Nonprofits as Policy Solutions to the Burden of Government

This book addresses a specific subset of nonprofits that are chartered with a single mission: decrease the burden of government. Designing and engaging nonprofits to lessen the burden of government requires a specific description and acknowledgement of the burden to be lessened, and these may include the provision of infrastructure, the relief of debt, or the provision of general public services that are not motivated by charity. It also requires the assignment of specific operating powers to the nonprofit including the power of eminent domain. This book explores these and other related topics including the avoidance of resource dependence on government when attempting to reduce its burden.

The book is addressed to the policy makers and rule makers who design policies that affect the ability of the nonprofit to effectively lessen the burden of government. It is also addressed to public administrators in search of innovative ways of implementing these policies consistent with the laws, and to the creative nonprofit managers who are charged with carrying out the mission often in collaboration with the government or other entities. To the advanced student in all related fields, the author offers not only material for discussion, but enables discovery of what is possible by giving key examples of organizations meeting the terms and objective of lessening a significant burden of government.

Autorentext

Herrington J. Bryce was a senior economist at the Urban Institute, a Brookings Economic Policy Fellow, a Fellow at the Institute of Politics at Harvard and a visiting professor in regional economics and planning at the Massachusetts Institute of Technology. He taught micro economic theory and public finance at Clark University in Worcester, Massachusetts, and was director of the program in legal and budget studies at the University College at the University of Maryland. He currently teaches courses at the College of William & Mary in nonprofits but mostly in corporate financial strategy and cost management-heavily reflected in this text. He has published extensively and has served on many state, local and federal government advisory committees. He has a PhD in economics from the Maxwell School at Syracuse University, and a Clu and ChFc from the American College.

Inhalt

** Preface | xv**

Chapter 1 - Purpose, Policy, Theory, Definitions and Context | 1

Purpose | 1

The Burden of Government | 2

Perspective, Collaboration, Competence | 5

Traditional, Nontraditional, Burden | 9

Organizational Design | 11

Prices, Profits and Nonprofit Motives | 12

The Context | 13

Dimension of the Problem in the United States | 13

Why the Nonprofit Option | 16

Toward a Supporting Theory | 17

Bibliography | 18

Chapter 2 - Designing, Empowering and Engaging the Nonprofit to Lessen the

Burden of Government | 19

The National Trust for Historic Preservation | 19

Crafting the Intent to Lessen the Burden of Government | 19

Federal and State Designation of an Eligible Burden | 21

Classification of Nonprofits as Doers and Facilitators | 22

The Planks on Which to Design a Nonprofit to Reduce the Burden

of Government | 26

Plank 1: Money | 28

Plank 2: Marketing and Persuading | 32

Plank 3: Membership and Public | 32

Plank 4: Management | 33

Plank 5: The Mission | 35

Plank 6: Collaboration and Cooperation | 37

Plank 7: Tax Exemption | 37

Plank 8: Powers to Act | 38

Plank 9: Accountability | 39

Plank 10: Legitimacy | 39

Summary and Preview | 40

Bibliography | 40

**** Chapter 3 - Empowering the Nonprofit to Lessen the Burden of

Government | 43

The Creation of the Corporation | 44

Incorporation: Process, Purpose, Powers | 45

The Powers of the Nonprofit Corporation | 48

Prohibitions | 50

Financial Advantages and Disadvantages of Exemption | 53

Some Factors that Threaten the Loss of Tax-Exampt Status

Under 501(c)(3) | 66

Summary and Preview | 68

Bibliography | 68

Chapter 4 - Nonprofits as Doers in Reducing the Burden of Government | 69

The Doers: Distinguishing Examples | 71

Categorizing 501(c)(3) Doers | 73

Doers Depending Mostly on Business Income | 78

Subsidiaries, Affiliates, and Holding Companies as Internal

Facilitators | 80

Other Categories of Doers | 83

A General Comparison of Doers | 85

Lessening the Burden of Government: The Benefits and Justification of Tax

Exemption | 86

Summary and Preview | 87

Chapter 5 - Nonprofit as Financiers and Facilitators in Reducing the Burden

of Government | 89

Two Government-Created Examples: To Be Close But Not Controlled | 89

The Nonprofit Financers | 91

The Rules of Foundation Operation | 93

The Key Characteristics of the Facilitator | 100

Hybrids: Private Operating Foundations | 102

Summary and Preview | 104

Chapter 6 - Government Created Nonprofits to Lessen the Burden of

Government | 105

Nonprofits Created by Governments to Lessen Their Own Burdens | 106

Qualifications of a Government-Created 501(c)(3) | 108

Public Authorities as Government-Created Nonprofits to Relieve

Government Burden | 110

****

Ports and Powers | 113

Are Authorities Doers or Financers? | 123

Summary and Preview | 123

Bibliography | 124

Chapter 7 - Decision-Making and Governance Structure in Lessening the

Burden of Government | 125

The Board | 125

Interlocking Directorates | 129

Conflict of Interest, Independence, and Board Members | 130

Dealing With Possible Conflicts of Interest | 132

Dealing With Non-Independence | 133

Standards at the Root of All Trustee Actions | 133

Excessive Economic Transactions and Due Diligence | 137

Duty of Organizations to Trustees and Their Rights | 138

Liability of Trustees | 139

Annual Disclosures of Involvement of Current and Past Trustees and Senior

Management | 141

Summary and Preview | 142

Bibliography | 143

Chapter 8 - Financing the Burden through Contributions | 145

A General Picture of Contributions and the Sector | 145

Requirements of a Tax-Deductible Gift | 152

Problems of Accepting Gifts Subject to Debt | 158

Summary, Responsibility, and Preview | 161

Bibliography | 161

Chapter 9 - Financing the Burden through Business Earnings | 163

Business Activity as a Source of Money | 163

Definition of Related and Unrelated Nonprofit Businesses | 165

Excess Profits: A Distinction Between Related and Unrelated Income | 168

Integration of Business Operations Into a Conglomerate Structure | 169

The Organization of an Unrelated Business | 169

Tax Treatment of Different Types of Business Income | 172

Key Points on Entrepreneurial Income in Nonprofits | 188

Summary and Preview | 189

**** Chapter 10 - Financing the Burden through Debt | 191

The Need for a Charter and Other Documentary Powers | 191

Terms of Debt | 192

Non-Deductibility and Taxability of Interest | 194

Debt as Credit Facility | 194

Covenants, Default, Bankruptcy | 195

Strategies for Treating a Loan Due | 195

Borrowing from the Securities Market | 196

Borrowing from Nonfinancial Sources | 197

Preparing to Borrow | 197

Debt Limits and the Nonprofit | 198

Subsidized Infrastructure Debt Available to Nonprofits | 198

Long-Term Debt tor Infrastructure Used by the Nonprofit | 199

Long-Term Debt Issued by Nonprofits on Behalf o…