California Charities Do Not Have To Reveal Their Donors

CNBC is reporting today that the Supreme Court has ruled 6-3 that California charities do not have to reveal a list of their donors.

The article reports:

The Supreme Court on Thursday struck down a California rule requiring nonprofits to disclose the names and addresses of their largest donors, delivering a victory to a pair of conservative groups that had challenged the requirement as unconstitutional.

The 6-3 decision, which divided the nine justices along ideological lines, reversed a 2018 appeals court ruling siding with California’s attorney general.

The rule had forced nonprofits to give the state their so-called Schedule B forms, which include the personal information of all donors nationwide who had contributed more than $5,000 in a given tax year. The state had argued that it needed that information to help it police misconduct by charities.

“We do not doubt that California has an important interest in preventing wrongdoing by charitable organizations,” wrote Chief Justice John Roberts in the majority opinion.

But “there is a dramatic mismatch” between “the interest that the Attorney General seeks to promote and the disclosure regime that he has implemented in service of that end,” Roberts wrote.

The conservative chief justice noted that about 60,000 charities renew their registration each year, and that virtually all of them were required to provide a Schedule B form.

“This information includes donors’ names and the total contributions they have made to the charity, as well as their addresses. Given the amount and sensitivity of this information harvested by the State, one would expect Schedule B collection to form an integral part of California’s fraud detection efforts. It does not,” Roberts wrote.

As much as I believe in transparency in donations, the Supreme Court was right to protect the names of the donors. A number of years ago, donors who supported a ballot referendum were harassed because of their donations. Unfortunately, that is not an unusual event. Americans need to be free to give to the charities of their choice without being harassed for their donations.

Some Helpful Suggestions

Yesterday The City Journal posted an article with the title:

False Prophets

If you really want to help black America, don’t look to Black Lives Matter.

The article notes:

Over the past two weeks, we have seen peaceful protests, but also looting, businesses torched, attacks on police, and the desecration of some of the nation’s most revered memorials. All of this is numbing. Recently, I thought that I had finally turned the corner on my anger over the Floyd killing. (I’m African-American myself.) “Where do we go from here?” I wondered. “How do we get something positive out of this?”

But then the demands shifted. Cries for justice morphed into “Defund the police.” We started hearing calls from white Americans to do something to help ease the difficulties blacks are facing. On the surface, this seems good; the intentions definitely are good. The problem is that, with no context or reference to what is needed in the black community, and often with few black friends or colleagues to consult, many Americans—from those in corporate America to vocal social media consumers—are throwing support and resources behind Black Lives Matter, without considering carefully what the group actually stands for.

Black Lives Matter was started in 2013 to shed light on mistreatment of and brutality against blacks by police, but it has become a radical leftist organization. The “Herstory” section of its website, for example, reads: “Black Lives Matter is an ideological and political intervention in a world where Black lives are systematically and intentionally targeted for demise.” This proclamation is demonstrably untrue: there is no evidence that anyone—including the police and white supremacists—is killing black people in a targeted campaign, nor are the numbers of such deaths significant compared with the number of blacks killed by other blacks. But beyond BLM’s inflammatory and false rhetoric, there are important reasons to avoid the group.

The article notes that defunding the police would hurt the people that BLM claims to want to help. It would create chaos in already dangerous neighborhoods. This would probably result in businesses and commercial enterprises leaving these neighborhoods.

The article continues:

BLM was started by three black women, but their stated goal—to achieve equality for blacks—masks a different agenda. In the “What We Believe” section of the BLM site, they highlight the work they do to “dismantle cisgender privilege” and their desire to “disrupt the Western-prescribed nuclear family structure”—a structure that many, including myself and Kanye West, believe is key to rebuilding black communities. The mission statement mires a message that should be about black lives in a slew of buzzwords and Marxist psychobabble. Not all the sentiments are bad, but none will create positive change in the black community.

I’ve never known of a nonprofit organization more than two years old and with national name recognition that posts no financial report on its site and no glowing list of “wins.” Most charities get donations by pulling at your heartstrings, highlighting all the lives they have touched. The only thing remotely resembling action on the Black Lives Matter website is a timeline under “Global Actions,” listing activism on behalf of illegal immigrants. Even this consists mostly of petitions and demonstrations.

Many well-intentioned people want to support the black community, especially now. We need to point them in the right direction. The most vulnerable blacks, and the ones most adversely affected by racism, are struggling financially. The best thing that we can do for them is lift them out of poverty. Defunding the police, dismantling the nuclear family, or focusing on immigration will not accomplish that goal.

The two most important things we can do to help the black community are to encourage the formation of nuclear family and encourage better educational opportunities. Part of the problem in the black community is the culture, and the community itself needs to begin to change the culture. Those of us outside the community can help and encourage, but we can’t do it for them.

Losing Our First Amendment Rights

On Tuesday, The Christian Post posted an article about a bill recently signed into law in New York State.

The article reports:

New York Gov. Andrew Cuomo has signed a bill into law that prohibits churches and other nonprofits from campaigning for or against political candidates.

Cuomo signed Senate Bill S4347 last week, creating a state-level equivalent to the current federal Johnson Amendment, which bans electioneering among nonprofits.

In a statement released last Wednesday, Cuomo said he felt the law was necessary in response to efforts by the Trump administration to weaken the Johnson Amendment.

“For too long we have listened to the Trump administration threaten to remove common sense protections prohibiting tax exempt organizations from engaging in inappropriate political activities,” Cuomo said.

“New Yorkers have a right to free and fair elections, and this law will further protect our democracy from unjustified interferences once and for all.”

Also known as Assembly Bill A623, the bill amended the state tax law to say that  nonprofit organizations, religious or secular, cannot participate in “any political campaign on behalf of or in opposition to any candidate for public office.”

The article reminds us:

In May 2017, President Donald Trump signed an executive order which, among other things, called for the federal government to stop enforcing the Johnson Amendment.

“In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective,” stated Section 2 of the executive order.

Despite the executive order and Trump saying on multiple occasions that he eliminated the amendment, it still has not been officially repealed.

The First Amendment states:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

People do not give up their First Amendment rights because they enter a church.

The article also includes a quote by Ryan Tucker of the Alliance Defending Freedom:

Ryan Tucker of the Alliance Defending Freedom took issue with Cuomo’s signing of the law, writing in a New York Daily News opinion piece last week that the state government was “cracking down on political speech.”

“In the minds of New York lawmakers, a group can only speak freely if it pays the government extra for the privilege of doing so. That type of financial coercion may pay for a payroll increase in Albany, but it will sideline the roles of both secular and religious charities,” Tucker wrote.

“Cuomo’s comments are wrong. The government can’t condition your tax-exempt status with the surrender of your First Amendment rights or any other constitutionally protected freedom.”

That is a very interesting way to look at this. Why should churches give up their right to speak out on political issues that are relevant to spiritual life simply because they are tax exempt?

Why All Congressional Bills Need To Be Read Carefully

CBN News reported today on an unnoticed item in the tax cut bill passed by Congress this year.

The article reports:

Churches and non-profit organizations are calling for the repeal of a provision in the GOP’s tax cuts law that would force ministries to file federal tax returns, and in some cases pay taxes.

Last winter, as lawmakers touted the tax savings in the Tax Cuts and Jobs Acts, no one mentioned this new federal tax on local churches. But for non-profits like Christian ministries, that little-known provision in the legislation has become a big cause for concern.

…Under the new tax plan, churches, hospitals, colleges and other historically tax-exempt groups must pay a 21 percent tax on some benefits they provide their employees, such as parking, transportation and other related benefits.

Dan Busby is president of the Evangelical Council for Financial Accountability. He says churches weren’t expecting to get hit with – of all things – an income tax bill, and this one could be a huge burden on groups that have historically enjoyed tax-exempt status.
 
“There are nearly 15 million employees that work in the United States for nonprofits – nearly 10 percent of the workforce – so that’s 15 million parking places. And conservatively, it’s going to cost the non-profit community as a whole up to a billion dollars,” Busby said.

That’s a lot of money for ministries that rely on donations. In response to the news, the ECFA put out a petition that churches and nonprofits can sign to protest the employee parking tax. 

“Tax practitioners who have evaluated Section 512(a) (7) generally believe that the result of this new provision is that tax‐exempt organizations that provide parking to their employees will be subject to unrelated business income tax on the cost of the parking provided. A nonprofit organization that simply allows its employees to park in a parking lot or garage that is part of the organization’s facilities will be subject to a tax on the cost of the parking provided,” the ECFA explained in a position statement available for download on its website.

This is the link to sign the petition against the new tax  –  https://www.ecfa.org/DocSig.aspx

Taxing churches on their staff parking places has to be one of the dumbest ideas I have ever encountered.

Progressive vs. Practical

Hot Air posted a story today about a pizza place in Boston that has gone bankrupt. That in itself is probably not all that unique, but there are some special circumstances here.

The article reports:

In the Roxbury neighborhood of Boston back in 2015, the people at the nonprofit organization Haley House came up with a novel idea. They would open a pizza shop based on the principles of economic justice and fair wages to support the community. Named Dudley Dough, the shop would pay wages far above the minimum which many people in that industry earn, with added incentives for training and community development. It was an inspiring idea.

Unfortunately for them, only two years later the place is closing down. It turns out that operating a for-profit business on the principles of a nonprofit social justice operation results in an undesirable side-effect. They were literally not producing a profit.

One of the most difficult parts of starting and running a business is balancing the cost of doing business with the cost of the product. There has to be enough of a gap between those two things to earn the money to keep you in business. The people who started this pizzeria started it with a noble goal in mind. Unfortunately, they did not start it with sound business practices.

The article concludes:

Labor costs are a major driver in the business model of any such operation. Once you’ve accounted for the standard expenses of kitchen equipment, ingredients, utilities and the cost of your site (which are fairly standardized), labor costs may turn out to be the margin of error which makes or breaks you in terms of profitability and controlling your prices. Everyone in the neighborhood may love your social justice oriented, woke attitude, but if your pizza costs three bucks a slice when everyone else is selling them for two, you’re not going to last long.

Dudley Dough may prove to be a cautionary tale for everyone engaged in the debate over minimum wage rates and so-called “economic justice.” What they experienced was the sort of justice which the real world administers to the overly idealistic in a capitalist system.

It’s called reality.

How Much Is Big Bird Actually Worth?

Steven Hayward posted an article at Power Line today about President Trump’s plan to cut funding for Public Broadcasting. The article illustrates the fact that in some cases, executives of nonprofit organizations make salaries that don’t sound as if they are appropriate for an organization that is nonprofit.

The article reminds us of two conflicting statements made by NPR about their budget:

On average, less than 1% of NPR’s annual operating budget comes in the form of grants from CPB [the taxpayer-funded Corporation for Public Broadcasting]  and federal agencies and departments.

…Federal funding is essential to public radio’s service to the American public. Its continuation is critical for both stations and program producers, including NPR. . . Elimination of federal funding would result in fewer programs, less journalism—especially local journalism—and eventually the loss of public radio stations, particularly in rural and economically distressed communities.

Both of those statements cannot be true. I have no idea which one is.

The article further reports:

According to tax filings — the most recent of which covers 2014 — then-president and CEO Melvin Ming was paid more than $586,000 in salary and benefits in the nine months before retiring, which included a $37,500 bonus and $18,700 in benefits. The year before that, Ming cleared $672,391 in salary, bonuses and benefits.

That’s five times the average pay for CEOs at nonprofits, according to Charity Navigator. (It’s twice as much as the CEO of the Corporation for Public Broadcasting gets paid.)

The average compensation for the other 10 top officials at Sesame Workshop in 2014 was a very handsome $382,135 — which is about six times the median household income in the U.S.

Big Bird is big business. The article states:

Last year, Sesame Workshop had $121.6 million in revenues. Of that, $49.6 million came in distribution fees and royalties and $36.6 million in licensing of toys, games, clothing, food and such. In 2014, only 4% of its revenue came from government grants.

I suspect there are other programs on Public Broadcasting that would do quite well if they chose to market items related to their television shows. I truly think it is time to give the free market the chance to work its magic in the area of Public Broadcasting.

Some Nonprofits Are Very Profitable

The Daily Caller posted an article today about the Rev. Kenneth Fairley, pastor of Mt. Carmel Baptist Church in Hattiesburg, Mississippi. The article reports that the Reverend allegedly profited after the federal Department of Housing and Urban Development gave $47,000 to the local government, which gave it, in turn, to a nonprofit called Pinebelt Community Services to renovate houses.

The article reports:

HUD has relationships with many such nonprofits that often function as expensive middlemen between government aid programs and those in need of help.

In Fairley’s case, Pinebelt had no capacity to do construction and told the city it had handed off the money yet again via a contract with a New Orleans company called Interurban Development. But Fairley had arranged with Interurban’s owner to make the hand-off an on-paper-only arrangement at an inflated price.

The article explains that the work that HUD paid for was done locally for less money than the grant, and Reverend Fairley kept the difference.

The article further explains:

HUD does little vetting of the middleman nonprofits to which it awards millions of tax dollars annually.

In Baltimore, for example, it has funneled millions through a nonprofit called Enterprise Community Partners to pass it on to neighborhoods. But instead, its CEO makes $577,000 and it has 48 officers who were paid $267,000 on overage.

Only half of its money actually made it to neighborhoods that needed it and no positive results have been demonstrated.

The idea of revitalizing our inner cities is good. However, when the money for these efforts comes from the federal government, there is no way that the projects can be watched carefully for fraud and misuse of funds. Unless local people are directly involved in improving their section of any given city, it is quite likely that the efforts to improve the area will not be successful. If you truly want to revitalize America’s inner cities, we need to change the culture there. The inner cities will not improve until the people living there develop pride in their surroundings. Non-profit groups can be very helpful in this effort, but obviously a vetting process is needed to find the appropriate group.

 

 

Opening The Door Wide For Identity Theft

Identity theft is a problem in the electronic age. Credit cards with chips can be stolen without anyone actually going near the actual card. The internet is a gold mine for identity thieves. Now the Internal Revenue Service (IRS) is going to make it really easy to have your identity stolen.

Freedomworks posted an article yesterday about a new rule the IRS is proposing on charitable donations.

The article reports:

A new rule is proposing that non-profit organizations collect the “tax identification numbers” of all their donors who give over $250. For you and me, that means our Social Security numbers.

It’s hard to imagine a more chilling regulation on charitable giving. Would you be willing to enter your Social Security number into an internet donation form, knowing that the government will get to see it? Would you be willing to write that number down and mail it through the U.S. Post Office alongside a check? I wouldn’t.

The article continues:

This is part of the IRS’a continued efforts to reduce the reach and effectiveness of non-profit organizations. Many of you will remember the proposed regulations from last year that would have narrowly defined “social welfare” to shut down conservative organizations critical of the IRS. Through a massive grassroots activism campaign, FreedomWorks, along with other organizations, was able to stop the regulation by driving a record number of comments – over 150,000 – to defeat the rule. This new regulation is a resurrection of the same idea – identify and deter voters to causes the government doesn’t approve of.

In addition to the compliance cost of organizations having to keep track of all these numbers, the potential for civil liberties violations is huge. The Constitution guarantees us the freedom of association, but that freedom is compromised when the we know the government is watching us, especially when the watching is being done by an organization capable of inflicting punishment in the form of fines, audits, asset forfeiture, and general harassment.

We saw that harassment when a business was boycotted because they gave money to support Proposition 8 in California. If this information is required, we can expect to see donors to conservative causes targeted. We have already seen thegovernment harass businessmen who contributed to conservative causes using audits and safety inspections.

The comment period on this new rule is open until December 16. Please comment and let the IRS know that they have no right to demand your Social Security number for charitable contributions.

The Internal Revenue Service Under President Obama Is Still Political

Fox Business posted an article today about a Government Accountability Office investigation of the Internal Revenue Service. A House Oversight subcommittee will take testimony from IRS commissioner John Koskinen today.

The article reports:

The GAO now says that IRS political “targeting is indeed possible in the audit process” for nonprofits, largely due to poor agency oversight and controls.

“Unfortunately, the IRS has not taken sufficient steps to prevent targeting Americans based on their personal beliefs,” the GAO says.

Specifically, The GAO found that “control deficiencies” do “increase the risk” that the IRS nonprofit unit “could select organizations for examinations in an unfair manner—for example, based on an organization’s religious, educational, political or other views.”

Judicial Watch, a watchdog group, says it has obtained Freedom of Information Act filings that show IRS workers were using donor lists from conservative nonprofit groups to target people for audit. It also says documents detail a October 2010 meeting between former IRS official Lois Lerner, Justice Department officials and the FBI to plan “for the possible criminal prosecution of targeted nonprofit organizations for alleged illegal political activity,” and that the IRS transferred confidential tax returns from 113,000 nonprofit social welfare groups to the FBI “as part of its prosecution effort.” The documents also show “the Obama DOJ wanted IRS employees who were going to testify to Congress to turn over documents to the DOJ before giving them to Congress.”

The IRS is a very obvious example of a government agency out of control. We need to revise our tax system so that the IRS is no longer necessary. The IRS is a descendant of  the office of Commissioner of Internal Revenue, established in The Revenue Act of 1862 as part of a temporary war-time tax plan. The Sixteenth Amendment to the Constitution (1913) allowed Congress to levy an income tax.

It is time to seriously consider a flat tax or a value-added tax.

 

I Am Definitely In The Wrong Business

The chart below is from a Daily Caller article posted this morning. It shows the salaries of the top executives of the ObamaCare state health exchanges:

2013SalariesofTopObamaCare

As you can see, these executives are paid very well for their efforts.

The article reports:

More than a million Americans have enrolled in the 23 non-profit Obamacare co-ops since they began in 2011. The co-ops were intended to be consumer-operated non-profits focused on delivering healthcare to the working poor and others needing health insurance.

Eighteen of the 23 co-ops paid their top executives prodigious salaries ranging from $263,000 to $587,000, according to 2013 IRS tax filings.

The high take-home pay for the “nonprofit” executives appears to violate both federal law and Obamacare rules prohibiting “excessive executive compensation.”

I strongly suggest that you follow the link above to read the entire article, but here are two examples of your tax dollars at work:

The top paid co-op executive was Thomas Policelli, CEO of Massachusetts’ Minuteman Health. He was awarded $587,000 in 2013, according to the co-op’s tax return. Minuteman was also among worst performing Obamacare co-ops, reporting only 1,700 enrollees at the end of 2014.

Minuteman’s cash-burn rate was 53 percent, with a net operating loss of $21 million last year, according to an analysis by Galen’s Turner and Thomas Miller, a senior health fellow at the American Enterprise Institute.

In nearby Connecticut, HealthyCT paid Kenneth Lalime $352,000. The co-op reported total enrollment of only 7,966 and suffered operating losses of $28 million. Standard & Poor’s estimated its cash-burn rate at 61 percent.

It is not news that the private sector runs things better than the government. You would think that after all the years that we have seen government waste and inefficiency, we would have learned that lesson by now. Healthcare needs to be part of the free market. There need to be things in place to help people who need assistance in obtaining health insurance because of their financial situation or because of a pre-existing condition, but generally speaking, healthcare needs to operate in a free market environment. It is obvious that ObamaCare has because a government money hole that will eventually provide poor quality healthcare to everyone who is enrolled in it. There is a reason that the Supreme Court, despite their obvious belief that ObamaCare should stand, is not enrolled in ObamaCare.

 

Defending Free Speech

The Washington Examiner is reporting today that Senate Finance Committee Chairman Orrin Hatch has asked Internal Revenue Service Commissioner John Koskinen not to change the Internal Revenue Service’s rules regarding political speech by nonprofit organizations.

The article quotes Senator Hatch:

“The IRS is just beginning to recover its reputation, and your agency is just beginning to regain trust from lawmakers,” Hatch wrote to Koskinen. “Do not throw all of that away in a quixotic and bizarre mission to regulate the political activity of Americans.”

Hatch said Congress will “have no choice” but to investigate the agency’s motivations if it issues the rules, claiming that it would be viewed as an act of political bias. He asked Koskinen to preserve all communications related to the rulemaking, in case the Obama White House or Treasury Department is playing a role in shaping it.

The IRS is not supposed to be a political organization. Unfortunately under President Obama it has become one. It would be nice to have an IRS Commissioner who would uphold the political neutrality of the IRS. Evidently John Koskinen is not that person.