This is a very well done, short video on serious issues facing Higher Education. It all makes me wonder which institutions will weather the bursting of this bubble. Anyone….endowments? Changing business models?
Law School Hero Taking the Fifth!
Joking aside, I really can’t fathom the swiftness of the IRS scandal and how it is heading right at Western New England Law’s former hero lawyer, Lois Lerner. It isn’t surprising with the Administration and Media looking for a fall guy/gal but the whole story is still shocking.
Here are two of the initial stories that just came out this afternoon:
http://www.huffingtonpost.com/2013/05/21/lois-lerner-irs-scandal_n_3314693.html
http://www.latimes.com/news/politics/la-pn-top-irs-official-fifth-amendment-20130521,0,6645565.story
Imagine if she actually received orders from above to engage in the political agenda profiling that is coming to the surface. Imagine if she actually has proof that someone gave her directions. She might want to go into hiding or hire body guards, too!
For someone like myself who doesn’t watch TV or movies, this is pretty exciting stuff!
Say it ain’t so! More on the IRS exempt org. scandal ;)
As a graduate of Western New England College School of Law (now known as Western New England University School of Law), our most famous graduate (at least for the tax guys like me) was none other than Lois Lerner, director for the IRS Exempt Organization Division!!!!
Well, she just got a lot more famous. Click here or on the Pinocchios to check out the Washington Post’s fact checking story on public statements of hers.
Just think, two day ago, she was supposed to be the honored Commencement Speaker at Western New England’s law school graduation. (click to see her bio on the Western New England website – soon to be removed once they see this post!). Apparently the scandal put an end to her commencement speech plans.
Today, she is at the head of the line to take the fall for IRS exempt org debacle.
At least our law school’s name recognition will be up. Ironically, the law school happens to have particularly good tax law professors and its building is even named after the one of the most notorious charitable tax cases: S. Prestley BLAKE v. COMMISSIONER OF INTERNAL REVENUE (Mr. Blake, founder of Friendlys Corporation, whose headquarters was located across the street from the campus). Who would have thought that Western New England’s law school would be all over the news!
The real story behind the IRS tax-exempt org. scandal
When the media gets hold of a controversial issue, it is always a good idea to hear what insiders on the issue think is the real story because it is often diametrically different than what we are hearing.
In this case of the IRS targeting political enemies of the ruling administration, what do tax lawyers for tax-exempt orgs think of the scandal?
If you are interested, click here to check out a post from the TaxGirl blogger (now on Forbes.com).
In short, the IRS does this kind of stuff all the time (with or without the Obama administration)! Just bad timing for getting caught during a particularly strong scandal season for the President.
My own two cents: in my experience, the IRS has no problems with overstepping their jurisdiction. Orgs I have advised were held hostage over their exemption status over non-federal tax issues or issues irrelevant to tax-exempt status. One organization was forced to sign an agreement that they would never again participate in raffles schemes (clearly a state law issue) if they wanted their 501(c)(3) letter. Another organization was held hostage over their use of parsonage for their clergy-teachers (probably incorrectly and certainly not relevant to the 501(c)(3) application). Basically, they used their strong bargaining position to push around the nonprofit for any issue they didn’t feel comfortable with – regardless of whether it had anything to do with the application being submitted.
The message I took from my limited experience was that when you go to the IRS for tax-exempt recognition, go in with as clean an application as possible, plain vanilla, nothing out of ordinary. Nothing to give them reason to think twice.
$6.7 Million Bequest from 1891 Alumni (1891, not 1991) received by McDaniel College!
I thought that I had seen the oldest planned giving case stretching back into the 1800′s when Huguette Clark (daugher of William Andrews Clark – U.S. Senator/copper baron from late 1800s) lived in the hospital I worked for (she voluntarily lived her last 20+ years – to age 104 – at Beth Israel Medical Center in NY).
Well, Philip Henry Dorsey – an 1891 graduate of Western Maryland College (now McDaniel) – topped my oldest planned giving story by leaving a bequest that is just reaching the college now!
Here is a synopsis of the story: http://www.prweb.com/releases/2013/4/prweb10680290.htm
This gentleman passed away in 1945 with a provision in his estate to create a trust that would pay for “family descendants” to attend the college. My guess is that the trustee and/or family finally realized that sitting on $6 million+ (and waiting for relatives to decide to go to this particular college) didn’t make sense anymore and they worked out something with the college to take the principal, create a scholarship fund, and still somehow offer scholarships to his descendants.
What can we learn from the story, besides hoping that attorneys will guide their clients away from unusual arrangements like this? It seems to me that – and I have given this advice out to surprised colleagues and clients – any unusual, outdated trust or will provision CAN BE CHANGED! Courts love fixing these kind of things, especially if there is agreement among the parties.
The only question I have here – what took them so long to fix this one?
The best argument for getting your planned giving program going…
Read this NY Times article about a man who passed away with no will, no heirs, and $40 million+ in his name: http://www.nytimes.com/2013/04/28/nyregion/holocaust-survivor-left-an-estate-worth-almost-40-million-but-no-heirs.html.
It is an incredibly sad story on several fronts – not to mention that the entire fortune might end up going to New York State!
…whatever money is remaining from Mr. Blum’s estate will be passed to the city’s Department of Finance. If, after three years, no one comes forward, the money would go to the state comptroller’s office of unclaimed funds, which has $12 billion in its accounts dating to 1943. That office keeps a portion of the estate and transfers a portion to the state’s general fund. If an heir comes forward, the entire amount is returned.
The article doesn’t mention any charitable interests but I am sure there were and if your organization had any connection to the late Mr. Blum, you should be sitting shiva now (the seven day mourning period for immediate relatives in the Jewish tradition).
If this type of story doesn’t inspire your organization to get going with legacy conversations with your supporters, I don’t know what will.
Tossing the baby out with the bath water: American Cancer dropping direct mail efforts?
I was taught by a college professor to avoid cliches but sometimes they are so right on target, there’s no better way to express an idea. The following article from Fundraising Success Magazine (thanks to Greg Warner for posting it on Linkedin) is about how the American Cancer Society is beginning to undo its direct mail program:
http://www.fundraisingsuccessmag.com/article/american-cancer-society-rethinks-direct-mail/2
Putting aside all of the general fundraising questions it raises, the potential negative impact on planned giving revenue could be staggering. They raise ridiculous sums of bequests from their direct mail donor universe. There is no better way for an organization like that to reach so many people who eventually leave bequests – let alone the annual gifts they make.
We all must be looking for new and better ways to reach prospects but to drop a system that works so well, you have to wonder if they are not foolishly going overboard with a new vision.
If you can’t read the entire article and just want to focus on the planned giving impact, here is the second paragraph on unknowns as a result of their bold plans:
Planned giving donors have long been linked to the direct mail audience for most charities. There are multiple views of this, but overall the industry data suggests that direct mail is a great lead generator for planned giving. It’s about the right message at the right time to the right audience. Plus, as that audience ages and begins to withdraw from other engagement opportunities such as events, direct mail is often their single connection with the brand. We have become used to looking for the “little old lady making $5 or $10 gifts” when we think of the link between direct mail and planned giving. Will leads be impacted? The Society does not know yet. But, as with the above areas, I hope to report back on how planned giving leads are (or are not) being affected with this decision over the next 18 months. The longer-term impact will probably never be known due to the 7- to 10-year timeline for a gift to be realized in this area. But, with all change comes opportunity, and perhaps new strategies will be developed to offset any impact.
If I were working in the planned giving program, I would be in mourning over the moves!
