Nonprofit Law Prof Blog

Aprill, Standards for Charitable Disaster Relief In the Time of Pandemic

Ellen P. Aprill has posted Standards for Charitable Disaster Relief In the Time of Pandemic, The Exempt Organization Tax Review (2020). Here is the abstract:

This short piece explains how exempt organizations currently face uncertainty about the standards for determining need for disaster relief, particularly in the time of a crisis, such as the current pandemic. The available IRS guidance is not any official document published in the Internal Revenue Bulletin, but only a Publication 3833, “Disaster Relief: Providing Assistance through Charitable Organizations.” This IRS publication states that organization must make an individualized, specific determination of need before giving such assistance. This piece argues that the IRS should issue official guidance for the COVID-19 crisis, modeled on that given in connection with the September 11 terrorist attacks. After 9/11, the IRS issued a notice permitting charities to distribute funds so long as payments were made in good faith using objective standards. The IRS should do the same now. If it does not, Congress should act, as it also did after 9/11.

Samuel D. Brunson

Ellen Aprill: Trump Donated His Salary To HHS. Is That Kosher?

Back in March I missed this article in HistPhil by Ellen Aprill related to her work looking at federal charities that I think would be of interest to our readers. It is entitled Trump Donated His Salary to HHS. Is that Kosher?

"On March 3, President Trump’s Press Secretary, Stephanie Grisham, announced on Twitter that, consistent with his commitment to donate his salary while in office, President Trump was giving his 2019 fourth quarter salary to the Department of Health and Human Services “to support efforts being undertaken to confront, contain, and combat #Coronavirus.” The announcement prompted questions about whether such an earmarked donation to a federal agency is possible. The answer in this case is yes, but getting to that answer requires several statutory steps and implicates a set of issues I just happened to have begun to research."

For taxpayers who itemize rather than take the standard deduction, section 170(c)(1) of the Internal Revenue Code permits a charitable contribution deduction for “a contribution or gift to or for the use of . . . the United States or the District of Columbia . . . if the contribution or gift is made for exclusively public purposes.” In general, gifts to the federal government must go to the general fund of the Treasury; agencies cannot augment Congressional appropriations. To that end, the miscellaneous receipts statute provides that “an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim.” Governmental agencies, however, can be given specific statutory authority to accept and retain donations. It turns out that the Department of Health and Human Services is one of the federal agencies with statutory authority to accept gifts for its benefit “or for carrying out any of its functions.” Thus, Trump’s gift is kosher."

I also recommend HistPhil to our readers.

Philip Hackney

Crawford, Taxation as a Site of Memory: Exemptions, Universities, and the Legacy of Slavery

Bridget J. Crawford (Pace) has posted Taxation as a Site of Memory: Exemptions, Universities, and the Legacy of Slavery, SMU Law Review (forthcoming 2020). Here is the abstract:

Many universities around the United States are attempting to grapple with their direct and indirect involvement with the institution of slavery. Lolita Buckner Inniss’s book The Princeton Fugitive Slave: the Trials of James Collins Johnson (2019) enters directly into the conversation taking place on university campuses and nation-wide about what responsibilities institutions have to acknowledge their past and to create racially inclusive campuses in the twenty-first century. Because most universities are tax-exempt, it is important to understand that their activities are indirectly subsidized by local, state and federal governments. The lens of tax law facilitates better understanding of universities’ unique historic role in American economic activity as well as contemporary arguments about their obligations to workers and community constituents during the COVID-19 crisis.

Lloyd Mayer

Hackney, Political Justice and Tax Policy: The Social Welfare Organization Case

Fellow blogger Philip Hackney (Pittsburgh) has posted Political Justice and Tax Policy: The Social Welfare Organization Case, Texas A&M Law Review (forthcoming 2021). Here is the abstract:

In addition to valuing whether a tax policy is equitable, efficient, and administrable, I argue we should ask if a tax policy is politically just. Others have made a similar case for valuing political justice as democracy in implementing just tax policy. I join that call and highlight why it matters in one arena – tax exemption. I argue that politically just tax policy does the least harm to the democratic functioning of our government and may ideally enhance it. I argue that our right to an equal voice in collective decision making is the most fundamental value of political justice. To test this case, I evaluate our choice to exempt ‘social welfare organizations’ from the U.S. income tax. In addition to efficiency and equity, I also ask whether the policy is politically just in a democratic sense. I examine three models of democratic justice: liberal, republican, and deliberative. In making the democratic case I try to find commonalities among the three in order to further what an agreed upon notion of democratic justice might look like in the tax context. I contend that the notion of democratic justice must exist at the substantive level of Code. This Code level application demonstrates that the typical criteria of efficiency and fairness do not provide sufficient criteria to evaluate the justice of tax-exempt policy. There are likely significant other parts of income tax policy that need to be considered from the value of political justice as democracy as well.

Lloyd Mayer

mair, Social Entrepreneurship: Research as Disciplined Exploration

johanna mair (Stanford Hertie School of Governance) has posted Social Entrepreneurship: Research as Disciplined Exploration. Here is the abstract:

Social enterprises address social problem by means of markets. Over the last two decades they have become increasingly popular across geographies. During this time open contestation and ideological debates over the promise, intention and meaning of social entrepreneurship have dominated public discourse but also inhibited the development of a solid knowledge base on social enterprises as a form of organizing in the spectrum of private action for public purpose.

The dominant way of seeing social enterprises as pursuing dual – commercial and social – goals and as ideal sites to study the battle of logics confines our way of looking and limit the theorizing potential around social enterprise. In this chapter I advocate for disciplined exploration approach to study social enterprises to expose this potential. I draw from a collaborative research project involving 1,045 social enterprises across nine countries and show patterns and common features of social enterprises regarding their choice of legal form, their participation in the market for public purpose, their social footprint, and their role in changing local institutional arrangements. I argue that embracing rather than taming the diversity of social enterprises opens opportunities for developing new but more importantly for recasting, refining and connecting existing theories.

Lloyd Mayer

McMillan, Noncharitable Nonprofit Organizations and Tax Policy

Lori A. McMillan (Washburn) has published Noncharitable Nonprofit Organizations and Tax Policy: Working Toward a Public Benefit Theory in the Washburn Law Journal. Here is the introduction (without footnotes):

Noncharitable nonprofit organizations' in Canada enjoy virtually complete exemption from income taxation for almost all sources and types of income. Such an organization is exempt, regardless of whether its income is from an active or passive business, property, donations, or government funding. The organizational form likewise does not matter; a "club, society, or association" can avail itself of the provision, and the judicial interpretations of this phrase have recognized corporations as a type of association, such that there is almost no conceivable entity form that would be unable to take advantage of this provision. The problem is that there has been no assessment of this provision to ensure that it achieves certain goals, or provides a benefit to society that would justify its existence from either an economics or policy perspective. This provision must be examined against the backdrop of the costs to the government in having it, contrasted against the costs to society of not having it. This article will explore what the purpose of this exemption is, to enable a determination of whether it achieves its goal, and if not, what changes need to be made to reach its goal. Public support through tax exemption for the nonprofit sector as a whole, and the noncharitable subsector as a part, is not challenged per se in this article, but rather if support is to be given (as assumed), then the question arises if it is being done appropriately.

Lloyd Mayer

Ryznar, Extending the Charitable Deduction Beyond the COVID-19 Pandemic

Margaret Ryznar (Indiana) has published Extending the Charitable Deduction Beyond the COVID-19 Pandemic in Tax Notes Federal. Here is the abstract:

While the importance of the charitable deduction decreased in the 2017 tax reform, it has returned during the COVID-19 pandemic with the CARES Act. This Article lays out the reasons that the limited above-the-line charitable deduction authorized by Congress during the coronavirus pandemic should remain a permanent feature of U.S. tax law.

Lloyd Mayer

Spires, Regulation as Political Control: China's First Charity Law and Its Implications for Civil Society

Anthony J. Spires (University of Melbourne) has published Regulation as Political Control: China's First Charity Law and Its Implications for Civil Society in the Nonprofit and Voluntary Sector Quarterly. I missed this article when it first came out, but given the importance of its topic it is still worth highlighting. Here is the abstract:

With the passage of a nationwide Charity Law in March 2016, Chinese nongovernmental organizations (NGOs) entered a new and unprecedented era of legal regulation, one that dramatically transformed the formal rules governing state–civil society relations. This article highlights problems experienced under earlier regulations and outlines the major features of the new law. Drawing on multiple focus groups and interviews with grassroots NGOs around China, the article highlights gaps between NGO leaders’ understandings of their work and several of the law’s key provisions, revealing civil society’s skepticism and pessimism about prospects for change. It concludes by considering the law’s likely implications for civil society development in China and lessons for other authoritarian states, suggesting that regulation in such regimes should be seen more properly as a tool of political control.

Lloyd Mayer

Mayer & Pohlman, What Is Caesar's, What Is God's: Fundamental Public Policy for Churches

Lloyd Hitoshi Mayer (Notre Dame) and Zachary B. Pohlman (JD Candidate, Notre Dame) have posted What Is Caesar's, What Is God's: Fundamental Public Policy for Churches. Before I post the abstract, just let me say: I saw this on Twitter about a week ago. While the topic has been addressed before, this is a pretty comprehensive look at at least one theory for exempting churches and what that theory has to say about the prohibition on churches endorsing or opposing candidates. I've written notes all over my copy. And here's the abstract:

Bob Jones University v. United States is both a highly debated Supreme Court decision and a rarely applied one. Its recognition of a contrary to fundamental public policy doctrine that could cause an otherwise tax-exempt organization to lose its favorable federal tax status remains highly controversial, although the Court has shown no inclination to revisit the case and Congress has shown no desire to change the underlying statutes to alter the case’s result. That lack of action may be in part because the IRS applies the decision in relatively rare and narrow circumstances.

The mention of the decision during oral argument in Obergefell v. Hodges raised the specter of more vigorous and broader application of the doctrine, however. It renewed debate about what public policies other than racial discrimination in education might qualify and fundamental and also whether and to what extent the doctrine should apply to churches, as opposed to the religious schools involved in the original case. The IRS has taken the position that churches are no different than any other tax-exempt organizations in this context, although it has only denied or revoked the tax-exempt status of a handful of churches based on this doctrine.

The emergence of the Bob Jones University decision in the Obergefell oral argument, along with developments over the past several decades both with respect to the legal status of churches and what arguably could be considered fundamental policy, render consideration of these issues particularly timely. This Article therefore explores whether there are emerging conflicts between a significant number of churches and what could be considered fundamental public policy, not only with respect to sexual orientation discrimination but also with respect to sex discrimination, sanctuary churches, and other areas. Finding that there are several current or likely future such conflicts, it then explores whether there are philosophical and legal grounds for treating churches differently from other tax-exempt organizations for purposes of applying the contrary to fundamental policy doctrine and the related illegality doctrine. Drawing on both the longstanding concept of “sphere sovereignty” and emerging work in the area of First Amendment institutions, the Article concludes that churches should not be subject to the former doctrine while still being subject to loss of their tax benefits if they engage in or encourage significant criminal illegal activity. The Article then concludes by applying this conclusion to the identified areas of current or likely future conflict to demonstrate how the IRS and the courts should apply the Bob Jones University decision to churches.

Samuel D. Brunson

 

Brunson, God Is My Roommate?

Happy March! To start my week here at the Nonprofit Law Prof Blog, I'm going to do some shameless self-promotion. I recently posted God Is My Roommate? Tax Exemptions for Parsonages Yesterday, Today, and (if Constitutional) Tomorrow to SSRN. I'll copy the abstract below, but a little non-abstract information first:

I wrote this in response to the Seventh Circuit's decision in Gaylor v. Mnuchin. In that case, the court held that section 107(2), which allows "ministers of the gospel" to receive a tax-free housing allowance, did not violate the Establishment Clause. It based its ruling on two tests: the Lemon test and, in the alternative, what it called the "historical significance test." The second of these tests, it said, essentially provides that if something was accepted at the time of the Framers and has continuously been accepted since, it doesn't violate the Establishment Clause.

The big problem? Well, the income tax hasn't been around nearly that long. The court held that the property tax exemption for parsonages had no substantive difference (n.b.: the two differ substantially, both substantively and constitutionally), and instead looked at that. Or, rather, looked at a caricature of the history of property tax exemptions for parsonages.

Continue reading

Breen & Quinn, Philanthropic Giving in Ireland

Oonagh B. Breen (University College Dublin) and Patricia Quinn (Benefacts) have posted Philanthropic Giving in Ireland: A Scoping Project. Here is the abstract:

For a developed country, with a reputation for generosity towards the needy, Ireland has a very limited profile in structured, persistent philanthropic giving. At €120m, institutional philanthropic giving (as defined) represents a tiny proportion of Ireland’s €11bn turnover in the non-profit sector. Philanthropists need evidence of need and potential impact if their donations are to be well informed; the public needs to witness and approve of the effects of philanthropy if philanthropy is to be recognised as creating social goods; policymakers need tangible evidence to support decision-making including tax regulation.

Recognising the growing coalition of interest in measuring philanthropy and the lack of any Irish equivalent to the annual surveys produced overseas, this paper sets out to close the knowledge gap by identifying the factors necessary to make Irish philanthropy more transparent and better understood.

Supported by Benefacts, a leading non-profit research body in Ireland, the researchers aim to conduct a multi-annual research project 2018–21 to set out for the first time an agreed definition of ‘philanthropy’ in the Irish context and to provide a comparative basis for the study of Irish philanthropy by third party researchers. This paper is the first step towards facilitating valid international philanthropic comparisons between Ireland and other similar countries. Identifying the available data sources on, and gaps in knowledge about, philanthropy in Ireland, focusing specifically on gifts and receipts, it assesses the discernible trends in philanthropic giving in Ireland.

Lloyd Mayer

Chan, Constitutionalizing the Registered Charity Regime

Kathryn Chan (University of Victoria) has posted Constitutionalizing the Registered Charity Regime: Reflections on Canada Without Poverty v. Canada (AG), Canadian Journal of Comparative and Contemporary Law (forthcoming 2020). Here is the abstract:

In Canada Without Poverty v Canada (AG), the Ontario Superior Court of Justice struck down provisions of the federal Income Tax Act that limited the political activities of charitable organizations, on the ground that the provisions violated the freedom of expression of the registered charity before the court. This paper addresses the decision's complex legacy, reflecting on the promise and the perils of charity law’s increasing encounters with public law. I address some of the difficult questions raised by the decision: (1) What types of associations are rights-holders under the Canadian Charter of Rights and Freedoms? (2) What are the constitutional limitations on the government’s ability to set the outer bounds of the registered charity regime? (3) What is the rationale for limiting the political advocacy of charities? While Canada Without Poverty has generated significant improvements to the registered charity regime, I argue, the Ontario Superior Court of Justice missed an important opportunity to draw constitutional law and charity law into closer conversation.

Lloyd Mayer

Dupuy & Prakash, Why Restrictive NGO Foreign Funding Laws Reduce Voter Turnout in Africa’s National Elections

Kendra Dupuy (Chr. Michelsen Institute) and Aseem Prakash (University of Washington) have published Why Restrictive NGO Foreign Funding Laws Reduce Voter Turnout in Africa’s National Elections in the Nonprofit and Voluntary Sector Quarterly. Here is the abstract:

Laws that restrict foreign funding to nongovernmental organizations (NGOs) can depress voting through two mechanisms. First, they can signal a democracy recession. Consequently, citizens might fear rigged elections where their vote will not influence who forms the next government. Second, by denying funding to NGOs, these laws can undermine NGOs’ ability to generate social capital, which is crucial to mitigate collective action problems associated with voting. Since 1990, 13 of Africa’s 54 states have enacted laws restricting foreign funding for NGOs. Drawing on the 2016 Afrobarometer survey (36 countries, 53,936 respondents), we find support for the argument that restrictive NGO laws reduce citizens’ electoral participation in national elections probably by signaling democracy recession, and not by undermining social capital that foreign-funded NGOs are supposed to generate. In fully democratic countries, respondents are around 94% more likely to report having voted in a recent national election even after controlling for restrictive NGO laws.

Lloyd Mayer

Yu et al., Understanding the Effect of Central Government Funding on the Service and Advocacy Roles of Nonprofit Organizations in China

Jianxing Yu (Zhejiang University), Yongdong Shen (Zhejiang University), and Yong Li (Tsinghua University) have published Understanding the Effect of Central Government Funding on the Service and Advocacy Roles of Nonprofit Organizations in China: A Cross-Regional Comparison, inthe Nonprofit and Voluntary Sector Quarterly. Here is the abstract:

This research examines the effects of government funding on the service and advocacy roles of nonprofit organizations in China through a cross-regional comparison. Based on a nationwide survey of 2,058 nonprofits and in-depth interviews with 65 nonprofit executives from the same sample in 2013–2017, we find that a higher level of central government funding leads to stronger organizational capacity for service provision through leveraging matching funds and to more intensive administrative advocacy and media advocacy. Furthermore, a cross-regional comparison shows that, in contrast to those in nonwestern regions, nonprofit organizations with higher levels of central government funding in the western region engage in more administrative advocacy but less in media advocacy. Taken together, these findings highlight the importance of the government’s leverage strategy and selective empowerment in shaping nonprofits’ service and advocacy roles through government funding in China.

Lloyd Mayer

Nonprofit Policy Forum: Special Issue on INGO Governance and Public Policy

The Nonprofit Policy Forum published a Special Issue on INGO Governance and Public Policy: Implications of the Oxfam Scandal. From the Editor's Note for the issue:

This special issue of Nonprofit Policy Forum contains a set of papers derived from a roundtable panel discussion at the 2018 ARNOVA annual conference, organized by special editor Aseem Prakash and his colleagues, to examine the recent Oxfam sexual exploitation scandal and its implications for governance of international NGOs, nonprofit theory and public policy. Prof. Prakash’s insightful introductory essay opens the issue by providing background on the scandal itself, the organizational and historical context in which it, and other NGO scandals, have occurred, and the questions that these events raise for policy, practice, nonprofit theory and future research. No need to summarize that content on this page, as Prof. Prakash’s essay provides a well-crafted yet compact overview of the symposium papers.

Lloyd Mayer

Rogel, Executive Compensation in the Charitable Sector

Lauren Rogal (Vanderbilt University) has published Executive Compensation in the Charitable Sector: Beyond the Tax Cuts and Jobs Act, 50 Seton Hall Law Review 449 (2019). Here is the abstract:

This Article examines charity executive compensation in light of the reforms enacted by the Tax Cuts and Jobs Act of 2017. Charities receive preferential tax treatment under Section 501(c)(3) of the Internal Revenue Code because they provide humanitarian, educational, and other services that benefit the public. The payment of excessive compensation undermines the policy purpose of charitable tax status by diverting resources from the public good to private gain. The costs are borne by the intended charitable beneficiaries, the subsidizing taxpayers, and the charitable sector as a whole, which requires public confidence to sustain its work.

The Tax Cuts and Jobs Act reformed charity compensation laws for the first time in decades, imposing an excise tax on compensation over $1 million. With its enactment, there are now three legal constraints on charity compensation that together provide piecemeal accountability. This Article deconstructs the three mechanisms, assessing their enforceability and metrics for appropriate compensation. It argues that the excise tax is the mechanism best tailored to the goals of Section 501(c)(3), but that it is impaired by a blunt and arbitrary metric. This Article then explores alternative metrics that may better align with the policy objectives of 501(c)(3) status and proposes avenues for further investigation.

Lloyd Mayer

Has It Been 50 Years Already? HistPhil Series on the Tax Reform Act of 1969

The HistPhil blog has a series of in-depth posts reflecting on the Tax Reform Act of 1969 and its effects on tax-exempt nonprofit organizations and more broadly. Here are the titles and authors:

Karen Ferguson (Simon Fraser University), Parallel Confrontations: The Ford Foundation And the Limits of Racial Liberalism, 1968 And 2019

Ellen Aprill (Loyola-Los Angeles), Penalty or Tax: Reconsidering The Constitutionality Of The Private Foundation Excise Taxes

Lila Corwin Berman (Temple University), The Private Charity Lacunae: The Tax Reform Act Of 1969 And The Rise Of Donor-Advised Funds

James Fishman (Pace University), The Private Foundation Rules At Fifty: How Did We Get There?

Lloyd Mayer

College & University Investments: Slowing Returns, Fossil Fuels Divestment

The initial results of the 2019 NACUBO-TIAA Study of Endowments, released late last month, reported that the 774 U.S. colleges, universities, and affiliated foundations reporting had an average annual endowment return of 5.3% (net of fees) from July 1, 2018 through June 30, 2019. This was a decline from the previous fiscal year's 8.2% average. Here is more information from the press release announcing the results:

Data gathered from 774 U.S. colleges, universities, and affiliated foundations for the 2019 NACUBO-TIAA Study of Endowments® (NTSE) show that participating institutions’ endowments returned an average of 5.3 percent (net of fees) for the 2019 fiscal year (July 1, 2018 – June 30, 2019).

Despite posting a lower return than FY18’s one-year average of 8.2 percent, the average 10-year endowment return reached 8.4 percent, surpassing institutions’ long-term average return objective of 7 percent for the first time in a decade. This reflects the strong stock market recovery since the 2008 financial crisis as well as solid management practices.

Due in part to strong 10-year returns, three quarters of institutions increased spending from their endowments to support students and faculty, with an average increase of more than $2 million. Participating institutions put 49 percent of their endowment spending dollars to student financial aid, 17 percent to academic programs, 11 percent to faculty, and 7 percent to campus facilities.

“The jump in spending from endowments last year shows once again the value of college and university endowments in supporting students and their access to a high-quality education,” said NACUBO President and CEO Susan Whealler Johnston. “These endowments help make opportunity available to college and university students and ensure the strength of academic programs that prepare them for work and life.”

“Endowments continue to play a significant role in institutions’ operations and financial strength, making it essential to take advantage of a wide range of investment options and strategies,” said Kevin O’Leary, Chief Executive Officer of TIAA Endowment and Philanthropic Services. “Endowment asset allocations and returns varied across different size endowment cohorts.  Considering larger endowments generally have greater access to certain asset classes, such as private equity and venture capital, which were some of the highest performing asset classes in FY19, they again outperformed their smaller cohorts.”

One current hot topic with respect to higher education endowments is whether institutions should divest from fossil fuel holdings. C.J. Ryan (Roger Williams University School of Law) and Christopher Marsicano (Davidson College) have posted Examining the Impact of Divestment from Fossil Fuels on University Endowments. Here is the abstract:

Between 2011 and 2018, 35 American universities and colleges divested, either partially or completely, their endowments from fossil-fuel holdings, marking a shift toward sustainability in university endowment investment. However, the decision by these universities to divest was often marred by controversy, owing to conflicts between student- and faculty-led coalitions and the university board. Principally, endowment fiduciaries are averse to divestment decisions because they think that it will hurt the endowment's value, but this concern, motivated by a narrow interpretation of fiduciary law, can be empirically examined.

To date, the academic study of the effect of divestment on endowment values has focused on the top university endowments and has produced mixed results. Our study is different from the extant but limited literature in this area in that we examine holistically the impact of total or partial divestment on endowment values for all universities as well as a select group of institutions that are illustrative of their peers by endowment size. More importantly, we evaluate the assumption that divestment does injury endowment values through legal and empirical lenses.

Results from our difference-in-differences analyses of the effect of full and partial divestment suggest that either form of divestment does not yield discernible consequences--either positive or negative--for endowment values, at statistically significant levels. However, we do find evidence that divestment improved the value for three of four universities that we examined through synthetic control analysis, with the greatest increase in value at a university with a very large endowment (Stanford University) and modest increases at two universities with mid-sized and large endowments, respectively (University of Dayton and Syracuse University). Thus, the negative consequences of divestment may be overstated in the near-term. This challenges the assumption that divestment yields negative returns to endowments and cracks open the door for endowment fiduciaries to divest without violating duties of loyalty and prudence. We hope that this study both grounds and advances the debate about endowment divestment with empirical evidence and a reasoned discussion of its costs and benefits.

Lloyd Mayer

Aprill: The Private Foundation Excise Tax on Self-Dealing

Ellen Aprill (Loyola-LA) posted The Private Foundation Excise Tax on Self-Dealing:  Contours, Comparisons, and Character (forthcoming, Pittsburgh Tax Review) to SSRN.  Here is the abstract:

This paper considers section 4941, the private foundation excise tax on self-dealing, on the occasion of its fiftieth anniversary. Part I gives background on section 4941. Part II compares the rules of section 4941 to the parallel ones applicable to public charities, including the special rules for supporting organizations and donor advised funds. The fiftieth anniversary of the private foundation excises taxes is also an appropriate time to confront two foundational questions, and Part III does so. It first asks whether we can view the private foundation taxes in general and section 4941 in particular as constitutional exercises of Congress’s taxing power under the tests announced in National Federation of Independent Businesses v. Sibelius. Second, it considers whether we should characterize the section 4941 excise tax as a Pigouvian tax – a hot category among economists but less familiar to lawyers. It answers “maybe not” to the first and “yes but” to the second.

Inconsistent Congressional treatment of self-dealing by section 501(c)(3) organizations and the low level of enforcement lead me to question the effectiveness of our current self-dealing rules. Thus, this examination concludes by suggesting a number of possible changes to the excise taxes applicable to tax-exempt organizations. The conclusion not only considers in detail a relatively small but potentially significant change – expanding abatement rules for first-tier excise taxes to section 4941, but also endorses a large one – the suggestion that approaches outside of the Internal Revenue Service be considered for regulating the charitable sector.

Nicholas Mirkay

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