Wednesday, May 11, 2022

Nonprofits in a Post-Roe World

In the aftermath of the Dobbs leak, there has been a lot of discussion about what a post-Roe world would look like. Understandably, the vast majority of that discussion has surrounded women's autonomy and reproductive rights, and what other rights we might lose under Alito's reasoning.

It may be worth taking a look at who would be shaping a post-Roe world. And at least one major player, it seems, might be the Foundation to Abolish Abortion, a Texas-based 501(c)(3).

FAA seems to be a fairly new organization; it received its exemption in 2020. And for 2019 and 2020, it reported less than $50,000 in gross receipts.  It hasn't provided any significant amount of information to Guidestar or Propublica, but as best I can tell, it is exempt as an educational organization. (If anybody has a copy of FAA's Form 1023, I'd love to see it! I tried to submit a request, but I'm not clear on whether the request went through or not.)

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May 11, 2022 in Current Affairs, In the News | Permalink | Comments (0)

Monday, May 9, 2022

Charter Schools, Race, and Polygamy

Yesterday, Fox 13 in Utah ran an exposé of Vanguard Academy, a public charter school in West Valley City, UT (which seems to be a suburb of Salt Lake City). The charter school is run by the Kingston family, a Mormon fundamentalist group.

(As a quick aside, Mormon fundamentalism has become a popular culture thing again, largely because of Hulu's "Under the Banner of Heaven." While this blog post is basically not at all about Fundamentalist Mormonism, it's worth noting that there isn't a single fundamentalism; there are disparate groups. Moreover, it's a distinctly modern thing---fundamentalism arose as aa direct response to modernism. Finally, though the polygamy aspects of Mormon fundamentalism swamp discussion of other aspects, honestly, the economic system many of these groups adopt is at least as interesting.)

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May 9, 2022 in Current Affairs, In the News | Permalink | Comments (0)

Friday, April 29, 2022

Art Museum Deaccessions to Diversify

For some reason the issue of a nonprofit art museum selling some of its collection off resonates at a high level for me. Sometimes, they sell off in order to generate working capital. Probably never really a good idea because you are not solving the long term problem of a sustainable future for the museum. 

The Toledo Museum of Art in Ohio just announced it is selling off a number of Impressionist works in order to diversify it's collection. Of course the fascinating question remains how do you best diversify - by the folks who come to your museum and are included, or by the story your art works tell? I'm not sure of the answer and it is probably a bit of both, but it's a fascinating and important question to ask. Obviously a Museum needs to grow and change over the years and so curating its collection is key.

From the story in Hyperallergenic: 

"The Toledo Museum of Art (TMA) will send three works by Paul Cézanne, Henri Matisse, and Pierre-Auguste Renoir to auction next month. Proceeds from the sale, an estimated $60 million, will be used to build a more diverse collection with the goal of “broadening the narrative of art history,” the museum said in a statement.

The TMA will deaccession Renoir’s “Nu s’essuyant (The Bather)” (1912), Cézanne’s “Clairière (The Glade)” (c. 1895), and Matisse’s “Fleurs ou Fleurs devant un portrait” (1923). The works will be offered as part of Sotheby’s Modern Evening Auction on May 17."

Museum leaders say its collection is already strong in that area and this opens up resources to expand its collection in other ways.

Philip Hackney


April 29, 2022 in Current Affairs, In the News | Permalink | Comments (0)

Thursday, April 28, 2022

Laws and Enforcement Governing the Political Activities of Tax Exempt Entities Hearing

The Senate Finance Committee's Subcommittee on Tax and IRS Oversight, chaired by Senator Whitehouse, is holding a hearing on May 4 on entitled Laws and Enforcement Governing the Political Activities of Tax Exempt Entities. 

It's a little odd to report on this one, because I am one of the witnesses who will present testimony.

The witness list includes

Philip Hackney, Associate Professor of Law, University of Pittsburgh School of Law, Pittsburgh, PA

Bradley A. Smith, Chairman and Founder, Institute for Free Speech, Washington, D.C. 

Ann M. Ravel, Former Chair (2015), United States Federal Election Commission, Los Gatos, CA

Scott Walter, President, Capital Research Center, Washington, D.C. 

I will be posting my testimony soon. I will try to post the other written testimony as well.

Philip Hackney

April 28, 2022 in Current Affairs, Federal – Legislative | Permalink | Comments (0)

Tuesday, April 26, 2022

Harvard joins other Major Universities in Confronting its Role in Slavery

Harvard is the latest university to confront its role in slavery releasing a report entitled  “Harvard and the Legacy of Slavery”  and pledging $100 million for initiatives and an endowment to reckon with the findings in the report.

From the article: "Harvard is among the latest major universities to engage in a public reckoning with their role in slavery, a trend that emerged after Brown University published a soul-searching report in 2006 on its ties to the transatlantic slave trade. Georgetown University, the University of Virginia and William & Mary, among others, have also dug deeply into their slavery-stained past in recent years. A group called Universities Studying Slavery, based at U-Va., counts about 90 members (including Harvard) in the United States and abroad."

"The report recommended an expansion of partnerships with historically Black colleges and universities (HBCUs). Under this plan, Harvard would pay for HBCU faculty members to spend a summer, semester or school year in visiting appointments on the Cambridge campus, and Harvard professors would be able to do the same at HBCUs. The report also envisioned that HBCU students would be invited to spend a summer or one or two semesters at Harvard during their junior year — with financial aid from Harvard. Juniors at Harvard could spend time at HBCUs as well. Students in those programs would be known as Du Bois Scholars, honoring the civil rights leader W.E.B. Du Bois, who in 1895 became the first African American to earn a PhD from Harvard."

Philip Hackney

April 26, 2022 in Current Affairs | Permalink | Comments (1)

Monday, April 25, 2022

May 16 Deadline for Filing Form 990 Series

IRS issued a useful reminder last week that May 16, 2022 is the upcoming deadline for filing the Form 990 series and Form 4720.

IR-2022-93, April 21, 2022

WASHINGTON — The Internal Revenue Service today reminded tax-exempt organizations that many have a filing deadline of May 16, 2022. Those that operate on a calendar-year (CY) basis have certain annual information and tax returns they file with the IRS. These returns are:

  • Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF)
  • Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
  • Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts)
  • Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

Mandatory electronic filing

Electronic filing provides fast acknowledgement that the IRS has received the return and reduces processing time, making compliance with reporting requirements easier.

Organizations filing a Form 990, 990-EZ, 990-PF or 990-T for CY2021 must file their returns electronically. Private foundations filing a Form 4720 for CY 2021 must file the form electronically. Charities and other tax-exempt organizations can file these forms electronically through an IRS Authorized e-File Provider.

Organizations eligible to submit Form 990-N must do so electronically and can submit it through Form 990-N (e-Postcard) on

"To help exempt organizations comply with their filing requirements, the IRS provides a series of pre-recorded online workshops," said Robert Malone, Exempt Organizations and Government Entities Director. "These workshops are designed to assist officers, board members and volunteers with the steps they need to take to maintain their tax-exempt status, including filing annual information returns."

Common errors

The IRS also reminds organizations to submit complete and accurate returns. If an organization's return is incomplete or the wrong return for the organization, the return will be rejected. Common errors include missing or incomplete schedules.

Extension of time to file

Tax-exempt organizations that need additional time to file beyond the May 16 deadline can request a 6-month automatic extension by filing Form 8868, Application for Extension of Time To File an Exempt Organization Return PDF. In situations where tax is due, extending the time for filing a return does not extend the time for paying tax. The IRS encourages organizations requesting an extension to electronically file Form 8868.


Philip Hackney

April 25, 2022 in Current Affairs, Federal – Executive | Permalink | Comments (0)

Thursday, March 24, 2022

Private Foundations and Crypto

Behnam-norouzi-lmCajireIn8-unsplashYesterday, Axios reported that Katie Haun has raised $1.5 billion for a couple crypto-based venture capital funds that she started.

The story is interesting partly because of the sheer amount of money and partly because that sheer amount of money was raised by a woman in a field unfortunately dominated by men. Neither of those has much to do with this blog though.

Her massive fundraising is relevant to our world though because Axios reports that institutional investors, including college endowments and private foundations, are using venture capital funds like Haun's to get exposure to cryptocurrencies.

I'm not going to weigh in on the wisdom of tax-exempt organizations investing in crypto. It's probably an, if not necessary, at least plausible, asset class for a diversified investor to hold, though financial journalist Felix Salmon is skeptical of the wisdom of tax-exempts locking up their assets in these VC funds:

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March 24, 2022 in Current Affairs, In the News, Web/Tech | Permalink | Comments (1)

Wednesday, March 23, 2022

Judge Jackson and Tax-Exempt Opinions

Today is Day 3 of Judge Ketanji Brown Jackson's confirmation hearings for the Supreme Court and, since I'm blogging this week, I thought it might be worth seeing if she had ruled any cases dealing with tax exemption during her time as a district court judge. With nearly 600 opinions, it seemed at least plausible.

And it turns out she has at least one.[fn1]

In 2009, Z Street was incorporated as a Pennsylvania nonprofit. Its original purpose was to " educat[e] the public about Zionism; about the facts relating to the Middle East and to the existence of Israel as a Jewish State; and about Israel's right to refuse to negotiate with, make concessions to, or appease terrorists.” But when Z Street applied for federal tax exemption the following year, it was informed that the IRS carefully scrutinized 501(c)(3) applications related to Israel to make sure their activities didn't contradict Administration policies.

Z Street sued the IRS claiming that this special scrutiny constituted constitutionally-prohibited viewpoint discrimination. The IRS moved to dismiss based on the Anti-Injunction Act (which prohibits taxpayers from filing suits that would interfere with the collection of taxes), the Declaratory Judgments Act (which allows declaratory judgments except in the case of taxes), and sovereign immunity.

I'm not going to summarize all of the facts here, though I do recommend reading Judge Jackson's opinion here (or, if you'd prefer, Law360's summary of the opinion here). Ultimately, though, she denied the government's motion to dismiss. She read the AIA's prohibition on suits for the collection of revenue narrowly; here, she said, the suit wasn't a tax claim "couched [] in constitutional terms." Rather, it was a constitutional claim that didn't implicate the collection of taxes. Likewise, the DJA didn't prevent the suit. (As for sovereign immunity, she held that the APA waived sovereign immunity for claims like Z Street's.)

Ultimately, the D.C. Circuit affirmed her decision. And in 2018, the DOJ settled with Z Street.


[fn1] She may have more, but this is a busy week for me and I don't have time to do an exhaustive review of her opinions.

Samuel D. Brunson

March 23, 2022 in Current Affairs, Federal – Judicial, In the News | Permalink | Comments (0)

Tuesday, March 22, 2022

Wyden and Crapo On Charitable Giving

Last week, the Senate Committee on Finance held a hearing on trends in charitable giving; the Committee heard from four witnesses. And over the next couple days I plan to look at (and, of course, blog about) what those witnesses said. But I thought the opening statements of Sen. Wyden, the Chair of the Committee, and Sen. Crapo, the Ranking Member, were interesting and worth a quick glance.

Both highlighted the work that nonprofits during the pandemic. Sen. Crapo praised nonprofits for "adapt[ing] to the COVID-19 situation incredibly well, often fulfilling their missions with fewer resources and volunteers or even cancelled events, all while ensuring the communities they serve were being helped." And Sen. Wyden found that "Americans stepped up when their neighbors needed help. Charitable giving reached new highs."

Both Senators set the stage for the government helping the charitable sector--from the Senators' introductions, it does not look like this was at all a critical hearing. Both Senators said that supporting the nonprofit sector has the bipartisan support of the whole committee. Sen. Crapo explained that his goals include using the tax policies to encourage giving while looking forward at new challenges (including crypto and crowdfunding).

And Sen. Wyden mentioned the fact that the doubling of the standard deduction had eliminated the tax benefits of charitable giving for a substantial portion of taxpayers. He seems to want to focus on extending the small above-the-line charitable deduction as well as provide direct aid to help nonprofit organizations keep their doors open.

It will be interesting to see what the witnesses said and where the federal government goes from here.

Samuel D. Brunson

March 22, 2022 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (0)

Monday, March 21, 2022

The Underground Museum, Closed

Last night, as I was getting ready for bed, I took one last scroll through Twitter. And a New York Times article caught my eye: the Underground Museum was closing.

I'm not super familiar with the Underground Museum; it is, after all, in LA while I've been in Chicago for the last almost decade and a half. Still, I love art museums and was curious about what had happened.

And the answer is, it's not clear. The museum, founded by artists Karon and Noah Davis in 2012, had become both a vehicle for Noah's legacy and one of the premier venues for Black art. But last week, after its post-pandemic reopening and hiring a new co-director, the museum announced that directors were no longer with the museum and it was closing indefinitely.

I don't know either what happened or what will happen going forward; the loss of the museum strikes me as a real loss (glancing through the website, it has some really great art). It will be interesting to watch the next steps. Will the museum reopen in its same form? in a different form? If it doesn't, what will it do with its art and other assets? Will other museums step up or spring up to take over its curation of Black art and artists?

I never love learning about cool institutions as a result of their closing. But I'll be watching what happens with interest (and, if it reopens, I have plans for next time I'm in LA).

Samuel D. Brunson

March 21, 2022 in Current Affairs, In the News | Permalink | Comments (0)

Monday, March 14, 2022

Russian Orthodox Parishes in Europe in Uproar as War Rages in Ukraine

Religion News Service (RNS) is today reporting that the war in Ukraine has split Russian Orthodox parishes across Europe, forcing believers outside Russia to either stay loyal to the church leadership in Moscow despite its support for the invasion, leave the church in protest or seek a messy middle ground.

Writing for today's edition of RNS, Tom Heneghan states:

While public opinion in Europe has almost unanimously denounced the war Russian President Vladimir Putin has unleashed, the small communities of Russian Orthodox faithful to the Moscow Patriarchate are in a bind because its head, Patriarch Kirill, has come out solidly in its favor.

Many of these believers are Western-born descendants of earlier emigres who have few links to today’s Russia but a faith anchored in the Russian tradition. Some belong to other Orthodox churches but happen to frequent a Russian church. 

Meanwhile, in Paris, Metropolitan John of Dubna, Archbishop of the Russian Orthodox Churches in Western Europe, in an open letter to Patriarch Kirill on March 9, struck a typical note by declaring solidarity with Ukraine and calling the war “monstrous and senseless.” While denouncing Kirill’s support of the war and asking for his intervention, Dubna stopped short of taking action that might signal a formal break.

Others stopped commemorating the patriarch in their liturgies -- an act which ranks as a serious protest in Orthodox churches -- but otherwise kept their dissent discreet. Only more attentive parishioners would notice at a Sunday service that the patriarch was not mentioned in normal commemorative prayers.

The Parish of Saint Nicholas of Myra in Amsterdam, where several hundred worshippers from about 20 nations attend weekly services in Dutch, Russian or English, has learned how complicated this choice can be. Probably the first Western Orthodox church to break ties with Moscow over the Russian invasion of Ukraine, St. Nicholas went from loyal criticism of Moscow’s decision to switching its allegiance to the rival Ecumenical Patriarchate in Istanbul.

“There are many traditions within Russian Orthodoxy,” Archimandrite Meletios Webber, head of the parish, told the congregation earlier today, Monday, March 14.

The London-born archimandrite — a monsignor in Roman Catholic terminology — spoke in a clipped English accent at his church near central Amsterdam. Another Orthodox priest translated his remarks into Russian.

“This tradition cannot be attached to any organization or any thought which promotes violence and warfare,” said Meletios, born an Anglican but converted during his studies at Oxford by the influential British Orthodox theologian, Bishop Kallistos Ware.

Heneghan tells the story leading to this announcement in lively and interesting detail:

Horrified by the ferocious fighting in Ukraine, the four priests of St. Nicholas first signed a petition in early March asking Patriarch Kirill to urge Russian authorities to end the war. But Kirill, doubling down like his ally Putin, came out in favor of the war, prompting a petition from Orthodox priests in Russia against the violence. Even the head of the Ukrainian Orthodox Church loyal to Moscow, Patriarch Onufry, appealed to Putin for “an immediate end to the fratricidal war.”

The priests in Amsterdam decided they could no longer commemorate Kirill at their divine liturgies and informed their superior, Archbishop Elisey of the Moscow Patriarchate in The Hague.

On March 6, Archbishop Elisey turned up unannounced just before their Sunday service. He took over the celebration and made sure a deacon from outside the parish commemorated Kirill.

“His visit was like a spiritual tank sent to our parish,” one parishioner complained afterwards to the Dutch daily Nederlands Dagblad.

The archbishop, who came in a car from the Russian embassy, warned the priests that both the Moscow Patriarchate and the Russian Foreign Ministry were closely following developments in the parish.

The priests saw Archbishop Elisey’s warning as a threat but loyally mentioned his name during the service. “Then we started making contact with other hierarchs,” Meletios said.

“We have not left the Moscow Patriarchate,” the priests wrote on the parish website last week in an initial report about the archbishop’s unexpected visit. They listed examples from the past when dropping a patriarch’s name from a liturgy was not considered a schism.

But by Tuesday, March 8, a “Z” — the symbol widely used in support of Moscow’s intervention in Ukraine — was daubed on the church’s gates. During the week, the parish received enough other threats that it decided to close down until further notice.

It was “no longer possible to function within the Moscow Patriarchate and provide a spiritually safe environment for their believers,” they concluded in another report on Saturday.

“We cannot go back on our decision to distance ourselves from Patriarch Kirill. Our consciences will not allow that,” they said. “So we see ourselves forced to link with the Ecumenical Patriarchate.”

The priests have now asked Archbishop Elisey to officially dismiss them from his diocese and asked Metropolitan Athenagoras, the top cleric of the Ecumenical Patriarchate in the Benelux countries, to take them under his wing.

According to the priests, they took this "very difficult step with pain in [their] hearts." As far as they are concerned, they and their parish "are concerned with the kingdom of Heaven and not with any political movement of any kind of kingdom here on Earth.”

As an ordained minister of religion myself, I stand in solidarity with these priests who have chosen to speak truth to power. I wish them well.

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


March 14, 2022 in Church and State, Current Affairs, In the News, International, Religion | Permalink | Comments (0)

Postal Reform Around the Corner -- Along with Higher Prices


Today's NonProfitTimes reminded us that postal reform legislation gained U.S. Senate approval by a wide margin last week, setting up President Joe Biden to quickly sign the measure.

The Postal Service Reform Act of 2022 (H.R. 3076) passed last month by a vote of 342-92 in the House of Representatives. Sponsored by Carolyn Maloney (D-N.Y.), the measure gained approval from all 222 Democrats and 120 Republicans. Following House approval of the postal reform bill in February, Sen. Rick Scott (R-Fla.) objected, blocking the bill because of an apparent technicality.

Last Tuesday, however, the Senate approved its version of the legislation (S. 1720), by a vote of 79-19. The Senate’s 48 Democrats were joined by the two Independents and 29 Republicans in voting for the measure, sponsored by Chairman Gary Peters (D-Mich.), chairman of the Homeland Security and Government Affairs Committee.

So what is the legislation all about?

According to the Times,

The Postal Service Reform Act is expected to save USPS $22.6 billion over 10 years by requiring new postal retirees to use Medicare as their primary insurance. Another $27 billion would be saved by the repeal of a pre-funding requirement for projected retiree healthcare costs that was included in the 2006 Postal Enhance and Accountability Act (PAEA). In addition to bipartisan support, the legislation had the backing of the National Association of Letter Carriers (NALC).

The new legislation comes with some costs for consumers:

New Consumer Price Index (CPI) data released last week is likely to push mailing rates higher than first envisioned. The Alliance of Nonprofit Mailers (ANM) estimates the average caps for each class of mail will increase between 6.789% and 8.789%. Actual increases will vary according to how USPS distributes the increase across rate cells and an organization’s mix of mail, according to Stephen Kearney, ANM’s executive director. 

“If USPS uses all the authority, it will lead to a second round of increases in less than a year,” Kearney said in an email to members on Friday. The ANM is advocating that the USPS defer at least some of the authorized rate increases given that it has $24 billion in cash, received a $10 billion grant for COVID relief last year, and will benefit from $107 billion in relief from the Postal Reform Act of 2022.

According to Kearney, USPS is expected to file in April with the Postal Regulatory Commission (PRC) no later than the next CPI release on April 12, and plans to use six months of CPI authority to raise rates again in January.

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


March 14, 2022 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (0)

Friday, March 11, 2022

Rules Preventing Rules Regarding Nonprofits in Omnibus Spending Bill of 2022

We are seeing some familiar foolish provisions prohibiting the IRS and the SEC from engaging in rulemaking in Congress's Consolidated Appropriations Act of 2022. The Senate passed the $1.5 Trillion dollar spending bill last night for the fiscal year that started about 5 months ago. It is good to have an appropriations bill done, and these provisions were probably not worth fighting over to ensure the government has the money and certainty it needs to act.

In Div E, Title I, sec. 123 (p. 498) of the Act, Congress prohibits the IRS and Treasury Department from issuing rules about section 501(c)(4) organizations. I guess recognizing that there is some problem with this provision, because of the fact that the IRS continues to have to make judgments about these organizations on determination and audit, which surely could be construed as rules, provides that the law after the Act will be based upon the "standard and definitions as in effect on January 1, 2010, which are used to make such determinations . . . for purposes of determining status under section 501(c)(4) of such Code of organizations created on, before, or after" the Act.

Div E Title I sec. 610 prohibits the President's office from requesting a determination regarding an organization described in section 501(c). I am not certain why that is in the bill. Have not seen this one before, so appreciate anyone who has knowledge as to why this got added. 

Div E, Title VI, sec 633 (p. 602) prohibits the SEC from issuing rules regarding the disclosure of political contributions to tax exempt organizations. 

Philip Hackney

March 11, 2022

March 11, 2022 in Current Affairs, Federal – Executive, Federal – Legislative | Permalink | Comments (0)

Thursday, February 10, 2022

Colgate University Announces $25 Million Gift from Alumni

Colgate University in Hamilton, New York, has announced a $25 million gift from alumni Chase Carey (’76), his wife, Wendy, and their children Steve (’12) and Tara (’13) in support of renovating the Reid Athletic Center and other initiatives.

The gift includes $1 million in support of the university’s club rugby program and $1 million for the university’s Center for Freedom and Western Civilization. The bulk of the gift -- $23 million -- will be used to renovate the university's athletic center, which was first built in 1959. Renovations will include a performance arena in a newly constructed south wing that will serve as the home for Colgate’s men’s and women’s basketball and volleyball teams with dedicated locker rooms, lounges, and film rooms. Once complete, the new 35,000 square foot arena will include additional sport office suites; locker rooms for softball, field hockey, golf, and men’s and women’s tennis; visitor locker rooms; a new football suite; and a health and performance center that integrates the university’s sports medicine, strength and conditioning, sports nutrition, and mental health and performance programs. 

In a press release issued earlier this week, Colgate stated that 

Chase Carey has made significant contributions to Colgate during the last several decades, resulting in gifts to the University of more than $35 million. Carey was an active member of the leadership group that helped construct the Class of 1965 Arena and also played an instrumental role in establishing the Trudy Fitness Center, which bears his mother’s name. He and Wendy are members of the Campaign Leadership Council.

The release quoted Mr. Carey as stating:

Athletics has always been a source of pride, energy, and school spirit that the Colgate community can share in. Our student-athletes make a commitment to pursue excellence, and as part of that process, they learn lessons about teamwork and determination that are incredibly important in life. As a world-class university with world-class student-athletes, we want to build a world-class facility that will help them reach and exceed their goals.

Congratulations to Colgate -- and to the Carey family.

Vaughn E. James, Judge Robert H. Bean Professor, Texas Tech University School of Law


February 10, 2022 in Current Affairs, In the News, Other, Sports | Permalink | Comments (0)

Wednesday, February 9, 2022

Changes to DAF Rules Reintroduced on Capitol Hill

Late last week the NonProfit Times reported that Congressional representatives had introduced companion legislation that would set timelines on when donations to donor-advised funds (DAFs) would have to be distributed to working charities.

According to the Times, the Accelerating Charitable Efforts (ACE) Act, introduced by Rep. Chellie Pingree (D-Maine) and Rep. Tom Reed (R-N.Y.) with Rep. Ro Khanna (D-Calif.) and Rep. Katie Porter (D-Calif.), is similar to a measure introduced in the Senate last June by Senators Angus King (I-Maine) and Chuck Grassley (R-Iowa).

The legislation would update regulations for private foundations and set timelines for distributions from DAFs. The full text of the ACE Act can be accessed here.

In a prepared statement announcing the legislation, Rep. Pingree said: “For countless Mainers and people across the country, charitable organizations are life-changing and lifesaving,” yet $1 out of every $8 donated to charities goes to DAFs, giving generous tax breaks for charitable contributions but not ensuring that the funds help anyone in need. “Our half-century old philanthropy laws must be reformed to correct this fundamental flaw in our current system.”

The Initiative to Accelerate Charitable Giving (IACG), led in part by billionaire philanthropist John Arnold and Boston College law professor Ray Madoff, helped to develop the basis for the proposals. In a statement, IACG leaders noted that they were  “pleased that policymakers continue to seek a legislative solution to restore the connection between charitable tax benefits and direct contributions to charities.” They labeled the bill “a step toward getting more resources to our nation’s charities faster. . . a thoughtful and pragmatic approach that takes the policy ideas outlined in the coalition’s statement of principles and puts them into action at a time when charities across our communities need more help than ever.”

According to the Times report, 

Proponents of the federal reform estimate some $160 billion is set aside for future charitable gifts. While the funds are dedicated to charities once the contributions are made, there is no requirement to ever distribute them. Commercial DAFs, such as Fidelity Charitable and Schwab Charitable, have ballooned over the past decade, in part due to increasing contributions as well as appreciated assets to become some of the largest charities in the nation with tens of billions of dollars in assets.

As regards substance, the legislation would create two new types of DAFs:

  • 15-year DAFs would allow donors to receive upfront tax benefits as they do under current law but only if funds are distributed within 15 years of the donation.
  • 50-year DAFs would allow donors to elect an “aligned benefit rule,” continuing to receive capital gains and estate tax benefits upon donations but not the income tax deduction until all donated funds are distributed to charity. All funds would be required to be distributed to charities no later than 50 years after their donation.

Donors would be allowed to hold up to $1 million in DAF funds at any community foundation without being subject to payout rules. For amounts of more than $1 million, a donor would still receive up-front tax benefits if the DAF requires a 5% annual payout, or if donations must be distributed within 15 years of contribution.

For private foundations, salaries and travel expenses to a donor’s family members, or distributions to DAFs, could not be included in annual 5% payout obligations.

Opponents of the legislation have said that the measures to increase DAF distributions are solutions in search of a problem, noting that DAFs typically distribute at a higher annual rate than the 5% required of private foundations.

The NonProfit Times quotes Elizabeth McGuigan, director of policy at Philanthropy Roundtable, as saying in response to the House bill's introduction: “When people have the flexibility to give how, when and where they choose, it spurs even more generosity and uplifts those who we all wish to help. A bill that disincentivizes giving is tone deaf at best and at worst hurts communities around the country who rely upon their fellow Americans’ generosity.”

We shall see how the legislation fares this time.

Vaughn E. James, Judge Robert H. Bean Professor, Texas Tech University School of Law



February 9, 2022 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (0)

Wednesday, January 26, 2022

A Coat and Cause of Many Colors

    This one is for all the nonprofit parents and grandparents out there.  Often I think about the intersection of the nonprofit world and the fashion world as I notice ads that mention designers are donating a portion of the profits to a charity with a noble cause.  Having written about the area of impact investing, I cannot help but to notice also that some of my favorite brands are now “Certified B Corporations” and now display this label along with their regular ones. 

    One of my six- year-old daughter’s favorite items of clothing is a perfectly weighted “puffer jacket” that is not too heavy, nor too light from the brand Primary that is well-suited for New Orleans.  She often tells me that her friends have the same jacket only in one of the other many different colors in which it is offered.  Thus, it has reached almost a coat of many colors status in our home. 

    Today, Primary announced that its “Heart Shop” is open, which features a number of adorable heart-printed items for little ones.  Of course, my eye was immediately drawn to a phrase that states with every purchase, $5 will be donated to “the conscious kid,” so naturally I looked up this nonprofit.  The main goal of “the conscious kid” is to support families and educators in taking action to stop racism, inequity, and bias.  For example, among other things, the nonprofit is donating 120,000 books that foster anti-racist conversation and action to 3,000 public schools in 50 states.  As regular readers know, I have blogged about the pervasive problem of discrimination among private schools that are allowed to maintain their tax-exempt status, despite racist practices.  Earlier this month, I moderated a AALS panel featuring bloggers Lloyd Mayer and Sam Brunson as well as Provost JoAnne Epps of Temple University which discussed this problem.  It is encouraging to see a fashion brand taking efforts to stop racism where it often starts.  I have two reasons now to make a purchase from the “Heart Shop.”


Khrista McCarden

Hoffman Fuller Associate Professor of Tax Law

Tulane Law School

January 26, 2022 in Current Affairs | Permalink | Comments (0)

Tuesday, January 25, 2022

Terrorist Funding by Nonprofits (WSJ)

    The concern over nonprofit funds being used for terrorist activity is a valid and pressing one.  In examining whether the United States should allow a charitable deduction for donations to non-U.S. charities, I had to address this crucial issue.  Ultimately, I devoted a separate article to the topic, which provided a comprehensive analysis of how the Financial Action Task Force (FATF) could prevent terrorist funding in the event donations to non-U.S. charities were allowed.   

    A recent article in the Wall Street Journal about convicted Boston Marathon Bomber Dzhokhar Tsarnaev also raises a similar issue.  Federal prosecutors are requesting that a U.S. District Court judge allow them to collect funds held in his inmate trust fund account owed in criminal restitution.  As of the filing earlier this month, Tsarnaev had paid $2,202 of the $101.1 million owed in criminal restitution and other court fees and has been spending the money in other ways.  The prosecutors said “he has received tens of thousands of dollars.”  Surprisingly, one source of funds for Tsarnaev was the nonprofit Federal Defenders of New York.  When approached for comment, the nonprofit declined to comment.  It will be interesting to see what details emerge from the nonprofit and what steps will be taken to avoid this result.


Khrista McCarden

Hoffman Fuller Associate Professor of Tax Law

Tulane Law School

January 25, 2022 in Current Affairs | Permalink | Comments (0)

Wednesday, January 19, 2022

More Nonprofit News Organizations Forming

In Houston, some nonprofits including Houston Endowment and Kinder Foundation are teaming up to invest about $20 million in getting a new nonprofit newsroom to cover the area. 

From the story: "The Houston Endowment and Kinder are each pitching in $7.5 million, according to Stern. Meanwhile, Arnold Ventures, the philanthropic investment fund backed by billionaires Laura and John Arnold, and the journalism funder Knight Foundation are giving $4 million and $250,000, respectively, she said.

"The funders say the newsroom will be financially sustained through donations, memberships and sponsorship revenue. Stern estimates about 40 staffers might be on board when the newsroom launches, but she notes the size will be dependent on how many people the management team eventually decide to hire."

Chicago nonproft Chicago Public Media which runs the local NPR affiliate WBEZ in Chicago is acquiring the Chicago Sun Times and will be holding it in a subsidiary nonprofit corporation. 

From the story: "According to the two organizations, the Sun-Times would join WBEZ as a not-for-profit subsidiary of Chicago Public Media.

The Chicago Sun-Times would get its own non-profit board, with Moog getting a seat, as well as current CPM board directors Adrienne King of Bain & Company and Lerry Knox of Sovereign Infrastructure Group. The board would also include Kristen Mack of the John D. and Catherine T. MacArthur Foundation and Aretae Ortiz Wyler, who is the chief operating officer of The Atlantic, as independent board members."

Philip Hackney

January 19, 2022 in Current Affairs, In the News | Permalink | Comments (0)

Tuesday, January 18, 2022

Senate Finance Committee to Investigate Opportunity Zones

Senator Wyden, chair of the Senate Finance Committee, announced recently that the committee would begin an investigation into Opportunity Zones. The announcement begins:

"Senate Finance Committee Chair Ron Wyden, D-Ore., today launched an investigation into the Opportunity Zone Program and whether it has delivered on Republican promises to create jobs and drive investment in low-income communities, rather than just create a loophole for wealthy investors to avoid paying taxes.

In letters to SkyBridge CapitalBaker Tilly US, LLPCresset Partners, LLCHatteras SkyPTM Partners, LLCRelated GroupShopoff Realty Investments, Wyden wrote, “I have long been concerned that the Opportunity Zone program may permit wealthy investors another opportunity to avoid billions of dollars in taxes without meaningfully benefitting the distressed communities the program was intended to help. A report released by the Government Accountability Office (GAO) heightened my concern about the effects of the Opportunity Zone program. The GAO report notes that representatives of several Opportunity Funds indicated that they would have proceeded with projects in what are now designated zones without the tax incentives provided by the Opportunity Zone program…Currently, there are no safeguards or transparency measures in place to ensure taxpayers are not simply subsidizing high-end real estate investments by billionaires without demonstrating the benefit they are providing to low income-communities they claim to help.”

January 18, 2022 in Current Affairs, Federal – Legislative, In the News | Permalink | Comments (0)

Friday, January 14, 2022

Fundraising Consolidations

Yesterday, GoFundMe, the nearly-ubiquitous crowdfunding platform, announced that it was acquiring Classy in an all-stock deal.

As best I can tell, GoFundMe allows both individuals and organizations to solicit money. While GoFundMe does allow charities to ask for money, my impression is that individuals looking for help with medical bills and other emergencies is a big part of what it does.

Classy, by contrast, appears to focus exclusively on putting donors together with nonprofits. I confess that I hadn't heard of them until this morning, but the acquisition announcement says that over its 10-year life, Classy has helped put $4 billion in the hands of nonprofits (including $1.1 billion last year).

I confess that I don't have any sense of who benefits from this kind of consolidation in the nonprofit fundraising sector. Is it good for charities? for donors? for shareholders of the two companies?  (If you have thoughts, I'd love to hear them in the comments or in emails!)

It will, however, be interesting to watch what happens as GoFundMe starts to focus on nonprofit fundraising in a serious way.

Samuel D. Brunson

January 14, 2022 in Current Affairs | Permalink | Comments (1)