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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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 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.
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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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).
