May Day Post: What If 501(c)(3) Asked for More?
On a day that happens to also be May Day a/k/a International Workers’ Day, I am left reflecting on how little we, from a legal perspective at least, ask of some of our nonprofit organizations. Yes, this blog has many posts about different rules they need to follow to different types of activities and limits on private benefit. But what do we really ask in terms of commitment to a particular set of values? I think the answer is “next to nothing”.
We are reminded this week that you can enjoy all the benefits of 501(c)(3) nonprofit while still calling a militarized police force to inflict violence on your own students for protesting in solidarity with victims of an escalating U.S.-backed atrocity in Palestine, and attack the rights of the press in the process. Columbia University’s exempt status is never going anywhere, and I’m not saying it should, but I can’t reconcile a sector that is supposedly about “doing good” with one that has no value judgment on this action. Just as the shamelessness of certain nonprofits' response to Gaza and the suppression of dissent has been completely disheartening, but treated as a standard operating procedure within our sector.
We know many times over that nonprofit employers can be just as hostile to the rights of workers and labor as for-profit employers. Although the law affords the right of workers to unionize, strike, and engage in other protected activities, nonprofit hospitals, universities, newspapers, and organizations of all kinds engage in the same “union avoidance” propaganda campaigns and retaliatory actions with minimal consequences under our broken system. (No need to redo this rant here, as I’ve already made it).
Even for those organizations with an interest in funding social causes, we take control of those organizations by the wealthiest individuals in our society as a given. Giving the people affected by those issues a voice in the process or “trust” to carry out the programs is treated as a new and innovative strategy because control by elites is so deeply ingrained as the default. There are countries that require openness to the public’s input (e.g. the right of anyone to be a member) as part of qualifying for tax-exempt status — far from requiring democracy, we default to plutocracy.
I suppose none of the above is surprising. There is a libertarian streak in our country’s approach to civil society and, while we could choose to structure our tax system to subsidize some activities more than others (we do it all the time through other parts of the tax code), we generally let the nonprofit sector be any kind of “charitable, educational, or religious” that it wants to be. And it turns out that when you let the wealthiest individuals decide what those priorities are, supporting the powerless and worker solidarity fall pretty far down the list.
With that in mind, here are a few items I want to work on this year to feel a bit better about my own role in the nonprofit sector:
Employee-governed nonprofit as an off-the-shelf option for new and old nonprofits. I have seen and worked on examples of these, but I have yet to formalize the best way of doing this. Sustainable Economies Law Center has some great work on this, but I want to spend some time trying to come up with something that balances my pickiness regarding what I consider “good governance and bylaws compliant with corporate law” with worker empowerment. I spend so much more time locking in founder control of nonprofits, and almost never talking about how to give employees control over a nonprofit, or at least sufficient control to block hostile actions by the Board (e.g. refusing to recognize a union after a landslide election in favor of unionization). It would be great to say to people forming nonprofits that basic options include: (a) self-elected Board (the most common), (b) the “sole member” structure (if you want to give one person or organization the power to appoint the Board, or (c) the “employee-governed” option if you want to let employees elect some or all of the Board and keep the nonprofit on course. There are challenges with that structure, but perhaps working to normalize it with an option will help make it less intimidating.
Criteria for engagement with new clients. Our current client mix is great — we’ve always been fortunate in terms of who comes to us for work being generally aligned with our values. But as we grow, I’d like to cultivate a sense that our client represents a community of nonprofit organizations with a shared vision and values that go beyond just being tax-exempt. Just because the tax law is agnostic about what nonprofit organizations value, does not mean that we have to be. And we aren’t agnostic, of course — we are selective about who we work with to maintain alignment with our mission — but I’d like to see us go a step further and actively seek out, prioritize, and subsidize those organizations that reflect the kind of sector we want to see. At the very top of that list of standards would be respect for the rights of employees and organized labor, both internally and externally.
Workers’ Rights Education. When we created this firm, an early idea was using our nonprofit to carry out charitable and advocacy projects that our employees cared about. I have not moved this forward as fast as I’d like, but we are getting to a point, slowly but surely, where we will have the capacity to make some ideas happen. As that comes together, I would love to start by finding a way to support know-your-rights work, not only around criminal justice and interaction with police (which is endlessly necessary) but around the myriad rights of employees that exist and most people are not aware exist. When teenagers to their first job, they should know that they have the legal right to talk about what they are making with their coworkers, to discuss working conditions and what needs to change, and to organize and strike. It would be great to see the unionization rates in this country continue to increase and perhaps finally enter our post-Cold War era as a culture, where labor solidarity is celebrated and not villified.
A long way of saying “Ideas Welcome” from any of our clients and friends who feel similarly about the sector and want to do something about it. It has been and will continue to be an impossibly difficult year, but hopefully there will be something somewhere to look back on that feels like progress.
