ABA Exempt Orgs Committee on the Meaning of Nonprofit Life
There will be some interesting exempt org head-scratching and pontification at the ABA Tax Section Meeting next week in LA. The topics almost cover the whole meaning of exempt organization life, from private benefit and the meaning of “charity,” to free speech and social justice. I don’t know how I missed signing up for this one. Might be better anyway, because I get real riled up about some of the topics and at least one of the speakers. My mama has no filter and I’m liable to say something real out of turn. In Thursday’s first Exempt Org plenary session, talking heads will think out loud about charities at war, including my favorite subject, the badly mischaracterized “nonprofit killer bill:”
Enemies of the State? 9:30 am
In the wake of the October 7, 2023 attacks on Israel and nearly 25 years after the September 11, 2001 attacks on the World Trade Center, Congress is considering The Stop Terror-Financing and Tax Penalties on American Hostages Act (H.R. 9495), which, if enacted, would empower the Treasury Secretary to designate a nonprofit as a “terrorist supporting organization” if it provided material support or resources to a terror group within the past three years of the designation and to revoke such the organization’s tax-exempt status. This panel will discuss what lessons we may have learned from the War on Terror and efforts to curtail nonprofit involvement. Is it different this time? To what extent must nonprofits adhere to or support US foreign policy? Could HR 9495 be used to create an enemies list to stifle free speech? Panelists: Dr. Khaled Abou El Fadl, Professor, UCLA School of Law; Ellen Aprill, Scholar in Residence, UCLA School of Law; Dennis Lormel, President, DML Associates; Professor Shirin Sinnar, Stanford Law School
During the second plenary, the Committee will focus on fiscal sponsors, once again considering the tensions between civil society and national security:
Does One Bad Apple Spoil the Barrel? 1:00 pm
Fiscal Sponsors support a wide variety of projects in furtherance of their mission. They are an efficient means of conserving scarce charitable resources and maximizing impact. While federal law has long recognized and even encouraged fiscal sponsorship arrangements, the practice has recently been challenged by the House Committee on Ways and Means, alleging that fiscal sponsorships can enable foreign influence and conceal uncharitable, if not illegal activity. How do fiscal sponsors identify and limit abuse? Is more regulation warranted? Panelists: Erin Bradrick, NEO Law Group; Professor Jill Horwitz, UCLA School of Law; Suneela Jain, Tides Foundation, Chief Legal and Compliance Officer
And then there will be some constitutional tax law. This panel will feature the main proponent of the dumb notion that we may not deny tax exemption to hate groups and that tax exemption does not tolerate reparations for 400 years of slavery and Jim Crow. It would be around this time that I might start throwing chairs like Bobby Knight used to do.
Thoughts, Words, and Deeds. 2:45 pm
The First Amendment protects expressive activities. For example, the Supreme Court held that wedding cake bakers (Masterpiece Cakeshop) and website designers (303 Creative) can discriminate against same-sex couples because their activities are expressive and therefore within the scope of the First Amendment. Does this line of jurisprudence also protect the mission related activities of nonprofit organizations? To what extent does the First Amendment protect race-based grantmaking programs? Panelist: Professor Eugene Volokh, UCLA School of Law
Finally, the afternoon will close with some some hard-core tax, as the Section takes up tax exempt bonds. Yeah, it sounds like nap time. But I wouldn’t sleep through this one. The private benefit use regs are worse than substantial economic effect, but the effort to draw the line between public and private benefit underlies pretty much all of the economic issues in tax exempt jurisprudence, including NILs and OpenAI (c)(3)’s transformation into a for-profit. If we admit there is no line – that the public and private benefit are mutually dependent and instead blend into each other, we might do some better line drawing in individual cases.
Tax-Exempt Bonds for 501(c)(3) Attorneys 4:00 pm
Tax-exempt bonds are a valuable financing tool for 501(c)(3) exempt organizations. Panelists during this session will discuss, among other points, the context for giving and receiving opinions on exempt status and unrelated business issues in connection with qualified 501(c)(3) bonds., the sources counsel may rely on in determining whether an entity is operating in furtherance of its exempt purpose, and the restrictions that apply while tax-exempt debt is outstanding. Panelist: Andrew Rubin, Nixon Peabody
darryll k. jones