NONPROFIT & PHILANTHROPY LAW eJOURNAL

"Rhetoric and Reality in the Tax Law of Charity" Free Download
Fordham Law Review, Vol. 84, No. 101, 2016
Fordham Law Legal Studies Research Paper No. 2775204

LINDA SUGIN, Fordham University School of Law
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The rhetoric of public purposes in charity law has created the mistaken impression that charity is public and fulfills public goals, when the reality is that charity is private and cannot be expected to solve the problems that governments can solve. The rhetoric arises from a combination of charity-law history and tax expenditure analysis. The reality follows the money and control of charitable organizations. On account of the mismatch of rhetoric and reality, the tax law of charity endorses an entitlement to pre-tax income and (ironically) creates a bias against taxation. This article reorients the project of defining public and private in the tax law by starting from a normative theory of government responsibility. It challenges the conventional economic justifications for the charitable deduction and exemption, arguing for a more philosophical approach that makes affirmative demands on government to distribute the returns to social cooperation. Under this approach, the appropriate role of private organizations is residual; they must achieve what governments cannot. The article concludes by arguing that current law’s tax benefits for charity are easily justified in this new understanding.

"Partly Acculturated Religious Activity: A Case for Accommodating Religious Nonprofits" Free Download
Notre Dame Law Review, Vol. 91, Forthcoming
U of St. Thomas (Minnesota) Legal Studies Research Paper No. 16-09

THOMAS C. BERG, University of St. Thomas, St. Paul/Minneapolis, MN - School of Law
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Many of today’s most vexing problems concerning the accommodation of religion involve religious organizations that straddle the perceived boundary of the public and private: that is, not the "private" instance of churches and their clergy, but rather nonprofit organizations (religious colleges, adoption agencies, etc.) that employ or serve people outside their faith but also make religious freedom claims to follow their religious norms in the face of generally applicable laws (contraception mandates, anti-discrimination laws, etc.). I refer to these organizations and activities as "partly acculturated": acculturated in that they reach out to the broader society to provide services of general civic value, but unacculturated in that some of their doctrines and practices clash with dominant secular values. To many critics, it is plainly improper to accommodate partly acculturated activity: when an organizations hires or serves people outside its faith, it must follow whatever rules the government sets.

This paper argues that we should make real efforts to protect religious freedom for partly acculturated religious activities. The law should not force all religious organizations and activities into one of the two polar categories, acculturated or unacculturated. Part II presents several reasons why there is a strong interest in protecting the freedom to engage in partly acculturated religious activity. Among other things, I argue, relying on work in sociology of religion, that refusing accommodation to partly acculturated activity risks losing the distinctive vigor that such organizations offer in providing services to society: their countercultural positions tend to create a sense of identity and commitment, while their acculturation means they apply that identity to serve society rather than withdraw from it.

Accommodating partially acculturated activity does present distinctive challenges because of effects on non-adherents. Part III proposes addressing those, and drawing lines concerning accommodation, by relying on concepts of:(1) notice to employees and clients concerning the organization’s religious identity, and (2) alternative sources of receiving the services or opportunities in question.

"The 21st Century Fight Over Who Sets the Terms of the Charity Property Tax Exemption" Free Download
Exempt Organization Tax Review, Vol. 77, No. 4, 2016

EVELYN BRODY, Chicago-Kent College of Law
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Turning from the substantive issue of defining charity, this article considers the “who? question by examining the roles of the courts, legislatures, municipalities, and charities in determining exemption and payments in lieu of taxes. The three covered topics – constitutional power, statutory interpretation, and the “intermediate sanctions? of user fees and PILOTs – braid together to form the procedural framework for the financial relationship between nonprofit property owners and the taxing jurisdictions that host them. Change the parameters of one, and you change the others.

Staying off the rolls or minimizing the tax bite often results from compromise – whether at the state constitutional level; in state statutes; as a matter of assessment; or through negotiation with local governmental bodies. But such an application of a multi-level framework for mischief leads to legal incoherence. The article begins with the knockdown, drag-out separation-of-powers fight that has arisen in Illinois and Pennsylvania: Which branch, the judicial or legislative, defines “charities? granted exemption by the state constitution?

Next up is the more mundane world of statutory interpretation, where even here courts second-guess the legislature. A June 2015 decision by the New Jersey tax court exemplifies what could be view as “passive-aggressive separation of powers,? when the court basically says, “Surely the legislature could not have meant this entity (or this use of property) to qualify as charity.? This latest decision not only seems to render all “sophisticated centers of medical care? in New Jersey taxable, but also is causing sleepless nights for Princeton University: The same judge is hearing a challenge to the university’s exemption brought by local taxpayers.

New Jersey’s January 2016 proposed legislation fell a pocket veto short of enactment: It would have imposed a formulary community-service fee on nonprofit hospitals. Legislative efforts are again underway. Perhaps such a third-way solution might become more common. Voluntary agreements for payments in lieu of taxes are literally all over the map, from Boston’s revamped comprehensive PILOT program to a Florida appellate court’s striking of a PILOT program as inconsistent with statutory exemption. Will the people’s branch get the last word after all?

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About this eJournal

This eJournal distributes working and accepted paper abstracts in the fields of nonprofit law and policy, philanthropy law and policy and related areas of scholarship. Thus, drafts and articles that concern nonprofit corporations, charities, charitable corporations, charitable organizations, charitable donations, charitable foundations, charitable fundraising, charitable solicitation, charitable trusts, philanthropy, private foundations, nongovernmental organizations, tax-exempt organizations, tax-exempt corporations, private clubs, membership clubs and similar topics are appropriate for this journal.

Editor: David A. Brennen, University of Kentucky

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Directors

LSN SUBJECT MATTER EJOURNALS

BERNARD S. BLACK
Northwestern University - School of Law, Northwestern University - Kellogg School of Management, European Corporate Governance Institute (ECGI)
Email: bblack@northwestern.edu

RONALD J. GILSON
Stanford Law School, Columbia Law School, European Corporate Governance Institute (ECGI)
Email: rgilson@leland.stanford.edu

Please contact us at the above addresses with your comments, questions or suggestions for LSN-Sub.

Advisory Board

Nonprofit & Philanthropy Law eJournal

ELLEN P. APRILL
John E. Anderson Professor of Tax Law, Associate Dean for Academic Programs, Loyola Law School Los Angeles

EVELYN BRODY
Professor of Law, Chicago-Kent College of Law

JOHN DAVID COLOMBO
Albert E. Jenner, Jr. Professor of Law, University of Illinois College of Law

HARVEY P. DALE
University Professor of Philanthropy and the Law, Director - National Center on Philanthropy and the Law, New York University School of Law

DARRYLL K. JONES
Professor of Law, Stetson University College of Law

BEVERLY I. MORAN
Professor of Law and Sociology, Vanderbilt University - Law School

STEPHEN SCHWARZ
Professor of Law Emeritus, University of California, Hastings College of the Law

STEVEN J. WILLIS
Professor of Law, University of Florida - Levin College of Law