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 federal District Court in Rhode Island (Melissa R. DuBose) has expanded its preliminary injunction against the government’s inclusion of likely illegal requirements on grants from the Office on Violence Against Women. (See Nonprofit Issues®, Vol. XXXV, No. 6.)
In another trial court decision enjoining the government’s efforts to eliminate funding for diversity, equity, and inclusion efforts by government grantees, the federal District Court in Chicago (Matthew F. Kennelly) has issued a preliminary injunction against the inclusion of anti-DEI conditions in Department of Justice grants.
A federal District Court has dismissed most counts of a suit brought by ousted Penn State University Trustee Barry J. Fenchak against the University in their long-running dispute over Fenchak’s rights and duties as a member of the Board of Trustees. The Court has dismissed claims of defamation, breach of fiduciary duty, and violation of the Pennsylvania Constitution. It has refused to dismiss at this point, however, a claim for violation of the First Amendment of the U.S. Constitution.
The Pennsylvania Whistleblower Law does not protect a chief financial officer who complained that one of his staff had “plugged” items in financial records to make accounts balance from an adverse summary judgment, but did protect him from complaints about violations of internal ethics policies, a federal District Court in Pennsylvania has ruled.
