Law Commons^™

Building Resilience By Removing Barriers: Addressing Structural Impediments To Advocacy By Nonprofit Organizations On Behalf Of The Unenfranchised, Kirsten Widner, Heather M. Kolinsky

University of Cincinnati Law Review

Charitable contributions, particularly from private foundations, are an essential source of support for many nonprofit charitable organizations. However, the ability to accept these contributions comes with significant restrictions on lobbying and advocacy. Using vulnerability theory and an original survey of nonprofit advocacy organizations, we show that current restrictions on 501(c)(3) organizations disproportionally limit advocacy on behalf of the most politically disadvantaged groups—those without the right to vote. This, in turn, reinforces existing inequalities in whose voices are heard and whose interests are considered by policymakers. This Article argues that reforming the laws that structure what organizations can take tax-deductible charitable …

When Soft Law Meets Hard Politics: Taming The Wild West Of Nonprofit Political Involvement, Lloyd Histoshi Mayer

Journal Articles

Beginning in the 1990s and continuing to today, many of the legal and psychological barriers to nonprofits becoming involved in electoral politics have fallen. At the same time, political divisions have sharpened, causing candidates, political parties, and their supporters to scramble ever more aggressively for any possible edge in winner-take-all political contests. In the face of these developments, many nonprofits have violated the remaining legal rules applicable to their political activity with little fear of negative consequences, especially given vague rules and a paucity of enforcement resources. Such violations include underreporting of political activity in government filings, fly-by-night organizations that …

The Case Against Income Tax Exemption For Nonprofits, Michael Fricke

St. John's Law Review

(Excerpt)

In order to discuss the current state of affairs in the nonprofit world, Part I of this Article addresses how nonprofits are treated under the law and the various income tax exemption defenses that have been proffered over the years. Then, Part II investigates the problems raised by organizations that take advantage of their tax exemption, but decline to use their revenue for their exempt purposes. This problem has been addressed infrequently in academic literature, but Part III reviews other proposed reforms that might affect this issue. Part IV lays out the proposed solution, and Part V examines the …

Fragmented Oversight Of Nonprofits In The United States: Does It Work? Can It Work?, Lloyd Hitoshi Mayer

Journal Articles

Previously Brendan Wilson and I concluded that oversight of nonprofit governance would be most effective if it remained the responsibility of the states, although it would benefit from both a federal funding mechanism and enhanced coordination with the Internal Revenue Service.' More recently I concluded that oversight of federal tax exemption would be better served if Congress shifted the locus of that oversight to a national, self-regulatory organization working in close cooperation with the IRS given the perennial financial and other limitations faced by the IRS.2 What neither of these earlier articles addressed, however, was whether the current split of …

Charity At Work: Proposing A Charitable Flexible Spending Account, Alyssa A. Dirusso

Utah Law Review

The current federal system of tax law, in attempting to encourage the shift of assets from private individuals to charitable organizations, fails to reach significant portions of Americans. Not all donors are equal in the eyes of the law; donors with particular demographic characteristics—ranging from income, to race, to state of residence—are more likely to itemize than others. Despite its aim to reflect a pluralistic society, the charitable deduction sanctions the privileging of one-third of American voices over the rest. If taxes are ballots, the election is rigged.

Evaluating Trickle Down Charity, Matthew Rossman

Faculty Publications

As our nation's philanthropic sector becomes more entrepreneurial, ambitious and influenced by the private sector, longstanding legal standards on what constitutes “charity” struggle to stay relevant. More and more often, organizations that seek classification by the Internal Revenue Service as a Section 501(c)(3) charity (and the substantial public subsidy that this status unlocks) are not the soup kitchens and homeless shelters of yesteryear, but highly sophisticated ventures which accomplish their missions in ways that are less obviously charitable. In no case is this more true than in the recent widespread emergence of nonprofit organizations whose primary activity is providing direct …

Solving Charity Failures, Brian L. Frye

Law Faculty Scholarly Articles

“Crowdfunding” is a way of using the Internet to raise money by asking the public to contribute to a project. In the past, asking a large number of people to contribute small amounts of money to a project was expensive and inefficient for most organizations and individuals. By greatly reducing transaction costs, crowdfunding enables anyone to inexpensively and efficiently seek small contributions to a project. While crowdfunding is a new model of fundraising, it has already transformed funding for the arts. For example, the crowdfunding platform Kickstarter distributed more than forty million dollars to the creators of almost seventy-five hundred …

The Problem Of Nonprofit Executive Pay?: Evidence From U.S. Colleges And Universities, Brian D. Galle, David I. Walker

Brian D. Galle

Nonprofit organizations suffer from agency problems that are similar to or perhaps even more severe than those observed at for-profit companies. As a result, one might expect the executive pay setting process in the two sectors to reflect similar deficiencies. This Article explains why the managerial power theory that was developed to help explain for-profit executive pay is plausibly applicable to nonprofits. More importantly, this Article offers new evidence based on data from a large panel of colleges and universities collected across a nine year period that supports the idea that potential stakeholder outrage plays a role in limiting nonprofit …

Comparing The Treatment Of Charities Under Vat And Rst, Walter Hellerstein

Presentations and Speeches

Good VAT = Good RST

Desire to assist charities should be addressed outside the RST to avoid revenue losses and administrative complexity and to maintain fiscal neutrality

Assistance should be provided by other means such as direct subsidies

Stealth Preemption: The Irs's Nonprofit Corporate Governance Initiative, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

The Internal Revenue Service, the primary federal regulator of charities, has initiated a corporate governance initiative. The intervention by the Internal Revenue Service into an area traditionally the preserve of state nonprofit corporate law has little relationship to issues of tax compliance. This corporate governance initiative has been accomplished in the face of IRS acknowledgement that it has no statutory authority relating to these issues. Yet, the power of the Service to recognize tax exempt status and the method it has used to ensure it vision of correct corporate governance practices through a series of questions when an organization applies …

Do Different Types Of Hospitals Act Differently?, Jill R. Horwitz

Other Publications

This essay is based on testimony delivered before the U.S. House of Representatives Committee on Ways and Means on May 26, 2005.

Targeting Exemption For Charitable Efficiency: Designing A Nondiversion Constraint, Frances R. Hill

Articles

No abstract provided.

Gifts, Gafts And Gefts: The Income Tax Definition And Treatment Of Private And Charitable 'Gifts' And A Principled Policy Justification For The Exclusion Of Gifts From Income, Douglas A. Kahn, Jeffrey H. Kahn

Articles

Gifts have been given special treatment by the income tax laws since the first post-16th Amendment tax statute was adopted in 1913. The determination of how the income tax law should treat gifts raises a number of issues. For example: should gifts be given special treatment? If so, what should qualify as a gift? Should gifts to a private party be taxable to the donee? Should gifts to a private party be deductible by the donor? Should the donee's basis in a gift of property be determined by reference to the basis that the donor had, and should any modifications …

Recent Irs Letter Ruling Increases Opportunities For Exempt Organizations To Use Llcs, Monica Gianni

UF Law Faculty Publications

Monica Gianni discusses how the IRS’s analysis of a private operating foundation using an LLC in LTR 9834033 indicates the IRS’s approach to LLCs with exempt organization members.

Checkpoints On The Conversion Highway: Some Trouble Spots In The Conversion Of Nonprofit Health Care Organizations To For-Profit Status, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

This essay does not address the truly important policy issues: whether for-profit healthcare should be allowed or encouraged; how the quality of care compares to nonprofits or what criteria should be used to evaluate the quality of care; or what the impact of these conversions is on the communities they serve. It discusses less significant issues: those of process—how can we shape and control this tidal wave of change so that the public will be served and charitable assets preserved to the maximum extent possible? The focus is upon the valuation of these charitable assets; the appropriate process of conversion; …

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, …

The Imposition Of New York City's Water And Sewer Rents On Non-Profit Institutions , Adam Hoffinger

Fordham Urban Law Journal

This article focuses on the immunity from real property taxation and charges for the use of water and sewer services that New York nonprofit institutions have historically enjoyed. It first examines the nature of New York City's water and sewer rents and exemptions, and the method by which New York city charges for water and sewer services. It then examines the case law that establishes the liability of nonprofit institutions for the payment of water and sewer rent. It further explores the exemptions from water and sewer rents extended to nonprofit organizations in New York City. Finally, in light of …

The Imposition Of New York City's Water And Sewer Rents On Non-Profit Institutions , Adam Hoffinger

Fordham Urban Law Journal

This article focuses on the immunity from real property taxation and charges for the use of water and sewer services that New York nonprofit institutions have historically enjoyed. It first examines the nature of New York City's water and sewer rents and exemptions, and the method by which New York city charges for water and sewer services. It then examines the case law that establishes the liability of nonprofit institutions for the payment of water and sewer rent. It further explores the exemptions from water and sewer rents extended to nonprofit organizations in New York City. Finally, in light of …