Lead Stories

The volunteer board chair of a nonprofit drug and alcohol treatment program who made start-up and bridge loans to the organization and paid $193,000 in unpaid withholding taxes has lost a suit to recover the funds he personally advanced to pay the taxes.  A federal District Court in Tennessee has held that he was a “responsible person” and personally liable to pay the taxes the organization failed to pay itself.  (Bunch v. Commissioner, E.D. TN, No. 2:10-CV-122, 3/8/12.)

Ann Haskell created a charitable remainder unitrust in 1997 which provided that upon her death one-fourth of the residue would go to Lutheran Service Society of Western Pennsylvania in Pittsburgh, “to be used for benefit of Meals on Wheels, Squirrel Hill Chapter, … or any successor thereto.”  She further requested that if the funds could not be “used to full advantage” of that chapter, the board of the Society should distribute the funds to any one or more chapters of Meals on Wheels in Allegheny County.

Many years after the CRUT was drafted, the Squirrel Hill Chapter had disaffiliated from the Society and created a new nonprofit corporation to operate the program.  Who should receive the funds?  A divided appellate court in Pennsylvania has affirmed a trial court decision granting the funds to the Society and not the new organization. 

The Appeals Court of Massachusetts has affirmed an injunction against commercial co-venturers who failed to register under the state’s charitable solicitation registration law before promoting a designer “show house” in the name of a national charity.  The Court held that the companies were required to register under the statute.  (Attorney General v. Bach, App. Ct., MA, No. 11-P-1313, 4/4/12.)

A nonprofit association in New York City has been told that it cannot collect $185,000 in unauthorized withdrawals from its account when it failed to review its monthly bank statements and complain over a period of five years.  A trial court has granted Capital One Bank’s summary judgment motion to dismiss the complaint.  (Royal Arcanum Hospital Association of Kings County v. Herrnkind, Supreme Court of NY, Kings County, 3/28/12.)

In an opinion filed less than a month after the Pennsylvania Supreme Court said it would not consider the Legislature’s standards for determining qualification of a charity eligible for charitable tax exemptions (See Nonprofit Issues® 4/1/12), the state’s Commonwealth Court, its intermediate appellate court, has shown how hard it may be to rely solely on prior case law to qualify as an “institution of purely public charity” eligible for exemption under the state’s Constitution.  The Court has denied real estate tax

An appellate court in Illinois has allowed the estates of an employee’s wife and two children to sue a nonprofit ministry for negligently failing to protect them from being murdered by the ministry’s employee.  In rejecting the ministry’s motion to dismiss the Complaint, the Court said that the estate had alleged sufficient facts to sustain a claim that the ministry had voluntarily undertaken to protect the family but had negligently failed to perform its duties.  (R