Another really enjoyable time a couple of days ago with Fiscal Sponsor Conversations, this time talking about how fiscal sponsorship could be impacted by the Proposed DAF Regulations (which we wrote about earlier as it relates to other issues). I am sharing the slides here. Probably impossible to explain DAFs, what the proposed regulations are and mean, and what that has to do with fiscal sponsorship in a single presentation or blog post. But the exercise helped me boil down what my recommendations are for fiscal sponsors to manage this risk.

If you want a deep dive into the regulations, check out our earlier post or slides. If you want to skip to the back of the book, let’s go through what my current takeaways are (none of the below is legal advice, of course, just the rambling of someone who spent too much time putting together slides)…

On a day that happens to also be May Day a/k/a International Workers’ Day, I am left reflecting on how little we, from a legal perspective at least, ask of some of our nonprofit organizations. Yes, this blog has many posts about different rules they need to follow to different types of activities and limits on private benefit. But what do we really ask in terms of commitment to a particular set of values? I think the answer is “next to nothing”.

I was fortunate to present at Fiscal Sponsor Conversations this past week on Model C fiscal sponsorship as applied to filmmaking (and to present there this coming week on how the proposed DAF regulations affect fiscal sponsors). If you’re not familiar with this group and are engaged or interested in fiscal sponsorship, I can give it my strongest recommendation. Fun group, interesting speakers, and, at least when I’m not there, a great rotating cast of presenters. Andrew Schulman of Schulman Consulting and Oliver Hack of Social Good Fund do a great job creating an engaging atmosphere.

Because the topic is something I find interesting and think about often, I thought I’d share my (a bit rudimentary) slides from this presentation and a few random thoughts on filmmaking as a charitable activity, when it feels safe, and when it is pushing the boundaries of how the charitable sector is supposed to operate.

In addition to our own presentations (more to come soon), we want to make sure to call out some of the great work being done by others in the sector.

As a great first example, the exceptional team at the Forefront Project will be conducting a webinar on federal tax law and state law rules regulating ballot measure advocacy by nonprofits and how they might be able to help your organization navigate them.

The Forefront Project does fantastic work providing pro bono legal services to organizations that fight to defend reproductive rights. Given the ruthlessness of the right-wing and the degradation of human rights in this country by the current Supreme Court, organizations devoted to protecting the right to abortion need every tool they can get. And it is no time to shy away from political advocacy and the many ways you can do it without violating any rules.

Please check out the webinar and support organizations like Forefront doing what they can on this issue.

Most of the time, we forget to promote the various presentations we do here at MLC because we are too busy scrambling to get the materials together between calls and client projects. But, I feel particularly fortunate to be presenting with Gene Takagi of Neo Law Group, whose firm and exceptional blog are a big inspiration for us.

And we are speaking about a topic we covered not too long ago on this blog: the proposed DAF regulations and how they might impact sponsors, donors, and grantees.

The presentation is on February 6 at 12pm through Stafford Webinars — check it out here if you are interested (and we have a few complimentary registrations left over, so don’t hesitate to reach out if you’re curious).

Having just returned from the National Network of Fiscal Sponsors (NNFS) Annual Conference, it was heartening to be reminded that so many organizations are doing good work in so many different arenas.

The mood at the conference was broadly hopeful, though several sponsors and speakers flagged that they – like everyone else – are dealing with global uncertainty. From the impact of Supreme Court decisions to changes in Fiscal Sponsors relationships to their Sponsored Organizations – change was very much in the air.

We now have DAF (proposed) regulations!  If that seems like a strange thing for a human being to apply an exclamation point to (it is), consider that there are hundreds of billions of dollars in donor-advised funds (DAFs), with complex rules and prohibitions but barely any real guidance.  The DAF rules were created by the Pension Protection Act on August 17, 2006.  There are human beings driving cars and getting ready to vote in the next Presidential election who have never known a world without the DAF rules.  And today marks the first proposed regulations.

And after today… well… we still have some questions.  But it’s something!

Considering that these regulations have been nearly twenty years in the making, it would be prudent to do a slow and careful review of the regulations and advise on what they portend for the donor-advised fund (DAF) world and the nonprofit sector.  But I find hasty overreactions more fun to write, so here are some key takeaways from these proposed regulations, released today.

When I was a younger person with numerous pretensions and abundant spare reading time, if asked for my favorite to work to revisit regularly, I probably would have cited some bleak French or Russian literature that I may have read one and a half times (generous) but nonetheless decided was core to my personality.

Having traded (some of) those pretensions and (nearly all of) that spare reading time and attention span for the life of a nonprofit tax lawyer, the answer now might be Revenue Ruling 67-4: a 56-year old one-page-long ruling about when publishing counts as an educational activity for 501(c)(3) purposes. Life comes at you fast, etc.

Revenue Ruling 67-4 is not even mentioned in the 501(c)(3) application-denial ruling that caught my eye this week. But it easily could have been. And I think it pairs neatly with something that is cited: the commerciality doctrine, as articulated in Living Faith, Inc. vs. Commissioner, a 32-year old tax case about a religious health food store.

So, join me in a discussion of these two great works of “literature”, and the 501(c)(3) publisher that never was.

So, you've set your sights on that elusive IRS tax-exempt status, only to find yourself entangled in a web of forms, regulations, and uncertainty. We're here to illuminate the paramount significance of an often underestimated factor that can shape the destiny of your tax-exempt aspirations – the administrative record.

Greetings, readers!

I'm thrilled to join the Mill Law Center as the newest attorney and to add extensive experience in the highly regulated charitable fundraising space. Having worked for several years in this specialized field, I've had the privilege of navigating complex legal requirements, ensuring nonprofit organizations comply with regulations, and helping them make a lasting impact.

Throughout my career, I've witnessed the transformative power of philanthropy in changing lives. By closely collaborating with charitable organizations, I've become familiar with the challenges they face in raising funds ethically and transparently while abiding by strict rules across multiple jurisdictions.

I'm here to share insights, practical tips, and thought-provoking discussions on the legal aspects of charitable fundraising. I thought the first topic could be new California fundraising laws regulating charitable crowdfunding.

If you haven’t already heard, my last day at the Mill Law Center (MLC) is June 15, 2023.

It is a bitter-sweet farewell but as the name of the farewell suggests, you can’t have sweet without bitter.

Sometimes the firm announcements are easy; sometimes they are bittersweet.

After June 15, one of the great members of our team, Charli Cleland, will be leaving the firm for a new adventure. If you have been lucky enough to get to work with Charli, you will know him to be a creative, compassionate, and exceptionally skilled lawyer and advocate for our clients. We all feel very fortunate to have gotten to know Charli, and our firm has benefitted immensely from his time here. Both in his work with clients and efforts to help build and shape our firm and culture, Charli’s impact here will resonate with us for a long time. We feel very fortunate to have gotten to work with Charli, and (more than) a bit sad to say goodbye.

Now, the good news! One of Charli’s specialties here has been handling the tricky situations – the conflicts, the drama, the headed-towards-litigation – and bringing them to remarkably productive resolution. So it is fitting that Charli’s next venture is a firm focused on conflict resolution and (when unavoidable) litigation, not only for nonprofits in the midst of conflict but for for-profits and individuals too.

The firm’s name is Cleland & You and I know that we and our clients will continue to work with Charli over the years to come. It’s not easy to find an attorney experienced in conflict resolution and litigation that is also as compassionate and thoughtful as Charli, so we are thrilled to have a referral for clients in those litigation and approaching-litigation situations that extend beyond our work as tax and corporate lawyers.

So, while it’s goodbye for now, it’s also a celebration and good luck wishes to Charli!

More to come in terms of resources for nonprofits in this space soon!

A quick and exciting announcement: as of today, May 15, 2023, we are thrilled to welcome Patrick Hogan to the team. Patrick is based in the Cincinnati area, and licensed in Ohio and Kentucky. Patrick has been practicing nonprofit law in the Cincinnati area for a long time, representing a wide range of nonprofit clients on the sorts of matters we talk about with clients all the time here: corporate governance, regulatory compliance, tax-exemption, and all the other fun nonprofit law topics you can see on this blog.

Patrick’s addition is a huge step forward as we continue to expand our capacity to serve nonprofit clients around the country and address the multi-state compliance needs of nonprofits with distributed workforces and operations. While operating a multistate law firm can be (very!) complicated, we look forward to building out our capacity and presence so we can carry our firm’s mission as broadly as possible. With that in mind, welcome to Patrick!

More to come on this blog soon!

It’s been a quiet few months on our blogs, but we hope to have some exciting updates soon.

In the meantime, we wanted to share a couple of upcoming events where we will be doing hopefully unique and fun talks on charitable giving in different parts of California:

I will be giving a presentation at the Annual Meeting of the Northern California Planned Giving Council in San Francisco on April 24, 2023. The topic will be “Taxes and Charitable Giving – What Do Gift Planners Need to Know?” I’m looking to use it to talk as non-lawyerly as possible about the tax concepts that drive certain types of giving and decision-making, and give charities a greater ability to have persuasive conversations with their donors.

My colleague, Jennifer Hubbard, and I will be giving a joint presentation at the Western Regional Planned Giving Conference hosted by the Los Angeles Council of Charitable Gift Planners in Costa Mesa, CA, which runs from May 16 to May 18, 2023. The topic will be “Gifts That Make You Call a Lawyer: Working Through Some Stressful Planned Giving Situations”. This one should be a fun one, with Jennifer and I sharing anecdotes from tricky gifts that our clients have dealt with and some strategies to try and make everyone happy (or at least make most people, mostly happy).

Our blog has been a little quiet lately as we have all been doing our best to keep up with what has been a very busy last few months for our clients. To commemorate our first full year as a firm, and a year where we added several new members and many great nonprofits as clients, we want to take a quick look back at some of our posts and resources from the past year.

We (Ehsan Ali and I, along with our good friend Jinna Kwak from Adler & Colvin) just gave a fun presentation on fiscal sponsorship and spotting (and resolving) risks in the context of new projects, here at the annual meeting of the National Network of Fiscal Sponsors in San Diego

It was a lot of fun and involved us throwing together some useful (if a bit chaotic thanks to me) materials. Sharing those here in case they are useful to anyone, either who made it to the conference or is just interested in fiscal sponsorship.

I’m speaking at the “Ask the Expert” session with Erin Bradrick of NEO Law Group tomorrow. Looking forward to that too!

Most of our blog posts are for the benefit of nonprofits and the legal and accounting community that serve them. This is not one of those posts.

At this point, if you are not a billionaire*, we ask that you stop reading. No hard feelings — there will be more posts on UBIT, lobbying, and other fun tax-exemption issues for you soon. Come on back then. This is just a very special post for a special audience.

*We try to be as inclusive as possible here at MLC, so if your net worth is not yet over $1B but is at least many millions of dollars and you’re feeling bullish, we welcome you to stick around.

…

…

Are we alone now? Great.

I want to talk to you about a special opportunity we have. Namely, one where you give our 501(c)(4) affiliate the entirety of your company, save yourself hundreds of millions of dollars in taxes, and dominate our political system from the grave in perpetuity. And get yourself fawning and misleading (in your favor!) coverage in major publications.

Sound good? Excellent, let’s continue…

While most primarily associate it with the end of summer and a three-day weekend, 2022 is an excellent year to recognize Labor Day for what it is:  a celebration of workers and their power to organize. 

With the erosion of labor law by politicians and the courts that began in the 1970’s and continued through the last administration, it is hard to believe that in 1894, this country believed in unions enough to declare Labor Day a federal holiday.  Review the sweeping rights of workers introduced by the National Labor Relations Act in 1935 and consider just how far the mainstream left has retreated from economic justice – Congressional Democrats today could never pull this off.

But, if you will indulge a fleeting moment of optimism, consider the viral success of organizing efforts at Starbucks, Amazon, and other megacorporations, the 500-Day Warrior Met coal strike that continues as we speak, the sectoral bargaining that (subject to Gov. Newsom’s signature) would be created in California to regulate wages and practices in the fast food industry under AB 257, and a new Gallup poll showing a record high in terms of the public support of unions (71%!  Think of how many matters of objective fact fail to get that high of a consensus!).  It is possible that the decline in union membership, which closely parallels the stagnation and decline of the true wages of the working and middle class, may be reaching a turning point.

So….what does this all have to do with nonprofit law?  I’m glad you asked. 

Since reading The Lever and ProPublica’s excellent and essential joint piece, by Andrew Perez, Andy Kroll & Justin Elliott this morning, I have been wrestling with the best way to write about Barre Seid’s $1.6B gift to “The Marble Freedom Trust.” The Trust, a 501(c)(4), will be run by Leonard Leo, the co-chair of the Federalist Society who advised on the prior administration’s disfiguration of the judicial branch and is dedicated to various conservative and theocratic causes. 

I find the current state of affairs repugnant, and it is brutally depressing to see our country’s reactionary forces so thoroughly financed in perpetuity.  So, rather than try to organize a blog post, I will just free-associate…

One of our favorite things to do is talk to people with ideas for a new charitable activity and help them figure out whether and how they want to move forward.

And, in those conversations, we find ourselves raising the same question fairly often, particularly for small projects or projects that may or may not last for the long-term: are you better off just doing this as a fiscally sponsored project instead?

While we certainly love to help people form new non-profits, it is undoubtedly true that not every project needs a new entity to bring into existence. Fiscal sponsorship represents a great alternative in many cases and helps people with a big idea keep things simple while they figure out if it is going to work or not.

In the spirit of helping clients make a more informed decision, our team (Charli Cleland, Cate Chang, and myself) worked together to create a guide to weighing the option between a new entity and securing a fiscal sponsor.

We’ve also added this to our Resources page — where it joins several other resources we hope will be useful to non-profits and the people who lead them (clients and non-clients alike).