It was a delight to participate in this event honoring my friend and colleague, Ellen Aprill:

Loyola-L.A. hosted a festschrift, live symposium, and celebration to honor Ellen Aprill (Loyola-L.A.; Google Scholar) yesterday:

Lloyd Hitoshi Mayer (Notre Dame; Google Scholar), Nonprofits, Taxes, and Speech, 56 Loy. L.A. L. Rev. __ (2023):

Federal tax law is of two minds when it comes to speech by nonprofits. The tax benefits provided to nonprofits are justified in significant part because they provide nonprofits great discretion in choosing the specific ends and means to pursue, thereby promoting diversity and pluralism. But current law withholds some of these tax benefits if a nonprofit engages in certain types of political speech. Legislators have also repeatedly, if unsuccessfully, sought to expand these political speech restrictions in various ways. And some commentators have proposed denying tax benefits to groups engaged in other types of disfavored speech, including hate speech and fake news. These latter proposals have recently become more prominent as additional facts come to light about the role of nonprofits in supporting white supremacy and in disseminating misleading information about COVID-19 treatments.

This Article explores the existing and proposed limitations on speech by tax-exempt nonprofits given the constitutional restrictions on such limitations and the policy justifications for existing nonprofit tax benefits. It explains why the existing limits on political campaign intervention and lobbying by charities are both justified given the subsidy provided to charities and their supporters under existing federal tax law and constitutional given existing and longstanding case law. It further concludes that any expansion of these limits on charities to cover other types of speech, including hate speech and fake news, would be inconsistent with the existing broad definitions of the purposes that charities can pursue as well as, in some circumstances, constitutionally suspect. It also concludes that limits on speech by non-charitable tax-exempt nonprofits, including the existing limit on political campaign intervention for some of these nonprofits, is both unwise as a policy matter and, in some circumstances, constitutionally suspect given the lack of a subsidy for such speech by these nonprofits.

• Commentator: Eugene Volokh (UCLA; Google Scholar)

Roger Paul Colinvaux (Catholic University),  Strings Are Attached: Placing a Spotlight on the Hidden Subsidy for Gift Restrictions, 56 Loy. L.A. L. Rev. __ (2023):

Charitable gifts often come with strings attached. Donors limit their gifts in many ways, by restricting an asset’s use or purpose, controlling the timing of spending (as in an endowment), securing naming rights, or by retaining effective control over the distribution or investment of the asset by giving to a charitable intermediary such as a donor advised fund or private foundation. Most donor limits are perpetual in nature and a form of dead hand control. The Article explains that default rules strongly favor donor limits. Property law allows donors wide latitude to place limits on gifts, and they are easy for donors to impose. Once imposed, donor limits typically are extremely hard for charities to eliminate, as obedience to the donor’s intent is a priority in the law. Federal tax rules also favor donor limits by treating most donor-limited gifts the same as unrestricted gifts for purposes of the income and estate tax charitable deductions. As a result, donor limits are common, and burden a substantial portion of charitable assets. The Article finds based on a review of Form 990 data that, for 96 of the leading charities in the U.S., 69% of their $474 billion in net assets are subject to donor limits. For the 17 private universities in this group, 68% of the total endowment is donor limited. There is thus a substantial, hidden tax law subsidy for donor limits on gifts, yet one that entails many harms, including to the public interest, charitable autonomy, pluralism, constraining access to resources, compliance costs, and subsidizing gains to donors. Given these harms, the Article considers tax reform options for donor limited gifts. These include treating donor limits as retained rights or as return benefits (thus reducing the charitable deduction to account for limits), estate tax reform to discourage giving to intermediaries, encouraging unrestricted gifts from intermediaries, and not subsidizing donor limits in connection with any new giving incentive, such as a nonitemizer deduction or charitable giving credit. Under any of the reform approaches, the power of donors to impose limits would not change. But charity, and society, would be relieved from some of the costs of the dead hand.

• Commentator: Edward J. McCaffery (USC; Google Scholar)

Samuel D. Brunson (Loyola-Chicago; Google Scholar) & Philip Hackney (Pittsburgh; Google Scholar), A More Capacious Conception of Church, 56 Loy. L.A. L. Rev. __ (2023):

United States tax law provides churches with extra benefits and robust protection from IRS enforcement actions. Churches and religious organizations are automatically exempt from the income tax without needing to apply to be so recognized and without needing to file a tax return. Beyond that, churches are protected from audit by stringent procedures. There are good reasons to consider providing a distance between church and state, including the state tax authority. In many instances, Congress granted churches preferential tax treatment to try to avoid excess entanglement between church and state, though that preferential treatment often just shifts the locus of entanglement. But those benefits and protections come with cost both to individual churches (by making these organizations susceptible to tax shelters and political activity shelters) and to our democratic order (by granting churches to a higher status than other organizations). Does Congress get the balance right? We think the balance struck is problematic but justifiable. In this Essay we only note the problems and suggest some actions churches and religious organizations might take to protect against some of the dangers.

• Michael Helfand (Pepperdine; Google Scholar) (commentator)

Michelle D. Layser (San Diego; Google Scholar), The Uncertain Equity Impacts of Place-Based Tax Incentives, 56 Loy. L.A. L. Rev. __ (2023):

Nearly 30 years have passed since Professor Ellen Aprill warned policymakers not to rely on tax incentives to fight urban poverty. At the time, federal and state governments were just beginning to embrace so-called place-based tax incentives, which are used to promote investment in low-income areas. Aprill was skeptical and expressed doubts about their capacity to change business behavior or to benefit low-income residents. Nevertheless, federal and state lawmakers charged forward, introducing new place-based tax incentive programs in the decades that followed. Today, tax incentives are a central part of most place-based policy initiatives. Yet, there is still a lot we do not know about the consequences about place-based tax incentives. Almost everything we do know about place-based tax incentives has been produced by economists. Those studies cast serious doubt about place-based tax incentives’ capacity to benefit low-income communities, but they also have significant limitations. As a result, our understanding of the consequences of place-based tax incentives is incomplete, making it difficult to chart a path forward. The purpose of this Essay is to highlight several alternative scholarly frameworks that may be relevant to understand the consequences of place-based tax incentives. It proceeds with the modest goal of starting a conversation, and it makes no attempt to provide the final word. Rather, this Essay argues that the field of place-based tax incentive research must be expanded to include new, diverse perspectives—from researchers across the academy, from scholars of color and other nontraditional backgrounds, and even from members of low-income communities.

• Deanna Newton (Pepperdine) (commentator)

Richard L. Hasen (UCLA; Google Scholar), Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill:

This brief Essay was prepared for a festschrift honoring the work of Professor Ellen Aprill. I explain in the Essay how Professor Aprill’s deep knowledge of nonprofit and tax law and her relentless intellectual honesty leads her (and us) to an unhappy place: a world in which many of the remaining regulations of money in politics could well be struck down as unconstitutional or rendered wholly ineffective by a Supreme Court increasingly hostile to the goals of campaign finance law and extremely solicitous of religious freedom. Just as the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission used the First Amendment rights of nonprofit corporations to open up direct political spending by large, for-profit corporations, additional arguments about the rights of charitable institutions and other nonprofits will be used to push further judicial deregulation of the political process for all.

Professor Aprill in her most recent writings at the intersection of nonprofit law and election law reluctantly shows the way: a path toward getting churches, synagogues and other charitable institutions directly in the business of politics; a means of striking down or rendering ineffective what remains of our campaign disclosure laws; and a self-reinforcing bootstrapping that relies upon legislative and agency inertia coupled with judicially-created loopholes to argue for the ineffectiveness of the system as a whole, triggering its demise through constitutional litigation. It is a sad but expertly told story of regulatory collapse.

• Justin Levitt (Loyola-L.A.) (commentator)

Here’s a small tribute from Wall Street Journal tax columnist Laura Saunders, one of many journalists Ellen has helped over the years.

The deadline is looming. The topic is tough.  
The editor’s scowling: “This isn’t enough!
What is this nonprofit known as a (c)(4)? 
And why should our readers care to know more?” 

Or maybe the story’s on U.B.I.T.,  
Or a private foundation–is it a (c)(3)?
Or DAFs, or deductions, carryforwards, and such;
With exempt-org. campaigning, how much is too much?

When these questions are swirling, reporters all know 
Without a doubt, the best place to go.
“Call Ellen!” “Ask Ellen!” She’ll be patient and clear,  
She’s truly the Dean of the non-profit sphere.

With knowledge and context and contacts a-plenty,
She guides us among tax-exempt cognoscenti.
The story will work! The editor will smile!
We’ll still be employed — at least for a while. 

So thank you, dear Ellen, for all you have done 
For the Fourth Estate. It has been a great run.  
And it’s not over, we’re ready for more–
As you embark on your great encore! 

With gratitude,
Laura Saunders
The Wall Street Journal