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Ellen P. Aprill (Loyola-L.A.; Google Scholar), Governmental and Semi-Governmental Federal Charitable Entities:

The usual view of the connection between authorities and the nonprofit charitable sector treats them as separate and distinct. However they don’t seem to be. Quite a few federal companies have statutory authority to obtain tax-deductible charitable deductions. Their skill to take action, nonetheless, undermines the oversight achieved by means of the Constitutionally-mandated appropriations course of. Congress has additionally created many nonprofit tax-exempt organizations. These entities get pleasure from flexibility as to fundraising, funding, and spending that authorities companies lack. Nonetheless, they keep away from the accountability that varied federal statutes impose on authorities companies, on the one hand, and that state nonprofit legal guidelines accomplish for personal nonprofit organizations, on the opposite. On the similar time, these Congressionally-established nonprofits retain important governmental ties, corresponding to service by authorities officers on their boards and reliance on appropriations. These practices produce at finest a precarious steadiness between the governmental and non-governmental. Furthermore, Congress has bestowed honorific charters on dozens of on pre-existing nonprofit tax-exempt organizations, a follow that may erroneously indicate Congressional endorsement and oversight of those teams.

For the primary time within the scholarly literature, this text examines all of these kinds of entities and the problems they increase beneath tax regulation, nonprofit regulation, constitutional regulation and administrative regulation.

As one instance, the Smithsonian Establishment, the primary and arguably probably the most distinguished Congressionally-created nonprofit, engaged an unbiased assessment fee in 2007 to research widespread reviews of inappropriate habits by its then Secretary. The fee recognized failures of governance and administration, faulting the dearth of federal frequent regulation concerning board duties and obligations. It questioned the power of the Chief Justice and the Vice President to dedicate the hours required to discharge their fiduciary duties as Smithsonian Establishment board members. It known as for the Smithsonian, which is funded primarily by appropriations, to undertake procedures for transparency, disclosure, and compensation in line with statutes governing federal companies. The Smithsonian accepted some however not all of those suggestions. Particularly, no change to its board construction has taken place.

Emphasizing problems with governance, the article makes particular suggestions to extend accountability of each authorities companies and Congressionally-established nonprofit entities, corresponding to urging Congress to curtail the widespread follow of appointing authorities officers to nonprofit boards. Extra basically, it requires acknowledgment of those hybrid entities. It argues for viewing authorities and charity as resting on a continuum fairly than every floating in its personal untethered conceptual house. This new strategy clarifies our understanding of presidency, the nonprofit sector, and the connection between them. Use of a continuum reminds us that our nation faces a selection between the personal and public – or some mixture of the 2 – in funding actions through which each authorities and charitable nonprofits interact.

https://taxprof.typepad.com/taxprof_blog/2022/02/aprill-governmental-and-semi-governmental-federal-charitable-entities.html