Lead Stories

The Senate Tax Bill being considered simultaneously with the House Tax Bill in the Republicans’ effort to get something to President Trump by the end of the year, would not modify the Johnson Amendment to allow churches to engage in political activity, but would impose new unrelated business income taxes, deny across-the-board deductions for expenses in generating the unrelated business income, and would impose a tax on organizations involved in excess benefit transactions.

The “Tax Cuts and Jobs Act” (H.R.1) introduced by the Republicans in the House of Representatives contains a series of specific provisions that would affect charitable organizations but has drawn most of its criticism from national charitable organizations for its apparent impact in reducing the economic incentives for charitable giving and for partially repealing the “Johnson Amendment” to permit churches to engage in political activity.

An appellate court in California has affirmed a trial court decision refusing to compel arbitration of a breach of contract, fraud and defamation claim brought by a member against the American Contract Bridge League.  The Court had held that the member had no knowledge of the requirement to arbitrate that was included on the back of his annual membership renewal form.

A trial court in North Carolina has refused to dismiss a corporate derivative suit brought by a private foundation director on behalf of the foundation and against the other four directors for breach of fiduciary duty and gross mismanagement.  The director is seeking damages for the foundation and removal of the other directors from the board.  The defendants had claimed that the director did not meet the requirements of state law to make demands on them before filing the action.

An appellate court in New York has affirmed a Surrogate Court decision that a donor making a charitable bequest from her living trust intended to benefit a specific Catholic school that had been closed for several years and did not show a general charitable intent which would justify invoking the cy pres doctrine to divert the gift to the Catholic Diocese.  The Court, by a vote of 4-1, has affirmed a Surrogate Court decision dividing the gift between two other residuary beneficiaries of the trust.

James M. Montgomery convinced an employee of a bank he was about to open to invest $100,000 in the business, saying he needed the additional money to meet regulators’ capitalization requirements to start operating.  Shortly after the employee made the investment in 2008 and before the bank opened for business, Montgomery directed the bank to transfer $100,000 to his family foundation.  The bank failed in less than a year and all of the initial investors, including the employee, lost their investments.