Nonprofit Law Prof Blog

Festschrift for Professor Ellen Aprill at Loyola Law School LA

Loyola Law School Los Angeles hosted a Festschrift on Friday March 24, celebrating the scholarly career of Ellen Aprill who has
contributed so much to the nonprofit/tax-exempt organization legal sphere over her impressive career. I participated in the event. It was a wonderful opportunity for the Loyola Law School Community to share a collective recognition of Prof. Aprill with law professors from around the country, as well as practitioners. So many described the significant ways in which Prof. Aprill impacted their scholarly and personal lives. It was a touching tribute with her family sharing fabulous reflections as well. 

9:30 am – 3:00 pm  
FESTSCHRIFT & LIVE SYMPOSIUM featuring works-in-progress, to be published in a symposium issue of the Loyola of Los Angeles Law Review, by  

•  Lloyd Hitoshi Mayer, University of Notre Dame, Nonprofits, Taxes, and Speech 
• Samuel D. Brunson, Loyola University Chicago School of Law, & Philip Hackney, University of Pittsburgh School of Law: A More Capacious Conception of Church
• Roger Paul Colinvaux, Catholic University of America: Strings Are Attached: Placing a Spotlight on the Hidden Subsidy for Perpetual Donor Limits on Gifts
• Richard L. Hasen, UCLA School of Law: Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill
• Michelle D. Layser, University of San Diego School of Law: The Unknown Consequences of Place-Based Tax Incentives

The presentation of papers was followed by a celebration and tribute from around thirty different people from students to colleagues, from practitioners to family from 3:30 – 5:00 pm. It was a true joy.

Philip Hackney

Brunson & Hackney: A More Capacious Concept of Church

Samuel D. Brunson (Loyola Chicago) and Philip Hackney (Pittsburgh) have posted A More Capacious Concept of Church, which will be published in the Loyola of Los Angeles Law Review as part of a symposium issue honoring Ellen Aprill (Loyola L.A.). Here is the abstract:

United States tax law provides churches with extra benefits and robust protection from IRS enforcement actions. Churches and religious organizations are automatically exempt from the income tax without needing to apply to be so recognized and without needing to file a tax return. Beyond that, churches are protected from audit by stringent procedures. There are good reasons to consider providing a distance between church and state, including the state tax authority. In many instances, Congress granted churches preferential tax treatment to try to avoid excess entanglement between church and state, though that preferential treatment often just shifts the locus of entanglement. But those benefits and protections come with cost both to individual churches (by making these organizations susceptible to tax shelters and political activity shelters) and to our democratic order (by granting churches to a higher status than other organizations). Does Congress get the balance right? We think the balance struck is problematic but justifiable. In this Essay we only note the problems and suggest some actions churches and religious organizations might take to protect against some of the dangers.

Lloyd Mayer

Hasen: Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law

Richard L. Hasen (UCLA) has posted Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill, which will be published in the Loyola of Los Angeles Law Review as part of a symposium issue honoring Ellen Aprill (Loyola L.A.). Here is the abstract:

This brief Essay was prepared for a festschrift honoring the work of Professor Ellen Aprill. I explain in the Essay how Professor Aprill’s deep knowledge of nonprofit and tax law and her relentless intellectual honesty leads her (and us) to an unhappy place: a world in which many of the remaining regulations of money in politics could well be struck down as unconstitutional or rendered wholly ineffective by a Supreme Court increasingly hostile to the goals of campaign finance law and extremely solicitous of religious freedom. Just as the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission used the First Amendment rights of nonprofit corporations to open up direct political spending by large, for-profit corporations, additional arguments about the rights of charitable institutions and other nonprofits will be used to push further judicial deregulation of the political process for all.

Professor Aprill in her most recent writings at the intersection of nonprofit law and election law reluctantly shows the way: a path toward getting churches, synagogues and other charitable institutions directly in the business of politics; a means of striking down or rendering ineffective what remains of our campaign disclosure laws; and a self-reinforcing bootstrapping that relies upon legislative and agency inertia coupled with judicially-created loopholes to argue for the ineffectiveness of the system as a whole, triggering its demise through constitutional litigation. It is a sad but expertly told story of regulatory collapse.

Lloyd Mayer

Call for Papers (deadline: 3/15/23): 2023 Modern Studies in the Law of Trusts, Wealth Management & Philanthropy Conference

I received a call for papers for the fifth conference in the Modern Studies in the Law of Trusts, Wealth Management & Philanthropy series to be held at Yong Pung How School of Law, Singapore Management University on July 27-28, 2023. The deadline is March 15, 2023. Here is the full announcement:

Call for papers for Modern Studies in the Law of Trusts, Wealth Management & Philanthropy 2023

The fifth conference in the “Modern Studies in the Law of Trusts, Wealth Management & Philanthropy” series will take place on 27-28 July 2023 at the Yong Pung How School of Law, Singapore Management University (Singapore). The 2023 conference will be co-organised by Singapore Management University, Centre for Commercial Law in Asia, the University of York, and The Dickson Poon School of Law, King’s College London.

The theme of the conference is “The Law of Trusts, Wealth Management & Philanthropy: Innovation and Reform in the Law of Trusts”. The conference will focus on current developments and challenges facing trust law, wealth management and philanthropy, with particular focus on the need for innovations responding to contemporary developments and emerging issues – for example, technological disruption, new forms of regulation, climate change and sustainability goals - that impact global families and how they manage their wealth. The conveners of the conference (Richard Nolan (York), Tang Hang Wu (SMU), Yip Man (SMU) and James Lee (KCL)) plan to publish a selection of the papers presented at the conference in a special edition of a journal (subject to review and availability of space).

If you would like to offer a paper, please submit a working title and an abstract (of no more than 1500 words) by 15 March 2023 by email to James Lee (james.lee@kcl.ac.uk) and Yip Man (manyip@smu.edu.sg).  The conference conveners are particularly keen to hear from Global South, women and emerging scholars in the field. Acceptance will be on a rolling basis and the conference conveners will be grateful for early submissions. There are no speaker registration fees for those whose papers are accepted this conference. Speakers and attendees are expected to meet their own travel costs and accommodation for this conference.

Lloyd Mayer

When Tax-Exempt Nonprofits Detract Value From Society

I ran across an interesting paper regarding the measurement of and consequences from negative externalities generated by nonprofits.  Of course, most laws regulating nonprofits (tax or otherwise) are for the purpose of limiting or eliminating negative externalities.  The private foundation excise taxes, for example, are all designed to diminish whatever negative externalities are generated by embargoing large chunks of wealth from taxation.  The tax on unrelated income is an attempt to defeat a negative externality (unfair competition).  To the extent we can better measure negative externalities we can either increase or decrease bothersome and costly regulations.  Anyway, here is the abstract:

Nonprofits receive tax exemptions in return for social value creation and delivery. While the outcomes of these tax exemptions are often positive, there are value detracting situations in which the cost of granting the tax exemption is likely to exceed its benefits. To date, explanations for these value detracting situations remain scattered and discipline centric. Therefore, the purpose of this paper is to clarify the conditions under which tax-exempt nonprofits detract value from society. We survey fifteen years of tax-exempt nonprofit scholarship, across nine disciplines, and identify three value detracting conditions: policymaking and regulation intemperance, nonprofit management and governance distraction, and detection and prosecution inconsistencies. These three conditions interact and reinforce each other, compounding the value destruction to society. Overall, our findings offer important policy insights regarding the unintended consequences of tax exemptions and our framework can be used to identify negative return situations.

dkj

AALS Section on Trusts & Estates TWO Calls for Papers: WIP & Pedagogy

The AALS Section on Trusts and Estates Section is seeking papers/presentations for a works in progress panel and a panel on Pedagogy.

Here are the two calls for papers/presentations:

Call 1 WIP: The AALS Section on Trusts and Estates is pleased to announce a Call for Papers: “Works in Progress in Trusts & Estates” 

Selected papers will be presented at the Trusts & Estates Program Session at the 2022 AALS Annual Meeting held in San Diego from January 4-7, 2023. 

Program Description: The Section seeks submissions on a variety of topics and methodological approaches related to Trusts & Estates Law. We are interested in all states of article development.

Eligibility: Full-time faculty of AALS member schools or non-member fee-paid schools as of the submission deadline are eligible to submit papers. For co-authored papers, both authors must satisfy the eligibility criteria. We particularly encourage new voices in the field to submit.

Submissions, due dates and method: Submissions should be of abstracts between 250 and 1,000 words, inclusive of any footnotes. Scholarship may be at any stage of the publication process from work-in-progress to completed article, but if already published, scholarship may not be published any earlier than 2022. We welcome legal scholarship across a wide variety of methodological approaches. Each potential speaker may submit only one abstract for consideration.

There are two submission due dates. The Section seeks detailed abstracts in late summer, with final papers due in late fall.

• The due date for detailed abstractsis August 31, 2022.
• The due date forfinal submission is November 15, 2022.

Abstracts and papers should be submitted electronically in Microsoft Word format to Eric Chaffee at Eric.Chaffee@UToledo.Edu. The subject line should read “AALS Trusts & Estates Section CFP WIP Submission.” By submitting an abstract for consideration, you agree to attend the 2023 AALS Annual Meeting Trusts & Estates Program Session should your paper be selected for presentation.

Submission review, selection, conference attendance: Abstracts and papers will be reviewed by members of the Section’s Executive Committee. Selected presenters will be announced by October 1, 2022. The Call for Paper presenters will be responsible for paying their own AALS registration fee, hotel, and travel expenses.

Inquiries or questions: Any inquiries about the Call for Papers should be directed to Eric Chaffee at the contact information noted above.

 

 

Call 2 Pedagogy: The AALS Section on Trusts and Estates is pleased to announce a Call for Papers: “Post-Pandemic Pedagogy in Trusts & Estates” 

Selected papers will be presented at the Trusts & Estates Program Session at the 2022 AALS Annual Meeting held in San Diego from January 4-7, 2023. 

Program Description: We invite papers and/or presentations that provide insights into educating law students in trusts & estates. These insights might take a variety of forms. For example, papers/presentations might describe classroom techniques and innovations, innovations in course design or structure, or novel courses. They might discuss proposals that show how we might incorporate issues of race, gender, class, sexual orientation, immigration status, and/or disability into our classrooms. They might also explore the lessons learned during the time we have all now spent teaching during the pandemic. Or contributions might be completely forward looking and propose novel ideas or experiments in teaching that you have not yet implemented.

Eligibility: Full-time faculty of AALS member schools or non-member fee-paid schools as of the submission deadline are eligible to submit papers. For co-authored papers/presentations, both authors must satisfy the eligibility criteria.

Submissions, due dates and method: Submissions should be of abstracts between 250 and 1,000 words, inclusive of any footnotes. The submissions for this panel can either describe an intended paper or a presentation that you will provide. Scholarship may be at any stage of the publication process from work-in-progress to completed article, but if already published, scholarship may not be published any earlier than 2022. We welcome legal scholarship across a wide variety of methodological approaches. Each potential speaker may submit only one abstract for consideration.

There are two submission due dates. The Section seeks detailed abstracts in late summer, with final papers due in late fall.

• The due date for detailed abstractsis August 31, 2022.
• The due date forfinal papers/and or presentation materials is November 15, 2022.

Abstracts and papers should be submitted electronically in Microsoft Word format to Philip Hackney at phackney@pitt.edu. The subject line should read “AALS Trusts & Estates Section CFP Pedagogy Submission.” By submitting an abstract for consideration, you agree to attend the 2023 AALS Annual Meeting Trusts & Estates Program Session should your paper be selected for presentation.

Submission review, selection, conference attendance: Abstracts and papers will be reviewed by members of the Section’s Executive Committee. Selected presenters will be announced by October 1, 2022. The Call for Paper presenters will be responsible for paying their own AALS registration fee, hotel, and travel expenses.

Inquiries or questions: Any inquiries about the Call for Papers should be directed to Philip Hackney at the contact information noted above.

 

Philip Hackney

06/13/22

This Sunday: AALS Presentations on Nonprofits, Inequality, and Black Poverty

For people attending the virtual American Association of Law Schools (AALS) Annual Meeting this week, there are two nonprofit-related presentations of which I am aware that may be of interest.

On Sunday at 11:00 a.m. (Eastern), the Nonprofit and Philanthropy Law section will present A Subsidy for Inequality: Bob Jones and Fundamental Public Policy Today. The presenters are Provost JoAnne A. Epps (Temple), along with two of our blog contributors, Samual D. Brunson (Loyola-Chicago) and yours truly; the moderator is Khrista McCarden (Tulane), who is also a blog contributor.

And on Sunday at 4:45 p.m. (Eastern), the Tax Section will present New Voices in Taxation, including The Black Tax: How the Charitable Contribution Subsidy Reinforces Black Poverty by Nyamagaga R. Gondwe (NYU) (forthcoming in the Tax Law Review). Here is the abstract:

This paper analyzes tax-based welfare policy through the lens of Black economic history. It juxtaposes the tax treatment of Black Kinship Networks and the charitable contributions deduction in the federal tax code to show how the tax incentive for charity creates an economic burden for the Black community. The paper argues that when the tax code creates incentives to attract private capital to welfare projects without making antipoverty welfare a condition of the tax benefit, it shifts the burden and cost of providing welfare services back to communities in need. In the Black community, wealth and income disparities make the lack of public welfare accommodations an even greater burden. Still, Black Kinship Networks facilitate the survival of in-group members, as they have for generations, in an effort to counteract the effect of declining public welfare and ineffectual private welfare.

Lloyd Mayer

Philip Hackney, The 1969 Tax Reform Act and Charities: Fifty Years Later

I posted a new article on SSRN today that will be published in the Pitt Tax Review soon. This is an introduction to the symposium Pitt Law hosted back in November 2019 before the Covidian times on the 1969 Tax Act and Charities. I will post the link to the issue as soon as it goes live. It includes contributions from Ellen Aprill, Jim Fishman, Dana Brakman Reiser, Ray Madoff, and Khrista McCarden.

"Fifty years ago, Congress enacted the Tax Reform Act of 1969 to regulate charitable activity of the rich. Congress constricted the influence of the wealthy on private foundations and hindered the abuse of dollars put into charitable solution through income tax rules. Concerned that the likes of the Mellons, the Rockefellers, and the Fords were putting substantial wealth into foundations for huge tax breaks while continuing to control those funds for their own private ends, Congress revamped the tax rules to force charitable foundations created and controlled by the wealthy to pay out charitable dollars annually and avoid self-dealing. Today, with concerns of similar misuse of philanthropic institutions to further wealthy interests, it is worthwhile to reconsider this significant legislation fifty years later.

Natural questions arise. What was the goal of Congress with respect to charity and with respect to tax? Did it accomplish these goals? Are those goals still relevant? What goals might suggest themselves today? Do we have the ability to modify the law to support those new goals? On November 1, 2019, the Pittsburgh Tax Review hosted a symposium to examine the 1969 Tax Act."

The conclusion is kind of the kicker:

"As I reflect on this symposium that took place in 2019 before the origination of COVID-19 and the racial justice revolution ignited by the killing of Mr. George Floyd in Minneapolis, I think about the great potential of well-democratically-harnessed philanthropy and seriously doubt that can be accomplished within the space of “private” philanthropy. I lean strongly
towards eliminating tax benefits for this private “philanthropy” by denying tax exempt status to those organizations that are not public charities.

Why do I say this? Fundamentally, I believe the effort of philanthropy should not be publicly supported if it is not collectively determined. To me, Professor McCarden makes the beginnings of a persuasive case that the values inculcated and supported through the private foundation system are likely predominately exclusive ones rather than public ones. I think that lack of a public nature should matter. Oddly, the private foundation tax architecture not only supports these wealthy exclusive preferences, but as Professor McCarden points out, it forces the private foundation to spend a lot of money every year into the future furthering those preferences of the wealthy. To be clear, the problem with this form of philanthropy is not that it might support abstruse interests such as senators complained about with respect to the Mellons, but that it works to provide significant and lasting governmental benefits to the private, perhaps well meaning interests, of people simply because they happen to be wealthy. The private foundation tax architecture provides this support, lifts these efforts up, in the name of supporting collective efforts, but they are far from collectively led.

I believe deeply in the power of a fiercely independent and courageous civil society that empowers the voices of all in our communities, particularly those voices that have been and continue to be disempowered. But, the private foundation tax architecture even at its best likely can never really support such a vision because it is defined privately. And, as Professor Aprill shows, the lack of IRS enforcement capability likely makes this architecture weak anyway and unlikely to be able to ever ensure such a democratically based vision. The private foundation community is imbued with some important social justice voices such as Darren Walker of the Ford Foundation and Elizabeth Alexander of the Mellon Foundation.

Still, I believe its predominate ethic is that of Carnegie from The Gospel of Wealth: that the wealthy man is the savior of the rest of us, both in terms of their ability to invest their dollars and to spend them in ways that improve all lives. I think that wrong and harmful. That vision is not just antithetical to democracy, but it is antithetical to racial, gender, sexual orientation, and social justice. Given this, I think we ought to eliminate tax benefits for the private foundation form."

Appreciate comments good and bad on this one.

By: Philip Hackney

AALS Nonprofit & Philanthropy Law Call for papers

Hereby encouraging folks to submit papers they are working on on Nonprofit or Philanthropy law to be presented at the AALS 2021. 

CALL FOR PAPERS

AALS SECTION ON NONPROFIT AND PHILANTHROPY LAW

SESSION 2021 ANNUAL MEETING

JANUARY 5-9

San Francisco, CA

Nonprofits & Philanthropy

The AALS Section on Nonprofit and Philanthropy Law announces a call for papers to be presented as works-in-progress in our committee session at the 2020 AALS Annual Meeting in Washington DC from January 2-5, 2020.

The Section seeks submissions on a variety of topics and methodological approaches related to Nonprofit and Philanthropy Law. We are especially interested in receiving submissions from new and junior academics or scholars who have not previously written in the field. We are interested in all states of article development though more developed papers will be given a priority.

Eligibility: Scholars teaching at AALS member or nonmember fee-paid schools

Due Date: Sunday, August 30, 2020

Form and Content of Submission: Submissions may range from early drafts to articles that have been submitted for publication, but not articles that will have already been published by January 6, 2020.

Submission Method: please submit papers electronically to PHackney@Pitt.edu "AALS Nonprofit and Philanthropy Law Submission" in the email subject line.

Submission Review: Papers will be selected for inclusion in the program after review by members of the AALS Nonprofit and Philanthropy Law.

Additional Information: Presenters are responsible for their own expenses associated with the conference. If you have any questions, please contact the chair Philip Hackney at PHackney@Pitt.edu.

By: Philip Hackney

Bird-Pollan Presents "Taxing the Ivory Tower" at IU Tax Policy Colloquium Tomorrow

Professor Jennifer Bird-Pollan (U. Kentucky) will be presenting Taxing the Ivory Tower at the Indiana University Tax Policy Colloquium at 1:15 to 2:15 pm (EDT) tomorrow. If you are interested in attending (via Zoom), please contact Professor Leandra Ledermann at llederma@indiana.edu to receive the Zoom meeting information.

Lloyd Mayer

AALS2020 in DC Nonprofit & Philanthropy Law Section Panel

The Section on Nonprofit and Philanthropy Law of the AALS hosted a panel at #AALS2020 on Sunday January 5 entitled Charitable Giving and the 1969 Act: 50 Years Later. Roger Colinvaux of the Catholic University of America, Columbus School of Law moderated the session. Professor Colinvaux provided an excellent synopsis of the Act and the historical milieu in which it took place. He also did a nice job of presenting the stakes involved then and now.

Dana Brakman Reiser of Brooklyn Law School presented her article in progress Charity Regulation in the Age of Impact. It considers the ways in which the 1969 Tax Reform Act hinders types of investing that Professor Brakman believes are natural fits for private foundations. She explores novel ways of modifying the Act in order to allow private foundations to make more mission related investments (MRIs) and program related investments (PRIs).

Khrista McCarden of Tulane University Law School presented her article in progress on Private Operating Foundation Reform & J. Paul Getty. She argues that private operating foundations that operate as art museums are too often providing little in the way of public benefits because they tend to systematically exclude lower income and minority populations. She also believes these private operating foundations are particularly subject to self-dealing abuses that neither the IRS nor states attorney general respond to in an appropriate way.  

Finally, Ray D. Madoff, of Boston College Law School, presented her article in progress The Five Percent Fig Leaf examines some of what she perceives as the failure of the private foundation regime to ensure an appropriate payout amount of five percent from private foundations. She argues the allowance of three types of expenditures to count towards payout is too lenient: administrative expenses (that allow donor children to be paid well into the future for often little work), payments to donor advised funds, and PRIs. 

There was active questioning and participation from the audience. These issues clearly resonate at a high level of society. These papers will be published in the Pittsburgh Tax Review in Spring 2020 along with two other papers by Ellen P. Aprill and James J. Fishman  The five papers were presented at the University of Pittsburgh on November 1, 2020 as part of a symposium.

Next years AALS will be in San Francisco. I will be the chair this coming year and would be interested in any thoughts on panel ideas for next years session. The theme of the general conference is the Power of Words. Also very interested in highlighting new professors in the field. Would love to put together a new voices panel in addition to a regular panel. 

Philip Hackney

Pitt Symposium: The 1969 Tax Reform Act and Charities - Fifty Years Later

Where are we on the regulation of charity fifty years after Congress passed the Tax Reform Act of 1969? My colleague Tony Infanti and I along with our Pitt Law Students of the Pitt Tax Review hosted six scholars and two practitioners as commenters on Friday November 1 to consider that question. The symposium was entitled The 1969 Tax Reform Act and Charities: Fifty Years Later

Natural questions arise: (1) What was that act’s goal with respect to Charity? With respect to tax? (2) Did it accomplish these goals? (3) Are those goals still relevant today? (4) What goals might suggest themselves today? (5) Do we have the ability to make those changes that are needed? In our conversations we did not answer all of those questions, but we sure tried.

Pittsburgh as a city strikes me as a fit and proper place to ask these questions. Why do I say this? Pittsburgh, city of the rust belt, but also city of Carnegie, Frick, Mellon, Heinz, city of steel, coal, banking, and ketchup and now city of higher ed, tech, and cutting edge health care. It provides the natural and social landscape for investigating private wealth and its philanthropic use. At the beginning of the 20th Century Pittsburgh generated an enormous amount of the GDP of the US particularly through its manufacture of steel. That industrial choice brought great wealth to a few, and supported the careers of many, but also caused great damage to the environment for the long term. Pittsburgh as a city crashed in the 1980s (I have heard different dates, but place it there as that is when many of the steel mills seem to have closed down), and it has struggled to come back from the loss of the steel industry ever since.

However, today the city has transformed itself with Carnegie Mellon and Pitt driving a high tech economy, UPMC engaging in cutting edge health care connected with the University of Pittsburgh, and a robust provision of higher education. It almost surely survived to another day as a result of major philanthropic capital from the robber barron days from the likes of the Mellon, Heinz, Pittsburgh, and Hillman foundations. These private foundations led an effort to clean up the city and transform it into the more vibrant place that it is today.     

Congress in the 1969 Tax Reform Act responded to a concern about the type of wealth harnessed in foundations like those in Pittsburgh. In fact, as discussed by Jim Fishman in his presentation about the history of the 1969 Tax Act the Mellon Foundation played a big role. Congress at the time was deeply concerned that wealthy individuals were abusing money put into charitable solution and decided it was important to stop those abuses. These papers consider both the origins of these rules and whether these rules still have relevance today.

The first panel considered the topic of Investing for Charity. Ray Madoff presented  The Five Percent Fig Leaf critiquing the five-percent payout rule that the 1969 Tax Act imposed on private foundations. Professor Madoff's paper was paired with Dana Brakman Reiser's contribution Foundation Regulation in Our Age of Impact. Professor Brakman considered the placement of program related investments and mission related investments within the current regulatory context and found the rules wanting in many ways. 

The second panel was entitled Origins of Private Foundation Rules and their Meaning for Today. Jim Fishman provided great historical insight leading up to the Act in  Does the Origin of the 1969 Private Foundation Rules Suggest a Match for Current Regulatory Needs?  Interestingly, Professor Fishman thinks the Act really helped in creating the positive attitude many feel towards private foundations today. He thinks there is a real problem though with smaller private foundations where compliance is likely low. Khrista McCarden focused on a category we had not yet considered that of private operating foundations, which are treated a little better than typical private foundations in her piece entitled Private Operating Foundation Reform & J. Paul Getty. She is concerned about private art museums particularly because of their lack of broad community access. 

Finally panel 3 considered Regulating Charitable Actors. Ellen P. Aprill presented  The Private Foundation Excise Tax on Self Dealing:  Contours, Comparison and Character. It usefully compares the general ethic of the different self-dealing rules that exist within the charitable context particularly that of section 4941 and 4958. However, more interestingly she considers both whether NFIB v. Sebelius might suggest that the 4941 excise tax is a penalty rather than a tax, and whether the tax might be able to serve as a Pigouvian tax. Finally, Elaine Wilson presented her paper Is Consistency Hobgoblin of Little Minds? Co-Investment under Section 4941. The paper focuses on certain PLRs that allow private foundation donors to "co-invest" with their related private foundation, seemingly in violation of the section 4941 self-dealing rule. It then shows why it is valuable from a securities regulation perspective for the private foundations to be provided this leeway from the IRS, and asks why the IRS would have twisted the seemingly clear meanings of the self-dealing exise tax.

I hope to blog about each panel in more depth the rest of this week.

Philip Hackney

Pitt Tax Review - The 1969 Tax Reform Act and Charities: Fifty Years Later, Symposium

By: Philip Hackney

The University of Pittsburgh School of Law's Pittsburgh Tax Review hosts a symposium this Friday November 1, 2019 entitled: "The 1969 Tax Reform Act and Charities: Fifty Years Later.” It will offer experts in the taxation of charities, and those working in the nonprofit field, the opportunity to reflect upon and discuss the impact of the changes made by the 1969 Tax Reform Act 50 years after the law’s enactment. It will be held at The University Club in the Gold Room, located at 123 University Place on Pitt's campus. You can RSVP here. If you are in the area, please join us. 

The event is free and open to the public. CLE of 4.5 hours is available for $90. It will be livestreamed at this youtube link.

Here is the schedule and the speakers:

8-9 Registration/continental breakfast

9 – 9:15 Introduction

 

Panel 1: Investing for Charity 9:15 – 10:45

Ray Madoff,  The Five Percent Fig Leaf

Dana Brakman Reiser, Foundation Regulation in Our Age of Impact

Commenter: Carolyn D. Duronio, Partner, Reed Smith LLP

 

10:45 -11 Break

 

Panel 2 Origins of Private Foundation Rules and their Meaning for Today 11 – 12:30

Jim Fishman,  Does the Origin of the 1969 Private Foundation Rules Suggest a Match for Current Regulatory Needs?

Khrista McCarden, Private Operating Foundation Reform & J. Paul Getty.

Commenter: Penina K. Lieber, Partner of Counsel, Dinsmore & Shohl LLP

 

12:30-1:30 lunch

 

Panel 3 Regulating Charitable Actors  1:30 -3:00

Ellen P. Aprill,  The Private Foundation Excise Tax on Self Dealing:  Contours, Comparison and Character

Elaine Waterhouse Wilson, Is Consistency the Hobgoblin of Little Minds? Co-Investment under Section 4941

Commenter: Philip Hackney, Associate Professor, University of Pittsburgh School of Law

Call for Contributions: International Society for Third-Sector Research 2020

The International Society for Third-Sector Research is calling for contributions for its 2020 biennial conference, to be held in Montreal on July 7-10. The deadline is October 26th. As detailed in the Call for Contributions, submission can be in the form an individual submit an abstract for a paper or poster or in the form of a joint proposal with others for a panel or roundtable. My understanding is that panel submissions are particularly encouraged and tend to have a higher rate of acceptance than individual submissions. I am chairing the "Challenges and Opportunities of Advocacy and Campaigning in an Era of 'Fake News'" track for the conference, and so would particularly encourage submissions relating to this track. See the Call for Contributions for the other tracks.

Lloyd Mayer

Galle: Empirical Assessment of the Tax Exemption for Charitable Property

Brian Galle (Georgetown) has authorized a research paper entitled, "The Tax Exemption for Charitable Property: An Empirical Assessment," which he recently presented at Duke's Tax Policy Workshop Series.  Here is his brief abstract:

I offer the first multi-jurisdictional assessment of the balance-sheet effects of the property-tax exemption for charitable property. I combine a manually-assembled dataset of property tax rates in over 4,000 municipalities with three large samples of firm-level administrative data, as well as hand-coded variations in the legal details of different states’ exemption regimes, to assemble a panel of more than 1 million firm-years.

As expected, exemption causes charities to utilize more real property as tax rates rise. I offer new theoretical contributions showing that this effect, previously described as an unwanted distortion, may be second-best efficient in the presence of an income tax with accelerated depreciation, and confirm empirically the predictions of this new theory.

Exemption also increases managerial compensation while crowding out efforts to raise revenue through donations and commercial activity. Lastly, exemption eases liquidity constraints on colleges and universities, allowing them to expand enrollment while holding per-student costs level.

[Hat tip:  TaxProf Blog]

Nicholas Mirkay

Call for Papers: Empirical Analysis of Wealth Transfer Law

The University of California, Davis School of Law (King Hall) and The American College of Trust and Estate Counsel’s Legal Education Committee are happy to announce that the 8th ACTEC academic symposium will be held on Friday, October 11, 2019. The theme is Empirical Analysis of Wealth Transfer Law. The event’s goals are to bring together established and emerging scholars and to foster discussion about empirical scholarship about wills, nonprobate transfers, intestacy, inheritance taxation, and related issues.

Articles presented at the symposium will consist of those selected from this Call for Papers and those from invited speakers. All papers will be published by the UC Davis Law Review.

If you would like to be considered to present a paper, please email an abstract of no more than two pages to Professor David Horton (dohorton@ucdavis.edu) by March 1, 2019. The Law Review will notify those selected by March 15, 2019. Please be aware that speakers must submit drafts that are ready for the editing stage of the production process by mid-November 2019.

Speakers will be reimbursed for their reasonable travel expenses (economy airfare, ground transportation, and up to two nights in a local hotel). Speakers will also be invited to dinner on Friday, October 11. Breakfast and lunch will be provided to speakers and attendees on October 11 courtesy of the ACTEC Foundation. Questions about the symposium or this Call for Papers should be directed to David at the email address above or Professor Adam Hirsch (ahirsch@sandiego.edu).

-- TLH

Fidelity Charitable issues findings from survey on Tax Reform and Charitable Giving

Fidelity Charitable, one of the largest peddlers of Donor-Advised Funds, issued this interesting report about donor responses to 2017 federal tax changes (which increased the standard deduction, removing, for many people, the federal tax incentive to

Source: Fidelity Charitable

donate). Based on a survey of prior donors who itemized in 2017, more than 60% said that they planned to maintain prior levels of giving, with 19% planning to increase.  The report also finds that 20% of those surveyed aren't sure yet whether they will itemize in future years, although the report suggests that many of the respondents might not yet realize the impact of the tax changes on their situation. Thus, the promise to continue to maintain prior levels of giving may be too optimistic. The report concludes:

[T]hese findings demonstrate taxpayers may still be on autopilot from 2017 and have not updated their tax strategy to align with tax code changes. Given the confusion around the new standard deduction, it may take until they file their 2018 taxes to completely absorb the impact of the changes and potentially adjust charitable plans. Therefore tax reform’s influence on giving at large will likely not be fully known until 2019.

Zelenak: Tax-Free Basis Step-Up At Death and the Charitable Deduction of Unrealized Appreciation

Lawrence Zelenak (Duke) has made available a draft article titled The Tax-Free Basis Step-Up at Death, the Charitable Deduction for Unrealized Appreciation, and the Persistence of Error. Here are the opening paragraphs:

As every student of the federal income tax well knows, two of the system’s most glaring conceptual errors are the tax-free step-up in basis at death and the deduction for unrealized appreciation in property donated to charity. The two errors are closely related in both character and history.

As for character, both permit taxpayers to claim benefits which should be conditioned on the recognition of income, despite the absence of any recognition event. A basis step-up at death would be appropriate if gains were taxed at death, and a deduction for the fair market value of an appreciated asset donated to charity would be appropriate if the donation triggered taxation of the appreciation. The provisions are errors because the income tax does not treat either transfers at death or transfers to charity as gain recognition events.

As for history, both mistakes originated very early in the development of the modern federal income tax, and in similar ways. In each case, Congress enacted a statutory provision so vague and general that it did not address the issue, and shortly after enactment the Treasury Department promulgated a regulation introducing the conceptual error. There was no apparent intent on the part of either Congress or Treasury to subsidize bequests of appreciated property, or to subsidize charitable donations of appreciated property more heavily than cash donations; the overly-generous rules resulted from the failure of Congress to consider the issues, and from errors of tax logic made by Treasury when it addressed the issues left open by Congress.

Hat Tip: TaxProf Blog.

Lloyd Mayer

Chaffee, "Collaboration Theory: A Theory of the Charitable Tax Exempt Nonprofit Corporation"

Eric C. Chaffee, Professor and Associate Dean of Faculty Research & Development at the Univerity of Toledo College of Law,  presented his paper entitled "Collaboration Theory: A Theory of the Charitable Tax Exempt Nonprofit Corporation" on June 2 at the most recent Law & Society conference (Program Link here). The current draft of the paper, which is forthcoming 2016 in the U.C. Davis Law Review, is available on SSRN here - the SSRN abstract follows:

Legal scholarship regarding tax exempt nonprofit entities is meager at best. Although some excellent treatises, book chapters, and journal articles have been written, the body of scholarship relating to these entities is not nearly as healthy and robust as the scholarship relating to their for-profit companions. This is especially troubling considering that nonprofit entities help to improve our society in a myriad of different ways.

This Article seeks to fill a void in the existing scholarship by offering an essentialist theory for charitable tax exempt nonprofit corporations that helps to explain the essence of these entities. Beyond the purely academic metaphysical inquiry into what is a corporation, understanding the essential nature of these corporations is important because it helps to determine how they should interact with society, what rights they should have, and how they should be governed by the law. This discussion is especially timely because the recent opinions by the Supreme Court of the United States in Citizens United and Hobby Lobby have reinvigorated the debate over the essence of the corporation.

This Article breaks new ground by offering a new essentialist theory of the corporation, which shall be termed “collaboration theory.” The decades of debate over the essence of for-profit corporations has coalesced into three prevailing theories of the corporation, i.e., the artificial entity theory, the real entity theory, and the aggregate theory. The problem is that none of these prevailing theories fully answers the question of what is a corporation.

Collaboration theory suggests that charitable tax exempt nonprofit corporations are collaborations among the state governments, federal government, and individuals to promote the public good. Unlike the prevailing theories of the corporation, collaboration theory explains both how and why charitable tax exempt nonprofit corporations exist, which provides a fuller and more robust understanding of these corporations. Collaboration theory advances the existing scholarship by finally offering an essentialist theory for nonprofit corporations, and it shows remarkable promise for understanding the essential nature of for-profit corporations as well.

 

E.W.W.

 

 

Foreign Funding of Charities Under Assault, Including in the US

Last month I had the opportunity to attend the NYU National Center on Philanthropy and the Law's Annual Conference.  The conference was titled Regulation or Repression: Government Policing of Cross-Border Charity and provided an eye-opening overview of restritions imposed by many countries on foreign funding of charities and other NGOs.  What made the conference particularly timely was the fact that only a month earlier a prominent member of Congress had publicly attacked foreign donations to think tanks - in the United States.  This concern led to a bipartisan legislative proposal to require disclosure of foreign funding from scholars who testify on Capital Hill.  The timing was particularly ironic, as at almost the same time the Economist ran two articles raising concerns about autocratic and illiberal governments placing limits on such funding: Donors: Keep Out and Uncivil Society.  That said, whatever concerns charities and other nonprofits may have in the United States (including members of Congress criticizing them for accepting foreign donations), they pale in comparison to the concerns that the legal restrictions on both funding and activities raise for NGOs in many other parts of the world.  

Lloyd Mayer