Nonprofit Organizations Law Commons^™

Are Nonprofit Tax Exemptions And Deductions “Federal Financial Assistance”? Should They Be?, Lloyd Hitoshi Mayer

Journal Articles

Two recent federal court decisions have reignited the debate over whether “Federal financial assistance” as used in four federal anti-discrimination statutes includes the tax benefits enjoyed by most nonprofit organizations. Both courts concluded that it does. While an appellate court reversed one decision, and the other case settled without appellate review, these holdings create significant uncertainty. And this uncertainty affects the more than 1.8 million tax-exempt nonprofits, many if not most of which do not receive federal financial assistance through other channels and so could safely conclude these statutes do not reach them, absent these decisions.

This Article first considers …

Charity Law & Blockchain Technology: Using Old Wineskins For New Wine?, Lloyd Hitoshi Mayer

Journal Articles

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 …

21st Century Churches And Federal Tax Law, Lloyd Hitoshi Mayer, Ellen P. Aprill

Journal Articles

Federal tax treatment matters to churches, the term the IRS uses for all types of religious congregations, including synagogues, mosques, and temples. The federal tax provisions most significant for churches and certain entities closely related to them, however, are not those that the public and commentators often assume. Exemption from income tax and the ability of donors to deduct contributions, the benefits that receive the most public attention, in fact provide surprisingly little benefit either to churches in the aggregate or to most individual churches. Their status as organizations taxexempt under section 501(c)(3) of the Internal Revenue Code, moreover, imposes …

Nonprofit Corporations & Politics: The Entity/Coordination Tension, Lloyd Hitoshi Mayer

Journal Articles

Federal tax law treats separate nonprofit corporations as distinct legal entities for almost all purposes, in common with most other areas of law. With respect to political activity, this means that one nonprofit corporation’s lobbying or election related actions are generally not attributed to another nonprofit corporation. This is the case even if the two entities have overlapping or even identical boards of directors. It is also the case even if the two entities collaborate regarding their respective activities and share employees, facilities, outside vendors, and other resources, as long as the entities reasonably allocate the costs for those shared …

Nonprofits, Taxes, And Speech, Lloyd Hitoshi 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 …

A Critical Problem Needing A Bolder Solution?: A Response To Atinuke O. Adediran's "Nonprofit Board Composition", Lloyd Hitoshi Mayer

Journal Articles

The governing boards of nonprofit organizations, and particularly of nonprofits that serve low income and other vulnerable populations, fail to adequately include the populations that they serve. At least this is the common understanding among people familiar with these boards. Professor Atinuke Adediran not only confirms the existence of this problem but clarifies it in four important ways. Professor Adediran also proposes concrete steps to address it; although, the clarity she has brought to the problem raises the question of whether she could have been bolder in her proposed solutions.

The clarity comes from new data, careful consideration of previous …

Tax Exemption Is Not A Subsidy–Except For When It Is, Lloyd Hitoshi Mayer, Ellen P. Aprill

Journal Articles

In this report, Aprill and Mayer argue that there is no uniform answer to the question whether a tax exemption is a subsidy, and they urge policymakers and exempt organizations to note the distinctions when changes to laws or other guidance regarding exemption are under consideration.

What Is Caesar's, What Is God's: Fundamental Public Policy For Churches, Lloyd Histoshi Mayer, Zachary B. Pohlman

Journal Articles

Bob Jones University v. United States is both a highly debated Supreme Court decision and a rarely applied one. Its recognition of a contrary to fundamental public policy doctrine that could cause an otherwise tax-exempt organization to lose its favorable federal tax status remains highly controversial, although the Court has shown no inclination to revisit the case and Congress has shown no desire to change the underlying statutes to alter the case’s result. That lack of action may be in part because the IRS applies the decision in relatively rare and narrow circumstances.
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When Soft Law Meets Hard Politics: Taming The Wild West Of Nonprofit Political Involvement, Lloyd Hitoshi Mayer

Journal of Legislation

Beginning in the 1990s and continuing 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 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 under reporting of political activity in government filings, fly-by-night organizations that exist …

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 Promises And Perils Of Using Big Data To Regulate Nonprofits, Lloyd Histoshi Mayer

Journal Articles

For the optimist, government use of “Big Data” involves the careful collection of information from numerous sources. The government then engages in expert analysis of those data to reveal previously undiscovered patterns. Discovering patterns revolutionizes the regulation of criminal behavior, education, health care, and many other areas. For the pessimist, government use of Big Data involves the haphazard seizure of information to generate massive databases. Those databases render privacy an illusion and result in arbitrary and discriminatory computer-generated decisions. The reality is, of course, more complicated. On one hand, government use of Big Data may lead to greater efficiency, effectiveness, …

A (Partial) Defense Of Section 501(C)(4)'S “Catchall” Nature, Lloyd Histoshi Mayer

Journal Articles

Internal Revenue Code section 501(c)(4) provides exemption from federal income tax for “social welfare” organizations. The vagueness of this term and the failure of the Treasury Department and Internal Revenue Service to interpret it in a manner that would significantly limit that vagueness has led some commentators to criticize this section’s “catchall” nature. While much scholarly attention has been paid to this criticism with respect to the most visible section 501(c)(4) organizations, particularly those involved in political campaign activity and lobbying, almost no attention has been paid to the many less common types of section 501(c)(4) organizations that illustrate that …

The Vatican View On Sport At The Service Of Humanity, Ed Edmonds

Notre Dame Journal of International & Comparative Law

Participation in sport, particularly the opportunity for children to enjoy and learn through play, is a human right and strongly supported by the goals of Catholic social teaching and the efforts of the Olympic Movement and the United Nations. On October 5-6, 2016, the Vatican held the Sport at the Service of Humanity Conference, the first global conference on sport and faith, an initiative promoted by Pope Francis and supported by the International Olympic Committee and the United Nations. This essay focuses on the conference, its vision and goals, and a challenge to use sport to advance human development and …

The Vatican View On Sport At The Service Of Humanity, Ed Edmonds

Journal Articles

Participation in sport, particularly the opportunity for children to enjoy and learn through play, is a human right and strongly supported by the goals of Catholic social teaching and the efforts of the Olympic Movement and the United Nations. On October 5-6, 2016, the Vatican held the Sport at the Service of Humanity Conference, the first global conference on sport and faith, an initiative promoted by Pope Francis and supported by the International Olympic Committee and the United Nations. This essay focuses on the conference, its vision and goals, and a challenge to use sport to advance human development and …

The Cambridge Handbook Of Social Enterprise Law, Lloyd Histoshi Mayer

Books

Book Chapters

Lloyd Hitoshi Mayer, Creating a Tax Space for Social Enterprise, in The Cambridge Handbook of Social Enterprise Law 157 (Benjamin Means & Joseph W. Yockey eds., 2018)

While still relatively few in number compared to traditional nonprofit and for-profit organizations, the rise of social enterprises represents a possible disruption of not only existing models of doing business but also areas of law that in many respects have seen little fundamental change for decades. One such area is domestic tax law, where social enterprises currently find themselves subject to the rules of for-profit activities and entities. Here, both scholars …

Globalization Without A Safety Net: The Challenge Of Protecting Cross-Border Funding Of Ngos, Lloyd Hitoshi Mayer

Journal Articles

More than 50 countries around the world have sharply increased legal restrictions on both domestic non-governmental organizations (“NGOs”) that receive funding from outside their home country and the foreign NGOs that provide such funding and other support. These restrictions include requiring advance government approval before a domestic NGO can accept cross-border funding, requiring such funding to be routed through government agencies, and prohibiting such funding for NGOs engaged in certain activities. Publicly justified by national security, accountability, and other concerns, these measures often go well beyond what is reasonably supported by such legitimate interests. These restrictions therefore violate international law, …

Nonprofits, Speech, And Unconstitutional Conditions, Lloyd Hitoshi Mayer

Journal Articles

This Article proposes a new constitutional framework for approaching the issue of speech-related conditions on government funding received by nonprofits and demonstrates the application of this framework by applying it to the disputes that have reached the Supreme Court in this area. It argues that speech rights are generally inalienable as against the government under the First Amendment, and therefore any abridgement of such rights by the government – whether direct or indirect – is subject to strict scrutiny. As a result, the government is not permitted to buy an organization’s speech (or silence) absent a compelling governmental interest in …

Taxing Social Enterprise, Lloyd Histoshi Mayer, Joseph Ganahl

Journal Articles

The fairly strict divide in the United States between for-profit and nonprofit forms presents a quandary for many entrepreneurs who want to combine doing good with doing well. On the one hand, for-profits offer great flexibility and access to capital and so attract entrepreneurs who would like to take advantage of the ability of for-profits to scale up rapidly to meet growing demand. At the same time, however, for-profit forms also limit entrepreneurs’ ability to engage in philanthropy, due to the fiduciary duties managers owe to the equity holders. On the other hand, nonprofits offer their founders the freedom to …