Nonprofit Law YOU Want to Know
We regularly feature answers to questions from readers in our “To the Point” column. The full list can be viewed here. Here are a few questions recently received from readers.
How can founder be protected?
Lead Stories
Language of Trust Allows School to Contract
Court looks to IRS Regulations to determine definition of “regular” enrollment of students
An appellate court in Wisconsin has affirmed a trial court decision allowing a private school created pursuant to a decedent’s trust to contract from a four-year college prep boarding school to a “semester away” program for students at other institutions. It said the board’s contraction in response to financial constraints was not prohibited by the terms of the founding instrument.
Is Exec Entitled to Advanced Legal Costs In Suit by Employer for Theft?
Court must make independent review of known facts before denying advance
An appellate court in Minnesota has told a trial court that it must make its own determination whether a former executive of a nonprofit corporation is entitled to an advance of funds to pay legal fees and costs for defense against the organization’s claims against her for fraud, conversion, breach of fiduciary duty and breach of contract. The Court said the state’s Nonprofit Corporation Act requires it to make an independent judgment when the board has refused the request.
Court Protects Restricted Assets From Creditors on Dissolution
Museum’s restricted collection may be sold subject to continuing restrictions under “quasi cy pres” doctrine
An appellate court in New York has held that donor-restricted gifts to a museum are not generally available to pay creditors upon dissolution of the corporation. It has required an endowment to be kept intact to support an historic village, but has permitted a ceramics collection to be sold, if possible, subject to the terms and conditions of a loan and gift agreement with the original donors. (In the Matter of Friends for Long Island’s Heritage, Supreme Ct. of NY, App.
Allegations of bad things not sufficient to show discrimination
A black woman from Nigeria who claimed age, race, and gender discrimination when she was terminated from her nursing position by a nonprofit long-term care facility has seen her case dismissed by a federal District Court in New York.
Donors Denied Deduction For Gift to Advised Fund
Loans for son’s college tuition showed failure to give up control
Donors who used a donor advised fund to make college loans to their son have been denied a charitable contribution deduction and ordered to pay capital gains taxes on stock sales within the fund plus an additional 20% penalty for underreporting of income tax due. The Tax Court has affirmed the decision of the Internal Revenue Service. (Gundanna v. Commissioner, 126 T.C. No. 8, 2/14/11.)
In 1998, the donors transferred nearly $264,000 to a “family public charity” at the xélan Foundation after the husband sold his interest in a medical practice at a substantial gain.