Friday, July 30, 2021
White House Announces New Religions Affairs Leaders, Including First Islamic Religious Freedom Ambassador
The White House announced Friday (July 30) a slate of nominations and appointments for top religious affairs roles, including the first Muslim American nominated to be the U.S. Ambassador-at-Large for International Religious Freedom.
According to a report by the Religious News Service (RNS), President Biden will select Rashad Hussain as his nominee for that post, filling a State Department slot vacant since former Kansas governor and U.S. Senator Sam Brownback left at the close of the Trump administration. Hussain, who would need to be confirmed by the Senate, currently works as director for Partnerships and Global Engagement at the National Security Council.
Mr. Hussain previously served as White House counsel under President Barack Obama, as well as U.S. special envoy to the Organization of Islamic Cooperation and U.S. special envoy for the Center for Strategic Counterterrorism Communications, among other roles.
Commenting on the upcoming nomination, Saeed Khan, an expert on American Muslim communities at Wayne State University, stated: “Rashad’s appointment demonstrates not only the importance the Biden administration places on religious freedom, it also shows the importance of the Muslim world to the administration both in terms of combatting Islamophobia and also promoting religious freedom in Muslim majority countries. Rashad’s background will allow him to have a frank discussion with Muslim majority countries about religious freedom.”
Anila Ali, a co-founder of the American Muslims and Multifaith Women’s Empowerment Council Iftar who has worked with Hussain in the past, also celebrated his nomination. “As AMMWEC, and as a woman leader, I look forward to working with him because women play an important role in peace-making,” Ali said. “He has worked with Muslim communities during the Obama period and we hope his relevant experience is going to make him a voice for all of us.”
According to the RNS report, President Biden is also expected to nominate Deborah Lipstadt as the next U.S. special envoy to monitor and combat antisemitism. Lipstadt is a professor at Emory University in Atlanta and a prominent Holocaust historian. She is the author of Antisemitism: Here and Now and is known for successfully defeating a libel suit brought against her by Holocaust denier David Irving.
Commenting on the expected nomination of Prof. Lipstadt, Mark (Moishe) Bane, president of the Orthodox Union, had this to say: “She is a leader with great moral courage; her dedicated work, clear voice in fighting Holocaust denial and preserving the memory of the attempted destruction of the Jewish people make her an exemplary choice for this role.”
In addition, President Biden plans to appoint two new commissioners to the United States Commission on International Religious Freedom: Khizr Khan and Rabbi Sharon Kleinbaum.
Khan became famous in 2016 when he and his wife, Ghazala, spoke during the Democratic National Convention as “Gold Star” parents, discussing their son, Humayun, a U.S. Army captain who died in Iraq in 2004. Mr. Khan, the founder of the Constitution Literacy and National Unity Project, runs his own law practice and has authored three books, including This is Our Constitution: Discover America with a Gold Star Father.
Kleinbaum, for her part, already served as a USCIRF commissioner in 2020 and leads the Congregation Beit Simchat Torah in New York City, a community that centers LGBTQ people. A human rights advocate, she also sits on Mayor de Blasio’s Faith Based Advisory Council and serves on New York City’s Commission on Human Rights. In addition, she is a board member of the New York Jewish Agenda and the New Israel Fund.
Prof. Vaughn E. James, Texas Tech University School of Law
As we enter the weekend, here is some news that makes the heart glad:
Created in 2017 by the city commission to stabilize the city's budget, lower property taxes, and address poverty, the foundation aimed to raise a total of $500 million by 2019. The new commitment, to be funded over a ten-year period, will establish a $500 million endowment and enable the city to balance its budget, maintain the 2017 property tax decrease for home and business owners, and support projects that address intergenerational poverty, economic development, parks improvements, youth development, affordable housing, and neighborhood infrastructure.
Speaking upon the announcement of commitment, Kalamazoo city manager and FFE co-founder and board president, Jim Ritsema, stated: "This remarkable gift is like none other. This is to our knowledge the largest gift in history to support a municipality."
"It is my hope," said Kalamazoo mayor, David Anderson, "that FFE can serve as a model to transform how we live together in community in a way that gives all of us more hope for the future."
FFE was launched with an initial donation of $70.3 million from William Johnston, head of the Greenleaf Cos., and William Parfet, retired chairman and CEO of MPI Research Co. The foundation has since received gifts including $57 million and $28.2 million from the Stryker Johnston Foundation. To date, the foundation has invested more than $120 million in support of efforts to address needs and projects identified by residents.
Prof. Vaughn E. James, Texas Tech University School of Law
Wednesday, July 28, 2021
The Giving Environment: Understanding Prepandemic Trends in Charitable Giving, a new study by the Indiana University Lilly Family School of Philanthropy at IUPUI, examines giving patterns across the past two decades from five nationally representative studies and concludes that giving to charity by U.S. households has been on the decline not only since the Great Recession but since the turn of the century: One out of two American households donated to charity in 2018 compared with two out of three in 2000.
The report, based on research funded by the Bill & Melinda Gates Foundation, noted that 66.2% of American households gave charitable contributions in 2000, a figure that dropped by 17% to 49.6% in 2018, the latest year for which data is available. It is the first time that giving has dipped below 50% of U.S. households since the studies began tracking this information.
It is also the first time since the Philanthropy Panel Study (PPS) began tracking the share of American households that donated to charity in a given year that the participation rate dropped to half.
Commenting on the study's conclusions, Una Osili, Ph.D., associate dean for research and international programs at the Lilly School, stated, “The new research offers clear evidence of a substantial decline in formal charitable giving rates prior to the unprecedented challenges of 2020.” With an eye on crowdfunding and impact investing as additional means of charitable giving, Dr. Osili further stated, “It’s also important to acknowledge the many additional ways individuals are participating in philanthropy today.”
According to a report in the NonProfitTimes which analyzed the study:
Data is not yet available to show whether the decline in participation continued in 2020. The study analyzed the latest data from the PPS, a module of the University of Michigan’s Panel Study of Income Dynamics. The study follows more than 9,000 households over time and provides the most comprehensive data available on giving trends by U.S. households.
Giving participation rates decreased for members of all racial and ethnic groups studied between 2000 and 2019. While giving to religious groups began its decline before the Great Recession in 2008-09 — 46% between 2000 and 2004 to 29% in 2018 — giving to secular causes didn’t begin to dip until after the economic downturn of 2008-09. In 2008, about 57% of households donated to secular causes, down to 52% in 2010, and a low of 42% by 2018. The decline in average amount donated to religious causes ($1,107 in 2000 to $771 in 2018) has outpaced the decline in average amount given to secular causes ($684 in 2000 to $509 in 2018).
The Times continues:
The largest drops in giving participation were found among Hispanic households, from 44% in 2000 to 25.5% in 2018, about 18.5%. During the same period, giving by Black households declined from almost 49% to less than 33% (16%) while participation by White households dropped from 71% to 58% (13%).
About one-third of the decrease in participation from 2000-16 can be directly attributed to shifts in income, wealth, and homeownership, according to the report’s authors, suggesting that factors like interpersonal trust, empathy and compassion, among others, also may play a role.
The General Social Survey (GSS), which includes questions about interpersonal trust, was another study examined for the report. It indicated that trust and giving participation rates declined simultaneously between 2002 and 2014:
The drop was more severe among Americans 30 and younger than among those older than 30. Younger Americans in 2002 reported giving participation of 84.5% with a 24.7% trust rate, compared with 78.9% and 18.6%, respectively, in 2014. Although the correlation does not mean that the decline in trust helped cause the decline in giving participation, it suggests there may be a relationship, according to researchers.
Now, that is something to think about.
Prof. Vaughn E. James, Texas Tech University School of Law
Thursday, July 22, 2021
Thought I'd provide some quick reflections on the NCAA v. Alston a SCOTUS case handed down a month ago on June 21.
First a personal reflection. When I joined the IRS in the mid 2000s, I was told only somewhat in jest: there are two iron clad rules in exempt organizations -- preachers and college athletics ("hook em horns") always win. This latest case suggests that this iron clad rule may be beginning to subside in part at least.
Justice Gorsuch, writing for a unanimous Court affirmed the US 9th Circuit Court of Appeals in finding that the NCAA rules restricting educational benefits offered by colleges and universities to student athletes violated the Sherman Antitrust Act.
The Court affirmed the 9th Circuit that found that the NCAA limits on educational compensation violated the Antitrust Act only insofar as they involved educational benefits rather than other forms of compensation.
Probably the most significant aspect of the case that may have impact on other places for the NCAA and college athletics is that SCOTUS rejected the idea that the NCAA ought be treated differently because it deals with amateurs and is engaged in education rather than commercial activity.
This case does not change anything for how to think about universities and college athletics qualifying as charitable organizations under section 501(c)(3). John Colombo wrote an article The NCAA, Tax Exemption and College Athletics that is still relevant to this question today.
First, I would not expect this decision to effect college athletics entities like the NCAA or the university athletic activities to be found to be not charitable. This is because Congress amended the Code to provide that promoting amateur athletics is a purpose that meets the charitable requirement of section 501(c)(3). Perhaps, if universities start paying athletes and their amateurism is called into question, this would become an issue, but as of now, I do not see it threatening college athletics on the tax exemption angle.
Secondly, this ruling does not immediately impact the unrelated business income tax and college athletics either. The IRS and Courts have generally been favorable to college athletics. Just as Colombo concluded in his article some years ago, I think it still unlikely for that favorability to end because of the Alston holding.
However, as in the first matter, should the veneer of amateur begin to fall, and college athletics begin to compensate athletes, then the question of unrelated business income tax could become a real issue again for college athletics. The most dangerous possibility for college athletics and its expected tax treatment at least was raised in a concurrence by Justice Kavanaugh who suggested he would find the limitations on all forms of compensation to violate the Antitrust Act.
Tuesday, July 6, 2021
About two weeks ago, I read a New York Times article about the latest round of MacKenzie Scott's philanthropy. The article caught my eye for two reasons: first, a $2.7 billion round of donations is massive. And second, a lot of the money was going to arts organizations (and, as the article noted, dance organizations).
At this point, I kind of have a long history of attending dance performances. I'd been to very few before I moved to New York and met my now-wife. I'm more of a music person, personally, but my wife is a dancer and a dance teacher. So I'm familiar with several of the names on this latest round of funding.
And what was interesting to me was the framing. The donations were framed as being made to "organizations which are themselves historically underfunded." Which is hugely laudable and maybe not entirely accurate. Two names especially caught my eye: Alvin Ailey ($20 million) and Jazz at Lincoln Center (some amount that I can't find online in a quick search).
Monday, July 5, 2021
One June 30, Yale announced that its drama school had received a $150 million gift from David Geffen. With that gift, Yale has eliminated tuition for its drama students. It explained that his gift has "remov[ed] financial barriers to access."
According to the school, the $150 million donation is the largest in the history of American theater. And when you make the largest gift in the history of American theater, you get some benefits. Geffen's benefit? The Yale drama school has renamed itself--it is now the David Geffen School of Drama at Yale.
This isn't the first time a wealthy donor has gotten their name put on something they donated to, of course. It's not even the first time David Geffen has gotten his name on something: Lincoln Center's Avery Fisher Hall has been David Geffen Hall since he gave $100 million to Lincoln Center in the mid-2010s (or at least since Lincoln Center bought back the naming rights from the Fisher family).
Thursday, July 1, 2021
It’s rare we get a Supreme Court decision that falls squarely within the realm of “nonprofit law,” but today’s the day! The Court decided Americans for Prosperity Foundation versus Bonta. 501(c)(3)-exempt organizations challenged, on First Amendment grounds, a California law that required disclosure to the state of major donors to the organizations. Largely as expected, the Court vacated the 9th Circuit and struck down California’s donor disclosure requirements. Here’s my quick take, although I suspect other bloggers will be writing about this case as well.
No Threshold Chilling Showing is Required. One of the biggest divides between the majority and the dissent is whether the plaintiffs must first make a threshold showing that the disclosure requirement is meaningfully chilling its speech or its associational interests. As long as there is a “risk” of such a chill, the majority immediately places the burden on the government to show that the disclosure is justified. The dissent, in contrast, would first require "plaintiffs [to] plead and prove that disclosure will likely expose them to objective harms, such as threats, harassment, or reprisals."
Standard of review. The biggest thing we needed from the Court was clarification about what the standard of review was. And we didn’t get that. Instead, we have this breakdown:
Chief Justice (plurality in part II-1-B): "Regardless of the type of association, compelled disclosure requirements are reviewed under exacting scrutiny."
Thomas: Apply strict scrutiny: "Laws directly burdening the right to associate anonymously, including compelled disclosure laws, should be subject to the same scrutiny as lawsdirectly burdening other First Amendment rights."
Alito + Gorsuch: don't need to decide between strict and exacting scrutiny because California's law fails both (and "[t]he question is not even close.")
We fortunately did get some clarification on what exacting scrutiny means, at least in this context: “Where exacting scrutiny applies, the challenged requirement must be narrowly tailored to the interest it promotes, even if it is not the least restrictive means of achieving that end.” So the government must show more than a “substantial relation” between its goals and its ends, but need not show that it is the least restrictive. We’ll see how that turns out in practice.
Applying the standard.
The majority agrees "that California has an important interest in preventing wrongdoing by charitable organizations." However, the Court perceives a mismatch between amount of info disclosed (tens of thousands of charities) and the number of cases where that information is used/investigated (tiny). The Court describes the State's interest in broad proactive disclosure as "less in investigating fraud and more in ease of administration." Via Twitter, Phillip Hackney (@EOTaxProf) argues that this downplays the State's interests: first as a deterrent to those who might misuse the laws, and second to know who might be misusing a charity for fraudulent purposes. Without that information regulators are in the dark and unable to see fraudulent patterns." But the Court does not discuss this.
It's also significant that the district court made factual findings following a bench trial that rejected many of the state's asserted interests. The majority's ability to cite deference to the district court's findings allowed it to avoid a fact-intensive application of the standard.
Tax-Exemption. The Court left open the possibility that such disclosure requirements could be validly imposed through "revenue collection efforts and conferral of tax-exempt status." Recall that the California rules were implicated not by a charity's tax exempt status but merely operating in the state/soliciting donations. As the Court's citation to Regan v. Taxation with Representation confirms, the government has more latitude to impose restrictions as a condition of tax-exempt status (which is considered a government benefit) than it does when limiting/restricting/impeding on a constitutional right. Therefore, there's nothing about the opinion's logic that would call into doubt the constitutionality of the disclosure requirements in federal tax law.
Optics. One final note from me is that I worry about the way that this decision has been described in public discourse. This is ultimately a case about disclosure requirements for nonprofits that are not engaged in electioneering. The plaintiffs had support from a range of nonprofit ideologies -- such as the ACLU and the NAACP. This was not simply a case about campaign finance, or about conservative dark money. The news clips and commentary that reduce the case along political lines may be more dramatic and may fit in with some broader narrative, but they elide the actual dynamics of what is going on in the case.
That's my quick take. Look forward to reading others' views!
Sunday, June 27, 2021
In a 2000 EO CPE article entitled Private Schools, the Service stated, “private schools have long been of concern to the Service.” As stated therein, the Service’s determinations of whether private schools qualify for exemption under IRC 501(c)(3) were addressed in many of the CPE texts from 1979 through 1989. In Private Schools, the Service provided an important historical review, a discussion on the requirements of Rev. Proc. 75-50, 1975-2 C.B. 587, and a summary of the various filing requirements that apply to private schools.
In recounting the history of this problem, the CPE article notes the background and current status of an injunction (still in effect) that requires the Service to deny tax-exempt status to racially discriminatory private schools in Mississippi. The injunction resulted from a 1970 class action filed to prevent the Service from recognizing the tax-exempt status of or allowing IRC 170 deductions to private schools that engage in racial discrimination against black students. See Green v. Connally, 330 F. Supp. 1150 (D. D.C. 1971), aff'd sub nom., Coit v. Green, 404 U.S. 997 (1971). It is interesting to examine the injunction in place for Mississippi in considering how to handle the systemic problem of racially discriminatory private schools today. The CPE article states the following regarding Mississippi private schools:
These so-called “Paragraph (1) Schools” must demonstrate that they have adopted and published a nondiscriminatory policy. They must also provide certain statistical and other information to the Service to establish that they are operated in a nondiscriminatory manner. Most importantly, they must overcome an inference of discrimination against blacks.
As of now, the injunction from Green only applies to Mississippi schools. Clearly, Green provides a model for how to implement the restriction against private schools’ engaging in racial discrimination. The focus on “statistical” information is really the key. As we all know, numbers do not lie. If private schools were free and open to all, the student body at private schools would not be 90% or more white. The same is true regarding the bleak number of black teachers at private schools. The injunction from Green could cure some of the prevalent and pervasive problems of racial discrimination in private schools throughout the South.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
Saturday, June 26, 2021
Last month, Forbes published an article entitled The Racist History of “School Choice.” The article underscores yet another way that racially discriminatory private schools are subsidized. Raymond Pierce points out that for equitable education to exist, public schools need true reform, such as more funding for faculty development and other support systems necessary for nurturing high-quality learning environments. Given the need for greater investment into public schools, the last thing that should be done is to take money from public schools that are struggling and give it to largely segregated private schools, but that is what is happening under a common practice referred to as “school choice.” Not surprisingly, “school choice” has its underpinnings in a racist history. Pierce states, “We are less than six months into 2021, and to date, ‘school choice’ legislation has been introduced in at least 20 states, half of which are in the South.” Generally, the legislation involves tax credits, school vouchers, or “education savings accounts.” A common thread is that these bills take money from “underfunded, under-resourced public schools” and give it to private schools. While some proponents maintain that the bills will provide better education opportunities for Black and Brown students and those from low-income families, the reality is they do not according to Pierce.
The article traces the roots of “school choice” legislation to a history of racism and school segregation that is important to understand. Interestingly, public education in the South emerged during Reconstruction. When the Fourteenth Amendment was passed, education in the South was mostly privatized and available only to white children from wealthy families. Black children and poor white children typically were not educated at all. The Southern Education Foundation (SEF), which was featured in the June 21, 2021 post, was one of the first proponents of public education. The Peabody Fund (which preceded SEF), provided funding as well as drafted and promoted legislation calling for funding of public education through taxes. Former slaves strongly supported public education initiatives because they viewed education as essential to true freedom and had a strong desire to have their children educated. As a result of public schools, literacy among both Black and white students increased tremendously. Additionally, starting in 1913, the Anna T. Jeanes Fund (another precursor of SEF), supported “Jeanes Teachers” who traveled across the South to strengthen curriculum and instruction in rural schools that Black students attended. They taught students and community members how to excel independently and economically and how to overcome the challenges of the Jim Crow South. From 1910 through 1940, public education in the South grew dramatically.
However, in the 1940’s, Southern white students began leaving public schools to attend private schools to avoid integration after it was clear that the “separate but equal doctrine” from the 1896 Plessy v. Ferguson Supreme Court ruling would be dismantled. After the Supreme Court’s landmark decision in Brown v. Board of Education in 1954, segregation was no longer constitutional, and school vouchers became a means for subverting integration. During the 1950’s, Southern politicians passed legislation establishing tuition voucher or grant programs that were used to annihilate completely the public school systems, instead of desegregate. Pierce goes on to provide an illustrative example from Prince Edward County, Virginia where public schools were closed for five years until the Supreme Court intervened. Ultimately, the Supreme Court ruled in Griffin v. School Board of Prince Edward County that the county’s transferring of public funds to private white schools, instead of supporting public schools, was a violation of the equal protection clause of the Constitution. The Court stated that private school tuition assistance covered up as “school choice” was a tool to “systematically exclude Black children from the educational process.”
Despite the prohibition against this approach, Southern legislatures used it as a “blueprint” in an attempt to circumvent integration. From 1954 to 1964, Southern legislatures passed at least 450 laws and resolutions to prevent public school desegregation, many of which permitted the transfer of public funds to private schools. From 1958 to 1980, private school enrollment in the South increased by over half-a-million students. Indeed, hundreds of private segregated schools were established. At the same time, schemes to fund private schools at the expense of public schools, by using vouchers or tax credits to cover large portions of student tuition and operating costs, also increased. By the 1980’s, the 11 states that made up the former Confederacy had enrolled 675,000 - 750,000 white students. Of these students, 65 to 75% attended schools where 90% or more of the student body was white.
Today, school vouchers still are used to support segregated private schools and to continue de facto segregation. The numbers speak for themselves. In the United States, public schools have a student body that is comprised of 51 % white children and 48.3% children of color (mainly Black and Latino). In stark contrast, almost three out of every four private school students are white. As Pierce notes, this is part of a historical pattern.
The question becomes whether tax funding and subsidizing of a directed, intentional system of inequality, namely segregation, should be tolerated. As I recounted in the June 22, 2021 post, private schools are required to publicize their policies disavowing racially discriminatory practices. However, the numbers show that there are unspoken policies and practices that are being used to perpetuate both segregation and unfair treatment. One solution is to develop a better way of reporting racially discriminatory treatment so that private schools engaging in such practices would lose their tax-exempt status. Another solution is to re-examine the concept of “school choice” programs and school vouchers in their proper historical context and to require some form of accountability for the low numbers of minority enrollment in the private schools benefiting from these programs.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School
Tuesday, June 22, 2021
Tax-exempt private schools are required to have and to publish a racially nondiscriminatory policy. In 2019, the IRS released Rev. Proc. 2019-22, which allows private schools to use their Internet websites to publicize such policies, a requirement for exemption under section 501(c)(3) of the Internal Revenue Code. By way of background, Rev. Proc. 75-50 outlines the guidelines and recordkeeping requirements for determining whether a private school has a racially nondiscriminatory policy and in fact operates in accordance with such policy. Rev. Proc. 75-50 applies to private schools that are applying for tax-exemption and to private schools that already are tax-exempt.
Specifically, Rev. Proc. 75-50 requires, inter alia, a private school to include a statement acknowledging it has a racially nondiscriminatory policy “and therefore does not discriminate against applicants and students on the basis of race, color, and national or ethnic origin.” The statement must be included in one of the listed governing documents and in its brochures, catalogues, and other written ads for prospective students. Moreover, the school must make the policy “known to all segments of the general community served by the school.” Newspaper circulation and certain broadcast media are listed as acceptable means of doing so.
Rev. Proc. 2019-22 modified Rev. Proc. 75-50 by naming a third means of making a racially nondiscriminatory policy known in the manner prescribed: the school’s Internet homepage. Generally, the policy must be displayed on the school’s publicly accessible Internet homepage throughout the taxable year. Rev. Proc. 2019-22 even sets forth a sample notice for a private school’s homepage:
NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS
The M school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.
There are also enumerated factors used to determine whether the notice is “reasonably expected to be noticed” by homepage viewers, such as the size, color, and graphics used; whether the notice is unavoidable, etc.
Form 1023 is used to apply for tax-exemption under section 501(c)(3). Schedule B pertains to Schools, Colleges, and Universities. On Form 1023, there are a number of questions concerning the requirement of a racially nondiscriminatory policy for private schools. Moreover, private schools applying for tax-exemption are informed that they will need to file an annual certification regarding their policy. (Interestingly, there are also a number of questions under Schedule B that deal with racial discrimination, including whether the private school was established to subvert integration and the racial composition of the student body, faculty, and administrative staff).
Generally, tax-exempt organizations, including numerous private schools, must file an annual reporting return (Form 990 or 990-EZ). The return includes a question allowing private schools to satisfy the aforementioned annual certification requirement. Many of the other questions permit a private school to self-report and answer “yes” or “no” in regard to whether it maintains records regarding racial composition, engages in discriminatory practices in terms of admission policies and scholarships, etc. This comes as no surprise since our tax system is based largely on self-reporting. However, self-reporting depends on the overall honesty of taxpayers. Every year a tax student asks the inevitable question midway through the material on gross income (or sometimes earlier during the Cesarini/treasure trove lecture): How would anyone ever know? I respond by saying that I am there to teach them what the law says and how to abide by the law, and then I remind them that God will know. Many students who are facing or who have faced racial discrimination at private schools undoubtedly ask whether anyone will ever know about the systemic challenges they face in applying or almost daily while engaging in the necessary and noble pursuit of acquiring an education.
Perhaps one way the IRS could gain valuable insight into the true encounters of racial discrimination is to require private schools also to publish on their Internet homepages a number or a link to a nonprofit organization that would report such incidents to the IRS once a threshold number was reached. If amendable, the National Association of Independent Schools (NAIS) could serve in this role as it has already publicly announced that it plans to release initiatives to stop systemic racism. See NAIS Statement on Addressing Anti-Blackness and Systemic Racism.
Hoffman Fuller Professor Tax Law
Tulane Law School
Thursday, June 17, 2021
This year's American Foundation for Suicide Prevention’s overnight fundraising event will be virtual. The Overnight Virtual Experience, an online event which will take place the night of June 26 through the morning of June 27, is a culmination of a month-long physical movement and self-care activities drive.
According to a report in the NonProfit Times,
The lead-up activities to June 26 consist of four components: physical activities, including walking at least 16 miles or other actions; social engagement, including guidance on using social media to share experiences and spread information online; fundraising milestones, with a variety of tiered rewards; and, programming on June 26, including time to honor loved ones, connect with the community and, for those who need it, healing activities. All participants will receive a luminaria they can decorate as they wish, including to honor those loved and lost, and which they can share via an app during the June 26 virtual event.
The Times continues:
The 2021 Overnight Virtual Experience marks the second year in a row the event will be held virtually. In 2020, the roughly 3,300 participants raised more than $1.6 million. Last year’s event was initially planned as an overnight walk, but was recast as a virtual experience in April 2020. At that time, a fundraising minimum of $1,000 per participant was waived.
This year’s virtual event similarly does not have a fundraising minimum, although participants who reached multi-tiered levels of fundraising by May 31 were given a variety of premiums. As of June 11, pledges totaled just less than $700,000, but American Foundation for Suicide Prevention Public Relations Director Alexis O’Brien was optimistic final totals would exceed $750,000.
According to the Times, some aspects of the fundraiser have carried over to 2021. As in the past, "each participant is paired with a Walker Coach who provides guidance and encouragement regarding reaching fundraising milestones, and who helps measure impact as participants disseminate information regarding mental health and suicide among their communities."
Unfortunately, the organization expects the 2021 fundraising level to fall short of what the organization realized during two in-person events in 2019. That year, more than 1,400 participants in San Francisco raised over $1.6 million, while a Boston event that boasted 2,400 participants brought in more than $2.7 million.
According to O'Brien, the Overnight should return to an in-person event in 2022.
Prof. Vaughn E. James, Texas Tech University School of Law
In a press release issued yesterday, June 16, JPMorgan Chase announced new steps to addressing the housing affordability gap as part of its $30 billion commitment to help advance racial equity and drive an inclusive recovery. To that end, Chase will work with the Urban Institute to identify, test, and scale innovative affordable housing solutions and collaborate with the Center for Community Investment at the Lincoln Institute of Land Policy to address the affordability of existing homes and expand community ownership models in Chicago, Los Angeles, Miami, New Orleans, Seattle, and Washington, D.C. In addition, in response to the economic crisis resulting from the COVID-19 pandemic, the firm will assist nonprofits that fund foreclosure and eviction programs, provide liquidity to nonprofit providers that offer affordable housing as well as to landlords facing their own financial strains, and advance housing preservation models to maintain existing affordable units.
Along with its financial commitment, JPMorgan Chase will work to establish new paths to affordable and sustainable homeownership opportunities including product expansion and policy reform, and partner with policy makers and community leaders to advance data- and evidence-based solutions to tackle housing challenges.
The press release quotes JPMorgan Chase Chairman and CEO, Jamie Dimon, as saying: “We’re trying to address some of the barriers to affordable housing and homeownership to help provide family stability and build generational wealth for Black and Latinx families. Whether you rent or own your home, more families deserve fair, sustainable and accessible options and businesses have a responsibility to develop housing solutions for those who lack access to opportunity.”
The firm's view of and commitment to this undertaking are well articulated by Heather Higginbottom, President, JPMorgan Chase PolicyCenter and Co-Head of Global Philanthropy: “Businesses, community leaders and policymakers need to work together to advance solutions that address housing instability and bring foundational change to the housing market. These data-driven policy reforms will help families across the country who have previously been locked out of stable, affordable housing.”
Prof. Vaughn E. James, Texas Tech University School of Law
Tuesday, June 15, 2021
Today's NonProfit Times is reporting that Baylor University, a private Baptist university based in Waco, Texas, has raised $1 billion toward the $1.1 billion goal of its Give Light Campaign. The campaign is a capital improvement effort geared toward improving all aspects of campus life, including academics, athletics, service learning and student life.
According to the Times report, the campaign went over the $1 billion mark with a $7-million donation from philanthropist Paula Hurd. This $7 million gift, the most recent from Hurd and her late husband Mark, will be put toward the Baylor Basketball Pavilion, which will house Baylor’s men’s and women’s basketball program. Baylor will recognize the most recent gift by naming one level of the pavilion the Mark and Paula Hurd Floor at the Baylor Basketball Pavilion. Sports lovers may recall that earlier this year, Baylor’s men’s basketball team won its first NCAA Basketball Championship.
Baylor University states that the Give Light Campaign seeks to further activities that provide an “unambiguously Christian education environment;” create transformational undergraduate education experiences; boost the impact and visibility of Baylor’s research and scholarship; and foster nationally recognized arts and athletics programs.
The NonProfit Times continues in its report:
The Hurds had kicked off the Give Light Campaign in November 2018 with a gift of an undisclosed amount. The Hurds’ inaugural gift for the Give Light Campaign followed a silent fundraising phase started in May 2014. That phase raised $540 million toward the overall $1.1 billion goal. The November 2018 gift was large enough to give the Hurds naming rights to the Mark and Paula Hurd Welcome Center, a $60 million project that broke ground in February 2020. It also funded the Baylor Basketball Pavilion and the Football Operations Center.
Construction on the Welcome Center is scheduled to begin this month, and is targeted to be finished by May 2023. In addition to substantial infrastructure investment, Baylor has created more than 582 scholarship funds as part of the campaign since its beginning.
Paula Hurd is a graduate of the University of Texas; her late husband, Mark Hurd, attended Baylor on a tennis scholarship and earned his Bachelor of Business Administration in 1979. Mr. Hurd died in 2019 at age 62.
Prof. Vaughn E. James, Texas Tech University School of Law
Thursday, June 3, 2021
Over the last year and a half or so, one of my big interests has been in how the performing arts have been funded during a period when they can't actually perform. And there have been some creative solutions: a year ago I wrote about federal aid to performing arts as well as a public-private partnership in Illinois. Over the last couple months I discovered (as, I suspect many did) Emmet Cohen and his Live From Emmet's Place series, streamed with support of individuals and a couple nonprofits, including the Center for Performing Arts at Penn and the Lied Center of Kansas. (An aside: Live From Emmet's place is the most wonderful, joyful place to spend a couple hours a week, and this may be the most spectacular musical performance I've ever seen.)
So I was interested in this story from the New York Times talking about the Alphadyne Foundation. In short, a new (and secretive) foundation has provided about $6 million in grants to a number of performing arts organizations in New York so that they can put on performances and pay their performers. (It has also given money to charities trying to alleviate poverty, among other things.)
Tuesday, June 1, 2021
One of the biggest recent nonprofit stories has to be the Boy Scout bankruptcy. A lot of the issues are beyond my expertise; like most (I suspect) tax and nonprofit people, I'm not an expert in bankruptcy. And since BSA is a federally-chartered nonprofit, I've been told the issues it faces are somewhat unique.
But they're not entirely unique; in large part, its creditors (who in this case are victims of sexual abuse) are trying to maximize their recovery. In the interest of doing so, about a week ago the creditors sent a letter to the judge trying to resolve a discovery issue. Bloomberg Law has a discussion of the letter here. But a quick summary:
Basically, on of the Boy Scouts' main assets to pay victims' claims is its insurance. A number of the claims are covered by the Insurance Company of North America. The Insurance Company of North America restructured in the 1990s, though. While the surviving companies still have to pay, they claim they lack the ability to fully (or, it appears, even substantially) pay the necessary claims.
This has ripple effects in excess of merely reducing the pot paid by the restructured insurance company. If the survivors reduce their settlement with the Insurance Company of North America for less than $1.3 billion, it will reduce the amount another insurance company has to pay by 50 cents for every dollar below $1.3 billion.
Samuel D. Brunson
Wednesday, May 19, 2021
In a case deep in the weeds of tax-exempt law, the United States Eighth Circuit Court of Appeals remanded Mayo Clinic v. United States, No. 19-3189 back to the District Court. Though deep in the weeds, the case has some potential big importance to tax exempt law.
Though it is technically about whether Mayo owes the unrelated business income tax associated with debt financed income, it has big importance because a loss here would potentially open up a simple way for charitable organizations to establish that they have a favored status of being a public charity rather than a private foundation by being an educational organization.
In order to be allowed an exemption under section 514 of the Code from the UBIT, Mayo claimed that it is a qualified organization under section 514(c)(9)(C)(i) because it is an "educational organization under section 170(b)(1)(A)(ii). That statute states: an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on." Note that without the "primary test" a charity could normally maintain faculty and curriculum and normally have a regularly enrolled body or pupils, as something less than a primary part of the organization's activity.
The IRS determined that Mayo was not such an educational organization based on its regulation interpreting the above language. The regulation Treas. Reg. 1.170A-9(c)(1) provides an organization is an educational organization "if its primary function is the presentation of formal instruction and it normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on."
Obviously Treasury and the IRS added the "primary function" test to what is provided for in the statute. The District Court held for Mayo on the basis that the primary function was not a part of the test Congress implemented. Mayo Clinic v. United States, 412 F. Supp. 3d 1038 1042 (D. Minn. 2019).
After applying the Chevron Two Step, the Appeals Court upheld the Treasury Regulation, but only in part, it says. It first finds that the District Court was right that the primary test added by Treasury was not reasonable. They find that the history and prior case law did not support this language. But then it suggests that the primary test should indeed apply but as to the idea of educational generally. Thus, the court determines that the test to apply is as follows: "The analysis normally unravels in three parts: (1) whether the taxpayer is “organized and operated exclusively” for one or more exempt purposes; (2) whether
the taxpayer is “organized and operated exclusively” for educational purposes; and (3) whether the taxpayer meets the statutory criteria of faculty, curriculum, students, and place."
One part of the history of charitable organizations that the Eighth Circuit fails to trace is the development of the idea of a publich charity under section 509 of the Code. There an organization is generally determined to be a private foundation unless it meets one of the requirements under (a)(1)-(4). Section 509(a)(1) includes these same educational organizations.
I think what this all means is that there is an easier end run around obtaining public charity status for "educational organizations." A well funded advocacy organization by one individual that mainly educates the world about their point of view in order to influence political choices need only hire some faculty, have them establish curriculum, and then regularly educate some pupils. This would meet the above test and would circumvent the private foundation rules. I doubt this was intended by Congress, but that I think is the practical result of the Courts ruling.
The Eighth Circuit remanded the case for further proceedings. It seems likely to me that Mayo will again win at the District Court. I would be surprised if the IRS appealed it further as they have lost the main issue on this one. Additionally, given the way they lost, I don't think the IRS can fix the regulation. The only way for the IRS to fight this one again would be to try to win in another Circuit. Given the trend of federal court cases going resoundingly against the IRS on interpretation issues like these lately, including most recently CIC Services at the Supreme Court, I suspect the only way to solve this mess is for Congress to take action.
May 19, 2021
Thursday, April 22, 2021
Yesterday's NonProfitTimes reported that the rapid conviction by a criminal court jury in Minneapolis of former police officer Derek Chauvin in the death of George Floyd last year brought swift reactions from leaders across the nonprofit sector. According to the Times, the leaders not only backed the verdict, but many also voiced support for the George Floyd Justice in Policing Act of 2021 pending in Congress which would put federal law behind blocking tactics such as no-knock warrants and chokeholds when detaining a suspect.
Among the nonprofit leaders issuing statements in favor of the verdict were: Jody Levison-Johnson, president and CEO of The Alliance for Strong Families and Communities/Council on Accreditation; Tim Delaney, President & CEO of the National Council of Nonprofits; Daniel J. Cardinali, president and CEO, The Independent Sector; Derrick Johnson, President & CEO, The NAACP; Jason Williamson, deputy director of the ACLU’s Criminal Law Reform Project; and Matthew Melmed, Executive Director, ZERO TO THREE.
Among the many statements issued and comments made, this paragraph from the statement issued by The Alliance for Strong Families is noteworthy:
This verdict reflects the fact that our national reckoning on systemic racism in America is long overdue. Watching the Derek Chauvin trial unfold has been difficult for all Americans, and for people of color who have lost another father, mother, son, or daughter at the hands of law enforcement, this tragedy, played out daily on our television screens, has been especially hard to bear. Systemic racism and implicit bias are infused across too many of the systems that should support people, resulting too often in harm to those they are meant to protect. While we recognize the work that has taken place thus far to expand equity, diversity and inclusion, we must continue to build on it, and acknowledge that the road ahead of us is long, and that true systemic change is needed and required. We hope this verdict puts us on a path toward bringing about that needed change. …”
This hope lives deep within my heart.
Vaughn E. James, Professor of Law, Texas Tech University
Tuesday, April 20, 2021
The faculty of Seattle Pacific University, a Christian school associated with the Free Methodist Church, has taken a vote of no confidence in its board of trustees after members of the board declined to change its policy prohibiting the hiring of LGBTQ people.
The no-confidence vote, approved by 72% of the faculty Monday (April 20), was the latest in a series of escalating clashes between faculty, students and the school’s governing board. Faculty and students also want the school to drop its statement on human sexuality, which declares marriage between a man and a woman as the only permitted expression of human sexuality. A total of 213 out of 236 qualified faculty voted no confidence on an online form.
The board of trustees responded to the no-confidence vote Tuesday with a statement saying it would not change its employment hiring policy, which excludes LGBTQ people from full-time positions.
The statement read in part:
The board recognizes that fellow Christians and other community members disagree in good faith on issues relating to human sexuality, and that these convictions are deeply and sincerely held,” read the statement. “We pray that as we live within the tension of this issue, we can be in dialogue with the SPU community.
The board also indicated it was taking its stand because it wanted to continue to maintain its ties to the Free Methodist Church, a small denomination of about 70,000 in the United States and 1 million around the world. The Free Methodist Church has eight affiliated educational institutions including Azusa Pacific, Spring Arbor and Greenville universities.
Kevin Neuhouser, a professor of sociology at Seattle Pacific who is also the faculty advisor for HAVEN, the student club for LGBTQ students on campus, opined that “Right now the board is the last remaining group that has not yet come to recognize that LGBTQ individuals can be faithful Christians, and as faculty and staff they would play positive roles on our campus, if we can hire them.” According to Neuhousser, the school was engaged in a larger discussion of trying to discern what it means to follow Jesus. But, he asked, “Is it being faithful to include or exclude?”
Nationwide, a group of students and former students of Christian institutions are seeking an answer to that question. Last month, 33 LGBTQ students or former students at federally funded Christian colleges and universities filed a class-action lawsuit against the U.S. Department of Education alleging widespread discrimination at 25 Christian colleges and universities.
We shall follow closely as this case winds its way through the court system.
Vaughn E. James, Professor of Law, Texas Tech University School of Law
Tuesday, April 6, 2021
The virtual bankruptcy trial of the NRA filed in Texas kicked off yesterday with opening statements.
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."
Wednesday, March 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