As the year comes to an end, the boards of nonprofit organizations are taking a look back at 2020–2021 to reflect on the challenges they faced, as well as their accomplishments and their failures, to guide them in defining future strategies and opportunities. Indeed, while donations to charities were expected to drop by at least $13 billion each year as a result of the JCJA's changes to the charitable contribution deduction, it has been reported that the percentage of taxpayers who itemize their deductions declined by 35 percent.¹ It is no surprise that the COVID-19 pandemic forced many exempt organizations to do “more with less” and to create new workplace strategies and business practices to sustain their missions, in many cases creating what may be permanent change.² For example, at the university level, the sector pivoted and responded to the needs and safety of students with painful decreases in revenue and increased costs. In fact, I taught over the past year and a half at GW Law and Georgetown Law Center on a remote learning platform. Charitable organizations needed to respond to the escalated need for social services while maintaining pre-pandemic giving commitments and investment returns.

Charities were faced with the balancing of their own financial needs, both supporting nonprofits that had lost funding and recognizing the growing needs of the community, including unemployment and food insecurity. For this reason the use of joint ventures, impact investing, and mission-related investments, among other techniques, have become even more critical to the sustainability of the charitable sector. Commercial co-venturing has raised significant amounts of money. There are studies that show that millennials prefer to make purchases that identify with “causes,” so many social media platforms now provide the means by which the public can also solicit money for charities. However, this is a typically unregulated area, although in some states there is regulation of various kinds. It is clear that many charities are under financial strain for the foregoing reasons, but it should be kept in mind that in the last go-round after the Great Recession, charities that were in dire straits were able to restructure and, in many cases, merge as a way to preserve their charitable goals.

In Chapter 2, there is a continued review of the impact of the CARES Act on contributions by individuals and corporations that provide significant temporary tax relief and charitable giving benefits. There is also a discussion of Notice 2020-36 regarding modifications of the group exemption rules, followed by an explanation of the compliance strategy and commerciality doctrine, which has been expanded in recent times.

In Chapter 3, there is a brief discussion of waterfall and claw back rules with regard to partnership distributions to partners.

In Chapter 5, there is a discussion of the final regulations under Section 4960, including changes to the proposed regulations regarding volunteers and covered employees.

In Chapter 6, there is an expanded discussion of impact investing and the commercialism doctrine. There is also a new discussion regarding commercial co-ventures, which have become quite popular. And finally there is an expanded discussion of the use of C corporations and REIT blockers, including a number of diagrams illustrating their effect.

In Chapter 8, there is a discussion of the final silo regulations and changes made from the proposed regulations.

In Chapter 10, there is a discussion regarding the contribution of nonvoting LLC interest to a private foundation, with an analysis of the impact of the self-dealing and excess business holding implications.

In Chapter 13, there is an update of LIHTC, along with the various IRS notices relative to opportunity zone funds in which the proposed rules have been revised; in this regard, the discussion of the written plan exception to QOZBs and foreign investments that follow the publication of the final regulations. There is also a subsection discussing proposed legislative recommendations to improve guardrails and incentives without resulting in undue disruption to communities or market participants. Finally there is a discussion of new market tax credits, which have been extended through 2025 with an additional $5 million annually. The new market tax credit area has also received a lot of attention relative to unwinds, which occur after seven-year compliance.

In Chapter 14 there is a discussion of the final regulations under Section 4968, which generally follow the proposed regulations.

The bottom line, once again, is that there is no one paradigm for joint ventures, especially in the face of the COVID-19 pandemic and its continued pressures on the budget and reduced fundraising. As previously discussed, in view of the financial distress that exempt organizations have faced, they now need to be even more creative and forge new paths to create and solve many issues affecting their future and operations. This text is intended to suggest mechanisms to accomplish the worthy goals of the charitable communities, especially following the pandemic crisis. We also believe that the opportunity zone legislation will survive under the Biden administration and, in fact, is likely to be expanded; however, with additional reporting and disclosure requirements. It should create an extremely attractable alternative to allow funds to be redirected to include the revised 2020 census tract.