Law Commons^™

Keep Charitable Oversight In The Irs, Philip Hackney

Articles

Critics are increasingly calling for Congress to remove charity regulation from the IRS. The critics are wrong. Congress should maintain charity regulation in the IRS. What is at stake is balancing power between the state, charity as civil society, and the economic order. In a well-balanced democracy, civil society maintains its independence from the state and the economic order. Removing charitable jurisdiction from the IRS would blind the IRS to dollars placed in the charitable sector increasing tax and political shelters and wealthy dominance of charities as civil society. A new agency without understanding of, or jurisdiction over, tax cannot …

Allocating State Authority Over Charitable Nonprofit Organizations, Lloyd H. Mayer

Journal Articles

This Essay considers the allocation of state authority to enforce the legal obligations particular to charities and their leaders among state officials, including attorneys general, judges, and legislators, and private parties. It first describes the existing allocation. It then reviews the most common criticisms of this allocation, which primarily focus on two concerns: politicization and lack of sufficient enforcement. Finally, it evaluates the most notable proposals for reallocating this authority, including the reallocation of this authority in part to private parties.

This Essay concludes that reform proposals have two fundamental flaws. First, proposals aimed at countering the political nature of …

Nonprofits, Taxes, And Speech, Lloyd H. Mayer

Journal Articles

Federal tax law is of two minds when it comes to speech by nonprofits. The tax benefits provided to nonprofits are justified in significant part because they provide nonprofits great discretion in choosing the specific ends and means to pursue, thereby promoting diversity and pluralism. But current law withholds some of these tax benefits if a nonprofit engages in certain types of political speech. Legislators have also repeatedly, if unsuccessfully, sought to expand these political speech restrictions in various ways. And some commentators have proposed denying tax benefits to groups engaged in other types of disfavored speech, including hate speech …

Regulating Charitable Crowdfunding, Lloyd Hitoshi Mayer

Journal Articles

Charitable crowdfunding is a global and rapidly growing new method for raising money to benefit charities and individuals in need. While mass fundraising has existed for more than a hundred years, crowdfunding is distinguishable from those earlier efforts because of its low cost, speed of implementation, and broad reach. Reflecting these advantages, it now accounts annually for
billions of dollars raised from tens of millions of donors through hundreds of Internet platforms such as Charidy, Facebook, GoFundMe, and GlobalGiving. Although most charitable crowdfunding campaigns raise only modest amounts, every year several efforts attract tens of millions of dollars in donations. …

Americans For Prosperity Foundation V. Matthew Rodriquez, Nancy Mclaughlin

Utah Law Faculty Scholarship

The twelve individuals filing this amicus brief are professors and scholars of the law of nonprofit organizations. No party in this case represents all three of charity’s key stakeholders: charities, states, and taxpayers who underwrite the charities’ funding. Amici are participating in this litigation in order to aid the Court in understanding how these three interests depend on one another. They also attempt to provide a clearer understanding of state supervision of charities and how that supervision related to federal tax law.

Brief Of Amici Curiae Scholars Of The Law Of Non-Profit Organizations In Support Of Respondent: Americans For Prosperity Foundation V. Matthew Rodriguez, Nos. 19-251 & 19-255, Ellen P. Aprill, Roger Colinvaux, Sean Delany, James Fishman, Brian D. Galle, Philip Hackney, Jill R. Horwitz, Cindy Lott, Ray D. Madoff, Jill S. Manny, Nancy A. Mclaughlin, Richard Schmalbeck

Amici Briefs

The twelve individuals filing this amicus brief are professors and scholars of the law of nonprofit organizations. No party in this case represents all three of charity’s key stakeholders: charities, states, and taxpayers who underwrite the charities’ funding. Amici are participating in this litigation in order to aid the Court in understanding how these three interests depend on one another. They also attempt to provide a clearer understanding of state supervision of charities and how that supervision related to federal tax law.

States As Laboratories For Charitable Compliance: An Empirical Study, Eric Franklin Amarante

Scholarly Works

Each year, the IRS awards 501(c)(3) status to thousands of unworthy organizations. As a result, these undeserving organizations do not have to pay federal taxes and donations to these entities are tax-deductible. This is because the IRS, facing increasingly severe budget cuts, adopted a woefully inadequate application process that fails to identify even the most obvious of unworthy applicants. The result of this regulatory failure may prove to be catastrophic. As unworthy charities proliferate, the public will lose faith in the entire charitable regime. As trust dissipates, donations are certain to follow, and the charitable sector will lose a vital …

Basis And Bargain Sales: Income Tax And Other Concerns, Bridget J. Crawford, Jonathan G. Blattmachr

Elisabeth Haub School of Law Faculty Publications

In this article, the authors explain the income tax consequences of the sale during lifetime and at death of property for less than fair market value. The authors focus in particular on the tax consequences of a bargain sale by a transferor who wishes to confer some financial benefit on a family member, but leave the rest of her estate to charity. Generally speaking, death-time bargain sales may be preferable to similar transactions during lifetime, if the assets have a low basis pre-death, because of the step up in income tax basis under section 1014. The authors also discuss in …

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

Articles

Fifty years ago, Congress enacted the Tax Reform Act of 1969 to regulate charitable activity of the rich. Congress constricted the influence of the wealthy on private foundations and hindered the abuse of dollars put into charitable solution through income tax rules. Concerned that the likes of the Mellons, the Rockefellers, and the Fords were putting substantial wealth into foundations for huge tax breaks while continuing to control those funds for their own private ends, Congress revamped the tax rules to force charitable foundations created and controlled by the wealthy to pay out charitable dollars annually and avoid self-dealing. Today, …

The Natural Property Rights Straitjacket: The Takings Clause, Taxation, And Excessive Rigidity, Eric Kades

Faculty Publications

Natural property rights theories have become the primary lens through which conservative jurists and scholars view the Constitution’s main property rights provision, the Takings Clause. One of their most striking arguments is that progressive income taxation — applying higher tax rates to higher incomes — is an unconstitutional taking of wealthy taxpayers’ property. This has become part and parcel of well-established battle lines between conservative property rights advocates and their liberal counterparts. What has gone unnoticed is that the very same argument deployed against progressive taxation also deems regressive taxation — applying lower tax rates to higher incomes — an …

Charitable Subsidies And Nonprofit Governance: Comparing The Charitable Deduction With The Exemption For Endowment Income, David M. Schizer

Faculty Scholarship

Charitable subsidies are supposed to encourage positive externalities from charity. In principle, the government can pursue this goal by evaluating specific charitable initiatives and deciding how much each should receive. Although the government sometimes makes this sort of fine-grained judgment, this Article focuses on two income tax rules that leave the government essentially no discretion about which charities to fund: the deduction for donations to charity ("the deduction") and the exemption of a charity's investment income ("the exemption"). With each subsidy, federal dollars flow automatically as long as charities satisfy very general criteria.

As a result, these subsidies are especially …

Rejecting Charity: Why The Irs Denies Tax Exemption To 501(C)(3) Applicants, Terri Lynn Helge

Faculty Scholarship

New charitable organizations generally must file an application for exemption (Form 1023) and await approval from the Internal Revenue Service. Unfortunately, the criteria the Internal Revenue Service uses to evaluate applications has not always been transparent. If an application is approved, the Internal Revenue Service determination letter and the application for exemption are required to be made publicly available and can be requested from the Internal Revenue Service or the organization itself. Prior to 2004, in the case of denials, neither the application nor the Internal Revenue Service’s correspondence setting forth its rationale for the denial were made publicly available. …

Social Technology & The Origins Of Popular Philanthropy, Brian L. Frye

Law Faculty Scholarly Articles

The prevailing theory of charity law holds that the charitable contribution deduction is justified because it solves market and government failures in charitable goods by compensating for free riding on charitable contributions. This Article argues that many market and government failures in charitable goods are actually caused by transaction costs, and that social technology can solve those market and government failures by reducing transaction costs. Specifically, it shows that in the early twentieth century, the social technology of charity chain letters solved market and government failures in charitable contributions and facilitated the emergence of popular philanthropy.

Video: Charities For Fun & Profit: Serving & Representing Them, Adam Scott Goldberg

NSU Law Seminar Series

Registration & Continental Breakfast:

7:30 to 7:55 am

Atrium & Lecture Room

Welcome & Introduction:

7:55 to 8:00 am

Elena Rose Minicucci, J.D., Director of Alumni Relations, NSU Shepard Broad Law Center

• Welcome
• Introduce Adam Scott Goldberg, J.D., LL.M. of Krause & Goldberg, PA Weston, Florida.

Seminar Presentation

8:00 am to 9:30 am

Adam Scott Goldberg, J.D., LL.M.

I. Introduction

1. What is the difference between Tax Exempt and Not-For-Profit?

2. Why is the difference between a Calendar Year and a Fiscal Year?

A. Many Charitable Organizations use July 1st to June 30th

B. Tax returns are due 4.5 months …

Copyright As Charity, Brian L. Frye

Law Faculty Scholarly Articles

Copyright and charity law are generally considered distinct and unrelated bodies of law. But they are actually quite similar and complement each other. Both copyright and charity law are intended to increase social welfare by solving market and government failures in public goods caused by free riding. Copyright solves market and government failures in works of authorship by providing an indirect subsidy to marginal authors, and charity law solves market and government failures in charitable goods by providing an indirect subsidy to marginal donors. Copyright and charity law complement each other by solving market and government failures in works of …

The First Amendment Protection Of Charitable Speech, Joseph Mead

All Maxine Goodman Levin School of Urban Affairs Publications

Although philanthropy ranks among the best of human endeavors, local governments across the country have severely restricted charitable entreaties by organizations and individuals alike, all in the name of eliminating "panhandlers." These laws rely on premises that increasingly conflict with Supreme Court instructions about the freedom of speech. Yet lingering uncertainty about where exactly charitable restrictions fall in First Amendment jurisprudence has encouraged local governments to innovate new statutory formulations to wage war on expressions of poverty in order to "clean up" their cities. This piece examines seven arguments commonly used to justify restrictions on charitable solicitations and finds them …

Empowering Employees To Prevent Fraud In Nonprofit Organizations, John M. Bradley

All Faculty Scholarship

This Article examines the significant problem of fraud within nonprofit organizations and demonstrates that current anti-fraud measures do not adequately reflect the important role employees play in perpetuating or stopping fraudulent activity. Psychological and organizational behavior studies have established the importance of (1) participation and (2) peers in shaping the behavior of individuals within the organizational context. This Article builds on that research and establishes that to successfully combat fraud, organizations must integrate employees into the design, implementation, and enforcement of anti-fraud strategy and procedures. Engaged, empowered employees will be less likely to commit fraud and more likely to dissuade …

S14rs Sgr No. 21 (Prohibited Items At Athletic Entry Gate), Latham, Guillory

Student Senate Enrolled Legislation

No abstract provided.

Standing In The Shadow Of Tax Exceptionalism: Expanding Access To Judicial Review Of Federal Agency Rules, Lynn D. Lu

Publications and Research

No abstract provided.

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 …

Sunshine, Stakeholders, And Executive Pay: A Regression-Discontinuity Approach, Brian D. Galle, David I. Walker

Faculty Scholarship

We evaluate the effect of highly salient disclosure of private college and university president compensation on subsequent donations using a quasi-experimental research design. Using a differences-in-discontinuities approach to compare institutions that are highlighted in the Chronicle of Higher Education’s annual "top 10" list of most highly-compensated presidents against similar others, we find that appearing on a top 10 list is associated with reduced average donations of approximately 4.5 million dollars in the first full fiscal year following disclosure, despite greater fundraising efforts at "top 10" schools. We also find some evidence that top 10 appearances slow the growth of compensation, …

The Political Speech Of Charities In The Face Of Citizens United: A Defense Of Prohibition, Roger Colinvaux

Scholarly Articles

The Supreme Court’s decision in Citizens United v. Federal Election Commission makes a Supreme Court challenge to the tax law rule that prohibits charities from involvement in political activities more likely, and a reexamination of the political speech of charities necessary. Part I of the Article surveys the history of the political activities prohibition in order to emphasize that it was not a reactionary policy but quite considered, and that there are strong State interests supporting it, including protection of the definition of charity from further dilution. Part II of the Article analyzes Citizens United in detail and argues that …

The Role Of Charity In A Federal System, Brian Galle

Georgetown Law Faculty Publications and Other Works

This Article critiques the prevailing justification for subsidies for the charitable sector, and suggests a new alternative. According to contemporary accounts, charity corrects the failure of the private market to provide public goods, and further corrects the failure of government to provide goods other than those demanded by the median voter.

However, the claim that government can meet the needs only of a single “median voter” neglects both federalism and public choice theory. Citizens dissatisfied with the services of one government can move to or even create another. Alternatively, they may use the threat of exit to lobby for local …

Charity In The 21st Century: Trending Toward Decay, Roger Colinvaux

Scholarly Articles

The Article argues that the federal tax law framework relating to charitable organizations is decaying. Through an overview of the historical development of the law relating to charity in the 20th century, the Article shows that the statutory law has passively accommodated significant growth of the charitable sector without demanding any rigor of the sector in the form of positive requirements or quantitative measures. This has led to growth without meaningful oversight – a recipe for problems. The Article then provides an overview of many of the scandals that engulfed the sector during the early 21st century and shows that …

Charities And Lobbying: Institutional Rights In The Wake Of Citizens United, Lloyd Hitoshi Mayer

Journal Articles

One of the many aftershocks of the Supreme Court’s landmark decision in Citizens United v. FEC is that the decision may raise constitutional questions for the long-standing limits on speech by charities. There has been much scholarly attention both before and after that decision on the limit for election-related speech by charities, but much less attention has been paid to the relating lobbying speech limit. This article seeks to close that gap by exploring that latter limit and its continued viability in the wake of Citizens United. I conclude that while Citizens United by itself does not undermine the limit …

The Taxation Of Cause-Related Marketing, Terri Lynn Helge

Faculty Scholarship

With the economy in turmoil, charitable organizations are looking to nontraditional sources of financing to supplement contributions and fee-based revenues. One potentially lucrative source of revenue stems from cause-related marketing. Cause-related marketing is the public association of a for-profit company with a charitable organization to promote the company’s product or service in order to raise money for the charitable organization. Introduced almost twenty-five years ago, cause-related marketing has now become a $1 billion a year industry. Cause-related marketing has evolved beyond mere use of a charitable organization’s name to an apparent union for the purpose of promoting products that carry …

Charity And Information: Correcting The Failure Of A Disjunctive Social Norm, Brian Broughman, Robert Cooter

Articles by Maurer Faculty

Charitable donations fund social goods that the state and markets undersupply. Despite widespread belief in the importance of private charity, most Americans donate little or nothing. Experiments in behavioral economics show that anonymity, not human nature, causes low contributions. Anonymity poses a particular challenge for charity because of the special character of the obligation. Charity is a disjunctive social norm, meaning the obligation is owed to ‘A or B or C or …’. Disclosure of each individual’s aggregate conduct is necessary for the effectiveness of any disjunctive social norm. To revitalize charity we propose a public registry where each taxpayer …

Politics At The Pulpit: Tax Benefits, Substantial Burdens, And Institutional Free Exercise, Lloyd Hitoshi Mayer

Journal Articles

More than fifty years ago, Congress enacted a prohibition against political campaign intervention for all charities, including churches and other houses of worship, as a condition for receiving tax deductible contributions. Yet the IRS has never taken a house of worship to court for alleged violation of the prohibition through political comments from the pulpit, presumably at least in part because of concerns about the constitutionality of doing so. This decision is surprising, because a careful review of Free Exercise Clause case law - both before and after the landmark Employment Division v. Smith decision - reveals that the prohibition …

The Lds Church, Proposition Eight, And The Federal Law Of Charities, Brian Galle

Georgetown Law Faculty Publications and Other Works

This brief Commentary considers the merits of the argument that the Mormon Church's support for Proposition Eight violated federal tax law. I take as given the facts reported by the New York Times and other major news outlets. Although the facts are not really in dispute, much of the underlying law is. There are few clear guidelines governing lobbying by charities. In the end it is impossible to say with certainty whether the Church's conduct will have any tax-law repercussions. My conclusion that there is uncertainty, though, stands in contrast with existing claims that the expenditures of the LDS Church …

S08rs Sgb No. 5 (Fashion Show), Jackson, Sellers, Rogers, Juneja

Student Senate Enrolled Legislation

No abstract provided.