Charity Governance

HAVE A QUESTION? THEN OPEN YOUR MOUTH: FEDERAL COURT STRIKES DOWN TEXAS CHARITABLE SOLICITATION STATUTE

DATELINE:  February 8, 2010, Chicago

Jon Stewart and Stephen Colbert have yet to pick up on last week’s Illinois primary election.   One Scott Lee Cohen won the Democratic spot on the ballot for lieutenant governor.  The people spoke, but the next day, the other shoe dropped.  Mr. Cohen had been...

ARROGANCE, NOT A MISUNDERSTANDING—NO HALO IN HAITI

Dateline: February 4, 2010, Chicago

We have been watching the story about the imprisoned Baptist missionaries who were detained for allegedly trying to remove 33 Haitian children from Haiti.  The ten missionaries were charged today by Haitian authorities with abduction and criminal association.  Mark Lacey, Abduction Charges for Americans in Haiti, N.Y. Times (February 4, 2010).  While we suspect these missionaries will be returned to the United States shortly, we have no sympathy for their plight. 

These folks apparently assumed that their efforts to do good would not only shield them from legal liability, but serve as justification for ignoring the laws of another country and the rights of Haitian parents who might still be alive.  In their view, the opportunity to live in the United States apparently justifies any action needed to achieve that result.

The lesson in this story should be obvious and applies to matters that extend far beyond disaster relief, children, and adoption:...

INTANGIBLE ASSETS BEAT TANGIBLE ONES: THE IMPENDING CLOSURE OF THE PASADENA PLAYHOUSE

Dateline: February 3, 2010, Chicago

The generation currently holding the reins of power has a strong preference for flashy expenditures, yet it likes to talk about green, conservation, and recycling.  Maybe it should stop building McTheatres and McMuseums.

Case in point is the Pasadena Playhouse, a venerable California institution that presents award winning live theatre.  It recently announced it would be...

FAILURE TO MARRY ALLOWS CHARITY TO DEFEAT FUNG SHUI LOVER’S CLAIMS TO BILLIONS

DATELINE: February 2, 2010, Hong Kong

Our Ice House Street branch in Hong Kong has informed us of one of the great charity grabs of all time.  Yesterday, a Hong Kong court denied the claims of Tony Chan Chun-chuen, a fung shui master, to the fortune left by the late Nina Wang, Asia’s richest businesswoman.  Wang, who was dubbed...

DIRECTORS: YOU HAVE A DUTY OF CARE, BUT TO WHOM?

DATELINE: February 2, 2010, Chicago

We read with great interest Stephanie Rice’s article, City College Foundation Seeks Control of Assets, in the January 25, 2010 edition of the San Francisco Chronicle.  The article begins by referring to a criminal case against three former...

STEVENS FALLOUT: WHO WILL BE RUNNING THE SHOW?

DATELINE: January 29, 2010, Chicago

The Stevens board of trustees may have hoped the settlement with the New Jersey Attorney General would make the recent unpleasantness disappear.   Give the press coverage and comments that we have received from a number of sources, we suspect that much to its distress, the board now...

INTELLECTUAL PROPERTY MAY BE INTANGIBLE, BUT IT IS STILL PROPERTY: CHARITIES BEWARE

DATELINE:  January 29, 2010, Chicago

Chicago’s venerable Sun-Times recently carried a story regarding a lawsuit filed by McDonald’s against a student who conducted a fundraiser for the Special Olympics under the name McFest.  Cheryl V. Jackson, McDonald’s in Beef Over Trademark with Chicago Teen (January 26, 2010).  The student, Lauren McClusky, filed for a trademark on the name.  McDonald’s...

I HAVE A DREAM: IMPROVED INTERNAL CONTROLS AND BYLAWS

DATELINE: January 28, 2009, Chicago

The Atlantic Journal Constitution has reported that the Southern Christian Leadership Conference (SCLC) is experiencing serious governance problems, including what appear to be allegations involving misappropriation and misuse of SCLC funds.  Rhonda Cook, Judge Orders Previous SCLC Leadership Reinstated (January 21, 2010); and Rhonda Cook, $569,000 May Have Been "Diverted" from SCLC Funds (January 14, 2010).  In December 2009, the board of the organization founded by Rev. Martin Luther King, Jr.  voted to...

CHARITIES MUST WORK WITH A MAJOR DONOR WHEN THE DONOR PROPOSES A LARGE PLEDGE WITH CONDITIONS

DATELINE:  Washington, D.C., January 25, 2010

Of all the articles we have read about philanthropy during the first few weeks of the New Year, the article that has most caught our attention appeared in the Detroit Free Press.  Pistons Owner’s Estate Sued for Donation (January 20, 2010), which was penned by L.L. Brasier and brought to our attention by the Chronicle of Philanthropy.  The article focuses on an estate’s refusal to...

CAUTION: SUPREME COURT RULING IN CITIZENS UNITED DOESN'T ELIMINATE SECTION 501(C)(3) PROHIBITION ON CAMPAIGN INTERVENTIONS

DATELINE: January 21, 2010, Chicago

The United States Supreme Court issued a 183-page opinion in Citizens United v. FEC today. It strikes down part of the Bipartisan Campaign Reform Act of 2002 (BCRA), which prohibited corporations and unions from using their general treasury funds to make independent expenditures for speech that is an “electioneering communication” or for speech that expressly advocates the election or defeat of a candidate.

We certainly aren't experts in campaign finance law--anything but.  Yet our very brief review of the opinion leads us to issue this cautionary note to charitable organizations.  Campaign finance law limitations are separate and distinct from the prohibition against interventions in political campaigns in Section 501(c)(3). Nowhere in the opinion are those limitations referenced.  Consequently, this ruling should not be viewed as invalidating Section 501(c)(3)'s limitations.  

The experts in campaign finance reform already are poring over the opinion.  It may turn out that there is language in the opinion that might cause some organization to believe it can now mount a successful challenge to the Section 501(c)(3) limitation. After all, 183 pages of new law, particularly new law that also overrules some existing case law, may cause people to rethink what the precedents in this area mean.  But until there is a consensus on the issue or even better, a Supreme Court ruling, charities should assume that the prohibition in Section 501(c)(3) is still the law.