church of Scotland and the Church in Wales — and Roman Catholics, have been joined by a growing Pentecostal movement and other evangelical churches, according to the BBC."
In Britain, though, the Church of England remains the official, established church, with the monarch as its Supreme Governor, and since Elizabeth’s death on Sept. 8, we have seen it in the ascendant. Yet, there are also signs that the late monarch, now-King Charles III and the Church of England have recognized that the time has come to adjust.
RNS continues its analysis:
In a landmark speech in 2012 at Lambeth Palace, the London home of the Archbishop of Canterbury, the queen said of the Church of England that “Its role is not to defend Anglicanism to the exclusion of other religions. Instead, the Church has a duty to protect the free practice of all faiths in this country.”
She credited the established church with having done so already. “Gently and assuredly, the Church of England has created an environment for other faith communities and indeed people of no faith to live freely,” she said.
The new king has endorsed those words as recently as Sept. 9, the night after his mother died, in his first televised address to the British nation as its king. “The role and the duties of Monarchy also remain,” he said, “as does the Sovereign’s particular relationship and responsibility towards the Church of England — the Church in which my own faith is so deeply rooted.”
But he continued, ”In the course of the last 70 years we have seen our society become one of many cultures and many faiths.”
Nearly 30 years ago, as prince of Wales, Charles articulated concern about other faiths and Christian denominations in modern Britain not feeling included, and controversially suggested that when he became king he should be called Defender of Faiths — plural— rather than the title Defender of the Faith bestowed on Henry VIII by the pope in 1521 and used by England’s monarchs since.
Anglicans reacted harshly to Charles’ gambit, fearing he would not be fully wedded to assuming his role of Supreme Governor of the Church of England when the time came. Even after he rescinded his statement in 2014, the moment haunted Charles. His statement on Sept. 9 came in part to reassure doubters, who then heard him proclaimed king and Defender of the Faith the next day before the Accession Council, who proclaimed him the new monarch.
Then, bit by bit, we saw more evidence of how the king and his advisers, as well as the late queen, through her funeral plans, tried to embrace other traditions.
The Sept. 12 service of thanksgiving for the queen’s life was held at Edinburgh’s St Giles Cathedral, the main church of the Church of Scotland. Representatives of other faiths were in attendance, and the Gospel was read by Mark Strange, primus of the Scottish Episcopal Church, the other main Protestant church in Scotland besides the Church of Scotland.
More surprising, a passage from Paul’s Letter to the Romans was read by Leo Cushley, the Catholic archbishop of St. Andrews and Edinburgh, and included lines often interpreted as encouraging ecumenical dialogue: “We know that all things work together for good for those who love God, who are called according to his purpose.”
When Charles then paid a visit to Northern Ireland, more efforts were made to include the Catholic population, for whom the monarchy has long been a sensitive issue. At St. Anne’s Cathedral in Belfast — where the president of Ireland, Michael Higgins, and Taoiseach (as Ireland calls its prime minister) Micheál Martin were in attendance — Eamon Martin, the Catholic archbishop of Armagh and Primate of All Ireland, offered a prayer; others were said by Methodist and Presbyterian church leaders. At a service during Charles’ stop in Wales, prayers were said by Muslim and Jewish representatives as well as representatives of several Christian denominations.
But a reception at Buckingham Palace for 30 faith leaders on Friday (Sept. 16) — before the new king met any world leaders in London for the funeral, and even before he took part in a vigil with his siblings at the lying-in-state of his mother — spoke volumes about the importance Charles assigns religion in Britain.
Charles welcomed not only the Catholic archbishop of Westminster but Bishop Kenneth Nowakowski of the Ukrainian Catholic Eparchy and Imam Asim Yusuf, telling them that Britain’s sovereign has an “additional” duty — presumably in addition to being Supreme Governor of the Church of England — to protect “the space for faith itself” in Britain. This duty, he said, is “less formally recognized but to be no less diligently discharged.”
He added: “It is the duty to protect the diversity of our country, including by protecting the space for faith itself and its practice through the religions, cultures, traditions and beliefs to which our hearts and minds direct us as individuals. This diversity is not just enshrined in the laws of our country, it is enjoined by my own faith.”
That Charles’ words were backed up by his mother was evident in the state funeral Monday. The specialness of the Church of England and of multifaith, diverse Britain was acknowledged as a procession of religious representatives entered Westminster Abbey in advance of the main funeral party: Jews, Baha’is, Jains, Zoroastrians, Buddhists, Sikhs and Hindus, as well as Chief Rabbi Ephraim Mirvis; Pope Francis was represented by Archbishop Paul Gallagher, the Vatican’s secretary for relations with states.
Reading prayers during the service were the Rev. Iain Greenshields, moderator of the General Assembly of the Church of Scotland; Shermara Fletcher, principal officer for Pentecostal and charismatic relations for Churches Together in England; the Rev. Helen Cameron, moderator of the Free Churches; and Roman Catholic Cardinal Vincent Nichols.
The questions that remain are: "What happens now?" "What shall we see at Charles's coronation?" "Will it be all-inclusive affair, or will it be limited to clergy of the Church of England?" Of great importance also, is whether King Charles III, whose titles include "Defender of the Faith," be a defender of both believers and nonbelievers. After all, in the last British census (2011), a quarter of the population said they had no religion.
Prof. Vaughn E. James, Texas Tech University School of Law
Monday, September 19, 2022
Mass Corruption at Church: New York AG Investigation Reveals Harlem Clergy Took Secret Cash as They Sold Churches to Developer
According to New York State prosecutors, senior religious leaders conspired with a developer to sell seven churches in Harlem and Brooklyn in exchange for secret payments — only for the developer to waver from his promise to build new homes for the churches, in some cases demolishing them and letting the sites sit empty for years.
As reported by Nick Garber of Patch, prosecutors maintain that the deals, which netted the three church leaders nearly $2 million combined, were uncovered through an investigation launched by New York Attorney General Letitia James’s office into the developer, Moujan Vahdat. Vahdat and two of the church leaders reached settlements with the state last year, though the accusations against them have not previously been reported. A third pastor also under investigation is still battling the state in court.
According to prosecutors, the churches, all part of predominantly African-American denominations, were often struggling financially and saw the sales as potential lifelines. In a 2015 resolution, one church board supporting the sale to Vahdat wrote:
Not without a struggle, over the past several years we have worked hard to maintain the upkeep of the house of God. We understand that there has been a need for a greater vision from God to move this church forward in its fiscal responsibility and ministry.
However, authorities maintain, behind congregants' backs, church leaders were accepting cash payments and expensive gifts then turning a blind eye as Vahdat revised the sale contracts in his favor, squeezed churches for more money, and in one case, shut off a church’s heat in the middle of winter and allowed its ceiling to collapse onto a parishioner.
According to Patch, Vahdat’s attorney defended his client's conduct, telling the news organization that he remains focused on “bringing vibrant new church facilities to the community.” Indeed, said the attorney, even after the state’s intervention, many of the houses of worship are still doing business with Vahdat to this day.
In a court filing laying out their investigation, prosecutors wrote that Vahdat, a billionaire real estate and telecommunications magnate, began eyeing churches for possible development deals in 2013. However, prosecutors noted that despite his history in the real estate industry, Vahdat had no experience with church developments. But, prosecutors continued, Vahdat soon met Bishop Kevin Griffin, the senior pastor of Childs Memorial Temple Church of God in Christ (COGIC), and by 2014, Griffin agreed to sell his dilapidated Amsterdam Avenue Church building for $2 million to Vahdat, who promised to replace it with an apartment building with space reserved for Childs Memorial. According to prosecutors, Griffin did not reveal to either his parishioners or New York State authorities that he personally received $450,000 once the church sale closed in early 2016 and an additional $440,000 in “finder’s fees” for introducing Vahdat to other church leaders.
There followed a series of events whereby Vahdat was introduced to three other ministers and he purchased other churches in Harlem and one in Brooklyn using the same modus operandi. While claiming to be serving the Lord, the pastors were enriching themselves and really serving Vahdat. But by early 2018, the state attorney general’s office had begun investigating the church deals after hearing “allegations” that the churches’ sale terms had been changed. According to prosecutors, as the probe loomed, Vahdat asked two of the pastors to produce letters describing the personal payments he gave each of them as "having been made for charitable purposes for use on the churches’ behalf" — adding that he had given them the payments personally only for “expediency” and “convenience.”
According to Patch, clergy members pressed Vahdat in the ensuing months for answers about missing payments he owed to the churches and a lack of progress on the new developments.
By 2021, state prosecutors intervened in the New York church dealings, reaching settlements with Vahdat in October and with two other pastors -- Rev. Melvin Wilson and Bishop G.M. Ingram -- in November. Vahdat agreed to "neither admit nor deny" the state's accusations, while Ingram and Wilson both promised not to make any public statements denying the investigation's findings.
"The clergy placed their self-interest ahead of the interests of the churches," the attorney general’s office wrote in a virtual presentation delivered to the AME churches in November 2021.
Let us take a close look at the punishment meted out to the offenders:
- Wilson and Ingram’s settlements both required them to pay back the money they received in a series of installments — plus, in Ingram’s case, the proceeds from his Rolex watch, which he sold for $33,000;
- Both men are barred from holding a role in any New York-based nonprofit or charity that involves dealing with money, though both can continue holding purely “spiritual” positions;
- Yet, both Wilson and Ingram appear to maintain active roles in the AME Church. Ingram and his wife were thrown a retirement party in 2021 and were pictured attending an AME board meeting earlier this summer, while Wilson’s LinkedIn profile lists him as the pastor of an AME church in Orange, N.J.;
- According to the Religious News Service (RNS), on August 31, the AME Church released a statement that condemned "the inappropriate practices of our colleague and the former presiding elder in the New York Conference, who currently pastors in the New Jersey Conference;"
- Ingram will not take part in any denominational events until 2024, while discipline against Wilson will be determined by the bishop now in Ingram's former role;
- Vahdat’s settlement, meanwhile, requires him to keep up to date on any payments owed to the churches and cover their legal fees.
I wonder as I conclude, what ever happened to this principle learned at Seminary: "He has shown you, O man (and woman), what is good; And what does the Lord require of you, But to do justly, To love mercy, and to walk humbly with your God? (Micah 6:8, NKJV).
Prof. Vaughn E. James, Texas Tech University School of Law
Thursday, September 15, 2022
Sept. 15, 2022
The NYTimes published an article yesterday describing how Yvon Chouinard and his family have transferred all ownership of Patagonia, the company they own to a Trust and to a nonprofit organization that is organized and operated as a social welfare organization exempt from tax under section 501(c)(4) of the Internal Revenue Code. The intent is described as "to combat climate change and protect undeveloped land around the globe."
Apparently, the family transferred two percent of shares to the Patagonia Purpose Trust, controlled by the family while they transferred 98 percent to an organization called Holdfast Collective that the story states is organized as a social welfare organization.
I sure like conservation efforts, but have concerns about the way the NYTimes seems to treat this contribution less critically than it did a recent one by Barre Seid. It even compares the two. In that process, the author makes a number of claims that are off or sometimes wrong, at least in implication.
For instance, from the article: "Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation." They later compare the contribution by Barre Seid to a 501(c)(4) as well and claim the same.
It is incorrect that there is no tax benefit and it is also wrong to say that a section 501(c)(4) can make unlimited political contributions.
First, a clear tax benefit is that there is no gift tax owed on the transfer to a social welfare organization. The article properly noted that there was such a gift tax paid on the transfer to the family trust. Second, just like in Barre Seid, the transfer does not trigger a gain for income tax purposes on the contribution of highly appreciated assets - the Patagonia stock in this case. We don't know that appreciation, but given this is the founder, it is likely that the realized gain that no tax is paid upon here is large. Point is both Barre Seid and Chouinard obtained tax benefits.
Second, while it is true that a social welfare organization is not prohibited from intervening in a political campaign as tax law prohibits of a charity, such activity does not further a social welfare purpose. The article seems to suggest that Holdfast could only support political campaigns, but it could not. It must engage primarily in social welfare activity. It is possible that the reporter was using that term loosely and intending to include lobbying within the conception of "political contributions". A social welfare organization can spend 100 percent on lobbying as long as that lobbying furthers its social welfare purpose.
Also, posting the breathless comments of the person who helped Chouinard set the transfer in motion uncritically is below what I would expect from the NYTimes. See for instance: "“There was a meaningful cost to them doing it, but it was a cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”
Again, that last statement is just not true.
It appears the difference that the reporter may be referring to between Seid and Chouinard is that in Seid, (1) Seid did not give all his fortune and (2) immediately upon the transfer of stock in Seid the social welfare organization sold the stock; Chouinard no longer personally holds Patagonia stock and the social welfare organization in this case is going to continue to hold the stock of Patgonia rather than selling it off.
The difficulty in seeing the tax benefit here may be in that essential fact. It may be that some assume that as long as you haven't sold stock in some cash transaction there is no tax due. But that is not how things work. Any transfer of stock for any value can trigger tax. In fact, had Mr. Chouinard transferred the stock to a section 527 political organization, under section 84 of the Code, it would have had to pay tax on the difference between his basis and the stock's current FMV. Many have argued that section 84 ought to be extended to contributions of appreciated assets to social welfare organizations.
I think the case of the Chouinards suggests that section 84 should be so extended to a social welfare organization. Though Chouinard gave up a charitable contribution deduction, he also gains lots of ability to continue to control the use of that money as the article itself acknowledges. At the same time, he faces no gift tax and any sales of the stock will go without taxation. While there are some guard rails, they simply are nowhere near what would have happened had he transferred it to a charitable private foundation and face the rules under 501(c)(3) and 4940-4946. Thus, he can use these dollars earned at the nonprofit level tax free to accomplish purposes he and his family want to accomplish without any charitable limitations, including as the article notes political purposes. Note that Patagonia still is a for profit corporation that should still be paying tax at the corporate level.
Tuesday, September 13, 2022
The New York Times provided an interesting, though critical, look into Yeshivas in New York City. The two points that stand out are that the children of these schools, particularly the boys, are roundly not able to pass basic competency state tests assessing learning, and that the schools are taking in lots of public dollars to accomplish this result.
The story necessarily raises the issue of what role education plays within the nonprofit sector; what role nonprofits should play in primary and secondary education in a democratic order; what role primary and secondary education ought to provide in a democratic order; and what role religion should play in shaping any of that education. I have a draft paper thinking about charter schools within that order that I will be posting soon, that confronts some of those questions. But, it does not confront the role of religion in that order.
Primary and secondary education play many roles, but the two most significant that resonate in the US conception seem to be preparing individuals to be able to be employed and support themselves and also to support a democratic order. We are not born with the ability to do either of these things and it is in all our interests to ensure the children of the country have the ability to engage in both endeavors. From the description in the article, these schools are likely failing on both counts.
And yet, the notion of freedom of religion for parents to train children to uphold the values they uphold remains strong in our nation. This comes into stark contrast though with maintaining a just political order. I think there is a lot for the nonprofit world to reflect upon in this article. Worth some thought.
From the story: "The leaders of New York’s Hasidic community have built scores of private schools to educate children in Jewish law, prayer and tradition — and to wall them off from the secular world. Offering little English and math, and virtually no science or history, they drill students relentlessly, sometimes brutally, during hours of religious lessons conducted in Yiddish.
The result, a New York Times investigation has found, is that generations of children have been systematically denied a basic education, trapping many of them in a cycle of joblessness and dependency.
Segregated by gender, the Hasidic system fails most starkly in its more than 100 schools for boys. Spread across Brooklyn and the lower Hudson Valley, the schools turn out thousands of students each year who are unprepared to navigate the outside world, helping to push poverty rates in Hasidic neighborhoods to some of the highest in New York.
The schools appear to be operating in violation of state laws that guarantee children an adequate education. Even so, The Times found, the Hasidic boys’ schools have found ways of tapping into enormous sums of government money, collecting more than $1 billion in the past four years alone."
There are many highly critical responses of this article from the Orthodox community. Here is one.
Thursday, September 1, 2022
The nice thing about having practiced transaction law rather than litigation is that I'm not limited to asking question that I already know the answer to. So, for today's post, I'm going to ask a question I don't know the answer to: must the board of Newman's Own make specific distributions in accordance with Paul Newman's wishes from before he died?
See, that seems to be the central claim in his daughters' lawsuit against Newman's Own Foundation. Nell and Susan assert that their father directed Newman's Own Foundation to distribute at least $400,000 to each of his daughters' charitable foundations, allowing them to distribute that (small) portion of the revenue from Newman's Own according to their wishes. In fact, they claim, that was one of the conditions he imposed in licensing his name, image, likeness, etc., to Newman's Own Foundation:
Wednesday, August 31, 2022
As I wrote on Monday, two of Paul Newman's daughters are suing the Newman's Own Foundation. Central to their allegations is that the Foundation was supposed to contribute at least $400,000 to each of the daughters' own foundations, which would allow the daughters to themselves to be philanthropists.
Instead, after Paul Newman's death, the Foundation allowed the daughters to direct $400,000 of Foundation giving (a number, they allege, that has now been cut and will be cut more in the future). The complaint illustrates one (noncharitable) goal of these types of perpetual foundations, because even without the cuts, though, the directed giving doesn't comply with all of Paul Newman's goals:
Tuesday, August 30, 2022
I'm pretty sure it was the salsa (mild, because my parents don't do spice), though it may have been the ranch dressing (a break from our usual Hidden Valley Ranch), that introduced me to Paul Newman. It was only later that I fell in love with The Sting and Butch Cassidy and the Sundance Kid. First, though, came the Newman's Own brand.
In the early 1980s, Newman started making and selling food. Initially, he wanted 100% of the company's profits to go to charity. When he died in 2008, Newman left the stock in his for-profit company to the Newman's Own Foundation, a private foundation (that, as I discussed yesterday, is the target of a lawsuit by two of Paul Newman's daughters).
Monday, August 29, 2022
I'll spend some time this week going into more detail about the Newman's Own suit. The short version, though, is that the daughters allege that the Newman's Own foundation was supposed to make grants of at least $400,000 to each daughter's private foundation so that the daughters could direct some of the charitable money themselves (and pay themselves salaries).
They allege that almost immediately after their father's death, NOF stopped making donations directly to their foundations (in violation of their father's wishes and directive) and, instead, allowed each daughter to choose the recipients of $400,000 of money and that, more recently, NOF has cut that amount in half.
The suit asks for damages of about $1.6 million, as well as a declaratory judgment that NOF contribute $400,000 annually to the daughters' charitable foundations going forward.
It will be interesting to watch what happens in this dispute.
Samuel D. Brunson
Tuesday, August 9, 2022
With so much "bad news" in the news, it is always good to hear of something good happening. Today's Religion News Service (RNS) newsletter has just such a story.
According to the RNS story, during the blackout caused by Hurricane Ida, enthusiastic church volunteer, Ida St. Cyr, lost something she treasures greatly -- her independence, afforded by the electric wheelchair she expertly maneuvers over bumpy city sidewalks.
RNS reports that after Ida, St. Cyr, who has multiple sclerosis, was housebound. She did her best to conserve power on her wheelchair, going only to the end of her block or sitting on her porch after the storm made landfall last August 29. It took 10 more days before all of the habitable homes in New Orleans had electricity again. With the lights out and nothing open in her Broadmoor neighborhood of New Orleans, St. Cyr states that life “was not fun.”
One year later, a project launching in southeast Louisiana aims to help people like St. Cyr who are especially vulnerable during extended power outages as the warming climate produces more extreme weather including bigger and wetter hurricanes. And what is that project?
“Community Lighthouses,” outfitted with roof solar panels and a battery pack to store energy [that] can serve as electricity hubs after a disaster, enabling neighbors to recharge batteries, power up phones or store temperature-sensitive medications.
These lighthouses are being sponsored by Together New Orleans, a non-partisan network of churches and groups that tries to fix community problems. According to organizer Broderick Bagert, these groups
felt “impotent and powerless” as the city struggled to deliver basics like collecting garbage in Ida’s aftermath. They realized that local governments couldn’t handle everything alone.
Bagert continued: “You can spend a lot of time saying… 'Why don’t they?,' but you start to realize the real question is ‘Why don’t we?’”
The RNS newsletter continues:
More than just energy hardware, each lighthouse needs a team of volunteers to study their areas, learn who has health problems and who needs medication refrigerated or depends on electric wheelchairs for mobility. While people with means can evacuate ahead of a hurricane, about one in four people live in poverty in New Orleans, and not everyone can afford to flee. Hurricanes are also forming more quickly due to climate change, making it more likely that people can find themselves stuck in a disaster zone.
Bagert believes that each lighthouse should be able to connect with all of its neighborhood’s vulnerable people within 24 hours of an outage.
The pilot phase anticipates 24 sites — 16 in New Orleans and eight elsewhere in Louisiana. Together New Orleans has thus far raised nearly $11 million of the anticipated $13.8 million cost with help from the Greater New Orleans Foundation, the city, federal funding and other donations.
This sounds like a very worthwhile project. It will bring together people of different religious and political persuasions to fix community problems. I wish them well. We need more of this in today's America.
Prof. Vaughn E. James, Texas Tech University School of Law
Monday, August 8, 2022
The Philanthropy News Digest is reporting that the University of Haifa in Israel has announced gifts totaling $121.5 million from Giving Pledger Elie Horn to establish two scholarship funds. Mr. Horn, who lives in Sao Paulo, Brazil, is the Syrian-born Brazilian Jewish founder of Cyrela Brazil Realty, Brazil's largest real estate company. Through their foundation (The Elie and Susy Horn Foundation), Horn and his wife, Susy, have supported Jewish communities and causes around the world in countries including Israel, Korea and Belarus.
The gifts include $120 million over 20 years in support of Ahavat Olam (Eternal Love) scholarships for students interested in pursuing in-depth studies in Jewish religion, heritage, and history. Scholarship recipients participate in enrichment courses and activities in fields promoting pluralistic Judaism, Jewish culture and heritage, and Jewish history. The remaining $1.5 million from Horn and his sister, Joyce Horn, which will be matched by the university, is earmarked for women who face difficulties financing their studies. The new scholarships will be available for the 2022-23 academic year.
The Philanthropy News Digest reports that in a press release, University of Haifa president and professor Ron Robin stated, "I’m proud that we are able to offer these scholarships and to help a large and diverse circle of candidates, particularly after two difficult years due to the COVID-19 pandemic. The University of Haifa promotes social mobility, and thanks to these new scholarships we will be able to make higher education accessible to wider circles who might otherwise have chosen not to pursue academic studies due to financial considerations. We are tremendously grateful to Mr. Elie Horn for his historic gift, and we look forward with excitement to the upcoming academic year.”
Prof. Vaughn E. James, Texas Tech University School of Law
Friday, August 5, 2022
The Miami Herald has an interesting look at how Florida Power and Light used different means to support candidates in a Florida state senate race, including PACS and social welfare organizations.
From the story:
"A strong Democratic challenger was threatening to unseat a friendly Republican incumbent in a Gainesville-area state Senate race in 2018. FPL, one of the country’s largest utilities, needed to make sure the GOP held onto the seat.
So FPL used a shadowy nonprofit group to secretly bankroll a spoiler candidate, a longtime Democrat named Charles Goston, according to new documents obtained by the Miami Herald. Running as a no-party candidate in the general election, Goston helped split the liberal vote, siphoning off enough votes from the Democratic challenger to swing the race to the GOP incumbent.
The documents show that FPL sent $200,000 to the nonprofit, a Washington D.C.-based group called Broken Promises, in the fall of 2018. Within five weeks, Broken Promises had donated $20,000 to Goston’s political committee and spent roughly $115,000 on mailers and advertising supporting him. Best of all for FPL: Because of its nonprofit status, Broken Promises didn’t have to disclose its donors — meaning the cash was untraceable. No one would know that FPL had paid to secretly manipulate a state election in favor of Republicans. Voters were in the dark about who funded Goston and why."
Read more at: https://www.miamiherald.com/news/politics-government/state-politics/article264196761.html#storylink=cpy
Thursday, August 4, 2022
Propublica reported a few weeks ago that the IRS had granted church status to a right-wing think tank, the Family Research Council. Sam Brunson blogged on here about why FRC might be interested in obtaining this special status.
"We are writing to express concern regarding the Family Research Council’s (FRC) tax-exempt status as an “association of churches.” In addition, we request a review of the existing Internal Revenue Service (IRS) guidance related to political advocacy organizations self-identifying as “churches” to obtain the status of churches, integrated auxiliaries, and conventions or associations of churches.
As you know, Congress has enacted many special tax rules that apply to churches and religious organizations. Under Section 501(c)(3) of the Internal Revenue Code (Code), churches are tax exempt organizations and are not required to file IRS Form 990, which provides transparency on tax-exempt organizations’ board members, key staff salaries, donations, and large payments to contractors. Further, there are special limitations on how and when the IRS can conduct an
examination of churches. In accordance with section 7611 of the Code, the IRS cannot conduct tax inquiries of churches without approval from a “high-level Treasury official.”
Monday, August 1, 2022
An interesting new Tax Policy Center study by Nathan Born and Adam Looney estimates how much nonprofits gain from income tax exemption. While they found most nonprofits do not benefit, a small group earns significant benefits
They state: "a minority of tax-exempt organizations do earn large, persistent profits, and benefit a great deal from the tax subsidy: We found they saved around $21 billion in 2018. The largest beneficiaries are hospitals that charge more in patient fees than they spend providing medical care. They saved about $10.7 billion in taxes on their profits, 62 percent of the total subsidy. Universities that charge more in tuition than they spend on education saved about $1.7 billion. Public charities (a catch-all category of organizations financed by gifts from the general public), make up 44 percent of charities. But they saved $1.4 billion or only 8 percent of the total tax benefits."
They do not focus on 501(c)(3)s alone: "Within the tax-exempt sector, charitable (501(c)3s) were the largest beneficiaries ($17.7 billion). Civic Leagues and Social Welfare Orgs (501(c)4s) saved about $1.2 billion, as did Chambers of Commerce and Real Estate Board (501(c)6) organizations. Labor, Agricultural and Horticultural Organizations (501(c)5s) saved about $600 million."
Unsurprisingly most colleges and universities lose money and gain nothing from the benefit.
"Colleges and universities are a case in point. While in aggregate they earned about $31 billion in investment income (mostly from endowments) and received $230 billion in revenues (mostly from tuition), they spent about $323 billion on educational and research services. On a tax basis, they lost money. Hence, the sector’s $1.7 billion tax subsidy is less than one might infer from examining endowment income or tuition revenue alone.
Within colleges, the subsidy is concentrated among a few profitable organizations. Some are well-known institutions with large endowments, such as Yale and Princeton. But some just charge a lot in tuition for low-cost and online education, like Liberty University, Savannah College of Art and Design, Southern New Hampshire University, or Grand Canyon University."
Find the full report here.
Wednesday, July 20, 2022
Last December, I wrote a series of posts about charitable DAOs. (Brief recap: DAOs--decentralized autonomous organizations--are basically crypto-based business organizations that try to replace human governance with smart contract governance.) When I wrote them, I was thinking mostly hypothetically (though I've been informed that there are people actively pursuing charitable DAOs.) Yesterday, I saw a (now 2-month-old) story in the Washington Post about CowgirlDAO, a DAO formed to raise money to fund abortion rights groups.
The format isn't precisely a charitable DAO, at least as best as I can tell. Rather, the DAO sells “Computer Cowgirls,' a set of NFT art to negate its power. The kitschily dressed cowgirls moved with an empowerment swagger, subverting farmhand and cheerleader cliches." It then donates that money (or, rather, the ethereum used to purchase the NFTs) to abortion rights groups.
Tuesday, July 19, 2022
Is the FRC an association of churches? Not in any colloquial sense; rather, it's an advocacy group that, in its words, works to "advance faith, family, and freedom in public policy and the culture from a biblical worldview" (which it does, according to SPLC research, largely by denigrating and attacking the LGBTQ community). It claims to meet 11 of the IRS's 14 criteria for qualifying as a church, though many of those claims seem like a stretch.
And its worth noting at this point that FRC isn't the only organization to claim (and obtain) church status where the claim of being a church is a stretch. It has become an aspiration model for activist organizations. And why?
Monday, July 18, 2022
Over the last decade or so, we've seen a movement demanding that the IRS strip the tax exemption from churches that discriminate against LGBTQ individuals. Those demands are rooted in the Supreme Court's Bob Jones decision, which held that the requirements for tax exemption implicitly include not violating a fundamental public policy. The demands generally assume (or, sometimes, explicitly say) that LGBTQ rights have become a public policy, sufficiently embraced by government as to meet the "fundamental" standard. (David Herzig and I have written a little about this, including here.)
For various reasons (including especially that Bob Jones has only been expanded beyond racially-discriminatory private schools in the rarest of circumstances), these assertions have had rhetorical, but not legal, power. And I assumed they were rooted in the post-Bob Jones era.
But in researching a new project (I'm currently finish a draft of a book on Mormonism and the tax law, hopefully arriving sometime next year!) I learned that this kind of rhetorical activism predates 1983. In fact, in the early 1970s, the Feminist Party filed a complaint with the IRS asserting that the Catholic Church should lose its tax exemption. Why? Because of its involvement in the abortion debate.
Of course, it didn't ground the complaint in fundamental public policy. Instead, it claimed that the Church violated the tax law's restriction on lobbying.
The Feminist Party's complaint proved exactly as effective as later complaints in the LGBTQ context. Still, it's interesting to see tax exemption wielded as a pressure point on religious institutions before Bob Jones expressly made that a constitutional requirement, and it's interesting today to see it in the context of a reemergent abortion debate.
Samuel D. Brunson
Wednesday, June 29, 2022
Last week's Supreme Court decision in Dobbs v. Jackson Women's Health Organization has left the American public very divided. Many are angry; many are happy. The debate over the right to an abortion and women's rights to make their own decisions about their bodies has heated up. In the midst of this heated atmosphere, RNS reported today that in defiance of some U.S. Roman Catholic bishops, Speaker of the House Nancy Pelosi received Communion during a Mass presided over by Pope Francis on Wednesday (June 29) for the celebration of the feast of Sts. Peter and Paul.
Back in Speaker Pelosi's home diocese of San Francisco, California, Archbishop Salvatore Cordileone announced on June 1 that the Catholic congresswoman is banned from receiving Communion due to her abortion rights stance. Since then, she has been barred from receiving the sacrament in four other dioceses.
Pelosi called the Supreme Court's decision in Dobbs an “outrageous and heart-wrenching” decision. The US Catholic Bishops lauded the court's decision, which they said overturned “an unjust law that has permitted some to decide whether others can live or die.”
But earlier today, Wednesday, Speaker Pelosi met with Pope Francis before the service and received a blessing, according to one of the Mass attendees.
Sitting in the VIP section during the traditional Mass at St. Peter’s to celebrate the patron saints of Rome, Pelosi listened to Pope Francis’ homily before receiving Communion from one of the many priests in the basilica, according to eyewitnesses. Francis has rarely distributed Communion, citing precisely the desire to prevent politicization of the sacrament.
In his homily, Francis urged the faithful to “Go to the crossroads and bring everyone: blind, deaf, lame, sick, righteous, sinful, everyone, everyone! This word of the Lord must resound, resound in the mind and heart: everyone! In the church there is room for everyone!” He added that “many times we become a church with open doors but to dismiss people, to condemn people.”
The RNS article concludes by noting that
Last year, Pope Francis told reporters on his return flight from Central Europe that he has never denied Communion to anyone and criticized bishops who didn’t act as shepherds and “aligned themselves with political life, on political problems.” The Vatican’s doctrinal department, in a letter in May of last year, urged the U.S. bishops to engage in dialogue among themselves and with Catholic politicians before reaching any decision.
Well, in this, as in an increasing number of philosophies, there appears to be a great divide between these United States of America and the Rest of the World!
Prof. Vaughn E. James, Texas Tech University School of Law
Thursday, June 23, 2022
In thinking about the recent Supreme Court decision in Carson v. Makin, No. 20-1088, which deals with private religious schools and state tuition programs, I raised the question of whether government aid should be awarded to private schools at all. One reason I raised this issue is because private schools are not subject to the same civil rights laws as public schools. Almost one year ago to the day, I blogged about how historically private schools have not been subject to federal civil rights laws because they did not receive federal funds. I also noted that perhaps unknowingly, by virtue of receiving P.P.P. loans during the pandemic, private schools became subject to such 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. In other words, private schools with P.P.P. loans cannot engage in racial discrimination against employees, students, parents, or other participants. This includes in terms of employment, admissions, enrollment, and other treatment.
One must consider the compelling question whether private schools (which in the absence of a P.P.P. loan or other federal funding) are permitted to run afoul of civil rights laws, should be able to receive government aid under a state tuition program, which appears to be the case with the Maine law. Granted, private schools (non-religious and religious) are subject to nondiscrimination requirements by virtue of their 501(c)(3) status, which they must attest to annually either by filing Form 990 or a statement with the IRS, respectively. Nevertheless, it is important to consider that Title VI imposes prohibitions against racial discrimination not covered by section 501(c)(3). One definite difference is that private schools who become subject to federal civil rights laws, e.g., those who receive P.P.P. loans, 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. In other words, these private schools are no longer shielded from causes of action from individuals and families who have faced racial discrimination at their hands.
In the opinion, Chief Justice Roberts himself acknowledged the distinction between public schools and private schools in this regard: “[T]o start with the most obvious, private schools are different by definition because they do not have to accept all students…” Given that private schools (who have not received federal funds) largely are shielded from damages or injunctions for intentional discrimination which can be proven, should they be allowed to receive government aid? This is the larger question that must be answered.
Hoffman Fuller Professor of Tax Law
Tulane Law School
Monday, June 20, 2022
Earlier this month, the Impact Investing Legal Working Group (“IILWG”) and the Grunin Center for Law and Social Entrepreneurship at NYU Law hosted a conference entitled “Legal Issues in Social Entrepreneurship and Impact Investing in the U.S. and Beyond” at NYU. The IILWG is a group of lawyers and legal/compliance professionals who work or desire to work in the fields of impact investing and social enterprise. It is comprised of a impact investors, social enterprises, law firms, nonprofit organizations, foundations, and academic institutions. The Grunin Center for Law and Social Entrepreneurship was formed in May 2017 by two NYU School of Law alumni. Its mission is to “enhance the community of lawyers and legal institutions engaged in social entrepreneurship and impact investing and to accelerate their effective participation in these fields.”
The 2022 conference focused on the following themes: (1) Inclusive Capitalism and Going the Last Mile; (2) Blending Finance to Advance Climate Adaptation and Resilience; (3) Elevating Beneficiaries: Inclusive Design in Impact Instruments; (4) Climate Regulation and the Long and Winding Road; (5) Legal Implications of Minority Wealth Equity Strategies; and (6) Prepare for Impact: Training Lawyers for ESG, Impact Investing, and Social Enterprise Practices. The complete Program Agenda may be found here. The themed panel discussion on minority wealth equity seems particularly relevant in light of recent tragedies involving racially charged violence, and it focused on supporting minority-owned businesses in the United States and abroad. My former Corporations professor, Professor John Coates, delivered a keynote on the proposed SEC climate regulation in confronting a global concern. The agenda also included, inter alia, an in-progress case study on MicroBuild, a global impact investing fund with a goal of providing adequate housing for the poor. The topics from the conference lend credence to the notion that impact investing is an effective vehicle for resolving global challenges in a new era of much needed change.
Hoffman Fuller Associate Professor of Tax law
Tulane Law School
Friday, June 17, 2022
Congregation L’Dor Va-Dor, a progressive synagogue in Palm Beach County not affiliated with a broader denomination filed a lawsuit last week challenging Florida legislation banning most abortions after 15 weeks, under the State Constitution’s right to privacy and freedom of religion.
The Congregation apparently argues that under the Jewish religion “abortion is required if necessary to protect the health, mental or physical well-being of the woman.”
I have not found the complaint but would gladly post if anyone has found it online. I am wondering whether they are bringing a claim under the Religious Freed Restoration Act (presumably that would be Florida's version of that statute). EDIT: Here is the complaint
Seems like this should be an interesting case to follow for nonprofits given the potential of the public policy requirement to play a role in how we think about nonprofits engaged in the abortion realm after the Dobbs opinion comes out.