EO Tax Journal

Today I got to hear Diana Aviv, President, Independent Sector, Sarah Hall Ingram, Commissioner, TE/GE, and Jason Lilien, New York Office of the Attorney General, speak on nonprofit governance. The speakers were fine, but having sat through several sessions on nonprofit governance over the past few years, I’m familiar with most of the major points.

For those wishing that governance in the tax context would go away, Sarah Hall Ingram said the IRS emphasis on governance is here to stay, that the tax rules do interact with an EO’s corporate structure. According to Ingram, “It’s all about risk management.” She said a mission statement is important, as is an engaged and independent board. The organization needs to be transparent to both donors and the public. Continue…

IRS’ Steve Clarke Addresses Current Form 990 Issues

Chandler: Welcome to the National Council of Nonprofits Webinar on the Redesigned IRS Form 990. The new form has raised many questions for nonprofits, and we’re fortunate that in a moment we’ll be hearing from a tax specialist with the IRS who will be sharing with us some of the lessons learned from the redesigned 990 and highlighting some mistakes to help us avoid those mistakes as well as to help us determine what each of our organizations should do in order to file a complete and accurate return.

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Today I’m sending along the current EO Headquarters roster as of March 18, 2010, which, somewhat ironically, is either already out of date or soon to be, since EO has announced setting up another technical group under Mary Jo Salins. In any event, I’m sure the EO folks are sitting by their phones just waiting for your call, so reach out and touch someone.

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Yesterday evening I attended a panel discussion on “Philanthropy in the 21st Century: Should All Charities Be Created Equal?” sponsored by Catholic University’s Columbus School of Law.

Panelists included Diana Aviv, President of Independent Sector, Richard Schmalbeck, Professor of Law, Duke University, Eugene Steuerle, Fellow at the Urban Institute, and Russell Sullivan, Staff Director, Committee on Finance, United States Senate. The moderator was Roger Colinvaux, Professor of Law, Catholic University. Continue…

EO skullduggery right under my nose for the past 25 years and I missed it. As has been reported in recent months, Maryland-based Erickson Retirement Communities (ERC) is in bankruptcy court. In brief, ERC is a for-profit developer and manager of nonprofit retirement communities — 501(c)(3)s — in Maryland and nearby states.

ERC was built from scratch by John C. Erickson starting in the early eighties. The first retirement community, Charlestown, is not far from where I grew up in Baltimore. I have an aunt who is a current resident of the grandly named “Renaissance Gardens at Charlestown.” One of her sons, prior to his recent retirement, was one of the top tax officials in Maryland state government.

The ERC “concept” was simple in its design, more complex in execution. After ERC created a retirement community as the developer, it would sell the “campus” to an allegedly independent nonprofit organization, which would finance the purchase, at least in part, by tax-exempt bonds, and then enter into management contracts with ERC. It appears that the numerous nonprofits are largely controlled by National Senior Campuses Inc., a 501(c)(3) supporting organization, which appears to be largely controlled by ERC through overlapping officers and directors.

On April 4, The Washington Post did a great summary of what has transpired in recent years with ERC. Perhaps the IRS could have done more, but at least they were on the scene. My criticism today is directed at the State of Maryland, which, as I have mentioned in the past, is no fan of charity regulation. The reason is mostly political. No aspiring Maryland governor or attorney general wants to run on a platform that includes charity regulation in a state that is saturated with nonprofits. While no one likes excessive government regulation, without any regulation you get cases like ERC, where lots of innocent people get hurt. End of sermon.

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