Promoting Health with Sports: When Should Nonprofits Qualify for Tax Benefits?

Abstract for SMU Article - Promoting Health with Sports - April 1 2015 Current law routinely denies tax benefits to organizations promoting recreational adult sports even though medical research associates our inactivity with an epidemic of chronic diseases causing human suffering and spiraling healthcare costs. The IRS routinely grants tax-exempt status under IRC § 501(c)(3) to youth and college sports organizations based on century-old thinking that links sports with education. This obsession with evaluating sports as education developed in a bygone age when sports were merely for students and the idle rich, and most adults got plenty of physical activity at work. As recently as 1960, fifty percent of all jobs required at least moderate physical activity. By 2006, that figure had plummeted to twenty percent, and the average U.S. male age 40 to 50 was 32 pounds heavier than his counterpart in 1960. Over this same time span, there has been a dramatic increase in chronic diseases associated with inactivity. Scientists say that greater physical activity and improved diet are the ways to fight this epidemic. The IRS’s view that sports must be educational to justify tax benefits can be traced to a 1904 court opinion espousing the view that education involves the cultivation of the mind, the improvement of religious or moral sentiments, and the development of one’s physical faculties. The court’s foundation was that “those in charge of colleges . . . recognize this to be true,” and colleges encourage “football and other athletic sports.” Even in 1904, these factual assertions were dubious. U.S. college presidents, chancellors and other had mixed views about the role of athletics on campus even in 1904, and no other country’s education system embraces college sports on the U.S. scale. In 1945, the same appeals court rejected the 1904 three-part education theory and concluded that if an institution’s athletic activities greatly exceed its mental activities, the organization is not educational. Nevertheless, the IRS clings to the outmoded view that sports organizations must be educational to be worthy of tax benefits. This Article endorses even older, but forgotten, judicial precedents that recognized sports organizations as tax-exempt because they promote health. This would support tax benefits for organizations promoting adult recreational sports. This could encourage major shifts in the U.S. approach to sports. We could progress from an excessive emphasis on youth and college sports, to encouraging everyone to compete, and from huge number of spectators and few players, to greater participation by all

Charitable Pledges: Contracts of Confusion

With postmortem enlightenment, Jacob Marley\u27s ghost sternly forewarns Ebenezer Scrooge to embrace the business of charity, which Marley\u27s ghost associates with mercy, forbearance, and benevolence. This Article analyzes an aspect of the business of charity tainted with stealth bordering on trickery, mandatory ingratitude, and judicial contrivances. This Article seeks to make two contributions to the important debate about the enforceability of charitable pledges. First, new empirical evidence developed for this Article indicates approximately 95 percent of charities fail to disclose in their pledge forms that the donor will be legally bound to make all the pledge payments. Despite the absence of an agreement to be bound, consideration, or substantial detrimental reliance, courts almost always enforce charitable pledges. Second, this Article proposes reforming this sullied aspect of the business of charity with a new, workable approach focusing on traditional contract rules, basic promissory estoppel doctrine, and the donor\u27s intent

Contract Law’s “Too Good to Be True” Doctrine—Is It?

In a wonderful variety of emotionally charged contract law opinions, including the cases of the boastful cheater, the opportunistic attorney, and the careless concrete contractor,3 courts unfortunately have used the phrase “too good to be true” as a single-step test to decide enforceability. These cases can generate emotional responses ranging from empathy4 to schadenfreude5 because they involve a mistake with potentially disastrous results for one party (and a windfall for the other side). It is understandable that courts would be drawn to a catchy, down-to-earth phrase to reach a just resolution in these entertaining and memorable cases. Nevertheless, this Article argues that using too good to be true as a single-step test violates fundamental policies of contract law. Judicial too-good-to-be-true pronouncements appear arbitrary and unpredictable, likely undermining public confidence in the enforceability of contracts.6 As an alternative, sophisticated, time-tested, multi-factor doctrines are available to achieve just results in these cases.7 Accordingly, this Article argues that the phrase “too good to be true” should be expunged from the tool kits of decision-makers and advisors involved in contract disputes