Media Mentions
2011
“NPR’s Scandal Serves as Cautionary Tale for Fund Raisers”
The Chronicle of Philanthropy, March 18, 2011
Michael Peregrine cited two lessons for nonprofits from the threat to NPR’s funding and the dismissal of its CEO over a fund-raiser’s political comments. First, he said, “I’ve asked my clients, What if they lose the charitable deduction … their tax exemption? The board has to have a Plan B and C.” Second, he warned nonprofit executives that, like their corporate peers, they are being held responsible for subordinates’ actions. “We are in a finger-pointing climate,” Mr. Peregrine said. “There is a certain degree of unfairness, but the government feels that there is a deterrent effect by holding executives accountable.”
Michael W. Peregrine, Nonprofit Organizations
“Nonprofit Governance Trends to Look Out for in 2011”
Nonprofit Times, January 24, 2011
Michael Peregrine identified executive compensation, which “looked real good four years ago” but now is questioned because “it’s a very difficult time” economically, as a major concern for nonprofit boards. This typifies “more significant business issues that people didn’t get on the board to deal with,” he said, such as intellectual property and conflicts of interest. Mr. Peregrine noted that these issues “reflected the recession” because “charitable dollars are that much tighter.” Thus, he concluded, “boards are going to protect their own interests, even versus other charities,” in order to focus on “preservation of assets” – meaning “it’s a different board room atmosphere than ever before.”
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
2010
“IRS Steps Up Scrutiny of Colleges and Other Nonprofit Groups”
The Chronicle of Higher Education, December 20, 2010
Michael Peregrine warned that a 42 percent increase in Internal Revenue Service audit of charities means that “the IRS is still fully engaged in oversight of tax-exempt organizations.”
Michael W. Peregrine, Nonprofit Organizations, Tax Exemption
“High CEO Pay Not Always Reflective of Annual Earnings”
Chronicle of Philanthropy, October 3, 2010
Michael Peregrine was quoted in a story that examined specific nonprofit organizations that have come under critical public scrutiny for allegedly excessive executive compensation. He noted that such criticism may force boards of nonprofits to reexamine and restructure executive pay to head off potential public relations problems. “Boards are in an awkward place. They may have done exactly the right thing in past years, but that was then, this is now,” Mr. Peregrine said. “There has got to be a hard internal dialogue about the risk to the organization in the current environment. If you’re going to pay extraordinary dollars in deferred compensation or retirement benefits, you ought to start anticipating the fallout.”
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
“High CEO Pay Not Always Reflective of Annual Earnings”
Chronicle of Philanthropy, October 3, 2010
Michael Peregrine was quoted in a story that examined specific nonprofit organizations that have come under critical public scrutiny for allegedly excessive executive compensation. He noted that such criticism may force boards of nonprofits to reexamine and restructure executive pay to head off potential public relations problems. “Boards are in an awkward place. They may have done exactly the right thing in past years, but that was then, this is now,” Mr. Peregrine said. “There has got to be a hard internal dialogue about the risk to the organization in the current environment. If you’re going to pay extraordinary dollars in deferred compensation or retirement benefits, you ought to start anticipating the fallout.”
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
Christopher Jedrey was quoted on May 7 by the Boston Globe concerning six Catholic hospitals in Boston that are being purchased by a private equity firm. Mr. Jedrey, who represented the hospitals, stated that “a primary public interest served by the transaction is that it will provide the resources necessary to transform a crucially important, but financially challenged, system into a financially sustainable, lower-cost, high-quality, community-based provider of hospital and other health care services in the Commonwealth.” He added that the hospitals, which had previously been operated as non-profits, will contribute substantial tax revenue as for-profit institutions while continuing to spend on free care for the uninsured and on community services.
Christopher M. Jedrey, Health, Hospital and Health System Transactions, Nonprofit Organizations
H. Guy Collier, Jr. was mentioned in Washington Lawyer (April 2010) for his appointment as chair of the board of directors at the Children’s Law Center. Mr. Collier is a partner in the Firm’s Washington, D.C. office, counseling health care and other non-profit clients.
H. Guy Collier, Health, Nonprofit Organizations
Michael Peregrine was quoted in a January 18 Modern Healthcare article about a not-for-profit health system’s purchase of a stake in a health and wellness company whose CEO had sat on the health system’s board but resigned after the board voted to make the purchase. While not commenting on the transaction directly, Mr. Peregrine noted that not-for-profits must adhere strictly to conflict of interest policies in transactions involving board members’ companies, and that such transactions face greater scrutiny “regardless of whether it’s a ‘good deal’ or not.” He added that scrutiny by regulators and credit analysts is focusing on sophisticated private equity transactions by not-for-profit hospitals (such as in this case), because of doubts that the hospitals’ boards and executives have the ability to manage these investments.
Michael W. Peregrine, Conflicts of Interest - Health, Corporate Responsibility and Governance, Health, Nonprofit Organizations
Michael Peregrine was quoted in a January 4 Modern Healthcare story about how tax-exempt hospitals and health systems are likely to face more scrutiny than ever from federal regulators, state prosecutors, the media and the general public. Governance is an especially hot issue, because, as Mr. Peregrine noted, “The IRS has clearly seen enough examples of bad boards where they know what they look like. If you’re really pushing the edge of the envelope in a way that is not supportable, you’re going to see more challenges from the IRS” and from state attorneys general over governance matters. And, Mr. Peregrine added, if malfeasance is found, regulators will push for resignations of board members as well as executives.
Michael W. Peregrine, Corporate Responsibility and Governance, Health, Nonprofit Organizations, Tax Exemption
2009
Michael Peregrine analyzed for Government and Politics Watch (December 11) new Internal Revenue Service materials for charities regarding their governance practices. He said the materials “demonstrate that, to the IRS, charity governance is a serious matter,” and that “the IRS is expanding on the governance issues it considers of interest.” According to Mr. Peregrine, such issues can include “inability to obtain a quorum for meetings, control centralized in one or two individuals, failure to exercise strong financial oversight, poor conflicts practices, and failure to address the recommendations of the independent auditor.” He added that the new materials can be “a useful tool” for charities to “monitor the effectiveness of existing governance practices,” especially if state attorneys general start to expand their own reviews of charities.
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
Michael Peregrine was quoted by Modern Healthcare on December 11 concerning new materials issued by the Internal Revenue Service to help non-profit hospitals and other tax-exempt organizations better understand the IRS tax compliance review process. Mr. Peregrine said he sees the new materials “extrapolating and putting meat on the bones” of the governance section on the Form 990 that charitable organizations must file with the IRS. He added that the questions contained in the materials will give organizations “a better idea of what the IRS is expecting the right answer to be.”
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
David Ivill was quoted by Crain’s Health Pulse in an October 20 story about litigation decisions that will enable New York State teaching hospitals to get refunds of FICA taxes that they had paid on medical residents’ stipends. McDermott represented two hospitals that won their challenges against the IRS in the Second Circuit Court, which upheld the student tax exemption for residents and their hospital employers. “The Second Circuit cases should help us shake loose settlements for the taxpayers” covered by the decision, noted Mr. Ivill.
David S. Ivill, Health, Nonprofit Organizations
Michael Peregrine was quoted in The Wall Street Journal’s Health Blog (September 16) concerning Sen. Max Baucus’ healthcare overhaul. Nonprofit hospitals are relieved that Sen. Baucus doesn’t include an excise-tax measure that had been recently contemplated for hospitals not offering enough charity care. “What the Baucus Bill proposes is a supplement to, rather than a replacement of, the community benefit standard and without the controversial excise tax and minimum patient charity care standards originally proposed by Senate Finance last May,” said Mr. Peregrine.
Michael W. Peregrine, Health, Nonprofit Organizations
Thomas Jones was quoted by Modern Healthcare in an August 3 story about an Arizona-based health system that is one of the first not-for-profit hospital operators to win U.S. Department of Labor approval for reinsuring employee benefits through a captive insurance company. Such expanded use of captives has been allowed in limited circumstances since 2000, but has not been widely adopted. “This is cutting edge,” Mr. Jones said of the system’s program, “This is not garden variety.”
Thomas M. Jones PC, Captive Insurance and Reinsurance, Nonprofit Organizations, Tax
Michael Peregrine was quoted in BNA’s Health Law Reporter (July 30) concerning new Internal Revenue Service training materials for the leaders of nonprofit organizations. He called the best practices described in the materials “a good resource for nonprofit boards and their governance advisors,” saying that the materials address “governance ‘areas of interest’ that have not been as publicly pronounced before,” such as size, composition, authority allocation and key policies of boards. Mr. Peregrine asserted that “while the IRS may not be able to mandate specific governance practices, it is clearly extending its governance reach,” and added that the new training materials demonstrate that “the IRS is in it for the long haul as it relates to governance scrutiny.”
Michael W. Peregrine, Health, Nonprofit Organizations
Bernadette Broccolo was quoted in the July 6 issue of Modern Healthcare regarding the assertion by new IRS commissioner Sarah Hall Ingram that the IRS will more closely scrutinize governance practices of not-for-profit hospitals to ensure that they do not abuse their tax exemption. Noting that Ingram is building on the policies of her predecessor in pursuing once-controversial governance oversight, Ms. Broccolo said of the IRS: “They are going forth with confidence in that position. We’re not going to see a reversion to circumspection.”
Bernadette M. Broccolo, Health, Nonprofit Organizations, Tax Exemption
Michael Peregrine commented in a June 17 Wall Street Journal story about a recent federal appeals court decision supporting an IRS penalty against a nonprofit hospital board chair for unpaid payroll and related taxes. The ruling, combined with increased IRS oversight of the tax-exempt sector, shows the extent to which board members can be held personally liable for a charity's decisions. As Mr. Peregrine observed, “This stuff is starting to spread like wildfire in boardrooms, and people are starting to get nervous.”
Michael W. Peregrine, Health, Nonprofit Organizations
Michael Peregrine was quoted in a June 15 ModernHealthcare.com story about a Denver arbitrator’s recent ruling that a Catholic health system could buy out its secular sponsor in a disputed merger and acquisition transaction. Mr. Peregrine stated that many not-for-profit sponsors would feel that they have rights to assets upon dissolution of an M&A transaction, and that such disputes are likely to become more common due to the recession. “The economy is going to breed more disputes between merger partners,” Mr. Peregrine noted.
Michael W. Peregrine, Nonprofit Organizations
Michael Peregrine was quoted in The Wall Street Journal on March 27 concerning the impact that the furor over executive compensation at financial firms will have on executive compensation at nonprofit organizations. "The train of greater focus on nonprofit executive compensation has left the station, and charity boards better get on, or they will suffer greatly for noncompliance," he declared. Mr. Peregrine added that nonprofits should start reviewing their compensation practices in light of the current political environment, noting that, "It just cannot be business as usual."
Michael W. Peregrine, Corporate Responsibility and Governance, Nonprofit Organizations
Neil Kawashima was quoted on March 2 in The Chronicle of Philanthropy regarding President Obama's proposal to reduce the value of the charitable deduction for wealthy Americans. Mr. Kawashima commented that people who are considering types of giving that offer one-time, upfront charitable deductions on their federal taxes may especially be tempted to consider acting before the deduction rate falls. Although, Mr. Kawashima said that fund raisers may have a difficult time enticing donors to give more due to the bad economy, "Most people are feeling tapped out already," he said.
Neil T. Kawashima, Nonprofit Organizations, Private Client, Tax Exemption
Neil Kawashima was quoted on March 1 in The Wall Street Journal regarding nonprofit organizations criticism of the proposed limits to charitable deductions in President Barack Obama's budget plan. Critics argue that the decreased deduction rates will be an additional hindrance to nonprofits already struggling with a steep drop-off in donations. However, the change could cause an increase in donations before the new law takes effect. Mr. Kawashima said, "The only silver lining out of this is charities can try to argue that donors should prepay pledges now so that they can take advantage of the deduction sooner rather than later."
Neil T. Kawashima, Nonprofit Organizations, Private Client, Tax Exemption
Michael Peregrine was quoted on February 26 in The Chronicle of Philanthropy regarding the criticism of Obama's plan to reduce charitable deductions for the wealthy. Mr. Peregrine said charities now face three factors that could cut into their deductions including, the bad economy, the proposed charitable-deduction limits and proposals by President Obama to end tax cuts for wealthy people that were introduced by President Bush. Mr. Peregrine is concerned that charities that are hurting for donations will be more susceptible to fund-raising scams. He said, "What is certain is that the perception that this will reduce charitable donations in the short term is going to draw out the fraudsters."
Michael W. Peregrine, Health, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted on February 26 in The Chronicle of Philantrophy regarding the new Internal Revenue Service report on tax-exempt hospitals and executive compensation. Mr. Peregrine commented that, "charities need to take heed: Lawmakers and the American public today are questioning any institution that receives government assistance – whether it's bailout money or beneficial tax treatment." He continued, "They are saying, In this environment, with huge economic problems and deficits, tell me again why we are providing certain groups with tax exemptions….The IRS is saying, Everybody here play by the rules. And the broader charitable sector should say, All right, let me understand again what are those rules and double-check we are complying with them."
Michael W. Peregrine, Health, Nonprofit Compensation, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted on February 18 in the Chronicle of Philanthropy in an article regarding the recent report issued by the Internal Revenue Service regarding tax-exempt hospitals and executive compensation. Mr. Peregrine warned that charities need to take notice—lawmakers are paying particular attention to any institutions receiving government assistance. "They are saying, In this environment, with huge economic problems and deficits, tell me again why we are providing certain groups with tax exemptions," Mr. Peregrine said. "The IRS is saying, Everybody here play by the rules. And the broader charitable sector should say, All right, let me understand again what are those rules and double-check that we are complying with them," he added.
Michael W. Peregrine, Health, Nonprofit Compensation, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted on February 16 in Modern Healthcare in an article regarding the Internal Revenue Service (IRS) report on nonprofit hospital executive pay and community benefits. The IRS found that executive pay at nonprofit hospitals is uneven compared to the community benefits provided by nonprofit hospitals. Mr. Peregrine noted that "the reports release amid public outcry over payouts to executives at failed corporations could put not-for-profit hospitals on the defensive." He added that the unfortunate timing may overshadow positive survey results that show hospitals largely comply with regulations, "The report makes it clear that hospitals have been playing by the rules," Mr. Peregrine noted. Mr. Peregrine provided similar comments regarding the IRS report to BNA's Health Care Reporter and EO Tax Today.
Michael W. Peregrine, Health, Nonprofit Compensation, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted on February 13 in the Wall Street Journal in an article regarding a report issued by the Internal Revenue Service claiming that a small amount of nonprofit hospitals provide the most charity care and that the same nonprofit hospitals are overcompensating their top executives. "For the hospital sector, it's really unfortunate, the timing of this report, because this gets dropped into a real toxic environment," commented Mr. Peregrine. He continued, "You've got people really upset about government subsidies to organizations." Mr. Peregrine noted that many consider tax exemptions a form of subsidy.
Michael W. Peregrine, Health, Nonprofit Compensation, Nonprofit Organizations, Tax Controversy
2008
Michael Peregrine was quoted in the December 25 issue of BNA’s Health Law Reporter in an article regarding Senior Chuck Grassley discussing the possibility with other lawmakers of crafting legislation that would establish charity care and community benefit standards for nonprofit standards for nonprofit hospitals and accountability benchmarks for assessing whether exempt hospitals actually are meeting those standards. "Hospitals should not necessarily take comfort from the fact that Sen. Grassley’s previous efforts in this area never went anywhere," Mr. Peregrine said.
Michael W. Peregrine, Health, Hospital and Health System Transactions, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted in the November 3 issue of Modern Healthcare in an article regarding a case in the Virgin Islands where a board chair for a public hospital was arrested and charged for an alleged role in what prosecutors describe as a "criminal enterprise" among the top three executives. Hospital trustees on the mainland may wonder what it says, if anything, about their own risk of becoming targets when things go horribly wrong under their watch. "We are entering into an environment of recrimination, and there will absolutely be spillover in the nonprofit world against boards for what I call preventable harm,'' Mr. Peregrine said.
Michael W. Peregrine, Corporate Responsibility and Governance, Health, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted in the October 20 issue of Modern Healthcare in an article regarding Senator Chuck Grassley's intention to introduce new legislation in January that will attempt to define exact standards for tax exemption of not-for-profit hospitals, including community benefit. "The GAO report doesn't include any findings definitive enough to justify creating federal legislation mandating how not-for-profit hospitals report their community benefit-especially if that could lead to quotas. It doesn't provide the smoking gun that opponents of tax exemptions were looking for,'' Mr. Peregrine said.
Michael W. Peregrine, Health, Nonprofit Organizations, Tax Exemption
Michael Peregrine was quoted in the October 20 issue of Modern Healthcare regarding a Government Accountability Office (GAO) report that says the nation's approximately 2,900 nonprofit, non-government hospitals have made it all but impossible to uniformly measure community benefits across the country. Mr. Peregrine said the GAO report doesn't include any findings definitive enough to justify creating federal legislation mandating how not-for-profit hospitals report their community benefit, especially if that could lead to quotas.
