The due diligence process in considering a merger or affiliation is serious, but don’t let the lawyers use it to tell you why it shouldn’t be done. Lawyers are trained to tell you the risks. They will seldom provide the vision.
A charity that does not spend at least a portion of its time in advocacy work is probably not doing its job as well as it should.
Therefore, charities must understand the tax law definitions of "lobbying" and "legislation." There is a vast amount of advocacy that can be carried on without approaching tax limitations. Private foundations can support most of it, and preparing an application with foundation rules in mind can make it easier to get funded.
Tax law is not the only issue, however. Beware of federal and state lobbying registration requirements, with different definitions, and different reporting.
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Despite the political grandstanding that erupted after the disclosure that IRS determinations staff and attorneys had asked some improper questions of Tea Party and other potentially political organizations applying for 501(c)(4) social welfare exempt status, there has been no evidence that the IRS or the Obama Administration was targeting political foes.
When one reads the Treasury Inspector General’s Report, press reports of staff statements to the House Committee on Oversight and Government Reform, and comments of former IRS officials, one comes away with a vision of front line staff struggling to try to determine who can qualify as a (c)(4) organization when there is no clear definition to work with.
It isn’t as easy as it once was to claim a charitable contribution deduction for a gift to charity.
Because of perceived abuses by taxpayers claiming inflated deductions without adequate justification, Congress and the Internal Revenue Service have tightened the rules over the last several decades.
The rules apply to the taxpayers seeking the deduction. In most cases, they do not directly apply to the charities receiving the gifts and do not impose penalties on charities, but charities that want to assist their donors and receive additional gifts will want to be sure that the donors are in position to claim their deductions properly.
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The Pennsylvania Commonwealth Court has affirmed a trial court decision prohibiting a local municipality from imposing a “business privilege tax” on membership dues and assessments of private clubs. Although the clubs may be taxed on non-member activities like renting golf carts, sales at the pro shops, and locker room services, the Court said that the members were not doing business with themselves.
The federal District Court in the District of Columbia (James E. Boasberg) has issued preliminary injunctions to prevent the Federal Trade Commission from enforcing Civil Investigation Demands against advocates and providers of transgender care to individuals. In two separate companion opinions, the Court has found that demands for voluminous records from the Endocrine Society and the World Health Association for Transgender Health have a likelihood of success on their claim of First Amendment retaliation.
The federal District Court in Manhattan (Colleen McMahon) has enjoined the largest mass termination of previously awarded grants in the history of the National Endowment for the Humanities. More than 1,400 grants representing over $100 million in congressionally appropriated funds awarded to scholars, writers, research institutions and other humanities organizations were terminated in April 2025 because, according to the government defendants, they were intended to implement President Trump’s directives to eliminate grants associated with diversity, equity and inclusion.
More than half of the private foundations filing a Form 990-PF during 2022 have total net assets of less than $1 million, the IRS has reported recently.
Two cousins who each claimed half of the appraised value of a 13-acre parcel of property given to their local community have been denied charitable contribution deductions for lack of a contemporaneous written acknowledgment stating that they received no goods or services in return for the gift.
