Sunday, June 27, 2021

A Call for Statistical Information about Nondiscrimination & Private Schools: Numbers Don’t Lie

In a 2000 EO CPE article entitled Private Schools, the Service stated, “private schools have long been of concern to the Service.”  As stated therein, the Service’s determinations of whether private schools qualify for exemption under IRC 501(c)(3) were addressed in many of the CPE texts from 1979 through 1989.   In Private Schools, the Service provided an important historical review, a discussion on the requirements of Rev. Proc. 75-50, 1975-2 C.B. 587, and a summary of the various filing requirements that apply to private schools.

In recounting the history of this problem, the CPE article notes the background and current status of an injunction (still in effect) that requires the Service to deny tax-exempt status to racially discriminatory private schools in Mississippi.  The injunction resulted from a 1970 class action filed to prevent the Service from recognizing the tax-exempt status of or allowing IRC 170 deductions to private schools that engage in racial discrimination against black students.   See Green v. Connally, 330 F. Supp. 1150 (D. D.C. 1971), aff'd sub nom., Coit v. Green, 404 U.S. 997 (1971).  It is interesting to examine the injunction in place for Mississippi in considering how to handle the systemic problem of racially discriminatory private schools today.  The CPE article states the following regarding Mississippi private schools:

            These so-called “Paragraph (1) Schools” must demonstrate that they have adopted and published a nondiscriminatory                     policy. They must also provide certain statistical and other information to the Service to establish that they are operated             in a nondiscriminatory manner. Most importantly, they must overcome an inference of discrimination against blacks.

As of now, the injunction from Green only applies to Mississippi schools.  Clearly, Green provides a model for how to implement the restriction against private schools’ engaging in racial discrimination.  The focus on “statistical” information is really the key.  As we all know, numbers do not lie.  If private schools were free and open to all, the student body at private schools would not be 90% or more white.  The same is true regarding the bleak number of black teachers at private schools.  The injunction from Green could cure some of the prevalent and pervasive problems of racial discrimination in private schools throughout the South.

 

Khrista McCarden

Hoffman Fuller Associate Professor of Tax Law

Tulane Law School

June 27, 2021 in Current Affairs, Federal – Executive, Federal – Judicial, State – Judicial | Permalink

Saturday, June 26, 2021

School Choice Programs & Subsidizing Segregation

Last month, Forbes published an article entitled The Racist History of “School Choice.”  The article underscores yet another way that racially discriminatory private schools are subsidized.  Raymond Pierce points out that for equitable education to exist, public schools need true reform, such as more funding for faculty development and other support systems necessary for nurturing high-quality learning environments.  Given the need for greater investment into public schools, the last thing that should be done is to take money from public schools that are struggling and give it to largely segregated private schools, but that is what is happening under a common practice referred to as “school choice.”  Not surprisingly, “school choice” has its underpinnings in a racist history.  Pierce states, “We are less than six months into 2021, and to date, ‘school choice’ legislation has been introduced in at least 20 states, half of which are in the South.”  Generally, the legislation involves tax credits, school vouchers, or “education savings accounts.”  A common thread is that these bills take money from “underfunded, under-resourced public schools” and give it to private schools.  While some proponents maintain that the bills will provide better education opportunities for Black and Brown students and those from low-income families, the reality is they do not according to Pierce.

              The article traces the roots of “school choice” legislation to a history of racism and school segregation that is important to understand.  Interestingly, public education in the South emerged during Reconstruction.  When the Fourteenth Amendment was passed, education in the South was mostly privatized and available only to white children from wealthy families.  Black children and poor white children typically were not educated at all.  The Southern Education Foundation (SEF), which was featured in the June 21, 2021 post, was one of the first proponents of public education.  The Peabody Fund (which preceded SEF), provided funding as well as drafted and promoted legislation calling for funding of public education through taxes.  Former slaves strongly supported public education initiatives because they viewed education as essential to true freedom and had a strong desire to have their children educated.  As a result of public schools, literacy among both Black and white students increased tremendously.  Additionally, starting in 1913, the Anna T. Jeanes Fund (another precursor of SEF), supported “Jeanes Teachers” who traveled across the South to strengthen curriculum and instruction in rural schools that Black students attended.  They taught students and community members how to excel independently and economically and how to overcome the challenges of the Jim Crow South.  From 1910 through 1940, public education in the South grew dramatically. 

However, in the 1940’s, Southern white students began leaving public schools to attend private schools to avoid integration after it was clear that the “separate but equal doctrine” from the 1896 Plessy v. Ferguson Supreme Court ruling would be dismantled.  After the Supreme Court’s landmark decision in Brown v. Board of Education in 1954, segregation was no longer constitutional, and school vouchers became a means for subverting integration.  During the 1950’s, Southern politicians passed legislation establishing tuition voucher or grant programs that were used to annihilate completely the public school systems, instead of desegregate.  Pierce goes on to provide an illustrative example from Prince Edward County, Virginia where public schools were closed for five years until the Supreme Court intervened. Ultimately, the Supreme Court ruled in Griffin v. School Board of Prince Edward County that the county’s transferring of public funds to private white schools, instead of supporting public schools, was a violation of the equal protection clause of the Constitution.  The Court stated that private school tuition assistance covered up as “school choice” was a tool to “systematically exclude Black children from the educational process.” 

Despite the prohibition against this approach, Southern legislatures used it as a “blueprint” in an attempt to circumvent integration.  From 1954 to 1964, Southern legislatures passed at least 450 laws and resolutions to prevent public school desegregation, many of which permitted the transfer of public funds to private schools.  From 1958 to 1980, private school enrollment in the South increased by over half-a-million students.   Indeed, hundreds of private segregated schools were established.  At the same time, schemes to fund private schools at the expense of public schools, by using vouchers or tax credits to cover large portions of student tuition and operating costs, also increased.  By the 1980’s, the 11 states that made up the former Confederacy had enrolled 675,000 - 750,000 white students.  Of these students, 65 to 75% attended schools where 90% or more of the student body was white.

Today, school vouchers still are used to support segregated private schools and to continue de facto segregation.  The numbers speak for themselves.  In the United States, public schools have a student body that is comprised of 51 % white children and 48.3% children of color (mainly Black and Latino).  In stark contrast, almost three out of every four private school students are white.  As Pierce notes, this is part of a historical pattern.

The question becomes whether tax funding and subsidizing of a directed, intentional system of inequality, namely segregation, should be tolerated.  As I recounted in the June 22, 2021 post, private schools are required to publicize their policies disavowing racially discriminatory practices.  However, the numbers show that there are unspoken policies and practices that are being used to perpetuate both segregation and unfair treatment.  One solution is to develop a better way of reporting racially discriminatory treatment so that private schools engaging in such practices would lose their tax-exempt status.  Another solution is to re-examine the concept of “school choice” programs and school vouchers in their proper historical context and to require some form of accountability for the low numbers of minority enrollment in the private schools benefiting from these programs.

 

Khrista McCarden

Hoffman Fuller Associate Professor of Tax Law

Tulane Law School

June 26, 2021 in Current Affairs, Federal – Executive, Federal – Judicial, In the News, State – Legislative | Permalink

Tuesday, June 22, 2021

Reporting Racism in Private Schools to the IRS

Tax-exempt private schools are required to have and to publish a racially nondiscriminatory policy.  In 2019, the IRS released Rev. Proc. 2019-22, which allows private schools to use their Internet websites to publicize such policies, a requirement for exemption under section 501(c)(3) of the Internal Revenue Code.  By way of background, Rev. Proc. 75-50 outlines the guidelines and recordkeeping requirements for determining whether a private school has a racially nondiscriminatory policy and in fact operates in accordance with such policy.  Rev. Proc. 75-50 applies to private schools that are applying for tax-exemption and to private schools that already are tax-exempt.

Specifically, Rev. Proc. 75-50 requires, inter alia, a private school to include a statement acknowledging it has a racially nondiscriminatory policy  “and therefore does not discriminate against applicants and students on the basis of race, color, and national or ethnic origin.”  The statement must be included in one of the listed governing documents and in its brochures, catalogues, and other written ads for prospective students.  Moreover, the school must make the policy “known to all segments of the general community served by the school.”  Newspaper circulation and certain broadcast media are listed as acceptable means of doing so.

Rev. Proc. 2019-22 modified Rev. Proc. 75-50 by naming a third means of making a racially nondiscriminatory policy known in the manner prescribed: the school’s Internet homepage.  Generally, the policy must be displayed on the school’s publicly accessible Internet homepage throughout the taxable year. Rev. Proc. 2019-22 even sets forth a sample notice for a private school’s homepage:

NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS

The M school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

There are also enumerated factors used to determine whether the notice is “reasonably expected to be noticed” by homepage viewers, such as the size, color, and graphics used; whether the notice is unavoidable, etc.

Form 1023 is used to apply for tax-exemption under section 501(c)(3).  Schedule B pertains to Schools, Colleges, and Universities.  On Form 1023, there are a number of questions concerning the requirement of a racially nondiscriminatory policy for private schools.  Moreover, private schools applying for tax-exemption are informed that they will need to file an annual certification regarding their policy.  (Interestingly, there are also a number of questions under Schedule B that deal with racial discrimination, including whether the private school was established to subvert integration and the racial composition of the student body, faculty, and administrative staff).

Generally, tax-exempt organizations, including numerous private schools, must file an annual reporting return (Form 990 or 990-EZ).  The return includes a question allowing private schools to satisfy the aforementioned annual certification requirement.  Many of the other questions permit a private school to self-report and answer “yes” or “no” in regard to whether it maintains records regarding racial composition, engages in discriminatory practices in terms of admission policies and scholarships, etc. This comes as no surprise since our tax system is based largely on self-reporting.  However, self-reporting depends on the overall honesty of taxpayers.  Every year a tax student asks the inevitable question midway through the material on gross income (or sometimes earlier during the Cesarini/treasure trove lecture):  How would anyone ever know?  I respond by saying that I am there to teach them what the law says and how to abide by the law, and then I remind them that God will know.  Many students who are facing or who have faced racial discrimination at private schools undoubtedly ask whether anyone will ever know about the systemic challenges they face in applying or almost daily while engaging in the necessary and noble pursuit of acquiring an education. 

Perhaps one way the IRS could gain valuable insight into the true encounters of racial discrimination is to require private schools also to publish on their Internet homepages a number or a link to a nonprofit organization that would report such incidents to the IRS once a threshold number was reached.  If amendable, the National Association of Independent Schools (NAIS) could serve in this role as it has already publicly announced that it plans to release initiatives to stop systemic racism.  See NAIS Statement on Addressing Anti-Blackness and Systemic Racism.

 

Khrista McCarden

Hoffman Fuller Professor Tax Law

Tulane Law School

June 22, 2021 in Current Affairs, Federal – Executive | Permalink | Comments (0)

Thursday, June 17, 2021

Suicide Prevention Overnight Fundraiser Goes Virtual

This year's American Foundation for Suicide Prevention’s overnight fundraising event will be virtual. The Overnight Virtual Experience, an online event which will take place the night of June 26 through the morning of June 27, is a culmination of a month-long physical movement and self-care activities drive.

According to a report in the NonProfit Times,

The lead-up activities to June 26 consist of four components: physical activities, including walking at least 16 miles or other actions; social engagement, including guidance on using social media to share experiences and spread information online; fundraising milestones, with a variety of tiered rewards; and, programming on June 26, including time to honor loved ones, connect with the community and, for those who need it, healing activities. All participants will receive a luminaria they can decorate as they wish, including to honor those loved and lost, and which they can share via an app during the June 26 virtual event.

The Times continues:

The 2021 Overnight Virtual Experience marks the second year in a row the event will be held virtually. In 2020, the roughly 3,300 participants raised more than $1.6 million. Last year’s event was initially planned as an overnight walk, but was recast as a virtual experience in April 2020. At that time, a fundraising minimum of $1,000 per participant was waived.

This year’s virtual event similarly does not have a fundraising minimum, although participants who reached multi-tiered levels of fundraising by May 31 were given a variety of premiums. As of June 11, pledges totaled just less than $700,000, but American Foundation for Suicide Prevention Public Relations Director Alexis O’Brien was optimistic final totals would exceed $750,000.

According to the Times, some aspects of the fundraiser have carried over to 2021. As in the past, "each participant is paired with a Walker Coach who provides guidance and encouragement regarding reaching fundraising milestones, and who helps measure impact as participants disseminate information regarding mental health and suicide among their communities." 

Unfortunately, the organization expects the 2021 fundraising level to fall short of what the organization realized during two in-person events in 2019. That year, more than 1,400 participants in San Francisco raised over $1.6 million, while a Boston event that boasted 2,400 participants brought in more than $2.7 million.

According to O'Brien, the Overnight should return to an in-person event in 2022.

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

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

JPMorgan Chase Commits to Closing Housing Affordability Gap for Black and Latinx Households

In a press release issued yesterday, June 16, JPMorgan Chase announced new steps to addressing the housing affordability gap as part of its $30 billion commitment to help advance racial equity and drive an inclusive recovery. To that end, Chase will work with the Urban Institute to identify, test, and scale innovative affordable housing solutions and collaborate with the Center for Community Investment at the Lincoln Institute of Land Policy to address the affordability of existing homes and expand community ownership models in Chicago, Los Angeles, Miami, New Orleans, Seattle, and Washington, D.C. In addition, in response to the economic crisis resulting from the COVID-19 pandemic, the firm will assist nonprofits that fund foreclosure and eviction programs, provide liquidity to nonprofit providers that offer affordable housing as well as to landlords facing their own financial strains, and advance housing preservation models to maintain existing affordable units.

Along with its financial commitment, JPMorgan Chase will work to establish new paths to affordable and sustainable homeownership opportunities including product expansion and policy reform, and partner with policy makers and community leaders to advance data- and evidence-based solutions to tackle housing challenges.

The press release quotes JPMorgan Chase Chairman and CEO, Jamie Dimon, as saying: “We’re trying to address some of the barriers to affordable housing and homeownership to help provide family stability and build generational wealth for Black and Latinx families. Whether you rent or own your home, more families deserve fair, sustainable and accessible options and businesses have a responsibility to develop housing solutions for those who lack access to opportunity.”

The firm's view of and commitment to this undertaking are well articulated by Heather Higginbottom, President, JPMorgan Chase PolicyCenter and Co-Head of Global Philanthropy: “Businesses, community leaders and policymakers need to work together to advance solutions that address housing instability and bring foundational change to the housing market. These data-driven policy reforms will help families across the country who have previously been locked out of stable, affordable housing.”

I agree.

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

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

Tuesday, June 15, 2021

Baylor "Give Light" Campaign Passes $1 Billion Mark

Today's NonProfit Times is reporting that Baylor University, a private Baptist university based in Waco, Texas, has raised $1 billion toward the $1.1 billion goal of its Give Light Campaign. The campaign is a capital improvement effort geared toward improving all aspects of campus life, including academics, athletics, service learning and student life. 

According to the Times report, the campaign went over the $1 billion mark with a $7-million donation from philanthropist Paula Hurd. This $7 million gift, the most recent from Hurd and her late husband Mark, will be put toward the Baylor Basketball Pavilion, which will house Baylor’s men’s and women’s basketball program. Baylor will recognize the most recent gift by naming one level of the pavilion the Mark and Paula Hurd Floor at the Baylor Basketball Pavilion. Sports lovers may recall that earlier this year, Baylor’s men’s basketball team won its first NCAA Basketball Championship.

Baylor University states that the Give Light Campaign seeks to further activities that provide an “unambiguously Christian education environment;” create transformational undergraduate education experiences; boost the impact and visibility of Baylor’s research and scholarship; and foster nationally recognized arts and athletics programs.

The NonProfit Times continues in its report:

The Hurds had kicked off the Give Light Campaign in November 2018 with a gift of an undisclosed amount. The Hurds’ inaugural gift for the Give Light Campaign followed a silent fundraising phase started in May 2014. That phase raised $540 million toward the overall $1.1 billion goal. The November 2018 gift was large enough to give the Hurds naming rights to the Mark and Paula Hurd Welcome Center, a $60 million project that broke ground in February 2020. It also funded the Baylor Basketball Pavilion and the Football Operations Center.

Construction on the Welcome Center is scheduled to begin this month, and is targeted to be finished by May 2023. In addition to substantial infrastructure investment, Baylor has created more than 582 scholarship funds as part of the campaign since its beginning.

Paula Hurd is a graduate of the University of Texas; her late husband, Mark Hurd, attended Baylor on a tennis scholarship and earned his Bachelor of Business Administration in 1979. Mr. Hurd died in 2019 at age 62.

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

 

June 15, 2021 in Current Affairs, In the News | Permalink | Comments (0)

Thursday, June 3, 2021

Funding Performing Arts

Over the last year and a half or so, one of my big interests has been in how the performing arts have been funded during a period when they can't actually perform. And there have been some creative solutions: a year ago I wrote about federal aid to performing arts as well as a public-private partnership in Illinois. Over the last couple months I discovered (as, I suspect many did) Emmet Cohen and his Live From Emmet's Place series, streamed with support of individuals and a couple nonprofits, including the Center for Performing Arts at Penn and the Lied Center of Kansas. (An aside: Live From Emmet's place is the most wonderful, joyful place to spend a couple hours a week, and this may be the most spectacular musical performance I've ever seen.)

So I was interested in this story from the New York Times talking about the Alphadyne Foundation. In short, a new (and secretive) foundation has provided about $6 million in grants to a number of performing arts organizations in New York so that they can put on performances and pay their performers. (It has also given money to charities trying to alleviate poverty, among other things.)

Continue reading

June 3, 2021 in Current Affairs | Permalink | Comments (0)

Tuesday, June 1, 2021

Checking in With the Boy Scouts

One of the biggest recent nonprofit stories has to be the Boy Scout bankruptcy. A lot of the issues are beyond my expertise; like most (I suspect) tax and nonprofit people, I'm not an expert in bankruptcy. And since BSA is a federally-chartered nonprofit, I've been told the issues it faces are somewhat unique.

But they're not entirely unique; in large part, its creditors (who in this case are victims of sexual abuse) are trying to maximize their recovery.  In the interest of doing so, about a week ago the creditors sent a letter to the judge trying to resolve a discovery issue. Bloomberg Law has a discussion of the letter here. But a quick summary:

Basically, on of the Boy Scouts' main assets to pay victims' claims is its insurance. A number of the claims are covered by the Insurance Company of North America. The Insurance Company of North America restructured in the 1990s, though. While the surviving companies still have to pay, they claim they lack the ability to fully (or, it appears, even substantially) pay the necessary claims.

This has ripple effects in excess of merely reducing the pot paid by the restructured insurance company. If the survivors reduce their settlement with the Insurance Company of North America for less than $1.3 billion, it will reduce the amount another insurance company has to pay by 50 cents for every dollar below $1.3 billion.

Samuel D. Brunson

June 1, 2021 in Current Affairs | Permalink | Comments (0)

Wednesday, May 19, 2021

8th Circuit Remands Mayo Back to District Court

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. 

Philip Hackney

May 19, 2021

May 19, 2021 in Current Affairs, Federal – Executive, Federal – Judicial, Federal – Legislative | Permalink | Comments (2)

Thursday, April 22, 2021

Nonprofits React to Conviction of Derek Chauvin

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

April 22, 2021 in Current Affairs, Federal – Legislative, In the News, State – Judicial | Permalink | Comments (0)

Tuesday, April 20, 2021

Seattle Pacific University Faculty Vote No Confidence in Board Over LGBTQ Exclusion

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

 

 

April 20, 2021 in Church and State, Current Affairs, In the News, Religion | Permalink | Comments (0)

Tuesday, April 6, 2021

NRA Trial Begins

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

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

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

The WSJ describes the salient features of the first day: 

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

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

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

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

Philip Hackney

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

Wednesday, March 17, 2021

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

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

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

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

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

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

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

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

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

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

Mayo Clinic Receives $60 Million Gift for Patient Tower

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

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

According to the Digest

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

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

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

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

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

Tuesday, March 16, 2021

Educational Philanthropy Gets Ethical Update

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

Friday, March 12, 2021

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

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

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

David Brennen, Professor of Law at the University of Kentucky

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

Thursday, March 11, 2021

The House passes For the People Act

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

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

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

David Brennen, Professor of Law at the University of Kentucky

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

Wednesday, March 10, 2021

Israeli public interest group accused of improper political activity

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

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

 

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

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

Tuesday, March 9, 2021

HBCU's of Maryland may win big with upcoming legislation

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

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

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

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

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

Friday, February 5, 2021

Congress Members Reintroduce Spotlight Act Dealing with Dark Money Disclosure

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

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

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

You can find the Act here.

Philip Hackney

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