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Trends In Nonprofit Corporation Law In 1976 Aug 2015

Trends In Nonprofit Corporation Law In 1976

Akron Law Review

THE INTEREST OF most Americans in nonprofit, and especially in charitable, organization work has long been a notable feature of American society - having been remarked upon as early as the 1830's in Baron de Tocqueville's analysis of American democracy.' That tendency continues today, even in times of economic recession.2 The economic crunch of 1975-76 saw an increase, not a decrease, in American donations to charitable organizations:' specifically, a 6.5 percent increase in charitable donations ($26.88 billion in 1975, compared to $25.23 billion in 1974), though contributions by foundations and businesses declined by 4.7 and 4 percent respectively. Religious charities …


Trends In Nonprofit Corporation Law In 1976 Aug 2015

Trends In Nonprofit Corporation Law In 1976

Akron Law Review

THE INTEREST OF most Americans in nonprofit, and especially in charitable, organization work has long been a notable feature of American society - having been remarked upon as early as the 1830's in Baron de Tocqueville's analysis of American democracy.' That tendency continues today, even in times of economic recession. The economic crunch of 1975-76 saw an increase, not a decrease, in American donations to charitable organizations:' specifically, a 6.5 percent increase in charitable donations ($26.88 billion in 1975, compared to $25.23 billion in 1974), though contributions by foundations and businesses declined by 4.7 and 4 percent respectively. Religious charities …


Strengthening Charity Law: Replacing Media Oversight With Advance Rulings For Nonprofit Fiduciaries, Linda Sugin Jan 2015

Strengthening Charity Law: Replacing Media Oversight With Advance Rulings For Nonprofit Fiduciaries, Linda Sugin

Faculty Scholarship

This Article considers three urgent challenges facing the charitable community and its state regulators: too little fiduciary duty law for nonprofits, the rise of media enforcement of wrongdoing in charities, and an inherent tension in the state’s dual role as enforcer and protector of the nonprofit sector. It analyzes whether the scarcity of law is really a problem by comparing nonprofit organizations with business organizations and concludes that charities lack the selfenforcement mechanisms of businesses and therefore need more government guidance. It evaluates whether the media has made governmental supervision obsolete and expresses skepticism about the press displacing state oversight. …


Empowering Employees To Prevent Fraud In Nonprofit Organizations, John M. Bradley Jan 2015

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 …


What Went Wrong: Prudent Management Of Endowment Funds And Imprudent Endowment Investing Policies, James J. Fishman Jan 2014

What Went Wrong: Prudent Management Of Endowment Funds And Imprudent Endowment Investing Policies, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

Most colleges and universities of all sizes have an endowment, a fund that provides a stream of income and maintains the corpus of the fund in perpetuity. Organizations with large endowments, such as colleges, universities, and private foundations, all finance a significant part of their operations through the return received from the investment of this capital. This article examines the legal framework for endowment investing, endowment investing policies, their evolution to more sophisticated and riskier strategies, and the consequences evinced during the financial crisis of 2008 and beyond. It traces the approaches to endowment investing and chronicles the rise and, …


What We Talk About When We Talk About Tax Exemption, Philip Hackney Jan 2013

What We Talk About When We Talk About Tax Exemption, Philip Hackney

Articles

Under the Internal Revenue Code, certain nonprofit organizations are granted exemption from federal income tax (“tax-exemption”). Most tax-exemption rationales assume tax-exemption is a subsidy for organizations such as charities that provide some underprovided good or service. These theories assume there should be a tax on the income of nonprofit organizations but provide no justification for this assumption. This article contributes to the literature by examining the corporate income tax rationales as a proxy for why we might tax nonprofit organizations. The primary two theories hold that the corporate tax is imposed to: (1) tax shareholders (“shareholder theory”), and (2) regulate …


The Fatal Design Defects Of L3cs, Daniel S. Kleinberger Jan 2010

The Fatal Design Defects Of L3cs, Daniel S. Kleinberger

Faculty Scholarship

This article argues that the L3C is an unnecessary and unwise contrivance, and it's very existence is inherently misleading. The notion that an L3C should have privileged status under the Internal Revenue Code (known as the Code) for access to tax-exempt foundation resources is inescapably at odds with the key policies that underpin the relevant Code sections, and L3Cs are not on track-let alone on a fast track-to receive special status under the Code. An ordinary limited liability company (LLC) can perform precisely the same functions proclaimed of L3Cs. In addition, because of technical flaws, the L3C legislation adopted to …


The Attack On Nonprofit Status: A Charitable Assessment, James R. Hines Jr., Jill R. Horwitz, Austin Nichols Jan 2010

The Attack On Nonprofit Status: A Charitable Assessment, James R. Hines Jr., Jill R. Horwitz, Austin Nichols

Articles

American nonprofit organizations receive favorable tax treatment, including tax exemptions and tax-deductibility of contributions, in return for their devotion to charitable purposes and restrictions not to distribute profits. Recent efforts to extend some or all of these tax benefits to for-profit companies making social investments, including the creation of the new hybrid nonprofit/for-profit company form known as the Low-Profit Limited Liability Company, threaten to undermine the vitality of the nonprofit sector and the integrity of the tax system. Reform advocates maintain that the ability to compensate executives based on performance and to distribute profits when attractive investment opportunities are scarce …


Introduction Symposium: Nonprofit Law, Economic Challenges, And The Future Of Charities: Introduction, Linda Sugin Jan 2007

Introduction Symposium: Nonprofit Law, Economic Challenges, And The Future Of Charities: Introduction, Linda Sugin

Faculty Scholarship

This Symposium grew out of what I see as the public/private conundrum facing the nonprofit community and the law governing it. Nonprofit organizations are being called upon to better resemble for-profit organizations in a variety of ways. Those calls come from different sources-from donors increasingly interested in results that can be understood in terms parallel to bottom-line assessments to which businesses are accustomed, from cuts in government funding and increased programming that make nonprofits add more businesslike activities to finance their work, and from increasing numbers of for-profit competitors who have been able to mobilize technology and marketing to succeed …


Does Nonprofit Ownership Matter?, Jill R. Horwitz Jan 2007

Does Nonprofit Ownership Matter?, Jill R. Horwitz

Articles

In recent years, policymakers have increasingly questioned whether nonprofit institutions, particularly hospitals, merit tax exemption. They argue that nonprofit hospitals differ little from their for-profit counterparts in the provision of charity care and, therefore, should either lose their tax-exempt status or adhere to new, strict, and specific requirements to provide free services for the poor. In this Article, I present evidence that hospital ownership-whether it is for-profit, nonprofit, or government owned-has a significant effect on the mix of medical services it offers. Despite notoriously weak enforcement mechanisms, nonprofit hospitals act in the public interest by providing services that are unlikely …


The Common Law Power Of The Legislature: Insurer Conversions And Charitable Funds, Jill R. Horwitz, Marion R. Fremont-Smith Jan 2005

The Common Law Power Of The Legislature: Insurer Conversions And Charitable Funds, Jill R. Horwitz, Marion R. Fremont-Smith

Articles

New York's Empire Blue Ccoss and Blue Shield conversion from nonprofic cofor­ profic form has considerable legal significance. Three aspects of the conversion ma.ke checase unique: the role of the scace legislature in directing the disposicion of the conversion assets, che face chac it made itself che primary beneficiary of chose assets, and the actions of che scace attorney general defending the state rather than che public inceresc in che charitable assets. Drawing on several cenruries of common Law rejecting the Legislacive power to direct the disposition of charitable funds, chis article argues chat the legislature lacked power cocontrol che …


Charitable State Registration And The Dormant Commerce Clause, Charles Nave Jan 2004

Charitable State Registration And The Dormant Commerce Clause, Charles Nave

William Mitchell Law Review

Charitable solicitation in the U.S. is regulated by “the several States.” For most of the nation's history, charities tended to be local endeavors, raising money and providing relief in their immediate vicinities. In the latter half of the twentieth century, charities increasingly grew beyond these local origins as new technologies enabled even the smallest charities to develop a national reach with direct mail and telemarketing campaigns. Nevertheless, primary authority for regulating charitable solicitations remained with the states.


Note: Get The Balance Right: Finding An Equilibrium Between Charitable Solicitation, Fraud, And The First Amendment In Illinois Ex Rel. Madigan V. Telemarketing Associates, Inc., 538 U.S. 600 (2003), Christopher R. Sullivan Jan 2004

Note: Get The Balance Right: Finding An Equilibrium Between Charitable Solicitation, Fraud, And The First Amendment In Illinois Ex Rel. Madigan V. Telemarketing Associates, Inc., 538 U.S. 600 (2003), Christopher R. Sullivan

William Mitchell Law Review

This Note first examines the history of the relevant law in the areas of fraud, charitable solicitation, and prior restraints. Specifically, it examines the three leading cases on regulation of charitable fundraising speech: Schaumburg, Munson, and Riley. Next, the Note discusses the history and holding of Illinois ex rel. Madigan v. Telemarketing Associates, Inc. Next, this Note will explore the holding in Telemarketing Associates in light of Schaumburg and its progeny. This analysis includes a survey of recent and pending fraud litigation against charities and their fundraisers, and a review of the Federal Trade Commission's “Operation Phoney Philanthropy.” Finally, the …


Tax-Exempt Organizations And Internet Commerce: The Application Of The Royalty And Volunteer Exceptions To Unrelated Business Taxable Income, Leeanna Izuel, Leslie Y. Park Jan 2004

Tax-Exempt Organizations And Internet Commerce: The Application Of The Royalty And Volunteer Exceptions To Unrelated Business Taxable Income, Leeanna Izuel, Leslie Y. Park

William Mitchell Law Review

The Internet has created new opportunities for both large and small tax-exempt organizations (EOs) to raise funds through relationships with online vendors and “charity malls.” EOs provide hyperlinks to online vendors' websites through affiliate arrangements. In return, EOs receive payments based on a percentage of sales made at the vendor websites attributable to the EOs' hyperlinks. EOs also enter into payment arrangements with charity malls. Charity malls are commercial websites that provide hyperlinks to online vendors and attract consumers by pledging to donate a percentage of any purchases made through the malls to charity. There is no express authority stating …


Opining On The 501(C)(3) Tax-Free Bond Transaction: Avoiding Common Borrower's Counsel Misconceptions, Gina M. Torielli Jan 2004

Opining On The 501(C)(3) Tax-Free Bond Transaction: Avoiding Common Borrower's Counsel Misconceptions, Gina M. Torielli

William Mitchell Law Review

There are two areas where borrowers’ counsel can easily misstep when representing a charitable organization in a tax-exempt bond deal. The first is failing to recognize that “private business use” under § 145 can (and does) result in situations that would not constitute an “unrelated trade or business” of the borrower. The second occurs when borrowers’ counsel conflate the test for “unrelated business taxable income” under § 512 with the use of “unrelated trades or businesses” in the definition of a qualified 501(c)(3) bond under § 145. A mistake in either of these areas could lead to an erroneous opinion …


Decoupling Tax Exemption For Charitable Organizations, Charles A. Borek Jan 2004

Decoupling Tax Exemption For Charitable Organizations, Charles A. Borek

William Mitchell Law Review

[T]his article proposes a new approach to defining the term “charitable” for tax purposes that both respects the essence of tax-exempt eleemosynary activity and injects an element of clarity that has eluded the use of the term in modern tax parlance. Part I traces the evolution of the legal concept of charity, with emphasis on the shift in focus from poverty relief to social action facilitated through the device of trust law. I argue that it is in this shift of emphasis that the concept of charity became entangled in property concepts and thereby transformed into something wholly unrelated to …


Improving Charitable Accountability, James J. Fishman Jan 2003

Improving Charitable Accountability, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

This Article focuses upon a persistent problem of the nonprofit sector--its lack of accountability to the public. Director, officer, and organizational responsibilities will be analyzed. Past and current approaches to secure accountability of charitable assets will be discussed, and a proposal for improving charitable accountability will be suggested through the creation of public-private charity commissions at the state level under the aegis of the attorney general.


Why We Need The Independent Sector: The Behavior, Law, And Ethics Of Not-For-Profit Hospitals, Jill R. Horwitz Jan 2003

Why We Need The Independent Sector: The Behavior, Law, And Ethics Of Not-For-Profit Hospitals, Jill R. Horwitz

Articles

Among the major forms of corporate ownership, the not-for-profit ownership form is distinct in its behavior, legal constraints, and moral obligations. A new empirical analysis of the American hospital industry, using eleven years of data for all urban general hospitals in the country, shows that corporate form accounts for large differences in the provision of specific medical services. Not-for-profit hospitals systematically provide both private and public goods that are in the public interest, and that other forms fail to provide. Two hypotheses are proposed to account for the findings, one legal and one moral. While no causal claims are made, …


A Call For More Lenient Director Liability Standards For Small, Charitable Nonprofit Corporations, David W. Barrett Oct 1996

A Call For More Lenient Director Liability Standards For Small, Charitable Nonprofit Corporations, David W. Barrett

Indiana Law Journal

No abstract provided.


Corporate Philanthropy And The Business Benefit: The Need For Clarity, Shelby D. Green Jan 1990

Corporate Philanthropy And The Business Benefit: The Need For Clarity, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

The need for clarity or harmony is the subject of this essay. Part II summarizes a philosophical debate between two scholars on the mission of the corporation. Part III briefly traces the historical development of the relevant principles and Part IV examines the actual philanthropic practices of several large publicly held corporations. Finally, Part V considers the continuing significance of the common law rule in light of these practices and urges support for the ALI proposal.


Federal Tax Aspects Of Non-Profit Organizations, Marcus Schoenfeld Jan 1965

Federal Tax Aspects Of Non-Profit Organizations, Marcus Schoenfeld

Villanova Law Review

No abstract provided.