YOUR ONE-STOP PLACE FOR NONPROFIT LAW YOU NEED TO KNOW

Gifts of Valuable Art to Charity Face a Variety of Hurdles

Congress has increased requirements for qualified appraisals; the IRS has developed a stringent process of review of valuation

Donors of gifts of art to charities have been able to claim a charitable contribution deduction since The Revenue Act of 1917, the first significant tax bill passed by Congress after ratification of the 16th Amendment authorizing an income tax.  The value of the deduction for taxpayers fluctuated from time to time for more than half a century thereafter, with no special processing and generally in line with the value of deductions for other types of gifts.

There seemed to be a general consensus within Congress and the general public that charitable contribution deductions helped support charities do things that the government would not or could not do. Some critics argued that the deductions incentivized the “looting of antiquities” by allowing individuals to import, or maybe steal, antiquities from abroad at relatively little or no cost and make their money by giving the items to museums and taking a deduction based on a very generous valuation of the items.  The criticism seemed to have little impact on the system.

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Congregants of church lack standing to sue on its behalf

Congregants of a church who have power to vote on hiring a new pastor, but not the power to vote for new directors for the board, are not legal members of the corporation and have no standing under the California Nonprofit Religious Corporation Law to sue on its behalf, an appellate court has ruled.  It has affirmed dismissal of a claim by congregants who sought to stop a new pastor from disaffiliating the church from its parent organization.

One Big Bill Beautiful for Some

Not as bad as it could have been for nonprofits; A significant above-the-line deduction for public charities

The so-called One Big Beautiful Bill Act, which was narrowly passed by Congress and signed by the President in July 2025, provides a significant above-the-line charitable contribution deduction for public charities and avoids some of the most adverse proposals for the charitable sector.  But its major benefits flow to wealthy taxpayers whose “temporary” tax cuts of 2017 have been made permanent, and some of its other provisions will have significant impact on the work of the charitable sector.

This 4-page document reviews many of the important sections of the bill, including;
Major provisions that will affect charitable giving
New taxes on nonprofits
Adverse provisions that did not make the final act 
And other provisions that will seriously affect the nonprofit world

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MA Court holds actions against Harvard are illegal

The federal District Court in Massachusetts (Allison D. Burroughs) has ruled that the U.S government’s attempts to force Harvard University to give the government control over many of its academic procedures in order to save its federal funding are illegal.  The opinion governs two separate suits, one by the University and one by the American Association of University Professors, the United Auto Workers, which represents Harvard’s graduate teachers and nontenure-track faculty, and others (called the Organizational Plaintiffs in the opinion).

MA Court enjoins overhead cap on federal grants

A federal District Court in Massachusetts (Brian E. Murphy) has preliminarily enjoined the Department of Defense from imposing a 15% overhead cap on research grants.  “The Government has, for the fourth time, purported to announce a policy that has consistently been deemed unlawful, without acknowledgment of its apparent illegality and without any attempt to structure the policy in a manner that fulfills the established requirements of law,” the Court said in the introduction to its opinion.

University endowment tax receipts drop

Taxes received on endowment income of large private colleges and universities dropped significantly in 2024, the IRS has reported in a recent Statistics of Income release. After rising steadily from $68 million in 2021 to $380 million in 2023, receipts fell to $169 million in 2024. Only 45 institutions reported paying the taxes in 2024, compared to 58 in 2023.

Nonprofit conference center is exempt as religious employer

A nonprofit conference center operated by a limited liability company formed to promote religious purposes is considered a religious employer and is exempt from coverage of state anti-discrimination statutes in employment, a California appeals court has ruled.

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