United Cancer Council 10 Years Later

The Nonprofit Times ran an interesting story on the changes wrought (or not) since Judge Posner’s story in United Cancer Council.  As the story points out, the case jump started what had theretofore been unsuccessful attempts to enact “intermediate sanctions” — IRC 4958.  I recall studying the case in LLM school and it had still not be decided two or three year later.  Infamously, when it was decided, Posner still didn’t decide.  He said “do it all over again.”  That case has to be one of the biggest waste of enforcement resources ever even if it did lead to one of the more sensible enactments in federal tax exempt law.  Anyway, part of my reason for posting on the story is that the author quoted me.  I did the interview a few weeks ago so I hardly recognize my own quotes.  Still, I don’t sound like a complete idiot so I thought I would cut and paste my own rant from the article:

Darryll Jones, a professor at the Stetson University College of Law in St. Petersburg, Fla., said there has been little effect on the “cottage industry of raising money using a nonprofit’s name” since the UCC case, with some fundraisers still getting as much as 90 percent of the money raised. “The status quo is the same these days, just not on such a conspicuous level,” he said. Perhaps fledgling nonprofits have no choice but to rely on professional fundraisers, Jones said, however it has resulted in some “erosion of the nonprofit halo” because of an “almost prostituting of a nonprofit’s name.”

Yeah, I think that is about right.  Posner’s opinion pretty much legitimized the use of professional fundraisers and IRC codified the first bite rule so it is nearly impossible to impose intermediate sanctions on a nonprofit that uses a PFR.  The only option is to apply the mysterious private benefit doctrine.

dkj