Almost every non-profit organization has attorneys on their Boards of Directors or Trustees. A review of the boards of the largest non-profits in the region is a “Who’s Who” of the Maryland Bar. This is also true for private schools, small family foundations, and churches and synagogues. For example, The Arc Baltimore just added two attorneys to its Board, bringing the total to five of the 26 Board slots.

Why so many lawyers? In short, it makes sense. For the non-profit, they receive the benefit of legal counsel, often for free. Counsel has the ability to guide an organization on issues such as employment law, corporate law, immigration matters, and health care and government regulations. Attorneys understand complex contracts and can review loan documentation and credit agreements. Board attorneys can work with the organization’s paid advisors and provide input on tax compliance, gift acceptance policies, employee handbooks, and endowment guidelines.

By definition, non-profits have the public interest at heart. They address specific social, educational, or religious objectives. In part due to their mission, many advocates in the non-profit world are not comfortable with confrontation.

Attorneys, however, are problem solvers, by nature and by training.

They understand conflict resolution. And they deal with difficult issues all of the time - people generally do not call their attorney when they are having a good day. Boards seek out these advocacy and mediation skills for their organizations.

Attorneys play another important role on non-profit boards:  access to donors.  Many law firms in the region have their own foundations or charitable plans.  This is the Maryland Bar at its best.  Some firms suggest how much time and money each attorney should contribute to the foundation or other charities.  The competition for non-profit dollars is at an all-time high, with the proliferation of non-profits and the recent economic downturn.  This requires charitable, religious, and educational organizations to be more aggressive and more creative than ever before just to survive.  Law firms and their attorneys can be a great direct revenue source.

Attorneys also have clients with access to capital. Positive charitable and community exposure is a cornerstone of some businesses’ marketing strategy - think Avon and breast cancer. And these corporate sponsorships are critical for the non-profit. These sponsorships not only provide funding for programs and events, but also spur their competition to react.  Businesses do not want to be left out in the cold when their competitors are being featured as a positive community partner.

Because of what we do, attorneys often have access to high net-worth individuals. There are many estate and trust planning techniques that involve the use of charities and charitable foundations. Because of the favorable tax treatment charitable deductions receive, coupling a wealthy individual’s tax planning with their charitable intents provides a positive result for all parties.  Non-profits need to tap into these clients and this expertise.

Why do attorneys participate on non-profit boards to such an extent? It is not pure altruism.  The profession expects us to work for the public good: pro bono publico. Some law firms require such participation. The Bar requires its members to report their non-profit endeavors each year.

There is more to it, however.  Most attorneys realize that they have been fortunate, and they want to give back.  As a whole, attorneys have opportunities not always available to others for education, employment, and lifestyle.  Many attorneys provide services to non-profits in recognition of the privilege that they have been afforded.

Despite our relative comfort and status, there is a lot of dissatisfaction in the legal world. The legal profession is stressful, and attorneys deal with life’s unfortunate occurrences every day:  death, accidents, divorce, crime, disability, etc. Attorneys deal with life’s problems.  There is financial pressure, whether you are a partner at a major law firm or a solo practitioner. The level of job frustration and stress result in disturbing realities in our profession, like high rates of divorce, alcoholism, and other substance abuse. Maryland attorneys are fortunate that the Bar has taken a very proactive and positive approach to addressing these problems.

Board service also combats the negative aspects of the profession.  Board service provides attorneys with the opportunity to use their skills and training in a different context. Many attorneys publicly state that the energy expended on their non-profit service is the most rewarding aspect of their professional life. Winning cases and completing transactions can be satisfying, but raising money for a worthy charity, lobbying for legislation for people with disabilities, or helping a family during the holidays often provides a greater sense of accomplishment.

James A. List is the current President of The Arc Baltimore and the founding member of The Law Offices of James A. List, LLC.

Contact: Ray Weiss or Jessica Trzyna

443-451-7144 or rweiss@weissprassociates.com

BENELOGIC LOSES $3 MILLION LAWSUIT

AGAINST FORMER CHIEF STRATEGIC OFFICER

BALTIMORE, MD (9/22/11) — Lutherville, MD-based Benelogic, a provider of online benefits enrollment solutions, has lost a $3 million lawsuit the company had filed against its former Chief Strategic Officer (CSO) and start-up company. All counts of this lawsuit, which alleged that this executive breached his fiduciary duty to Benelogic, were decided in favor of the defendants by Baltimore County Circuit Court Judge H. Patrick Stringer, Jr.

Judge Stringer noted, “The Court … finds no persuasive evidence … that the damages claimed by Benelogic resulted from any of the alleged breaches of duty by the defendant.”

Benelogic had contended that the defendant covertly created a competing company, recruited Benelogic employees to work for it and solicited current and prospective Benelogic customers for his new company, and misappropriated Benelogic’s trade secrets. None of these contentions were proven.

In his opinion, however, Judge Stringer ruled specifically that the former CSO did not breach his employment agreement and did not usurp any of Benelogic’s corporate opportunities, customers, employees, or trade secrets. Further, the Court’s opinion affirmed that the defendant and his team had provided value to Benelogic commensurate with their work, and that the acts of preparation for a new company were permissible under Maryland law. “The plaintiff has not proved any loss due to the formation…,” stated Judge Stringer’s opinion.

“This lawsuit and the harsh accusations made by Benelogic in court pleadings, correspondence, and to third parties - many of them personal in nature - have done irreparable harm to my client’s reputation, and this lawsuit was costly to defend,” said attorney James A. List, who handled the defense for the defendants.

List added that in November 2010, Benelogic CEO Matthew T. Oros testified that Benelogic was forced to lay off nine employees because of financial difficulties while continuing to fund this litigation. That litigation began in 2009 when Benelogic attempted to get a temporary restraining order issued against the defendants on two occasions, both of which were unsuccessful.

After amending its complaint against the defendants four times and conducting extensive discovery, including numerous depositions, throughout 2009, the case finally went to trial in May 2010 and continued through January 2011, punctuated by several postponements and extensions. Benelogic put on testimony, including expert testimony, for approximately 25 trial days, while the defense called witnesses in response for only five trial days.

The Law Offices of James A. List, LLC is a mid-Atlantic law firm serving business owners; families with developmentally disabled members; and individuals with real estate, estate planning, asset protection and trust needs. The cornerstone of the firm is its personal, responsive customer service.

# # #

Contact: Ray Weiss or Jessica Trzyna

443-451-7144 or rweiss@weissprassociates.com

Attorney James A. List Named President of The Arc Baltimore

New Slate of Officers Also Elected at Organization’s 2011 Annual Meeting

Baltimore, MD (6/21/11) — James A. List, founding partner of The Law Offices of James A. List, LLC, has been named President of The Arc Baltimore Board of Directors.

List, whose firm focuses a substantial part of its practice on working with families which have members with developmental disabilities, was elected to the post when The Arc Baltimore held its 2011 Annual Meeting and Awards Ceremony at the Crowne Plaza Baltimore in Timonium, MD. List previously served as The Arc’s Vice President.

Also elected officers during the Annual Meeting were: Carla N. Murphy, Esq., a principal in Ober/Kaler’s Employment and Litigation Groups (elected Vice President); Thomas Sand, a partner at Ernst & Young, LLP (Secretary); and Michael J. Young, CPA, a director at Stout, Causey & Horning, P.A. and SC&H Tax and Advisory Services (Treasurer). Gilbert F. Kennedy, III is The Arc Baltimore’s Immediate Past President.

“The Arc Baltimore’s Annual Meeting celebrates a tradition of volunteer and staff commitment,” says the organization’s Executive Director, Stephen H. Morgan. “The contributions and continuing commitment of these individuals have been critical to The Arc’s continued success in serving individuals with intellectual and developmental disabilities.” The officers assume their new posts effective July 1.

In addition to the election of new officers, the 2011 Annual Meeting celebrated The Arc Baltimore’s recent decision to join with a network of more than 700 other independent Arc chapters nationally in introducing a new mission, brand identity, and logo, all of which embody those qualities that have always been at the heart of The Arc’s mission - opportunity, achievement, respect, and connection.

“The new mission, brand, and logo mark our opportunity to build on the progress we have made, while continuing to raise awareness around the challenges faced by more than seven million Americans and their families as they strive to be fully included in society,” says Morgan.

About The Arc Baltimore:

Dedicated to helping individuals with intellectual and developmental disabilities achieve their greatest potential since 1949, The Arc Baltimore supports more than 4,000 Baltimore City and Baltimore County residents with intellectual and developmental disabilities and their families. As one of the nation’s largest and most respected organizations of its kind, The Arc Baltimore is an indispensable resource, providing vocational training, residential services, supported employment, and other programs and services. For more information, visit www.thearcbaltimore.org or call 410-296-2272.

When it comes to fundraising, many charitable, academic, and religious organizations are incredibly skilled. Some of these organizations have instant name recognition. They regularly receive media coverage. And they pull in hundreds of thousands of dollars from supporters in annual fundraising efforts.

There’s no doubt that successful fundraising is an acquired skill. It does not happen by chance.  It’s the reason why organizations compete so intensely to hire persons with outstanding fundraising skills and a successful track record.

Given that, it is somewhat baffling why so many of the organizations that are most successful in fundraising struggle when it comes to building an endowment. Other non-profits, meanwhile, seem to have struck a balance, building both highly effective fundraising efforts and endowments that rival the budgets of emerging nations. Why is that?

It is important to recognize that there is an inherent conflict between annual fundraising objectives and building an endowment. On the fundraising side, all organizations have to balance their budgets. Virtually all strive to grow the services they offer and the number of people they serve. Senior executives of these organizations often have bonuses tied to annual fundraising objectives. Boards of directors and trustees want to accomplish certain goals and have an obligation to their donors and constituents to do so.

Now add to this the fact that there are various non-profit certifications and standards, all of which tend to focus on annual fundraising, capital campaigns, board participation, and donor designations. An organization’s by-laws may even establish funding expectations.

All of these annual organizational goals conflict with building endowments. Endowments represent a long-term commitment for an organization. Endowments take time to build with donations and earnings. And bottom line, executives, board members, supporters, donors, and other constituents tend to be impatient. They want to see tangible results NOW.

Even in cases in which a non-profit has managed to build a substantial endowment, it’s often tempting to use endowment income or principal to meet current operating needs. Doing so, however, clearly inhibits growth and delays the endowment from providing its ultimate goals.

Take, for example, the case of a private high school that wants to create an endowment providing four $2,500 scholarships each year to needy children in each grade. To make that happen, Year One would require $10,000 per annum, Year Two $20,000 per annum (eight total scholarships), and so on, until there are $40,000 per year of scholarships being awarded, four for each grade. Assuming that the endowment earns 5 percent a year, the endowment would require $800,000 to be able to support these 16 scholarships.

That seems fairly clear cut, but every year the school has budget shortfalls. The teacher’s 401(k) plan is chronically underfunded. To address this issue, the school’s trustees vote to use 1.5 percent of the earnings from the endowment, or $12,000, to fund the 401(k). That decision, however, leaves the school facing a number of difficult choices - it can make aggressive and risky investment decisions in its endowment portfolio, eliminate the scholarships, or use endowment principal. The last choice impacts future earnings, as there is less principal invested. Besides, these decisions may be contrary to the donor’s intent.

This example illustrates the dilemma many non-profit organizations face in trying to build an endowment. The long-term nature of endowments is somewhat contrary to our collective natures. Directors, trustees, constituents, and donors want to see results. And trustees and employees often prefer funding a summer camp next year to deferring that camp for 10 years so that it can be funded every year thereafter.

Capital campaigns also conflict with endowment building. Capital campaigns have very specific goals - construct a new building, renovate existing facilities, acquire more land. The organization solicits regular donors for these campaigns. And sometimes when these capital campaigns fall a little short of their financial goals, other sources - most prominently, endowments - are “raided” to make up the deficit.

To address these and other issues which can make it difficult for an organization to build its endowment, non-profits should adopt the following guidelines:

1. Set specific endowment goals, with particular attention to the amount of principal required before funding programs, the use of income and principal, the investment policy, the protections from operating budget demands, and protections to a donor’s intent.
2. Separate endowment fundraising campaigns from annual and capital fundraising efforts, which will help to ensure that endowment gifts do not compromise other gifts from the same donors. (Endowment campaigns, in fact, are often directed to a small sub-set of the overall donor pool.)
3. Understand the basics of estate planning and taxes, and be willing to meet with a donor’s financial, legal, and accounting advisors.
4. Study potential donors and understand their charitable motives.

With respect to charitable motives, it’s important to recognize that people make donations for a variety of reasons. Some sincerely care about the organization’s mission. Sometimes, an individual has suffered from a disease or illness, and their family and friends make contributions to organizations which provide support, research, and care. Some donors wish to thank a non-profit that has enriched their lives. Still others are motivated by recognition. There are donors (or their families) who take great pride in seeing their family name on a building.

Rare is the donor who cares solely about taxes or recognition. Most endowment decisions are impacted by all of these issues. What makes this difficult for the organization is that each endowment donor is unique. As a result, endowment gift planning has to be done in small groups or with individuals, and it has to be personalized.  This time commitment is a huge challenge for most non-profit organizations - but it can be made easier if these guidelines for building an endowment are carefully followed.

James A. List is founding partner of The Law Offices of James A. List, LLC, a Mid-Atlantic law firm which serves business owners and individuals with estate planning, asset protection, and trust needs. In the estate planning area, the firm counsels clients in the use of asset protection trusts, special needs trusts, and dynasty trusts; traditional wills and revocable and irrevocable trusts; and powers of attorney and medical directives. The firm also focuses a substantial part of its practice on working with families which have members with developmental disabilities.

Contact: Ray Weiss or Jessica Trzyna

443-451-7144 or rweiss@weissprassociates.com

ATTORNEY JAMES A. LIST NAMED TO 2011 LIST OF

FIVE STAR WEALTH MANAGERS

BALTIMORE, MD (1/26/11) — James A. List, founding partner of The Law Offices of James A. List, LLC, has been named to the 2011 List of Five Star Wealth Managers.

In a survey conducted by Baltimore Magazine, List joined an elite group of financial planners, investment advisors, and estate planning attorneys named by consumers as among the profession’s finest in terms of listening to their clients’ needs, representing client interests, and operating with an emphasis on integrity and service.

The 2011 List of Five Star Wealth Managers represents less than five percent of the more than 8,200 wealth managers in the Baltimore area.

In determining which wealth managers scored highest in overall consumer satisfaction, Baltimore Magazine partnered with Crescendo Business Services to survey more than 99,000 high-net-worth households in Greater Baltimore.

Survey respondents were asked to evaluate wealth managers who they know through personal experience and to evaluate them based on nine criteria: customer service, integrity, knowledge and expertise, communication, value for fee charged, meeting financial objectives, post-sale service, quality of recommendations, and overall satisfaction.

Wealth managers also were reviewed for regulatory actions, civil judicial actions, and customer complaints as reported by FINRA, the SEC, the State Board of Accountancy, and the State Bar.

Finally, a blue ribbon panel comprised of individuals from within the financial services industry reviewed the list of wealth manager finalists.

The Law Offices of James A. List, LLC serves business owners and individuals with estate planning, asset protection, and trust needs. In the estate planning area, the firm counsels clients in the use of asset protection trusts, special needs trusts, and dynasty trusts; traditional wills and revocable and irrevocable trusts; and powers of attorney and medical directives.

The Mid-Atlantic law firm also focuses a substantial part of its practice on working with families which have members with developmental disabilities.

# # #

I would urge you to read this article, which can be found here. You can also visit their website at  http://www.mksh.com for more information.

January 10, 2011

Dear Client,

The recently enacted “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010″ is a sweeping tax package that includes, among many other items, an extension of the Bush-era tax cuts for two years, estate tax relief, a two-year “patch” of the alternative minimum tax (AMT), a two ­percentage-point cut in employee-paid payroll taxes and in self-employment tax for 2011, new incentives to invest in machinery and equipment, and a host of retroactively resuscitated and extended tax breaks for individuals and businesses. Here’s a look at the key elements of the package:

• The current income tax rates will be retained for two years (2011 and 2012), with a top rate of 35% on ordinary income and 15% on qualified dividends and long-term capital gains.
• Employees and self-employed workers will receive a reduction of two percentage points in Social Security tax in 2011, bringing the rate down from 6.2% to 4.2% for employees, and from 12.4% to 10.4% for the self-employed. This means that net paychecks in 2011 will increase as a result of the decrease in social security taxes withheld.
• A two-year AMT “patch” for 2010 and 2011 provides a modest increase in AMT exemption amounts and allows personal nonrefundable credits to offset AMT as well as regular tax. Without the patch, an estimated 21 million additional taxpayers would have owed AMT for 2010.
• Key tax credits for working families that were enacted or expanded in the American Recovery and Reinvestment Act of 2009 will be retained. Specifically, the new law extends the $1,000 child tax credit and maintains its expanded refundability for two years, extends rules expanding the earned income credit for larger families and married couples, and extends the higher education tax credit (the American Opportunity tax credit) and its partial refundability for two years.
• Businesses can write off 100% of their new equipment and machinery purchases, effective for property placed in service after September 8, 2010 and through December 31, 2011. For property placed in service in 2012, the new law provides for 50% additional first-year depreciation.
• Many of the “traditional” tax extenders are reinstated for two years, retroactively to 2010 and through the end of 2011. Among many others, the extended provisions include the election to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction for state and local income taxes; the $250 above-the-line deduction for certain expenses of elementary and secondary school teachers; and the research credit.
• After a one-year hiatus, the estate tax will be reinstated for 2011 and 2012, with a top rate of 35%. The exemption amount will be $5 million per individual in 2011 and will be indexed to inflation in following years. Estates of people who died in 2010 can choose to follow either 2010’s or 2011’s rules.
• Omitted from the new law: Repeal of a controversial expansion of Form 1099 reporting requirements.
• Also not included: Extension of the Build America Bonds program, which permits state and localities to issue federally-subsidized municipal bonds.

I hope this information is helpful. If you would like more details about these provisions or any other aspect of the new law, please do not hesitate to call.

Very truly yours,

Bishop & Adkins, PA

For more information, please visit the firm’s website at www.bishopandadkins.com.

You can also view the entire video on our YouTube channel here:

http://www.youtube.com/view_play_list?p=101A5EC9B2B1C1B7.

1. Bush income tax cuts were extended for two more years;
2. Social Security Taxes were cut for one year;
3. Federal estate taxes were eliminated on estates less than $5 million ($10 million per couple);  the estate tax rate is reduced to 35% on estates larger than these thresholds.

A few comments.  It is nice to see some attempts at bipartisanship.  Hopefully, this Bill will stimulate the economy and job growth and our confidence in the economy.

Second, Congress has deferred fixing long-term problems again.  There are no required spending cuts.  Social Security is an underfunded time bomb.  Our aging demographics exert more pressure on Medicare and Social Security.  Because of the two-year duration of parts of this Bill, these issues will be at the forefront of the 2012 elections.

Finally, a word on estate taxes and planning.  For nine (9) years, estate planning professionals (attorneys, accountants, financial planners) have advised businesses and individuals under ever-changing tax laws that have become a political football.  Planned wealth transfer is essential to the future stability of small business and entrepreneurs, which are the backbone of our economy.  We need to urge our elected leaders to develop a bipartisan and permanent solution to this issue.

Link to New York Times article:  http://nyti.ms/hAWfZT