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Foundation Not Liable For Actions of Loaned Exec

Court says grantmaker did not have control over doctor working for another agency
A U.S. private foundation that loaned a physician on its staff to an international agency that conducted nonconsensual human medical experiments cannot be held liable for the actions of the loaned executive when it did not have control over his activities, the Fourth Circuit Court of Appeals has affirmed. The Court has upheld the earlier decision of a federal District Court in Maryland holding that the foundation could not be liable because the physician was not acting as its agent in conducting the experiments. More than 840 victims and relatives of victims brought suit under the Alien Tort Statute (“ATS”) against Johns Hopkins, the Rockefeller Foundation, and Bristol-Myers Squibb Company...

Utah Repeals Charitable Solicitation Registration Requirement

Will not accept registrations after May 1, will require Form 990 filing in 2025
The state of Utah has recently, and without fanfare, passed a statute ( H.B.43 ) that repeals the requirement for most charities to file charitable solicitation registration forms with the state, commencing with the effective date of the statute on May 1, 2024. The Act substitutes a requirement that most charities file an “unredacted” copy of their Form 990 tax information return commencing in January, 2025, but gives the Division of Consumer Protection the authority to spell out specific rules for the timing and format of the filing. A charity will have to file with the state only if required to file with the Internal Revenue Service, but will not be required to file a copy of a 990-T...

Court Affirms Trial Court Decision Denying Termination of Charitable Trust

Decision was within discretion to determine that burdens were not “unreasonably out of proportion to the charitable benefits”
The Pennsylvania Supreme Court has affirmed a decision by a state trial court holding that a charitable trust providing support of Virginia Military Institute should not be terminated because the additional burdens of operating as a separate private foundation were not “unreasonably out of proportion to the charitable benefits” of the trust. Richard H. Wells, a Class of 1924 graduate of Virginia Military Institute who was president of the Oil City Trust Company, had created a trust designating the residue for the benefit of VMI in 1956. Over the years, he had amended the Trust several times, to provide that the trustees give favorable consideration to providing the income to VMI, and in...

Student, Faculty and Donor Lists Are Not Trade Secrets

Court dismisses claims that former exec unfairly used information for new school
When the executive director of the Bronx Conservatory of Music failed to reach agreement with the school on an extension of his employment contract in 2020, he shortly thereafter founded the Bronx School of Music and sent emails to his personal contacts, former students, community friends, and donors, seeking to recruit them to his new endeavor. The Conservancy promptly filed suit claiming violation of the federal Trade Secrets Act, misappropriation of trade secrets and unfair competition. The federal District Court in New York City has dismissed the claims on summary judgment. Philip Kwoka is a classically trained pianist who became executive director of the Conservatory in 2015. During...

Multiple Breaches of Trust Can Constitute "Significant Breach” to Remove Trustee

Court affirms removal of private foundation trustee even though some events, alone, might not have caused the action
The Supreme Court of Minnesota has affirmed two lower court decisions holding that a series of incidents involving a breach of trust can cumulatively justify removal of the trustee for “significant” breach of trust, even though some of the breaches alone might not justify removal. It has affirmed the removal of one of the trustees of the Otto Bremer Trust, a $2 billion private foundation located in St. Paul, under the state’s version of the Uniform Trust Code. The Trust was created by Otto Bremer in 1944 and funded with shares of the financial institution he founded, now known as the Bremer Financial Corporation (called the “Bank” in the Supreme Court opinion). He transferred the remaining...

NAACP May Suspend “Life” Membership Of Former Board Member

Court says directors followed the procedures spelled out in the Constitution and Bylaws
An appellate court in Louisiana has held that the National Association for the Advancement of Colored People has appropriately followed its own internal rules in suspending a “lifetime” member for five years for conduct “inimical to the best interests” of the Association. The Court upheld the action to suspend the rights of Ernest L. Johnson, a former member of the national board of directors. According to the Court’s opinion, the NAACP was originally incorporated as a nonprofit corporation in New York in 1911 and was exempt from federal income tax as a charity under section 501(c)(3) of the Tax Code. In 2019, the 501(c)(3) organization changed its name to NAACP Empowerment Programs, Inc...

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