Wednesday, April 24, 2024

Mamaysky, Managing Nonprofit Endowments

Isaac Mamaysky (Potomac Law Group, adjunct professor at the Elisabeth Haub School of Law at Pace University) has recently published Managing Nonprofit Endowments and Institutional Funds: A Brief Overview of the Uniform Prudent Management of Institutional Funds Act, 128 Penn. St. L. Rev. 151 (2024). The abstract is here:

The article explores the key features of the Uniform Prudent Management of Institutional Funds Act, along with the Uniform Law Commission's comments and explanations, to provide an overview of the national landscape of endowment and institutional fund management.

(As a side note, I--like many law professors in the nonprofit/tax-exempt world, entered from the tax side, not the nonprofit side. So it's great to read scholarship and explanations of nonprofit law, to build up that knowledge base and competency!)

Samuel D. Brunson

April 24, 2024 in Publications – Articles | Permalink | Comments (0)

Tuesday, April 23, 2024

Robinson, The Regulation of Foreign Funding of Nonprofits in a Democracy

Nick Robinson (International Center for Not-for-Profit Law) has posted a fascinating article about the regulation of cross-border funding to nonprofits on SSRN. The abstract:

Governments around the world have increasingly regulated nonprofits access to foreign funding. These regulations, which often take the form of registration requirements, are justified as needed to protect a country’s politics from undue foreign influence. Yet, they have also placed new burdens on nonprofits and been used by governments to discredit critics, creating significant new constraints on activism on issues from fighting climate change to protecting human rights. While authoritarian governments have been the most aggressive proponents of these restrictions, many democracies have also embraced variants of them, creating new uncertainty about how foreign funding of nonprofits should be regulated.

In this moment of global regulatory flux, this article argues for what it calls a democracy centered approach. It begins by surveying the quite different regulatory approaches to cross-border funding of nonprofits in the world’s three largest democracies or democratic blocs: the United States, India, and the European Union. It labels their current respective approaches: “ambiguous regulatory heavy-handedness”, “government controlled nonprofit nationalism”, and “rights-based regulatory liberalism.”

Drawing on these examples, the article examines justifications for restricting cross-border funding to nonprofits as well as justifications for more open regulation. Significantly, it finds that perhaps the strongest argument both for and against limitations on foreign funding is protecting a country’s democratic self-governance. It argues that this apparent contradiction is the result not only of competing considerations about what improves self-governance, but also competing understandings of the proper relationship between government and civil society in a democracy.

It then develops a novel framework for how democracies should approach the regulation of cross-border funding of nonprofits that rests on five key principles that should shape and limit any such regulation. The potential benefits of this approach have implications not just for the regulation of the cross-border funding of nonprofits, but also the broader regulation of foreign influence in civil society.

Samuel D. Brunson

April 23, 2024 in Publications – Articles | Permalink | Comments (0)

Wednesday, February 28, 2024

Taxation's Limits forthcoming paper by Luís C. Calderón Gómez*

Luis C. Calderon Gomez, Assistant Professor of Law at Cardozo Law, has a new draft paper forthcoming in the Northwestern University Law Review entitled Taxation's Limits that is likely to be of interest to Nonprofit Scholars.

The Abstract is as follows:

"Countless pages have been devoted to the question of why should everyone pay tax, yet its obverse has gone largely unnoticed: why should some people and organizations not pay tax? Our tax system exempts from ordinary income taxation a wide and diverse array of people and organizations engaged in significant economic activity—from parents providing childcare services for their family, to consular activities and charities operating animal shelters—seemingly without a convincing explanation. Perhaps as a result of the dizzying diversity of activities that have been exempted from tax, scholars and policymakers have eluded comprehensively or coherently justifying our exemption regimes.

This Article develops a novel normative theory that rationalizes and justifies our current tax exemption regime. Rather than conceiving exemptions as subsidies or individual deviations from a normative base explainable by ordinary politics, the Article argues that exemptions are best understood as mapping the “limits” of tax. These limits are neither arbitrary nor merely a collection of individual subsidies to favored activities; rather, they are best seen as being reflective of deeper collective socio-political judgments about the scope of the State and the public sphere.

The Article constructs the “Limits Theory” by explaining and justifying the three most significant exemption regimes—those exempting the nuclear family, other sovereigns, and charities. The nuclear family perhaps occupies the center of the private sphere; its location demands exemption due to its intimate and private—not public—character. The exemption for other sovereigns is buttressed in notions of comity and federalism, cautioning against the taxation of a public sphere by other public spheres. Lastly, charities’ unique public-private hybrid character, oriented towards purposes aligned with the public sphere yet operated as private autonomous associations, justifies charities’ exclusion from the ordinary limits of taxation—limits that do extend to ordinary for-profit organizations that strive to both do good and do well. The collective socio-political judgments grounding these exemptions are neither novel nor idiosyncratic; in fact, they are traceable to the work of political theorists of all stripes who seek to define the public sphere, from Rawls’ liberalism to Nozick’s libertarianism and communitarianism à la Walzer or MacIntyre.

In developing a theoretical account, the Article does not only construct a coherent framework for thinking about tax exemptions more generally. Visualizing exemptions as limits rather than subsidies also allows us to explain and justify key common features of the exemptions—e.g., the law’s insistence that the commercial character of an activity vitiates exemption across different exemption regimes, foreclosing the possibility of for-profit charities and supporting the taxation of commercial enterprises run by other States. But perhaps most importantly, the theory illuminates the direction for further examination and refinement of the law. It renders exemptions intelligible and coherent at a more granular level and offers a common and normatively rich framework for scholars and policymakers to engage in more fruitful debates about old and new issues regarding the proper scope of current exemption regimes—for example, on whether the PGA Tour and the Saudi sovereign wealth fund deserve to lose their tax exemptions upon completion of their controversial combination."

February 28, 2024 in Publications – Articles | Permalink | Comments (0)

Monday, February 12, 2024

Aprill, Loui, & Horwitz: Board Control of a Charity's Subsidiaries: The Saga of OpenAI

Aprill-Ellen-faculty-profile-2000px Download (23) Rose+Chan+LouiEllen P. Aprill (Loyola L.A.), Rose Chan Loui (UCLA), and Jill R. Horwitz (UCLA) have published Board Control of a Charity's Subsidiaries: The Saga of OpenAI, 182 Tax Notes Federal 289 (2024). Here is the introduction:

Media coverage was hard-pressed to keep up with the fast-moving drama of Sam Altman’s
ouster and reinstatement as CEO of OpenAI. But the focus was on the wrong actor. OpenAI is not just another tech behemoth. It is a set of entities constructed to advance the legal purposes of a nonprofit, tax-exempt charitable corporation. The nonprofit and its tax-exempt charitable purposes, rather than Altman, should have been the star of the show.

Fairly evaluating the board’s decision to fire its CEO, as well as to reinstate him, requires knowing something about the collection of interlocking entities popularly known as OpenAI. OpenAI started as a tax-exempt, nonprofit company organized in Delaware (let’s call that “NonprofitOpenAI”). The board later determined that charitable gifts and grants were insufficient to achieve Nonprofit-OpenAI’s charitable purpose. It therefore created a structure designed to allow for private investments and, at the same time, to protect its charitable purposes. The protection of those purposes will depend on how the members of the board exercise their fiduciary duties.

Lloyd Mayer

February 12, 2024 in Publications – Articles | Permalink | Comments (0)

Horwitz: Threatening Nonprofit Hospital Tax Exemption - A Better Path Forward

Download (23)Jill Horwitz (UCLA) has published Threatening Nonprofit Hospital Tax Exemption - A Better Path Forward, JAMA (2024). Here is the introduction:

Unaccountable raiders of the public trust. Rip-off artists. Rapacious exploiters of the vulnerable. These kinds of epithets are more suited to describing criminals than nonprofit hospitals. Nonetheless, confronted with the intractable problems of US health care—rising costs, inadequate insurance, staffing crises, medical debt, intolerable inequity, and more—commentators and policy makers have blamed these systemic failures on nonprofit hospitals, vilifying them in the strongest terms as untrustworthy and undeserving of tax exemption. Detractors argue that tax exemption is justified only if the amount of free health care nonprofit hospitals provide exceeds the value of their tax benefits,1 ignoring the contributions these hospitals make to the public good by curing disease and promoting health.

Regulating nonprofit hospitals in this way would not only fail to fix these systemic problems but also exacerbate harm and inequity in the current system. Fortunately, there are better legal tools to hold nonprofit hospitals accountable to their charitable purposes.

Lloyd Mayer

February 12, 2024 in Publications – Articles | Permalink | Comments (0)

Murray, Umbers & Wesson: Regulating Political Advocacy by Charities Liberally

Download (27) Download (29) Download (28)Ian Murray, Lachlan Umbers, and Murray Wesson (all University of Western Australia) have published Regulating Political Advocacy by Charities Liberally, 53 Nonprofit and Voluntary Sector Quarterly  236 (2024). Here is the abstract:

In countries such as Australia, Canada, the United Kingdom, and the United States, whether certain classes of civil society groups are eligible to receive state support (by way of tax and other concessions) is primarily based on the entity’s intended purpose. Yet governments often view the advocacy, electioneering, or lobbying activities that are the means adopted by some civil society organizations to achieve their purposes, as unjustified attempts to intervene in the political process. Attempts to restrict these activities are, thus, not uncommon but raise challenges to fundamental tenets of liberal democracies. This article uses recent Australian experience as a case study to analyze such attempts through rule of law and freedom of expression lenses. It focuses on advocacy and electioneering via peaceful protest/civil disobedience activities and argues that charities have a valuable role to play as political actors and that any restrictions should meet the requirements of certainty and proportionality.

Lloyd Mayer

February 12, 2024 in Publications – Articles | Permalink | Comments (0)

Friday, December 22, 2023

Aprill & Horwitz: What do universities owe their big donors? Less than you might think

Download (23) Download (22)Ellen P. Aprill (Loyola L.A.) and Jill Horwitz (UCLA) have published What do universities owe their big donors? Less than you might think, explain 2 nonprofit law experts in The Conservation. Here is the introduction:

Exchanging gifts with family and friends can become fraught with contradictory emotions. Instead of gratitude, the recipients of expensive gifts may wind up feeling indebted to the givers. And the givers can have regrets too.

The same kinds of complicated motivations and expectations can sour relations between big donors and the institutions they support.

This dynamic has been playing out in a very public fashion lately with some high-profile donors to prestigious U.S. universities. At issue for these donors is the schools’ response to debates and demonstrations on their campuses after Hamas’ terrorist attacks on Israel and the Israeli government’s military campaign in Gaza that followed.

Lloyd Mayer

December 22, 2023 in Publications – Articles | Permalink | Comments (1)

Mayer: Charity Law & Blockchain Technology

Lloyd_mayerI have posted Charity Law & Blockchain Technology: Using Old Wineskins for New Wine?The Tax Lawyer (forthcoming Spring 2024) on SSRN. Here is the abstract:

Whenever something new emerges, the question of how existing law applies arises. Sometimes it is both easy to answer that question and the answer is consistent with the policy goals of existing law. But sometimes the answer to that question is uncertain, does not fit well with those policy goals, or reflects a mixture of these two issues.

This question is particularly vexing today with respect to new assets facilitated by blockchain technology. These new assets include cryptocurrencies, non-fungible tokens (NFTs), and ownership interests in decentralized autonomous organizations (DAOs). Commentators have written about how certain laws, particularly securities law, apply to these new assets. However, there is one legal area that commentators have yet to fully address: charity law, especially the federal tax laws relating to charities. Charities and donors are increasingly involved in transactions involving these new assets, with little guidance about how this law applies to those transactions.

This Article considers how existing charity law applies to these new assets and, to the extent that application is either uncertain or inconsistent with the policy goals underlying charity law, how charity law should be modified to accommodate these new assets. It concludes that existing law provides sufficiently certain answers regarding its application to these new assets and that application is consistent with the goals underlying that law. But two areas may require further guidance or modification of existing law in the foreseeable future: first, should certain cryptocurrencies be treated as readily valued for charitable contribution tax deduction purposes if sufficiently reliable cryptocurrency exchanges emerge; and second, if charities increasingly use blockchain technology, and particularly DAO governance structures, to further their exempt purposes, when is that use consistent with exemption under federal tax law.

Lloyd Mayer

December 22, 2023 in Publications – Articles | Permalink | Comments (0)

Webster: A historical analysis of Foundations' adoption, implementation, and diffusion of PRI strategies

P_weberPeter C. Weber (Auburn College of Human Sciences) has published Philanthropic innovations: A historical analysis of Foundations' adoption, implementation, and diffusion of program-related investment (PRI) strategies in Nonprofit Management & Leadership. Here is the abstract:

Philanthropic foundations are credited with being sources of social innovation. Yet, most scholarship focuses on foundations funding innovations rather than adopting innovative philanthropic practices. Program-related investments (PRIs) serve as lenses to understand how philanthropic innovations are adopted, implemented, and diffused. Scholars describe PRIs as innovations broadening grantmaking practices, but foundations today do not widely use PRIs despite their increased use in the 1980s and 2000s. I propose a theoretical model integrating foundation behavior literature with social transition theory, linking the diffusion of philanthropic innovations to specific configurations of micro-, meso-, and macro-factors. Drawing on archival research, the study analyzes the Ford Foundation's PRI Office and the Cooperative Assistance Fund between 1968 and 1988. It shows that individual foundations acted upon the favorable environment for PRIs created by a broader agreement that social responsibility was to be shared across sectors. Long-lasting norms about not mixing investments and philanthropy slowed the broad diffusion of PRIs in the foundation sector, which as an organizational field lagged the innovativeness of individual foundations. By focusing on how foundations adopt and implement innovative philanthropic strategies, the study moves beyond the practice of measuring philanthropic impact through grantees' performance rather than through philanthropic strategies.

Lloyd Mayer

December 22, 2023 in Publications – Articles | Permalink | Comments (0)

Tuesday, December 5, 2023

New Empirical Work on Hansmann’s Contract Failure Theory

A couple of weeks ago, my fellow blogger posted the abstract for a new article that provides some empirical evidence about what I consider the core theoretical grounding for the law of the nonprofit sector: Henry Hansmann’s seminal work, The Role of Nonprofit Enterprise.  The abstract reports that the authors “assess whether consumers use nonprofit status to form purchasing preferences as Hansman predicted.” I do not have the expertise to evaluate particular empirical methods in the social sciences, and so have no opinion whether their findings are useful or not, but they do an excellent job of introducing Hansmann’s theory and “updating” it in an important way.

First, the introduction: at its most concise, the authors explain that Hansmann “argued that government regulated nonprofit status provides a valuable signal to consumers about the trustworthiness of an organization.” The “signal” of “trustworthiness,” according to Hansmann, is the “non-distribution constraint” – the governmentally-enforced requirement that nonprofits not distribute their residual value to any corporate insiders. The power of this signal is that it allows “patrons” (donors to and paying users of nonprofit firms) to simplify the very complicated process of determining which firms are more likely to provide the services they want at the highest quality. The traditional view is that profit-seeking firms have incentives to provide high quality services in the most efficient way, because their owners can profit from cost-saving practices. Hansmann’s work argues that removing this strong economic incentive for firms can, under certain circumstances, be more efficient than its operation. His hypothesis is that the nonprofit firm is generally more efficient when it is impossible or very expensive for patrons to assess the value of the services provided, that is, when there is a strong need for trust. In what Hansmann calls “donative” nonprofits, the difficulty in assessing value comes primarily from the fact that the person who pays for the service is not the person who consumes it, and the “buyer” may have very little direct access to the “consumer.” It also comes from the fact that the value of the service being provided (alleviation of poverty, for example) may be hard to measure well.

The primary implication of Hansmann’s work for nonprofit law scholars is the idea that the nondistribution constraint, which generally falls under the heading of “inurement” in our peculiar vocabulary, is at the heart of what nonprofit law must effectively define and police. If the nondistribution constraint is fake, or too weak, or illegible as a signal, then the whole nonprofit sector could lose its value to society. On the other hand, if the regulation of nonprofit organizations is too restrictive, the value of the sector could be unnecessarily limited, losing out on opportunities to provide socially beneficial services in their most efficient form.  It’s a powerful idea that has influenced almost all of my thinking on nonprofit law, and which I tried to treat head-on in my early work.

The theory is subject to a number of attacks. First, there is the question of whether any of it is actually true. Do patrons use nonprofit status as a signal of “trustworthiness” and does it deliver what it promises? Both of those are empirical questions, the first of which Silvia, Child, and Witesman attempt to address at least somewhat in their paper. But even if nonprofit status does function as a signal of trustworthiness, there is the possibility that there are other, better, signals that exist or could be developed. This paper’s attempt to test how two very common signals – customer ratings and third-party certifications – affect the “signal” of nonprofit status. For the purposes of nonprofit law, the question of whether third-party certifications could better advance some of the functions served (in their absence) by the nondistribution constraint is extremely important. In some ways, the whole Benefit Corporation movement is an attempt to substitute a general third-party certification process for the nondistribution constraint. I think that general certifications of social benefit are likely to be too vague and amorphous to work as well as the nondistribution constraint in most circumstances, but it is by no means a foregone conclusion that they have no value.  The problem, of course, is that if for-profit models (like Benefit Corporations) confuse the general public, they have the potential to reduce the value of the nonprofit signal.  And if Hansmann’s theory is correct, then reducing the clarity of the nonprofit signal could destroy significant social value.

Benjamin Leff

December 5, 2023 in Publications – Articles | Permalink | Comments (0)

Friday, November 24, 2023

Kaplow, Optimal Income Taxation and Charitable Giving

Download (20)Louis Kaplow (Harvard) has posted Optimal Income Taxation and Charitable Giving, 38 Tax Policy and the Economy (forthcoming). Here is the abstract:

The philanthropic sector is highly consequential, particularly in the United States, and the most important policies directed toward this sector are tax policies. Yet most economic analysis of the optimal tax treatment of charitable giving is ad hoc, treating it as a subject unto itself. This article advances a different approach: integrating the tax treatment of charitable giving into the optimal income tax framework that has been developed over the past half century. The results supplement or overturn conventional wisdom. Notably, the analysis of revenue effects and the purported efficiency of subsidies to charitable giving is recast, focusing on the pertinent externalities rather than the direct revenue costs, which themselves are irrelevant in the basic case. Distributive concerns regarding donors are also misplaced because distributive effects can be offset by tax rate adjustments to the broader income tax and transfer system. These ideas are developed systematically, with an emphasis on intuition rather than technical formalism. The analysis also broadens and deepens the assessment of externalities from charitable giving, which are more numerous and heterogeneous than is generally recognized. Finally, refocusing our understanding of the optimal tax treatment of charitable giving identifies important subjects requiring further research.

Lloyd Mayer

November 24, 2023 in Publications – Articles | Permalink | Comments (0)

Ryan, Cy Près and Religious Discrimination

Ryan +CJ_WEB (1)C.J. Ryan (Louisville) has posted Nearer to Thee: Cy Près and Religious Discrimination. Here is the abstract:

In the law of charitable trusts, courts wield exceptional power with respect to two equitable remedies—cy près and the closely related doctrine of deviation—they can confer on trusts that have purposes or terms rendered ineffectual. Either doctrine allows the court to prolong the trust’s life, perhaps forever. Historically, the invocation of these remedies was anathema to American courts. But increasingly, they have contemplated the possibility of extending the life of charitable trusts through application of these doctrines. In many ways, the evolution of these doctrines is owing to the jurisprudence involving trusts created for the benefit of a religious congregation or charity. Yet, this connection and the implications of judicial decisions regarding the right to these remedies has not garnered academic attention until now.

In this study, I analyze the extent to which courts have applied these equitable remedies to religious purpose charitable trusts via an econometric analysis of a universe of cases with a published opinion from an American court from the nation’s founding through 2019. This study provides a novel analysis of these equitable remedies and the history of religious purpose charitable trusts along a considerable timeline in American history. First, it explores how the equitable remedies of cy près and deviation were shaped by and shaped the caselaw around religious purpose charitable trusts, elucidating the simultaneity of the recognition of each as valid remedy and trust. Second, it examines the possible bias of the courts in awarding these remedies to certain religious groups but not others, ultimately finding that trusts created for the benefit of Catholic churches and charities were deemed less worthy of these remedies by the courts, all else equal. These findings have implications not only for understanding the application of these equitable remedies more deeply but also for uncovering the implicit and overt bias of the courts in cases where it has no actual basis.

Lloyd Mayer

November 24, 2023 in Publications – Articles | Permalink | Comments (0)

Silvia, Child & Witesman, A New Look at Hansmann’s Contract Failure Theory

Witesman Child SilviaChris Silvia, Curtis Child, and Eva Witesman (all BYU) have published The Value of Being Nonprofit: A New Look at Hansmann’s Contract Failure Theory, Nonprofit and Voluntary Sector Quarterly (subscription required). Here is the abstract:

In his theory about the role of nonprofit enterprise, Henry Hansmann suggested that nonprofit status provides important information to consumers in low-information environments. In this article, we assess whether consumers use nonprofit status to form purchasing preferences as Hansmann predicted. Using choice-based conjoint analysis, we find that under different types of low-information circumstances, study participants prefer goods and services provided by nonprofits to those offered by businesses. In the absence of additional information (such as customer ratings and third-party certifications), nonprofit status serves as an important value signal to consumers. In the presence of additional information, nonprofit status is still relevant in some cases, although it becomes less so. The findings suggest that additional forms of information do not necessarily displace the value to consumers of information about organization type. We reflect on these findings in light of Hansmann’s thesis.

Lloyd Mayer 

November 24, 2023 in Publications – Articles | Permalink | Comments (0)

Slenn, Fraudulent Donations to Charity: The Gifts That Keep on Giving

David-Slenn-2023-300x300David J. Slenn (Akerman LLP) has published Fraudulent Donations to Charity: The Gifts That Keep on Giving, Business Law Today (November 2023). From the introduction:

This article examines what a charity should know about its exposure to liability as the transferee of a donation that turns out to be a fraudulent transfer by the donor. A charity can perform due diligence to manage most kinds of risk resulting from its receipt of a donated asset (e.g., hard-to-manage/risky assets, the risk of inadvertently participating in a tax shelter,[3] etc.), but a charity—even a large charity with sophisticated general counsel—faces a much more difficult challenge in attempting to mitigate the risk potentially posed by fraudulent transfer law. This article will also address how the law surrounding this intersection has evolved and how the courts have approached the issue of charity liability under fraudulent transfer law.

This article is especially timely given the recent federal bankruptcy court decision ordering a church to repay over $500,000 it had received, even though the church itself had acted in good faith and without knowledge that the funds originated from a fraudulent transfer (and even though the church had apparently already spent the contributed money).

Lloyd Mayer

November 24, 2023 in Publications – Articles | Permalink | Comments (0)

Saturday, November 11, 2023

Hoyt: The Legal Roadmap for IRA Distributions to CRTs and for Charitable Gift Annuities

Christopher-r.-hoytChristopher Hoyt (UMKC) has posted The Legal Roadmap for IRA Distributions to CRTs and for Charitable Gift Annuities. Here is the abstract:

The “SECURE 2.0" legislation of 2022 permits individuals over the age of 70 ½ to make a once-in-a-lifetime tax-free transfer of up to $50,000 directly from an Individual Retirement Accounts (“IRA”) to a charity for a charitable gift annuity (“CGA”) or to a charitable remainder trust (“CRT”). The distribution will be excluded from the IRA owner’s taxable income as a qualified charitable distribution (“QCD”). For individuals age 73 or older, the QCD counts toward satisfying the required minimum IRA distribution for that year.

This article examines every legal requirement that must be met in order for the IRA distribution to be excluded from the IRA owner’s taxable income. Problems can arise in situations when an IRA holds non-deductible contributions, or if the IRA owner claimed an income tax deduction for a contribution to an IRA after age 70 ½. Charities should not use standard off-the-shelf gift annuity agreements, but should instead have agreements drafted specifically for such IRA gifts. A standard CGA or CRT agreement might contain provisions that could make the IRA distribution taxable, such as permitting an assignment of the income interest or including beneficiaries other than the IRA owner and the spouse.

Even when all of the documents are properly drafted, there can be administrative problems that will cause the transaction to blow up. Even though the IRA owner will not be claiming an itemized charitable income tax deduction, all of the requirements to claim such a charitable deduction must be met in order for the IRA distribution to qualify as a QCD. For example, the IRA owner must receive from the charity an accurate contemporaneous written acknowledgment before filing a federal income tax return. The article also examines other unresolved legal issues, such as whether or not the distributions that the IRA owner receives from the CRT or CGA will be exempt from the Section 1411 3.8% net-investment income tax.

Lloyd Mayer

November 11, 2023 in Publications – Articles | Permalink | Comments (0)

Wahler, The Problem of Charitable Trust Enforcement

B9295971eeaa3a1dd376a3f052dc7a71Morgan Wahler has published The Problem of Charitable Trust Enforcement: Addressing the Insufficiencies of the Attorney General System and Proposing New Law Reform, 48 ACTEC Law Journal 361 (2023) (subscription required).  The paper won the ACTEC Foundation's Mary Moers Wenig student writing competition last year. From the introduction:

This article focuses on [a] problem that arises in special ways with respect to charitable trusts - the mechanism for their oversight and enforcement. First, this article analyzes the current system of charitable trust enforcement, namely, who has standing to sue for enforcement. Next, this article explores the limitations innate to the current structure and stresses the urgency with which the current system must be modified through the use of two examples of breach of trust. The article concludes that to address the immense agency costs and overall inefficiencies of the current enforcement scheme, the settlors of charitable trusts should be permitted to name a trust enforcer; and if they fail to do so, courts should be obliged to appoint one.

Lloyd Mayer

November 11, 2023 in Publications – Articles | Permalink | Comments (0)

Zelinsky: The Case for Taxing Nonprofit Hospitals

Edward_zelinsky_2019Following up on his 2022 article The Commerciality of Non-Profit Hospitals Requires Them to be Taxed: Bringing the Debate to a Conclusion, 42 Virginia Tax Review 401, Edward A. Zelinsky (Cardozo) has written The Case for Taxing Nonprofit Hospitals, Tax Notes, Oct. 24, 2023. From the Introduction:

Despite the label “nonprofit,” the contemporary nonprofit hospital is an essentially commercial institution, indistinguishable from its taxed, for-profit competitors. To enhance fairness and efficiency, similar institutions should be taxed similarly. Because the profitable operations of nonprofit hospitals today resemble the remunerative activities of for-profit hospitals, the federal income tax and the states’ income, sales, and property taxes should tax all of these hospitals in the same way.

Lloyd Mayer

November 11, 2023 in In the News, Publications – Articles | Permalink | Comments (0)

Friday, October 13, 2023

Papers Published for the UCLA Symposium on the Restatement of the Law, Charitable Nonprofit Organizations

P42882309-232294LThe UCLA Law Review Discourse has published the papers presented at last spring's UCLA Symposium on the Restatement of the Law, Charitable Nonprofit Organizations. Here are the paper titles and authors:

When Donor Meets Purpose by Atinuke O. Adediran

The Restatement of Charitable Nonprofits and the Changing Nature of the Modern Investment Committee by Garry W. Jenkins

Use of Restricted Assets During a Crisis: Is It Time to Raid the Endowment? by Jill R. Horwitz

Laws Governing Restrictions on Charitable Gifts: The Consequences of Codification by Nancy A. McLaughlin

Allocating State Authority Over Charitable Nonprofit Organizations by Lloyd Hitoshi Mayer

Lloyd Mayer

October 13, 2023 in Publications – Articles | Permalink | Comments (0)

Bai, Letchuman & Hyman: Do Nonprofit Hospitals Deserve Their Tax Exemption?

Ge-bai_630x630 Download (8) 1657232384018Ge Bai (John Hopkins University), Sunjay Letchuman (Icahn School of Medicine at  Mount Sinai), and David A. Hyman (Georgetown University) have published Do Nonprofit Hospitals Deserve Their Tax Exemption? in The New England Journal of Medicine (subscription required). Here is the brief abstract:

Data suggest that many nonprofit hospitals don’t provide enough charity care or have a substantial enough Medicaid shortfall (relative to for-profit hospitals) to justify their favorable tax treatment.

Lloyd Mayer

October 13, 2023 in Publications – Articles | Permalink | Comments (0)

McLaughlin: Laws Governing Restrictions on Charitable Gifts: The Consequences of Codification

ImageNancy A. McLaughlin (University of Utah) has published Laws Governing Restrictions on Charitable Gifts: The Consequences of Codification in UCLA Law Review Discourse. Here is the abstract: 

Over the last two decades we have seen marked changes in the laws governing donor-imposed restrictions on charitable gifts. These changes have occurred primarily as a result of the adoption in many states of the Uniform Trust Code (the UTC) and the Uniform Prudent Management of Institutional Funds Act (UPMIFA). This Essay explains that codification in the UTC and UPMIFA of liberalized versions of cy pres and deviation, as well as other related changes to the common law, have had unintended negative consequences. Those negative consequences include a lack of coherence in the law, an elevation of form over substance when it comes to the laws applicable to a particular gift, uncertainties regarding how the statutory provisions operate, inequities between sophisticated or well-represented donors and donees and those who are less sophisticated and without the resources to hire experienced advisors, and confusion in the courts as they grapple with this new, much more complex landscape of laws. This Essay outlines these problems and begins to consider what might be done to address them.

Lloyd Mayer


October 13, 2023 in Publications – Articles | Permalink | Comments (0)