Nonprofit Law Prof Blog

While I Wait for Women’s Single Sculls Repechages…. Exemption and the Olympics!

So … I never thought I’d see a concert lineup that included the metal band Gojira (complete with bloody severed heads in the background- BOLD!), Lady Gaga doing the can-can, and Celine Dion.   But here we are…. The 2024 Paris Summer Olympics opening ceremony.  And I’m down for it.  All of it.

I am an Olympics nerd. I have already watched Norway v. Sweden in Women’s Team Handball.  I’m disappointed I can’t find the Archery ranking rounds that happened yesterday streaming on Peacock.  I will wake up at 5 am to watch doubles badminton tomorrow.  I’m that person.

So, it seems only appropriate to do a little review of the tax-exempt status of the Olympics for the blog today, because there are no other competitions to watch on opening ceremony day and I’ve already watched all the available Rugby 7s replays (five stars – will watch again.)  So here’s a deep dive (pun intended) into the Olympics.

Section 501(c)(3) and Section 501(j)

If you are reading the Nonprofit Law Prof Blog, you probably already know that Section 501(c)(3) describes organizations that “foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment)…”   If, however, you are a “qualified amateur sports organization” under Section 501(j), you are exempt from the prohibition on providing athletic equipment.

Prior to 1976, the IRS would grant exempt status to athletic organizations if they could show that they were charitable or educational.   But those were pretty narrow buckets.   The amateur sports language was added to Section 501(c)(3) in 1976, but the IRS apparently took the provision of equipment provisions seriously – From a 1987 EO CPE Text: 

For example, an organization which, as part of its coaching program, made videotapes of athletes for the purpose of analyzing their performance could not be granted exemption as an amateur athletic organization under IRC 501(c)(3), since the use of videotape equipment was considered the provision of equipment.

As we all know from watching Cool Runnings, bobsleds are really expensive, so this simply could not stand. Section 501(j) wasn’t added until 1982.  While the definitions of a “qualified amateur sports organization” and the general 501c3 language are close, they aren’t completely co-terminus.  But it is clearly intended to cover Olympic-type organizations.   See e.g., GCM 39459, finding as exempt the organization for USA women’s bowling even though they supplied uniforms and equipment.

Bowling is not an Olympic sport but recognized by the US Olympic Committee and eligible for the Pan Am games, which is enough.  Apparently, bowling was a demonstration sport at the 1988 Seoul Summer Olympics and has lobbied to be added, making the short list for the 2020 Tokyo Summer Olympics but missing the cut to surfing, skateboarding, and sport climbing.  BUT I DIGRESS.

Your organization needs to be organized primarily to cater to serious athletes, so hosting running events open to all levels and not at Olympic distances didn’t get exempt status – it was deemed more recreational in nature. 

US Olympic & Paralympic Committee

So the USOPC is recognized by the International Olympic Committee as the National Olympic Committee for United States.  According to its website, it’s a “federally chartered nonprofit corporation” – you might remember my Veterans’ Day post on the USO, which is the same thing.  It’s a 501c3 and a public charity under 170(b)(1)(a)(vi) - the USOPC’s most recent Form 990 is in fact available on its website. It lists itself as a corporation formed in 1950 with a legal domicile in Washington DC but an HQ in Colorado Springs, Colorado.  A really interesting supplemental note on its Schedule D – wasn’t able to find a lot on this, does anyone have any details???

INSTALLMENTS FOR THE BROADCAST MEDIA RIGHTS, FOR THE OLYMPIC AND WINTER OLYMPIC GAMES, ARE HELD BY USOPC IN TRUST. THESE PAYMENTS ARE RECORDED ON THE STATEMENT OF FINANCIAL POSITION AS ASSETS HELD ON BEHALF OF OTHERS UNTIL THE GAMES OCCUR AND CERTAIN REQUIREMENTS ARE MET, THEN THE CASH WILL BE RELEASED AND THE AMOUNT WILL BE RECORDED AS REVENUE.

As a final note on related entities, there is a US Olympic and Paralympic Foundation, which “generates philanthropic support to empower Team USA athletes to achieve sustained competitive excellence and well-being.”  It appears that the USOPC doesn’t support athletes directly; athlete support comes from the USOP Foundation.  Formed in 2013 out of Colorado, it lists itself as a 170(b)(1)(A)(vi) on its Form 990.  The Foundation reports a management agreement with the USOPC on its Part VI and Schedule R.

National Governing Bodies.

If you look on the lists of grants made by the USPOC, it includes the national governing bodies for the various sports.  The list includes, USA Artistic Swimming,  the United States Curling Association (which is so much fun – try it if you can) and the Unites States Amateur Confederation of Roller Skating (OMG can we have roller derby in the Olympics?  I mean this year, breaking is an Olympic sport, so why not?  It does make me feel bad for bowling…) They are all listed as separate Section 501c3 organizations.

Because I had to, obviously, I did check out the US Amateur Confederation of Roller Skating, which is d/b/a USA Roller Sports (way better) and headquartered in that hotbed of roller sports, Nebraska (why Nebraska?  Any roller skaters out there know?)  Its 990s are also available, although curiously they report that they are a 509(a)(2) public charity.  

Apparently, rink hockey played on skates was a demonstration sport in the Olympic Games in Barcelona in 1992.  They tried for the 2016 Rio Summer Olympics but lost out to rugby 7s (I see why though – super fun) and golf.  BUT I DIGRESS.

International Olympic Committee. 

I would be remiss if I didn’t mention them.  It is an association under Swiss law, but many international organizations get exempt status from the IRS if they are worried about US source income – so I figure I’d check on the IRS’ website.  Et Voila!!!! And here’s its Form 990.  Interestingly, the list themselves as a Section 501(c)(4) organization, formed in 1894.  I immediately wondered if there is a US Friends of the IOC, or something like that, to take US-based charitable contributions (since 170 deductions are limited to domestic gifts… and they are a 501(c)(4) anyway). 

A quick check of the IOC’s website didn’t show anything that looks like a US fundraising arm, so if anyone has an info, let me know.   I’d keep looking, but it’s getting kind of late and I need to get some sleep before doubles badminton qualifying rounds at 5 am.

Frenziedly, eww

ABA Nonprofit Organizations Committee Outstanding Nonprofit Lawyer Awards for 2024

The ABA Nonprofit Organizations Committee has announced the 2024 awardees.    

Vanguard Award – for distinguished lifetime achievement in the nonprofit sector:
Karin Kunstler Goldman
Deputy Chief, Charities Bureau, Office of the New York Attorney General

Outstanding Attorney Award – for distinguished service as outside counsel to nonprofit organizations:
Morgen Cheshire, Managing Attorney, Cheshire Law Group

Outstanding In-House Counsel Award – for distinguished service by a nonprofit in-house counsel:
Nishka Chandrasoma,  Vice President, Chief Legal Officer, and Secretary, Ford Foundation

Outstanding Academic Award – for distinguished academic achievement in the nonprofit sector:
Roger Colinvaux, Professor Catholic University of America, Columbus School of Law  (Nonprofit Law Prof Blog's own...!)

Outstanding Young Lawyer Award – for distinguished service by an attorney in the nonprofit sector who is under the age of 35 or
has been in practice less than 10 years:
Elizabeth Leiserson, Project Director, Legal Aid Society of Middle Tennessee and the Cumberlands

Congratulations and well earned to all the recipients - to read more about their accomplishments, please see the Committee web page at https://www.americanbar.org/content/dam/aba/administrative/business_law/awards/2024-nonprofit-lawyer-award-winners.pdf

eww

Adventures in Teaching AI in Nonprofits Class

Last month, I asked if anyone had any experience in affirmatively integrating AI into a drafting class, which is how I teach Nonprofits. I didn’t get a lot of responses, so I forged ahead blindly into unknown territory.   As a result, I had an amazing teaching moment so, I just had to share.

The supplement book I use for Nonprofits has sample Articles of incorporation, derived from the form provided in IRS Publication 557, Tax Exempt Status for Your Organization.  I asked my students to look at the provisions of the Model Nonprofit Corporation Act, West Virginia law, and the sample Articles regarding amendment Articles of Incorporation, including amending the purpose clause.  West Virginia’s Act is based in large part on the 1989 version of the Model Nonprofit Corporations Act but specifically requires article amendments to have a 2/3 director vote (See WV Code 31E-10-1003(f)). The sample Articles in the supplement did not contain any clause regarding amendments to Articles.  I asked the students to go use their favorite AI to generate a provision for amendment of Articles of Incorporation that they would add to the IRS’ form, and to report back.  I did the same and we compared notes.

I used Chat-GPT3 – a number of students used Chat-GPT4 and some used Claude.  Students quickly learned they needed to ask for a nonprofit, non-member corporation under the laws of West Virginia to narrow down the language.  My attempt at this produced the following (reprinted in full but emphasis by me:)

Section [X]: Amendment of Articles

1. These Articles of Incorporation may be amended or repealed, and new articles may be adopted, by the affirmative vote of a majority of the directors/trustees in office at any regular or special meeting of the board of directors/trustees.
2. In addition to the approval required under Section 1, any amendment to these Articles of Incorporation that would materially and adversely affect the rights or interests of the organization's stakeholders, donors, or other constituents shall also require a notice period and approval as outlined in the organization's bylaws or as required by applicable law.
3. Notice of any proposed amendment, repeal, or adoption of new articles shall be provided to the organization's directors/trustees as required by law and the organization's bylaws. Such notice shall include the text of the proposed amendment, repeal, or adoption and the date, time, and place of the meeting at which the proposed action will be considered.
4. Any amendment, repeal, or adoption of new articles shall be filed with the appropriate governmental authorities as required by law.
5. No amendment or repeal shall be made that would jeopardize the organization's tax-exempt status under Section 501(c)(3) of the Internal Revenue Code or its corresponding provision in any future federal tax law.
6. The adoption of these Articles of Incorporation, as amended from time to time, shall constitute the agreement of the organization's directors/trustees and other constituents to be bound by the terms and conditions set forth herein and in any duly adopted amendments.

In witness whereof, the undersigned, being the duly appointed Secretary of [Organization Name], hereby certifies that the foregoing Amendment Clause is a true and correct copy as adopted by the board of directors/trustees on [Date].

[Signature of Secretary] [Printed Name of Secretary] [Date]

Please note that this draft is provided for general informational purposes and should be reviewed by legal counsel familiar with West Virginia nonprofit laws before being included in your nonprofit's Articles of Incorporation.

As you can imagine, this prompted a whole  bunch of questions about substance and drafting alike.  I had to explain a Secretary’s Certificate and all of the apparatus at the end of the proposed provision. We talked about Frankenstein drafting and how you’d need to coordinate these new provisions with other parts of your Articles and Bylaws, such as notice provisions and quorum and voting procedures.  Of course, we also discussed that you shouldn’t let the IRS draft your state law documents to begin with.

But of note, Chat-GPT3 got West Virginia law wrong in allowing  a majority vote on the amendment.  If you didn’t know that – or you didn’t bother to check it – you’d have a state law compliance issue and some nice malpractice.

While the obvious error was an eye opener to students, what came next was even better.  We talked about the provision that considered allowing donors, stakeholders, and constituents to approve article amendments, and the later statement that constituents were bound by the Articles.  The students figured out pretty quickly what a nightmare such a procedure would be and how the language proposed by AI was terrible in any event.  I have to admit that I felt pretty gaslit by AI in that moment - where was this language coming from?  Why would AI suggest it?  After all, AI theoretically pulls from collected knowledge so was there some state that required such a thing (most certainly not West Virginia, by the way) and I didn’t know about it?

So the students said… let’s ask it.  And we did, in real time.  I had no idea what the response would be and was somewhat filled with a foreboding dread of my imposter syndrome about to be laid bare, TBH.  And here is the first part of its response to the question, “Why did you include the language in paragraph 6 about stakeholders?”

I apologize for any confusion caused by the inclusion of the term "stakeholders" in paragraph 6 of the previous drafts. In nonprofit corporations, especially those with non-membership structures, the term "stakeholders" might not be as commonly used as in for-profit businesses. The term "stakeholders" could refer to individuals, groups, or entities that have a vested interest in the organization's activities, impact, or outcomes. However, the use of this term might not be necessary or appropriate in all contexts.

After the laughter died down, we tried again, “Why do you need to show amendments to the articles to donors?” – again, the first part of the response:

I apologize for any misunderstanding. Generally, nonprofit organizations are not required to show their amendments to the articles of incorporation to donors. Donors typically contribute to nonprofits based on their mission, impact, transparency, and financial accountability. While transparency is essential, sharing amendments to articles of incorporation with donors is not a common practice.

It was a beautiful thing, in real time, to have AI apologize to the class for bad drafting - twice.  But I couldn’t have asked for a better teaching moment!

Triumphantly, eww

Teaching Nonprofits in the Era of ChatGPT

First of all - let me say how excited I am to be back blogging.  As some of you may know, I have been the Associate Dean for Academic Affairs for the last five years, and as a result, I had to step back from blogging as well as many other things.  Sadly, efforts to clone myself failed miserably.  Now that my time in academic purgatory administration has come to a merciful end, I'm glad that Lloyd Mayer and all the the folks at Nonprofit Law Prof Blog were willing to have me back as a regular poster.  

For those readers who are academics, you know that it is that time of the summer to turn to those Fall syllabi, if you haven't done so yet. As I prepare to teach Nonprofits for the first time in a bit, I'm thinking a great deal about how to teach it and other drafting-heavy classes in a world with ChatGPT and other generative AI. I regularly use Nonprofits and my Estate Planning class (likely coming this spring) as a platform to teach the appropriate use of forms and samples.  I think that we can and should teach ChatGPT as just another type of form or sample - a starting point and not an ending point.   To know how to evaluate a form or sample, including text created by generative AI, one must know what good drafting looks like.  As a result, I'm thinking about how to mix original drafting with purposefully generated AI language.  It feels like things like bylaws and compensation policies are great places to do this kind of work.

• If you are an academic, are you thinking of doing this?  Do you have thoughts on exercises or assignments?  Thoughts on academic integrity issues?
• If you are a nonprofit professional, how are you using generative AI in your practice?  What skill sets do you want to see from graduates coming out of law school?

There were some great discussions at SEALS this year (a law prof conference for those of you who aren't academics)  on this topic, so I'd love to see some continuing work in this area.  I do think it is really important for practitioners to weigh in on this, however - when it comes to AI, I think that many law profs immediately start with either "It's cheating" or "How will they learn to write?"  Those are concerns that we need to address but we can't use those concerns simply to avoid AI -  I think we put our head in the sand if we don't acknowledge generative AI ... not as the future, but as the present.

What say you all!???

Originally, Elaine Waterhouse Wilson (aka eww)

(no part of this post was created using generative AI!)

 

 

 

 

 

Nominations Sought for 2023 Outstanding Nonprofit Lawyer Awards

Here is the Call for Nominations (including for the Academic category):

The Committee on Nonprofit Organizations of the American Bar Association's Business Law Section is calling for nominations for the "2023 Outstanding Nonprofit Lawyer Awards."  The Committee presents the Awards annually to outstanding lawyers in the categories of Academic, Attorney, Nonprofit In-House Counsel, and Young Attorney (under 35 years old or in practice for less than 10 years).  The Committee will also bestow its Vanguard Award for lifetime commitment or achievement on a leading legal practitioner in the nonprofit field.  Nominations are due by March 31, 2023.

For a nomination form, please go to the Nonprofit Organizations Committee webpage and scroll down to find the form under "2023 Outstanding Nonprofit Lawyer Awards."  The Awards will be discussed at the Business Law Section's Spring Meeting on April 27-29, 2023. The Committee expects to formally announce the awardees in late May.

Send nomination forms by March 31, 2023 to:

Emily N. Chan
Adler & Colvin
135 Main Street, 20th Floor
San Francisco, California 94105
(415) 421-7555
(415) 421-0712 (fax)
[email protected]

Lloyd Mayer

Something to Think About on Giving Tuesday...

"Giving Tuesday" is drawing to a close. My iPhone has been sounding off frequently all day as several non-profits have sent me word to "remember them" on this special day. Now that this day is drawing to a close, this report caught my ears (I am visually impaired; nothing catches my eyes anymore).

Monday's NonProfit Times reported that according to a new report from the New York state Attorney General’s office, commercial fundraising firms turn over an average of 73% of funds raised to the nonprofits that retain them. However, the report states, “there is a minority of [fundraising firms that] collect fees so large that charities receive only a small fraction of the total amount donated through a campaign.”    

According to the Times,

The authors analyzed data from 658 fundraising campaigns conducted either entirely or partially during 2021 by for-profit fundraisers in New York. That’s a dip from the 718 campaigns conducted the previous year, a drop attributed to COVID-19-related restrictions. “With vaccine eligibility limited until the second quarter of the year, live fundraising events remained difficult,” report authors wrote. “Charities and fundraisers had to pivot as the pandemic ebbed and flowed.”

The Times goes on to state that the report does not break out whether potential funders were from prospect databases or lists provided by the individual nonprofit. The two types of lists often have different remittance rates. Representatives for the New York state Attorney General’s office did not return messages at deadline seeking clarification regarding whether remittance rates on these types of lists differed.

Here is some more of what the Times had to say:

On the whole, the campaigns analyzed raised more than $1.71 billion, around $248 million more than was generated in 2020, despite the drop in the number of campaigns, according to Pennies for Charity: Funding by Professional Fundraisers, the new report from New York state Attorney General Letitia James’s office. Of that, the nonprofits received just less than $1.25 billion. More than half (60%) of the money raised was generated by two donor-advised funds – Network for Good, which coordinates Facebook-based campaigns, and Eaton Vance Distributors.

The $464 million retained by fundraisers made up 27% of all gross receipts, a percentage that has held more or less steady since 2018. But remittance rates to individual nonprofits varied widely: In 42% of the campaigns analyzed, charities received less than 50% of the funds raised. And in 15%, the expenses generated by the fundraisers exceeded the revenue generated, costing these charities an aggregated $10 million.

The report included at least three other interesting findings:

• Online funding, which had jumped 21% during 2020, continued its rise, growing an additional 9% during 2021.
• Millennials, the generation coming into its own as funders, are responsive to peer-to-peer fundraising efforts. Nearly four in 10 (39%) have made donations via social media in support of someone they know.
• Telemarketing use as a fundraising channel has been dropping. During 2020, 410 campaigns employed telemarketing, a figure that slipped to 401 in 2021. Part of the reason for telemarketing fundraising’s decline might be rooted in its efficacy – for the fundraisers. In 2019, 195 fundraisers retained more than 50% of the dollars collected via these campaigns. By 2021, that number had dropped to 158 fundraisers.

The report is based on the New York state database of charities and fundraising activity records. Individual campaign records include the name of the charity, name of the professional fundraiser, filing year, gross receipts, net remitted to charity, percentage remitted to charity and the amounts of uncollected pledges reported.

This might be something you want to look through as you reflect on all the money you gave away on Giving Tuesday.

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

 

 

In Southeastern Louisiana: 'Community Lighthouses' Powered by the sun and Volunteers

With so much "bad news" in the news, it is always good to hear of something good happening. Today's Religion News Service (RNS) newsletter has just such a story.

According to the RNS story, during the blackout caused by Hurricane Ida, enthusiastic church volunteer, Ida St. Cyr, lost something she treasures greatly -- her independence, afforded by the electric wheelchair she expertly maneuvers over bumpy city sidewalks.

RNS reports that after Ida, St. Cyr, who has multiple sclerosis, was housebound. She did her best to conserve power on her wheelchair, going only to the end of her block or sitting on her porch after the storm made landfall last August 29. It took 10 more days before all of the habitable homes in New Orleans had electricity again. With the lights out and nothing open in her Broadmoor neighborhood of New Orleans, St. Cyr states that life “was not fun.”

One year later, a project launching in southeast Louisiana aims to help people like St. Cyr who are especially vulnerable during extended power outages as the warming climate produces more extreme weather including bigger and wetter hurricanes. And what is that project?

“Community Lighthouses,” outfitted with roof solar panels and a battery pack to store energy [that] can serve as electricity hubs after a disaster, enabling neighbors to recharge batteries, power up phones or store temperature-sensitive medications.

These lighthouses are being sponsored by Together New Orleans, a non-partisan network of churches and groups that tries to fix community problems. According to organizer Broderick Bagert, these groups

felt “impotent and powerless” as the city struggled to deliver basics like collecting garbage in Ida’s aftermath. They realized that local governments couldn’t handle everything alone.

Bagert continued: “You can spend a lot of time saying… 'Why don’t they?,' but you start to realize the real question is ‘Why don’t we?’”

The RNS newsletter continues:

More than just energy hardware, each lighthouse needs a team of volunteers to study their areas, learn who has health problems and who needs medication refrigerated or depends on electric wheelchairs for mobility. While people with means can evacuate ahead of a hurricane, about one in four people live in poverty in New Orleans, and not everyone can afford to flee. Hurricanes are also forming more quickly due to climate change, making it more likely that people can find themselves stuck in a disaster zone.

Bagert believes that each lighthouse should be able to connect with all of its neighborhood’s vulnerable people within 24 hours of an outage.

The pilot phase anticipates 24 sites — 16 in New Orleans and eight elsewhere in Louisiana. Together New Orleans has thus far raised nearly $11 million of the anticipated $13.8 million cost with help from the Greater New Orleans Foundation, the city, federal funding and other donations.

This sounds like a very worthwhile project. It will bring together people of different religious and political persuasions to fix community problems. I wish them well. We need more of this in today's America.

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

  

 

Tax Exemption and Abortion

Over the last decade or so, we've seen a movement demanding that the IRS strip the tax exemption from churches that discriminate against LGBTQ individuals. Those demands are rooted in the Supreme Court's Bob Jones decision, which held that the requirements for tax exemption implicitly include not violating a fundamental public policy. The demands generally assume (or, sometimes, explicitly say) that LGBTQ rights have become a public policy, sufficiently embraced by government as to meet the "fundamental" standard. (David Herzig and I have written a little about this, including here.)

For various reasons (including especially that Bob Jones has only been expanded beyond racially-discriminatory private schools in the rarest of circumstances), these assertions have had rhetorical, but not legal, power. And I assumed they were rooted in the post-Bob Jones era.

But in researching a new project (I'm currently finish a draft of a book on Mormonism and the tax law, hopefully arriving sometime next year!) I learned that this kind of rhetorical activism predates 1983. In fact, in the early 1970s, the Feminist Party filed a complaint with the IRS asserting that the Catholic Church should lose its tax exemption. Why? Because of its involvement in the abortion debate.

Of course, it didn't ground the complaint in fundamental public policy. Instead, it claimed that the Church violated the tax law's restriction on lobbying.

The Feminist Party's complaint proved exactly as effective as later complaints in the LGBTQ context. Still, it's interesting to see tax exemption wielded as a pressure point on religious institutions before Bob Jones expressly made that a constitutional requirement, and it's interesting today to see it in the context of a reemergent abortion debate.

Samuel D. Brunson 

On Twitter and Charitable Exemption

On Friday, David Herzig (EY) proposed a thought experiment about what Elon Musk could do in his acquisition of Twitter:

So, how could one solve for this problem? Well, what if the take private proposed by Mr. Musk is done through a newly formed true Public Charity. And if one know the charitable rules like I do, then one would know that in the first year, Mr. Musk could do all the funding. 3/

— David Herzig (@professortax) May 27, 2022

His proposal led to some interesting discussion--could Twitter qualify as a 501(c)(3)? After all, newspapers and other journalistic organizations have been doing it for the last couple decades. Most recently, the Chicago Sun-Times converted from a for-profit newspaper into a nonprofit, tax-exempt one.

As I've thought about it, I see two major impediments to the idea of Twitter itself become a tax-exempt organization.

Continue reading

2022 Outstanding Nonprofit Lawyer Awards

The ABA Nonprofit Organizations Committee has announced its annual Outstanding Nonprofit Lawyer Award recipients.  They are:

Vanguard Award: Beth Kinglsey

Outstanding Lawyer Award: Samuel Maizel

Outstanding In-House Counsel Award: Lisa Johnsen

Outstanding Young Lawyer Award: Judith Kim

Outstanding Young Lawyer Award: Jason Qu

Congratulations to all of the recipients! You can read more about the awards and recipients here.

Samuel D. Brunson

Colgate University Announces $25 Million Gift from Alumni

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

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

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

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

The release quoted Mr. Carey as stating:

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

Congratulations to Colgate -- and to the Carey family.

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

 

ABA Nonprofit Organizations Committee Seeking Nominations for 2022 Outstanding Nonprofit Lawyer Awards

The Committee on Nonprofit Organizations of the American Bar Association is seeking nominations for the "2022 Outstanding Nonprofit Lawyer Awards."  The Committee will also name a recipient for its Vanguard Award for lifetime commitment or achievement in the nonprofit field.  Nominations are due by March 7, 2022.  For the nomination form and further information, please visit the Nonprofit Organizations Committee webpage.  Scroll down to access the nomination form under "2022 Outstanding Nonprofit Lawyer Awards."  The award recipients will be announced at the Business Law Section's Spring Meeting on March 31 - April 2, 2022.

Martin Luther King reading his Letter from a Birmingham Jail

In honor of Martin Luther King day, posting King reading his tremendous Letter from a Birmingham Jail. Give it a listen. It has potency still today as we reflect on our current moment and as we consider models of nonprofit leadership. Much of the civil rights work was carried out through nonprofits and the letter came from King in his role in leading a large group of nonprofits.  Here is the introduction:

"WHILE confined here in the Birmingham city jail, I came across your recent statement calling our present activities "unwise
and untimely." Seldom, if ever, do I pause to answer criticism of my work and ideas. If I sought to answer all of the criticisms
that cross my desk, my secretaries would be engaged in little else in the course of the day, and I would have no time for
constructive work. But since I feel that you are men of genuine good will and your criticisms are sincerely set forth, I would like
to answer your statement in what I hope will be patient and reasonable terms.

I think I should give the reason for my being in Birmingham, since you have been influenced by the argument of "outsiders
coming in." I have the honor of serving as president of the Southern Christian Leadership Conference, an organization operating
in every Southern state, with headquarters in Atlanta, Georgia. We have some eighty-five affiliate organizations all across the
South, one being the Alabama Christian Movement for Human Rights. Whenever necessary and possible, we share staff,
educational and financial resources with our affiliates. Several months ago our local affiliate here in Birmingham invited us to be
on call to engage in a nonviolent direct-action program if such were deemed necessary. We readily consented, and when the hour came we lived up to our promises. So I am here, along with several members of my staff, because we were invited here. I am here because I have basic organizational ties here.

Beyond this, I am in Birmingham because injustice is here. Just as the eighth-century prophets left their little villages and carried their "thus saith the Lord" far beyond the boundaries of their hometowns; and just as the Apostle Paul left his little village of Tarsus and carried the gospel of Jesus Christ to practically every hamlet and city of the Greco-Roman world, I too am compelled to carry the gospel of freedom beyond my particular hometown. Like Paul, I must constantly respond to the Macedonian call for aid.

Moreover, I am cognizant of the interrelatedness of all communities and states. I cannot sit idly by in Atlanta and not be
concerned about what happens in Birmingham. Injustice anywhere is a threat to justice everywhere. We are caught in an
inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly affects all indirectly. Never
again can we afford to live with the narrow, provincial "outside agitator" idea. Anyone who lives inside the United States can
never be considered an outsider.

You deplore the demonstrations that are presently taking place in Birmingham. But I am sorry that your statement did not express a similar concern for the conditions that brought the demonstrations into being. I am sure that each of you would want to go beyond the superficial social analyst who looks merely at effects and does not grapple with underlying causes. I would not
hesitate to say that it is unfortunate that so-called demonstrations are taking place in Birmingham at this time, but I would say in more emphatic terms that it is even more unfortunate that the white power structure of this city left the Negro community  with no other alternative." 

You can read the text here. 

Philip Hackney

Study: Churches' Ministry to Those Hurt by Pandemic Shows Monumental Growth

Today's Religion News Service (RNS) is reporting that according to a survey conducted by the Hartford Institute for Religion Research, more than half of Christian congregations say they have started a new ministry or expanded an existing one during the COVID-19 pandemic. On average, in fact, these Christian houses of worship began or broadened more than three of their outreach activities in response to the pandemic. 

The Hartford Institute's report is the second installment in a five-year project that began earlier this year called “Exploring the Pandemic Impact on Congregations,” based on a collaboration among 13 denominations from the Faith Communities Today cooperative partnership and institute staffers. If their findings are representative of the roughly 320,000 Christian congregations in the country, the institute said, the researchers estimate that nearly 175,000 churches launched or expanded ministries, funds and supplies in response to the pandemic over the past two years. Overall, almost three-quarters (74%) of churches have offered social support during the pandemic and close to two-thirds of congregations say they have been involved in new ministries.

According to the RNS report,

The new findings, a November survey drawn from 820 responses from representatives of 38 Christian denominational groups, showed significant changes in congregations’ attitudes toward change, particularly increasing diversity. Less than three-quarters (73%) agreed in 2020 that their congregations were willing to change to meet new challenges. That increased to 86% in November.

There also seemed to be greater interest in striving to be diverse, with 38% describing themselves as doing so in November compared with 28% in summer of 2021 and 26% before the pandemic and before the majority of the 2020 protests spurred by the murder of George Floyd, a Black man who died under the knee of a white Minneapolis police officer.

But even as congregations considered new ways of operating, an increasing number are concerned about their future, with 23% saying they are worried about their ability to continue, compared to 16% in the summer.

This worry may well be the result of a grim reality: the institute’s researchers estimated that some 200,000 church members have lost their lives due to COVID-19. The percentage of churches reporting deaths within their membership increased from 17% in the summer to 28% in November, when the second survey was conducted. The average number of deaths among those reporting losses in their congregation was 2.3, up slightly from 2 in the summer.

In response, Allison Norton, co-investigator of the study, told RNS in an email, “This is a sobering picture; however, we would have expected an even greater loss, given the aging population of regular churchgoers.” 

The project’s first report, based on responses from summer 2021, showed that about a third of congregations had increased requests for food. About a quarter received more requests for financial assistance during the pandemic. The November survey found that 22% said they had added or increased food distribution and 21% had enhanced or begun financial assistance for their community.

It is good to see churches functioning in society as they should.

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

 

IRS to No Longer Issue Letter Rulings on Certain Activities of Private Foundations

In Revenue Procedure 2021-40, 2021-38, IRB (due for publication on September 20, 2021), the Internal Revenue Service is set to announce that it will no longer issue letter rulings on whether certain transactions are self-dealing within the meaning of section 4941(d) of the Internal Revenue Code.  In making the announcement in a recent Guidewire release, the Service stated that specifically, it "will not issue rulings on whether an act of self-dealing occurs when a private foundation (or other entity subject to section 4941) owns or receives an interest in a limited liability company or other entity that owns a promissory note issued by a disqualified person." This approach amplifies Rev. Proc. 2021-3, 2021-1 IRB 140, which sets forth areas of the Internal Revenue Code relating to issues on which the Internal Revenue Service will not issue letter rulings or determination letters.

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

 

Winner-Take-All Philanthropy

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).

Continue reading

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

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

 

 

Brody, Pause Play

Yesterday I got an email from Eveyln Brody (Professor Emeritus, Chicago-Kent). I'm sure everybody reading this knows what an important voice she has been in the world of nonprofit and tax law. But did you know that she's an amazing artist?

A year and a half ago or so, I went to see an exhibition of her pastels at the Leslie Wolf Gallery in Chicago. And now, for the next two months, she's back with a new show of seven of her large pastels entitled "Pause Play." The show will be at the NUPOC Gallery in downtown Chicago during all of March and April.

Evelyn's paintings capture apparently unremarkable moments in time--my favorite are when she paints people riding public transportation, but she also does amazing things with people in museums. And other things. Somehow, the moments she captures manage to be both perfectly ordinary and somehow transcendent.

If you're in Chicago during the next two months, I'd highly recommend checking out the second career of a tremendously talented law professor; maybe I'll see you there.

The exhibition is free and open to the public. It's located inn Suite 1100 at 680 N. Lake Shore Drive.  Public hours are 9:00-4:45, Monday-Friday.

Samuel D. Brunson

Nonprofit Halloween

Happy Halloween! In honor of today, I wanted some sort of Halloween nonprofit story.

Frankly, when I think about holidays and nonprofits, I think about the Thanksgiving-to-Christmas corridor. That seems to be when a lot of volunteering happens and, as the end of the tax year approaches, it also seems to be when a lot of year-end funding requests happen.

Are there any Halloween-oriented charities? Almost certainly. And the one I found quickly on Google was 'Ween Dream, a Louisiana-based public charity that provides costumes to kids who might otherwise not have costumes.

It's a small organization, collecting roughly $10,000 of donations annually. I don't know anything substantive about it, but I like that they're taking a charitable approach to a holiday that, as wonderful as it is, doesn't usually invoke thoughts of charity.

Samuel D. Brunson

Photo by Devers Kerr on Unsplash