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Jack Owen’s Tax-Exempt Alert MAY 2019

17th Annual Nonprofit Institute

For the 7th consecutive year, I participated on the faculty for the Pennsylvania Bar Institute’s Annual Nonprofit Institute.  It is always a whirlwind trip with much learning happening in the space of a very short time.

One of the best parts of the Institute is getting caught up on recent developments in the laws affecting nonprofit organizations.  While most of the Institute focuses on IRC Section 501(c)(3) charities, developments affecting other nonprofit organizations such as social clubs, cemeteries, business leagues and the like are also reviewed.  For example, the developments surrounding the U.S. Supreme Court’s Citizens United decision, a case involving the political activities of IRC Section 501(c)(4) social welfare organizations, were covered in “Latest Developments in Nonprofit Law” by Don Kramer, Esq.

The Latest Developments session is a good session to catch up on tax law and other general law developments affecting nonprofit organizations.  For example, an interesting situation covered involved the City of Allentown which is attempting to tax what is perceived to be the “business income” of a charitable hospital.

Other interesting sessions covered topics such as mission-aligned investing, corporate governance, choosing the right philanthropic vehicles, nonprofit startups, qualified opportunity zones, risk management, IRS audits, privacy – data security for nonprofits, and ethics.

The sessions where I served as a panelist included Corporate Governance and Ethics.  The Corporate Governance session covered the basics of boards of directors and their fiduciary duties.  My specific topic involved an update on the UPMC – Highmark – Attorney General litigation over the June 30, 2019 ending of the Consent Decree requiring UPMC and Highmark to contract with each other.  The difficult question in the UPMC situation involves the fiduciary duties of directors: are directors of a nonprofit corporation required to consider the needs of the general public?  There is no clear answer under Pennsylvania law.  Another looming question involves the impact of the Attorney General’s position on other nonprofit organizations, particularly small 501(c)(3) charities:  Do nonprofit organizations have a legal duty to contract with each other, even when their board of directors have said no?  Is it the role of the Attorney General to require nonprofit organizations to contract with each other?

The last session of the day is Ethics, and it is popular as ethics credits are always needed by lawyers to meet continuing legal education requirements.  The discussion ranged from when lawyers may have a duty to reveal confidences of a client or its officers, to “political” situations involving the Clinton Foundation, Trump Foundation, and other similar issues.

All in all, the Institute is a valuable day bringing together legal developments occurring over the past year.  The Institute has always helped me, and I suspect other lawyers, to determine the best use of our legal resources to assist nonprofit organizations, especially when we sit on the boards of nonprofit organizations.

Please let me know if you would like further information on the diverse array of topics covered by the Institute.

We sincerely hope you appreciate receiving the information in this newsletter.  But in case you do not want to receive it, please contact Diane Trichtinger at 412.745-1040, or [email protected] to be removed from this list.  Likewise, please contact Diane with any colleagues or other persons who you would like to add to this list. 

Note:  This provides general information regarding matters of interest to tax-exempt organizations.  Such information is neither legal advice nor legal opinion concerning particular situations.  If legal advice or opinion is required, legal counsel should be consulted. 

We would be pleased to address any questions you may have regarding the foregoing or any other tax-exempt issues.  For further information, please contact Susan Ott (412-745-9900)[email protected]; or Jack Owen (412-765-1020)[email protected].

©Owen Law Group, LLC, 310 Grant Street, Suite 1005, Pittsburgh, PA 15219  412.745.1040

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