Organizations Law Commons^™

Planning And Practice - The Rooftops Project: Report Summarizing Results Of A Survey Of Not-For-Profit Organizations, James Hagy

Rooftops Project

The Rooftops Project's first national field study of the attitudes and approaches of not-for-profit organizations with respect to the owned, leased or hosted real estate that supports their core missions and operations.

The Power Of Warm Glow, Usha Rodrigues

Scholarly Works

Professor Brian Galle’s Keep Charity Charitable is a thoughtful contribution to the ongoing conversation about the proper tax treatment of charitable organizations. I largely agree with Galle’s arguments, but I would like to offer two criticisms of his positions: first, Galle overstates the problem posed by for-profit firms offering charitable services; and second, he understates the power of “warm glow” in the nonprofit organization.

All Charities Are Property-Tax Exempt, But Some Charities Are More Exempt Than Others, Evelyn Brody

All Faculty Scholarship

Attention from the media notwithstanding, the nonprofit sector continues to achieve remarkable success in state supreme courts and statehouses in defending property-tax exemptions. But budget pressures remain. While the intermediate use of “payments in lieu of taxes” has not yet become a systematic compromise solution, PILOTs are attracting growing interest from local taxing jurisdictions. This Article highlights three issues— who decides the parameters of exemption, legislatures or courts; what are the specific factors and vulnerable subsectors; and how exemption is granted or withheld in practice—and concludes with several PILOT case studies. The Appendix sets forth a fifty-one-jurisdiction review of state …

Commentary: The Federalization Of Nonprofit Regulation And Its Discontents, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

The Internal Revenue Service, at the instigation of the Senate Finance committee-the Service's primary congressional overseer-has commenced a corporate governance initiative by issuing announcements and guidelines, as well as providing educational advice as to how charities' internal affairs should be ordered. The Service also has revised the Form 990 Annual Information Return, a publicly available document, so that it contains mandatory corporate governance questions.2 Nonprofit organizations traditionally have been creatures of state law and overseen by state agencies and regulators.3 What is unique about the corporate governance initiative is the Service's admission that it lacks express statutory authority for this …

Chasing Profits - Disregarding Values: Legal Persona Of Elite Schools And Their Destructive Tax-Exempt Status, 42 J. Marshall L. Rev. 1073 (2009), Oksana Koltko

UIC Law Review

No abstract provided.

A Comprehensive Solution For A Targeted Problem: A Critique Of The Eu’S Home State Taxation And Ccctb Initiatives, Ilan Benshalom

Faculty Working Papers

This Article examines the European Commission's Home State Taxation and CCCTB initiatives. It argues that both proposals undermine the long-term objective of attaining a consolidated European corporate tax regime. It suggests an alternative strategy, which offers a comprehensive formulary-tax-allocation-solution in one of the hard to tax sectors, such as the financial sector. This strategy requires more efforts and political risk-taking, but would better promote the long-term objective of a consolidated EU corporate tax regime.

An edited version of this article is scheduled to be published in a future issue of European Taxation (an IBFD publication).

A Complete Property Right Amendment, John H. Ryskamp

ExpressO

The trend of the eminent domain reform and "Kelo plus" initiatives is toward a comprehensive Constitutional property right incorporating the elements of level of review, nature of government action, and extent of compensation. This article contains a draft amendment which reflects these concerns.

Fiction, Form And Substance In Subchapter K -- Approaching Partnership Mergers, Divisions And Incorporations, Heather M. Field

ExpressO

The tax consequences of substantively equivalent partnership mergers, divisions and incorporations can vary dramatically depending on the form of the transaction. This disparate treatment arises because the tax analysis of these partnership transactions inconsistently adheres to the “form” of the transaction and limits the use of legal “fictions”. This part-form, part-fiction approach distorts parties’ incentives about whether and how to undertake such transactions and can make the transactions less efficient, all without materially advancing other policy goals. This result is exacerbated by non-tax business exigencies that restrict parties’ abilities to implement certain transaction forms and by the increase in “formless” …

Breaking The Bank: Revisiting Central Bank Of Denver After Enron And Sarbanes-Oxley, Celia Taylor

ExpressO

No abstract provided.

A Foundation For International Taxation: The Institutional Competence Of Nations, Eric T. Laity

ExpressO

This Article proposes a conceptual foundation for the field of international tax law. The Article refers to this foundation as the institutional competence of nations in global economic development. A nation’s institutional competence is its discretion to make decisions in pursuit of our collective goal of global economic development, discretion that is subject to a number of standards and limitations.

The Article constructs the institutional competence of nations in global economic development from institutional economics, simple game theory, and the literature on social norms. The Article expresses the institutional competence of nations through standards and limitations that reduce the abuse …

Taxing Nonprofits Out Of Business, Diane L. Fahey

Washington and Lee Law Review

In the last twenty years, the number of nonprofit organizations has exploded; there are more than 1.2 million organizations registered with the Internal Revenue Service. Donations and government grants have decreased, while at the same time, nonprofits are facing increasing demands on their services. As a result, nonprofit organizations have been forced to devise new strategies for acquiring funds. Some nonprofit organizations have resorted to renting their mailing lists to businesses and other nonprofit organizations and have licensed their names and logos to be displayed on affinity credit cards offered by banks to consumers. Nonprofit organizations have argued that these …

Ancillary Joint Ventures And The Unanswered Questions After Revenue Ruling 2004-51, Gabriel O. Aitsebaomo

ExpressO

Ever since the Internal Revenue Service (the "Service") issued Revenue Ruling 98-15… in which it emphasized "control" as a critical factor in determining whether a tax-exempt hospital that enters into a whole-hospital joint venture with a for-profit entity would continue to maintain its tax-exemption, practitioners and scholars alike have sought guidance from the Service regarding whether such "control" would also be required of an exempt organization that enters into an "ancillary joint venture" with a for-profit entity. In response, the Service issued Revenue Ruling 2004-51 on May 6, 2004.

… In Revenue Ruling 2004-51, the Service enunciated that a tax-exempt …

Quest For Cash: Exempt Organizations, Joint Ventures, Taxable Subsidiaries, And Unrelated Business Income, J. Patrick Plunkett, Heidi Neff Christianson

William Mitchell Law Review

Most “for-profit” or “business” activities of exempt organizations take one of three forms: (A) The exempt organization may undertake to perform the business activities within the existing structure of the exempt organization. (B) The exempt organization may form a “taxable” subsidiary or affiliate which will perform the business activities. (C) The exempt organization may “partner” with other individuals and entities (both nonprofit and for-profit) to form a corporation, limited liability company (LLC), partnership, joint venture, strategic alliance, or other collaborative effort which will perform the “for-profit” activities. Depending in part upon which of these forms is chosen, any business activities …

A Crash At The Crossroads: Tax And Campaign Finance Laws Collide In Regulation Of Political Activities Of Tax-Exempt Organizations, Elizabeth Kingsley, John Pomeranz

William Mitchell Law Review

[T]his article will look at the tax law's definitions of “political” activity by § 501(c)(3)s, other § 501(c)s, and § 527s, identifying the many points of congruence and the occasional important differences. We further attempt to explain why the FEC's detour onto the slippery pavement of tax law led to this crash, and why attempts to follow the tax law's definitions of political activity will inevitably lead regulatory efforts astray. The legal roads of tax and election law begin from different policy rationales, intersect in seemingly similar concepts, but then proceed to wildly different legal destinations. We conclude with a …

The Changing Accountability Climate And Resulting Demands For Improved Fiduciary Capacity Affecting The World Of Public Charities, Ellen W. Mcveigh, Eve R. Borenstein

William Mitchell Law Review

In the wake of the scandals at major corporations such as Enron and WorldCom, attorneys general of several states are proposing additional legislative reforms to ensure financial accountability of nonprofit organizations, and both the Senate Finance Committee and House Ways and Means Committee have recently held hearings on proposed reforms for exempt organizations. These increasing demands for accountability have, in turn, amplified the pressure on boards of directors of all nonprofit organizations to govern effectively. But what is effective governance in this new climate of accountability, particularly for organizations holding exalted status under I.R.C. § 501(c)(3) and concomitant “public charity” …

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

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 …

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 …

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

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 …

Sin, Salvation, And The Law Of Charities, Corwin R. Kruse

William Mitchell Law Review

Review of Governing Nonprofit Corporations: Federal and State Law and Regulation. By Marion R. Fremont-Smith. Belknap Press, 2004. 570 pages, $95.

Race Conscious Affirmative Action By Tax Exempt 501(C)(3) Corporations After Grutter And Gratz, David A. Brennen

Law Faculty Scholarly Articles

The Equal Protection Clause of the Fourteenth Amendment generally acts as a legal limit on the permissible bounds of government action. Accordingly, public universities and other government entities are constitutionally prohibited from engaging in acts that violate equal protection of the laws. The Supreme Court recently reinforced this point when it ruled, in two related cases, that public universities may consider the race of applicants when making admissions decisions, so long as an applicant's race does not amount to a deciding factor when granting admission. By its very terms, the constitutional limitation imposed by the Equal Protection Clause only directly …

Rendering Unto Caesar Or Electioneering For Caesar--Loss Of Church Tax Exemption For Participation In Electoral Politics, Alan L. Feld

Faculty Scholarship

The restriction on church participation in political campaigns contained in the Internal Revenue Code operates uneasily. It appears to serve the useful purpose of separating the spheres of religion and electoral politics. But the separation often is only apparent, as churches in practice signal support for a particular candidate in a variety of rays that historically have not cost them their exemptions. Although the limited enforcement by the Internal Revenue Service has reflected the sensitive nature of the First Amendment values present, the federal government should provide more formal elaboration by statute or regulation. Focus on the use of funds …

Charities In Tax Reform: Threats To Subsidies Overt And Covert, Evelyn Brody

All Faculty Scholarship

Fundamental tax reform would do far more damage to charities than the obvious repeal of the deduction for charitable contributions. Over the decades, charities have quietly garnered billions of dollars worth of indirect benefits. For example, the largest tax expenditure - the exclusion from workers' income of employer-provided health insurance - has fattened nonprofit hospitals, and the new tuition tax credits promise to spur tuition inflation. Tax reform presents an opportunity to eliminate tax subsidies and enact any desired direct expenditures for specific public goods and activities. However, converting tax expenditures to direct outlays would likely take the form of …

Hocking The Halo: Implications Of The Charities' Winning Briefs In Camps Newfound/Owatonna, Inc., Evelyn Brody

All Faculty Scholarship

In Camps Newfound/Owatonna, the petitioner charity – with important assistance from friends-of-the-court charities – persuaded the Supreme Court to overturn a Maine statute that granted property tax exemption only to those charities primarily serving state residents. Camps Newfound/Owatonna, Inc. v. Town of Harrison, 117 S. Ct. 1590 (1997). Given this statute's facial discrimination, why was victory a 5-4 squeaker? The charities naturally reasoned that coming within the Commerce Clause requires proving that charities engage in commerce (particularly interstate commerce). In their focus on the financial impact of the discriminatory statute, however, the charities never offered a positive construct of property-tax …

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption (Symposium), Evelyn Brody

All Faculty Scholarship

No abstract provided.

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption, Evelyn Brody

All Faculty Scholarship

This piece explores the broad financial relationship between the public and the charitable sectors. Tax exemption operates as a peculiar subsidy - offering the greatest benefits to charities carrying on the most profitable activities and owning the most valuable property. Perhaps, then, the property tax and income tax exemption of charities can be explained by a 'sovereign' view of the charitable sector. Resembling the federal tax treatment of state and local governments, exemption for charities respects the independence of the nonprofit sector, and minimizes the involvement of charities in the political process. Unfortunately, the long history of Anglo American philanthropy …

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; …

Hocking The Halo: Implications Of The Charities' Winning Briefs In Camps Newfound/Owatonna, Inc. (Symposium), Evelyn Brody

All Faculty Scholarship

No abstract provided.

The Proposed Corporate Sponsorship Regulations: Is The Treasury Department "Sleeping With The Enemy"?, David A. Brennen

Law Faculty Scholarly Articles

In 1993, the Treasury Department (the Treasury) issued a proposed regulation outlining when money received by a charity from a corporate sponsor would be subject to federal income tax. In defining the phrase "trade or business," the proposed regulation addresses the extent to which sponsorship payments to charities will be treated by the Treasury as having been made in return for advertising on behalf of the sponsor, thus subjecting the payment to income tax. In the proposed regulation, the Treasury concludes that a charity's use of a corporate sponsor's name in the title of a charitable event is a mere …