Charities do not always receive the benefit of the most favorable state law when they are in litigation involving multiple states. When two Texas pilots’ planes collided at a Wisconsin air show, the defendant non-profit organization sought to apply Texas law, which limits liability for both charitable organizations and their volunteers. Wisconsin, on the other hand, essentially has eliminated common-law charitable immunity. Although both pilots were from Texas, the court applied the less-favorable Wisconsin law because it concluded that Wisconsin was the state with the most significant relationship to the issue of charitable immunity in the case. A petition for review to the Texas Supreme Court is pending. See Doctor v. Pardue, 186 S.W.3d 4 (Tex. Ct. App. 2006).

The City of Picayune and community members sought to bring an equitable action against a charitable non-profit corporation seeking to prevent the non-profit from selling a city hospital. Because the non-profit was a corporation, and not a charitable trust, the court determined that city residents did not have standing to challenge the sale. See City of Picayune v. Southern Regional Corp., 916 So.2d 510 (Miss. 2005).

The members of a society amended the bylaws and removed certain officers and directors. The court found that a quorum of the society’s members were not present at the annual meeting where the vote to amend the bylaws took place. Because New York law requires a majority of members to amend bylaws, the court found that the proposed new bylaws were invalid and actions taken pursuant to them, including the removal of board members, were also invalid. See Sealey v. American Soc. of Hypertension, 810 N.Y.S.2d 48 (N.Y. App. Div. 2006).

At a regularly scheduled meeting of the board, the directors voted to remove one trustee without giving him notice. The institute’s bylaws provided that any board member could be removed by a majority vote so long as the board member was given at least one week’s notice. The court ruled that the former trustee had a common law right to notice and opportunity to defend against any asserted wrongdoing before being removed as a trustee. See Ellis v. Broder, 2006 WL 221166 (N.Y. App. Div. Jan. 30, 2006).

Homeowners filed a complaint against a non-profit homeowners association and its board of directors alleging breach of certain covenants concerning maintenance of certain association lakes and alleging private and public nuisance. The court found that the business judgment rule is no defense to breach of contract, or to public or private nuisance, if the remedy is otherwise proper. See Willmschen v. Trinity Lakes Improvement Ass’n, 840 N.E.2d 1275 (Ill. App. Ct. 2005).

A former client of a California non-profit housing clinic sued the clinic, which had represented him in a suit against his landlord, alleging that the clinic was not entitled to statutory attorney’s fees because the clinic was not licensed to practice law in the state under laws limiting the practice of law. The court disagreed, finding that non-profit advocacy groups have a Constitutional right of associating for non-commercial purposes to advocate the enforcement of legal and constitutional rights of members and others within the class whom the organization exists to serve, and that California statutes do not limit this right. See Frye v. Tenderloin Housing Clinic, Inc., 2006 WL 560633 (Cal. March 9, 2006).

On December 21, 2005, the Federal Election Commission (“FEC”) voted unanimously to remove exemptions for 501(c)(3) non-profits to the Bipartisan Campaign Reform Act rules on election communications. Previously, non-profit charities and religious organizations had enjoyed exemptions from rules restricting paid television, radio and cable messages that mention a federal candidate 30 days before a primary or 60 days before a general election. However, the Supreme Court subsequently cast doubt on the viability of the FEC’s new advertising restrictions when it concluded that the FEC’s ban can be challenged by non-profits on a case-by-case basis. See Wisconsin Right to Life Committee v. Federal Election Commission, 126 S.Ct. 1016 (2006).

Senate bill S. 2349, sponsored by Senator Trent Lott, was approved in the Senate by a vote of 90-8 (with two not voting) on March 29, 2006. On May 23, 2006, the House of Representatives passed the bill with no objection. The bill puts limits on private gifts and travel that can be accepted by members of the government.

Senate bill S. 2128 sponsored by Senator John McCain, and identical to H.R. 4575 (sponsored by Representative Christopher Shays), was considered in committee and now has been recommended for consideration by the Senate as a whole. The bill modifies the Lobbying Disclosure Act by increasing lobbyist reporting and disclosure requirements, including more frequent reporting, decreasing the dollar amount of donations that must be reported, and requiring disclosure of efforts to stimulate grassroots lobbying, but not disclosure of grassroots lobbying itself.

House bill H.R. 4667 has been introduced to committee by Representative Michael Fitzpatrick. The bill is similar to the legislation introduced by Senator McCain, including quarterly reporting and heightened disclosure, but it also includes a provision that limits the amount of privately raised funds that can be used for advocacy purposes by groups that receive federal grants. It also creates a comprehensive definition of political advocacy, and constructs new regulatory and paperwork requirements for charities.

The Comprehensive Immigration Reform Act of 2006 (S. 2611) was introduced April 7, 2006, by Senator Arlen Specter. The bill passed in the Senate on May 25, 2006, by a vote of 62-36. Section 205 of the bill allows for potential imposition of criminal and civil liability on nonprofit organizations for providing humanitarian assistance to illegal aliens. However, the bill also provides that as long as the organization has not been convicted previously of a violation of the same section, it will not suffer penalty for its actions.