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VMI Can’t Force Termination Of Charitable Trust for Its Benefit

Pa. Court says potential cost savings do not overcome paramount intent of donor to keep assets in separate trust
The Superior Court of Pennsylvania, an intermediate appellate court, has affirmed a trial court decision and denied a request of the Virginia Military Institute to terminate a $2 million trust for its benefit and transfer the assets to its affiliated foundation outright. In what it called a case of first impression, the Court upheld the position of the trustee bank and the state attorney general that the donor had intended to keep the assets separate from the institution and a difference in cost was not sufficient to deviate from that intent. Richard H. Wells, a graduate of VMI in the class of 1924, became president of the Oil City Trust Company in Pennsylvania in 1952 and significantly...

DAF Donor Lacks Standing To Sue Over Excessive Fees

Court of Appeals affirms trial court decision dismissing case against Schwab Charitable Fund
The Ninth Circuit Court of Appeals has affirmed a trial court decision dismissing a suit by the creator of a donor advised fund who sought reputational and other damages on the ground that the sponsor of the DAF paid excessive fees for managing the investments and deprived him of funds to distribute to other charities. ( See Nonprofit Issues ® Vol. XXXI No. 2 ) The Court has ruled that the donor lacks standing to sue when he has given up all rights to the assets. Philip Pinkert sued Schwab Charitable Fund and claimed he was injured in four ways. He claimed that he had retained a property right to direct the use of the funds and the excessive fees impaired his ability to exercise that...

Descendant of Enslaved People May Sue Harvard for Emotional Distress

Appellate court says university had duty to deal with ancestral issues, but dismisses claims for property rights in degrading daguerreotypes
In 1850 noted Harvard University professor Louis Agassiz arranged to have four daguerreotypes made of Renty Taylor and Delia Taylor, who were enslaved on a plantation in South Carolina. Renty was ordered to disrobe. His daughter was striped to the waist. Their images were used by Agassiz in an academic publication and various lectures “to support polygenism, a pseudoscientific racist theory for which Aggasiz, a prominent scientist, was a vocal proponent,” according to the highest court of Massachusetts. The pictures were subsequently transferred to Harvard’s Peabody Museum of Archaeology and Ethnology where they “remained in obscurity” until rediscovered in 1976. The discovery attracted...

Court Denies Deduction for DAF Gift For Lack of Adequate Acknowledgement

Substantiation letter failed to state that recipient had “exclusive legal control” over funds
A federal District Court in Texas has upheld an IRS denial of a $1.257 million charitable contribution deduction claim for a gift to a donor advised fund because, it said, the contemporary written acknowledgment of the gift did not say the money was held under the “exclusive legal control” of the recipient charity. The Court said that the Contemporaneous Written Acknowledgment could not be combined with the gift agreement, which provided for ultimate authority and control of the assets, to meet the requirements of the Treasury regulations. Kevin and Patricia Keefer donated the proceeds from the sale of a 4% limited partnership interest in a partnership that was selling a hotel in Burbank CA...

Is Federal Sentence Enhanced For Exec’s Theft from Charity?

Seventh Circuit remands case to trial court to decide how to interpret federal sentencing guidelines
Should the federal criminal sentencing guideline be used to add an extra eight to ten months in prison for the executive director of a charity who embezzled about $150,000 from the agency when the guideline says a two-level enhancement should be applied when the offence involves “a misrepresentation that the defendant was acting on behalf of a charitable” organization? A federal District Court in Illinois said it should be applied. The Seventh Circuit Court of Appeals has said not so fast. The executive director of a charitable organization pleaded guilty to wire fraud and was sentenced to 42 months in prison, plus a fine, restitution and a year’s supervised release. He had raised $1.1...

NRA Loses Counterclaims Against NY Attorney General

Court dismisses claims that investigation is unconstitutionally retaliatory or selective
The trial court that recently ruled that the New York Attorney General did not have grounds to force a judicial dissolution of the National Rifle Association ( See Nonprofit Issues ® , Vol. XXXII, No. 2 ) has denied counterclaims by the NRA seeking to dismiss the entire case as unconstitutionally retaliatory or selective. The Court has ruled that the AG may continue to pursue a variety of other claims against the organization and individual defendants. In reviewing a motion to dismiss, the Court said, it had to accept the factual allegations of the complaint as true and give the plaintiff the benefit of every possible favorable inference, but need not give credit to claims that are either “...

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