Law Commons^™

Thou Shalt Not Electioneer: Religious Nonprofit Political Activity And The Threat “God Pacs” Pose To Democracy And Religion, Jonathan Backer

Michigan Law Review

The Supreme Court’s 2010 decision in Citizens United v. FEC invalidated a longstanding restriction on corporate and union campaign spending in federal elections, freeing entities with diverse political goals to spend unlimited amounts supporting candidates for federal office. Houses of worship and other religious nonprofits, however, remain strictly prohibited from engaging in partisan political activity as a condition of tax-exempt status under Internal Revenue Code § 501(c)(3). Absent this “electioneering prohibition,” religious nonprofits would be very attractive vehicles for political activity. These 501(c)(3) organizations can attract donors with the incentive of tax deductions for contributions. Moreover, houses of worship need …

Confidence In The Nonprofit Sector Through Sarbanes-Oxley-Style Reforms, Joseph Mead

Michigan Law Review

Over the past several years, the nonprofit sector suffered a series of highly visible scandals that shook the public's confidence in charitable organizations. Concerned politicians and nonprofit leaders responded with a variety of reforms inspired by the Sarbanes-Oxley Act. The Note focuses on three such reforms: requiring nonprofit officers certify financial statements, mandating audits of nonprofits' financial statements, and imposing independent audit committees on nonprofit boards of directors. This Note argues that, contrary to the conclusions of many commentators, these reforms will provide a net benefit to the nonprofit sector by increasing donor confidence while imposing minimal costs.

What's Good For The Goose Is Not Good For The Gander: Sarbanes-Oxley-Style Nonprofit Reforms, Lumen N. Mulligan

Michigan Law Review

In this Article, I contend that the Sarbanes-Oxley-inspired nonprofit reforms currently being put forward in seven states, particularly the costly disclosure requirements, will be of little value in the effort to improve ethical nonprofit board governance. After providing a primer on the oversight of nonprofit organizations and highlighting the unique difficulties facing the nonprofit sector the Article reviews the recent Sarbanes-Oxley-like nonprofit reforms introduced in seven states. It then contends that the disclosure- focused reforms that form the bulwark of these initiatives will not foster improved ethical nonprofit board governance. It also argues that this failure stems from the inappropriate …

The Role Of Nonprofits In The Production Of Boilerplate, Kevin E. Davis

Michigan Law Review

Drafting contracts-by which I really mean the documents that embody contracts-requires investments of time, experience, and ingenuity. Those investments may yield significant returns because the quality of contractual terms can be an important determinant of the gains that parties realize from trade. This in tum suggests that, from an economic perspective, it is important to understand how contracts are produced. It seems particularly important to examine the production of contracts or individual contractual terms that are widely used-that is to say, "boilerplate." In a market oriented society, boilerplate is the predominant feature of the network of legal obligations that provides …

The Nonprofit Sector And The New State Activism, Mark Sidel

Michigan Law Review

The burgeoning field of nonprofit and philanthropic law has a new and superb history in Norman Silber's pathbreaking A Corporate Form of Freedom: The Emergence of the Nonprofit Sector. In confronting "the history of efforts to control the creation and permissible purposes for nonprofit corporations by states, and ... the relocation of these efforts to the Internal Revenue Service" (p. 5), Professor Silber effectively deliniates the rich history of our ambiguous, often conflicted attempts to regulate the American nonprofit sector, and points clearly to the ways in which history influences the current complexities of state regulation. From a discredited …

Are You Now Or Have You Ever Been A Member Of The Aclu, David Cole

Michigan Law Review

A Review of In Defense of American Liberties: A History of the ACLU by Samuel Walker

Does Charity Begin At Home? The Tax Status Of A Payment To An Individual As A Charitable Deduction, Michigan Law Review

Michigan Law Review

In White v. United States, the United States Court of Appeals for the Tenth Circuit reversed a district court decision and held that the taxpayers could deduct expenses they paid directly to their dependent son to support his missionary activities away from home. In Brinley v. Commissioner, the Tax Court sitting in Texas refused to follow the Tenth Circuit in White, and held that while the missionary son was entitled to deduct his personal expenses, the parents could not deduct their payment of the son's expenses.

This Note supports the result in Brinley and argues that the …

Freedom Of Association After Roberts V. United States Jaycees, Douglas O. Linder

Michigan Law Review

The decision of the U.S. Supreme Court in Roberts v. United States Jaycees, upholding a Minnesota ruling which requires the Minnesota Jaycees to admit women as full members, ended one controversy but marked only the beginning of a far larger one. It was predicted by many that U.S. Jaycees would answer the question of whether private associations with restrictive membership policies were vulnerable to state anti-discrimination laws or were constitutionally protected. It did not. Instead, while rejecting the Jaycees' constitutional claims, the Court established a comprehensive framework for analyzing future claims of associational freedom that contains a number of …

Irs Denials Of Charitable Status: A Social Welfare Organization Problem, Michigan Law Review

Michigan Law Review

This Note argues that the courts and the Service should recognize social welfare organizations as charitable and, consequently, contributions to such organizations should be tax deductible. Part I describes the Service's position and sets forth the statutory arguments supporting it. Part II raises two objections to the Service's position: (1) the distinction between social welfare organizations and charitable organizations lacks an adequate statutory justification, and (2) this distinction produces unpredictable and arbitrary results. Part III proposes that all social welfare organizations be accorded charitable status under subsection 50l(c)(3). This proposal would eliminate the arbitrary results now reached by the Service, …

Another Theory Of Nonprofit Corporations, Ira Mark Ellman

Michigan Law Review

This Article argues that the distinction between donors and customers is critical, and that the contract failure model is therefore seriously flawed. It distinguishes two types of nonprofit corporations - those structured to satisfy donors' needs ("donative nonprofits") and those structured to satisfy customers' needs ("mutual benefit nonprofits"). This dichotomy suggests a very different nonprofit corporation law than the one urged by Hansmann. Once the concept of contract failure is limited to donors, it can be refined to serve as part of the rationale for donative nonprofits. Refining the concept of contract failure reveals, however, that it confuses the analysis …

Discriminatory Membership Policies In Federally Chartered Nonprofit Corporations, Michigan Law Review

Michigan Law Review

Since 1791 the United States has created federal corporations by specific acts of Congress. These corporations fall into three general types, including corporations organized in the District of Columbia, corporations that carry out a federal governmental or public function, and private nonprofit corporations that undertake educational, charitable, historical, cultural or similar purposes. About fifty groups comprise the third category, including the American National Red Cross, the Girl Scouts of America, the Boy Scouts of America, the United States Olympic Committee, the American Legion, the Veterans of Foreign Wars of the United States (VFW), and the Little League.

Recently, the discriminatory …

Religious Corporations And The Law, Paul G. Kauper, Stephen C. Ellis

Michigan Law Review

This article will attempt to present a picture of the legal status of religious organizations, with particular reference to the enjoyment of the corporate privilege. Necessarily, this will involve at the outset an historical review tracing the development of that status, beginning with the practice of granting special charters to churches and culminating in the now familiar general incorporation statute. Special attention will be paid to distinctive problems that arose in Utah, Pennsylvania, and Virginia concerning corporate status. The historical review is followed by a summary survey of the current state laws relating to the incorporation of churches. The last …

The United States Post Office, Incorporated: A Blueprint For Reform, Stanley Siegel

Michigan Law Review

For several generations, the United States Post Office has been the textbook demonstration of the inefficiency of the government in business. To some, the solution to its problems lies only in turning over its functions to free enterprise. A more constructive and politic approach is to inquire whether a structural arrangement falling somewhere between that of a governmental department and that of a privately owned business would permit the Post Office to achieve some of the efficiencies of private enterprise without compromising the most essential elements of public responsibility. This approach has been given new timeliness by the proposal of …

Foundations And The Patman Committee Report, John E. Riecker

Michigan Law Review

It is the purpose of this article to evaluate the major points of the first, and main, installment of Congressman Patman's Report in the light of existing Internal Revenue Code provisions, Treasury regulations, and the more significant federal court decisions and Internal Revenue Service rulings. While the Report itself is more inclusive, space limitations dictate that this article be confined to section 501(c)(3) organizations-chiefly foundations, tax-exempt funds, and charitable trusts. Although the writer will strive to be objective, it is difficult to avoid some of the political gloss in which the Report is cast and impossible to discuss the ramifications …

Taxation-Federal Income Taxation-The Three-Party Sale And Lease-Back, Lawrence R. Velvel S.Ed.

Michigan Law Review

The so-called sale and lease-back device has long been the subject of judicial and governmental scrutiny. The Internal Revenue Service has recently decided to begin a more active campaign of enforcement against a certain three-party variation of the sale and lease-back device. The structure of this variation can be best understood by considering the following hypothetical situation.

Taxation-Federal Income Tax-Religious Order Not Exempt From Supplment U Tax As A Church, Alan Rothenberg

Michigan Law Review

Plaintiff, a non-profit, membership corporation consists of members of the Christian Brothers Order, and was established to furnish religious and secular education to youth. The Catholic Church considers religious instruction to be the performance of a church function, and property of the Christian Brothers Order is church property according to Roman Catholic canon law. During the taxable years in question plaintiff owned and operated a novitiate, Catholic schools, homes for the Brothers, and a winery and distillery. Plaintiff was assessed and paid $489,800.83 as a Supplement U tax on its unrelated business income realized from the winery and distillery operation. …

Municipal Corporations - Tort Liability - Duty To Protect Informers, Thomas A. Kauper S.Ed.

Michigan Law Review

Decedent Schuster supplied information to the police which led to the arrest of the notorious Willie "The Actor" Sutton. After decedent's part in the arrest was widely publicized he received threats against his life. He demanded police protection, which was denied on a belief that the threats were not seriously made. Three weeks later the decedent was shot and killed by an unknown assailant. Plaintiff, administrator of decedent's estate, sued the defendant city to recover damages for wrongful death. The supreme court dismissed the complaint, and the appellate division affirmed. On appeal, held, reversed, three judges dissenting. The complaint …

Dispositions Of Property To Unincorporated Non-Profit Associations, Harold A.J. Ford

Michigan Law Review

It now becomes necessary to examine the cases in which the disposition could not be treated as one to the existing members. This treatment will disclose that some courts have been prepared to regard some dispositions to associations as being for the purposes of the association. The only way in which property may be devoted to a purpose without conferring beneficial interests on particular individuals is by a trust. Accordingly in many instances the disposition takes effect as a trust.

Dispositions Of Property To Unincorporated Non-Profit Associations, Harold A.J. Ford

Michigan Law Review

The aim of this article is to examine the ways in which courts in common law countries have given this assistance and the problems they have encountered in regard to property transactions.

Taxation - Federal Estate Tax - Deductibility Of Contingent Bequests To Charity, Jack G. Armstrong S.Ed.

Michigan Law Review

Testator bequeathed a remainder interest to charitable organizations which was contingent upon her sister, age eighty-two, predeceasing two other women, ages sixty-seven and sixty-eight. The Commissioner disallowed a deduction for this bequest on the ground that it was not certain that charity would receive any benefit. In the district court the parties stipulated that there was an eleven to one chance that charity would receive the bequest. On the basis of this stipulation the district court found for the taxpayer. On appeal, held, reversed. In order for a deduction to be allowed the possibility that charity will not take …

Damage Liability Of Charitable Institutions, Carl Zollman

Michigan Law Review

The question of the liability of charitable institutions to actions for damages presents great difficulties. This is not due how- -ever to a lack of cases. The question has peculiarly "engaged the attention of the bench and bar of the country. The problem has been scrutinized from every conceivable viewpoint. The arguments for and against have well nigh been exhausted, and little, if anything, new remains to be advanced".' In their opinions the courts have frequently gone back to certain English cases disregarding the points decided but stressing certain dicta which have been uttered by the judges which decided them. …

Liability To Third Persons Of Associates In Defectively Incorporated Associations, Joseph L. Lewinsohn

Michigan Law Review

The principles underlying the obligations to third persons of the members of defectively incorporated associations, are few and not difficult of apprehension. Yet there is hardly a topic in the law of private corporations upon which the views of both courts and theoretical writers dre in more disagreement. This disagreement is concerned largely with three questions, namely: What is the basis and scope of the doctrine of de facto corporations? Are persons dealing with the associates on a corporate basis estopped to deny the corporate character of the association? Are the associates ipso facto liable as partners? Upon all of …

Note And Comment, Harry B. Hutchins, Edwin C. Goddard

Michigan Law Review

The Liability of Charitable Corporations for the Torts of Their Servants; the Powers of General and Special Agents; Municipal Ordinances Licensing Trades and Occupations; "Sic Utere Tuo Ut Alienum Non Laedas"; Interference with the Formation of Contracts; The Right of Directors to Use Corporate Funds in Getting Proxies From the Stockholders; Sales Void for Uncertainty and Lack of Mutuality; The Negotiable Instruments Law as Affecting the Discharge of Accommodation Maker and Surety by Extension of Time of Payment