Deregulating election laws

Rick Hassen posted his latest paper on the Supreme Court and election law, Beyond Incoherence: The Roberts Court's Deregulatory Turn in FEC v. Wisconsin Right to Life. Based on the title, I suspect he's not a fan of the Roberts Court... A little reading for your Tuesday if you're into analysis. After my tangle with Dulles Airport (which I may personally rename to include expletives, but that's another post), I may hold off until later...

Nonprofit Law Podcast #7

Episode 7 of the Nonprofit Law Podcast is now available... this week, I cover publishing legislative scorecards. Check out the shownotes and resources at nplawcast.com!

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More Nonprofit Law Podcast kudos

More kudos for the Nonprofit Law Podcast came from onPhilanthropy this week... it's gratifying that the latest episode on social networks is getting a lot of positive feedback. I think nonprofits have been very innovative in the use of technology, but unfortunately the law does not give much guidance on the legality of these innovative strategies... I'm glad the podcast and some of my other projects will be helpful on the subject.

Nonprofits and elections discussion

The Hudson Institute is hosting an event entitled, Should Nonprofit Organizations Play an Active Role in Election Campaigns? on August 9th from noon to 2 PM in DC:

Recent readers of The Chronicle of Philanthropy witnessed a lively discussion unfold on its pages between D.C. Central Kitchen president and author ROBERT EGGER and Georgetown University scholar PABLO EISENBERG. With a view to the next election cycle, Egger argued in a May 31 opinion piece* that nonprofit organizations deserve the kind of political stature corporations enjoy because like corporations, they employ millions of Americans, command billions of dollars in resources, and thus play a vital economic as well as civic role in their communities. Yet nonprofits face a double standard when it comes to political activity, and they “accept their muzzled role.” Egger concludes that the laws that prohibit charities from direct campaign activities “not only are outdated, but also will be counterproductive” as nonprofits continue to grow in size, wealth, and stature.

Eisenberg, a regular contributor to the Chronicle, responded to Egger in his June 28 column.** “Existing regulations are not the culprit for the nonprofit world’s failure to be more activist and politically involved,” he wrote. Historically, charities and foundations have held themselves apart from business and government, serving as a mediating force between the two. Yet as a result, nonprofit groups have “enormous leeway in supporting and promoting activism and influencing the political system.” The problem is not that these organizations are hampered by their nonprofit status and all that it entails, Eisenberg argued, but that most simply fail to exercise their current rights to organize communities, communicate with elected officials and their staffs, and educate and register voters.

On Thursday, August 9, Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal will host a discussion between these two storied nonprofit sector leaders. Chronicle of Philanthropy editor STACY PALMER will serve as the discussion’s moderator. Please join us! Lunch will be served.

* “Charities Must Challenge Politicians,” Robert Egger, The Chronicle of Philanthropy, May 31, 2007. (For an electronic copy, visit the Chronicle's web site at http://www.philanthropy.com. Also available in PDF form - click here.)
** “Charities Should Remain Nonpolitical,” Pablo Eisenberg, The Chronicle of Philanthropy, June 28, 2007. (For an electronic copy, visit the Chronicle's web site at http://www.philanthropy.com. Also available in PDF form - click here.)

I plan on attending... this should be an interesting discussion.

WRTL: the FEC and settlements

The final disposition of the WRTL case seems to let nonprofits engage in grassroots lobbying without interference from the FEC. Following settlements in WRTL and a subsequent case, the parties and the FEC have agreed that the Supreme Court has essentially determined that genuine issue advertisements are not regulable by the FEC. The new standard, for those playing the home game, is that communications may only be regulated if they are “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.”

That's pretty hard for the Congress to prove, and it seems that the pendulum has swung back to favor advocacy rights over the need to regulate campaign finance. Alliance for Justice has more here.

Nonprofit Law Podcast #6

Episode 6 of the Nonprofit Law Podcast is now available... this week, I cover the legal issues for nonprofits using social networks like MySpace and Facebook. Check out the shownotes and resources at nplawcast.com!

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IRS Draft Form 990 teleconference

Today's IRS teleconference on the new Form 990 was interesting. Here are the highlights:

Reasons for change & approach
The form is outdated... it was last updated in 1979. Since then there have been an explosion in the number and sophistication of tax exempt organizations. The current form has been "jury rigged" to deal with changes, and that has not been effective. The form can't be renumbered in the current system, so the form often makes no sense. This leads to incomplete and incorrect filings.

The new form is designed to increase transparency, improve compliance and reduce burden on filers. One of the ways to deal with this was to reduce the number of schedules and restructure the whole form so that it makes more sense and is more consistent, especially for smaller organizations.

Overview of the redesign

• A summary or snapshot of the organization... the information all comes from other places on the form
• New calculation of efficiency and effectiveness indicators (seeking comments on this)
• Five highest compensated individuals (not just officers, etc.) - must use W2 or 1099 reporting and it expands beyond just 501(c)(3)s
• City and state of residence for individuals added (currently allows address of the organization)
• Page 4 - mostly new questions on governance (seeking comments)
• More breakdown on types of support and some forms of expenses
• Part VII - trigger questions for filing schedules (seeking comments)
• Part VIII - trigger questions for filing other IRS forms (seeking comments)
• Trimmed to 15 Schedules... some highlights:
• Schedule A is still for (c)(3)s only but it has been streamlined. It includes a public support test section with a five year period instead of four. Lobbying information has moved to Schedule C.
• Schedule B is largely unchanged (lists donors).
• Schedule C includes lobbying and inter-organization transfers with 527s.
• Schedule D has a mix of old and new, including Donor Advised Funds
• Schedule F has new information on foreign activities
• Schedule G has new information on third party fundraising (not internal development officer information, however)
  
• Schedule I still covers grants, but there are some changes
  
• Schedule J is new and targets information on highly compensated individuals
  

More information on the draft Form 990 is here. As far as the Form 990 goes, it looks like this new form may be simpler to handle, but as with any change, people who are used to the old form may be puzzled by the proposed changes. It seems like the IRS has put a lot of effort into this redesign, but it remains to be seen the degree to which this helps smaller nonprofits. There may be some threshold changes to the Form 990-EZ to help with that, but those changes are unclear right now (the IRS is seeking comment on that). The very smallest of organizations will be filling out a new Form 990-N beginning in 2008... basically a postcard that includes very limited information for filing.

Comments are due by September 14th (details here) in order to get this new form ready for fiscal 2008 (filed in 2009). The IRS rep says that if the new form is not finalized by December of this year it could not be implemented until 2012. That seems odd, but it apparently has something to do with the IRS technology division... and you don't want to argue with them, I suppose.

Forum on election activity

I received an invite to a panel discussion on election activity for 501(c)(3) charities in my email box yesterday... I plan on attending, and will post my thoughts on the blog afterwards. I've copied the information in case anyone is interested in participating in the discussion:

OMB Watch invites you to a panel discussion on the Pros and Cons of an IRS Bright Line Rule for Campaign Activities for Charities and Religious Organizations

Has the IRS' more aggressive approach to enforcement of the ban on partisan activities by 501(c)(3) organizations created unanswerable questions for your organization?

Ever wonder why IRS rules can't define permissible electoral activity as clearly as they define lobbying?

What impact could the recent Supreme Court decision in FEC v. Wisconsin Right to Life have on IRS enforcement policies? Does the IRS enforcement process need to be changed?

Hear experts discuss these questions and more:

Friday, August 3
10 a.m. to 12 p.m.
2040 S Street, NW, Washington, DC

Participants may also join by phone
Dial 1-302-709-8424; participant code 11549882# (not toll-free)

Panelists include:

Gregory Colvin
Attorney, Silk Adler & Colvin, expert and author on nonprofit lobbying and political activities. Co-Chair of the Subcommittee on Political and Lobbying Organizations and Activities of the Exempt Organizations Committee of the Tax Section of the American Bar Association.

Beth Kingsley
Attorney at Harmon Curran Spielberg & Eisenberg specializing in tax exemption, lobbying, policy advocacy and federal election law. Co-chair of the ABA Exempt Organizations Committee's subcommittee on Forms, Rulings, and Administrative Developments

Marcus Owens
Former IRS Director of Exempt Organizations Division and attorney at Caplin & Drysdale. Represents a broad range of tax-exempt organizations. Projects include organizations interested in public policy but concerned with legislative and political activities. Co-chair of the ABA Tax Section EO Committee's Subcommittee on Audits and Appeals

Moderator – Kay Guinane, Director – Nonprofit Advocacy Program

Please RSVP to Katie Clabby at kclabby@ombwatch.org or (202) 234-8494

House subcommittee to consider new Form 990

Next Tuesday, the House Ways and Means Oversight Subcommittee will hold a hearing on the new Form 990 and the impact on tax-exempt organizations. The subcommittee will hear testimony from the IRS, GAO and some select nonprofits. If you're interested in weighing in, you can let the Oversight Subcommittee know your thoughts here. I'll post some thoughts next week after the hearing.

Nonprofit Law Podcast #5

Episode 5 of the Nonprofit Law Podcast is now available... this week, I cover the different flavors of nonprofits. Check out the shownotes and resources at nplawcast.com!

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Nonprofit Law Podcast featured

onPhilanthropy's media blog just featured the Nonprofit Law Podcast... welcome to one and all!

McCain's reversal of fortune

The Wall Street Journal suggests that Sen. McCain's recent fundraising troubles are related to his own campaign finance reform law. Two years ago he was the absolute front-runner in the GOP, and now he's fallen well out of that slot and his landmark legislation has been turned back in part by the Supreme Court. What a difference two years makes...

New Nonprofit Law Podcast this weekend... have a good one!

Al Gore on nonprofit disclosure

I just finished listening to the audiobook version of Al Gore's The Assault on Reason, and deeply embedded towards the end, Gore mentions how he would like to require full transparency of donors to nonprofits. I think his intentions are good... he believes that corporations (the energy industry in particular) hides behind front nonprofits, funding ballot measure campaigns with practical anonymity. Unfortunately, I think the mechanism he would choose to solve this problem ignores decades of precedent protecting donor privacy. It wasn't that long ago that civil rights groups were targeted by those opposed to their cause for donor lists... it was an intimidation game, and it almost worked until the Supreme Court declared that these lists are private.

Would philanthropic giving drop if people knew that their names would be public? Would people who ordinarily give to controversial groups back off and start giving only to "safe" charities? I wonder if Gore has considered these questions?

Nonprofit Law Podcast #4

Episode 4 of the Nonprofit Law Podcast is now available... this week's topic is public disclosure rules. Check out the shownotes and resources at nplawcast.com!

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Nonprofit paying for Gov. Schwarzenegger's travel

NPR's Marketplace has a story, based on reporting first in the L.A. Times, on a nonprofit footing the bill for Gov. Arnold Schwarzenegger's overseas travel. The California State Protocol Foundation has paid for some (reportedly) pricey travel for the governor, and due to the protections afforded to nonprofits, the donors names are protected from public (but not IRS) scrutiny.

The issue of public disclosure of charitable contributors has been popping up a lot lately... it will be interesting to see if this causes a push in Congress to change the disclosure rules for charities. If so, expect the matter to be taken up by the courts. If you're interested in learning more about public disclosure rules, check out episode #4 of the Nonprofit Law Podcast, coming out this weekend.

IRS teleconference on new Form 990

The IRS is hosting two days of teleconferences as part of its roll-out of the new Form 990. It's definitely attracting some attention, as the first day is totally booked. The remaining available slot is July 19th from 1-2 PM EDT.

If you're the point person at your nonprofit that fills out the annual tax return (aren't you lucky!), this might be of interest to you. If you're already booked during the big show, or would alternatively rather do something... anything else, I'm signing up for it and will post the scoop here.

Nonprofit Law Podcast #3

I present to you episode 3 of the Nonprofit Law Podcast... this week's topic is bylaws. Check out the shownotes at nplawcast.com!

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