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The State of Nonprofit Governance

September 17, 2014 Comments off

The State of Nonprofit Governance
Source: Urban Institute

This report provides a snapshot of nonprofit governance policies and practices among operating public charities. Using IRS Form 990 data, we find that many public charities have good governance policies and practices in place. In 2010, more than 60 percent of organizations had a conflict of interest policy, an independent audit and a compensation review and approval process for their chief executive. We also find that organizational characteristics such as size, type of organization, government funding, age, board size and board independence all appear related to whether or not a public charity chooses to adopt these recommended practices.

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“Dark Pools” In Equity Trading: Significance and Recent Developments, CRS Insights (August 27, 2014)

September 16, 2014 Comments off

“Dark Pools” In Equity Trading: Significance and Recent Developments, CRS Insights (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Dark pools are relatively recent and controversial electronic stock trading alternatives to traditional exchanges, such as the New York Stock Exchange (NYSE), and now account for about 15% of overall trading volume. A dark pool is a type of alternative trading system (ATS), a broker-dealer who matches the stock trading orders of multiple buyers and sellers outside of exchanges. Orders sent to dark pools to buy or sell certain stocks are not publicly displayed. When they emerged in the late 1990s, that opacity attracted the pools’ initial clients, institutional investors (such as pension and mutual funds), who used it to conceal large trading interests, thus helping to reduce the risk of the market moving against their trades. Quote concealment is a legacy of a regulation adopted by the Securities and Exchange Commission (SEC) in 1998, Regulation ATS, which allowed ATSs with less than an average 5% share of the trading volume to not publicly display their quotes. This contrasts with the “lit” venues, Nasdaq and the exchanges, which do.

CRS — Corporate Expatriation, Inversions, and Mergers: Tax Issues (September 3, 2014)

September 15, 2014 Comments off

Corporate Expatriation, Inversions, and Mergers: Tax Issues (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

News reports in the late 1990s and early 2000s drew attention to a phenomenon sometimes called corporate “inversions” or “expatriations”: instances where U.S. firms reorganize their structure so that the “parent” element of the group is a foreign corporation rather than a corporation chartered in the United States. The main objective of these transactions was tax savings and they involved little to no shift in actual economic activity. Bermuda and the Cayman Islands (countries with no corporate income tax) were the location of many of the newly created parent corporations.

These types of inversions largely ended with the enactment of the American Jobs Creation Act of 2004 (JOBS Act, P.L. 108-357), which denied the tax benefits of an inversion if the original U.S. stockholders owned 80% or more of the new firm. The Act effectively ended shifts to tax havens where no real business activity took place.

However, two avenues for inverting remained. The Act allowed a firm to invert if it has substantial business operations in the country where the new parent was to be located; the regulations at one point set a 10% level of these business operations. Several inversions using the business activity test resulted in Treasury regulations in 2012 that increased the activity requirement to 25%, effectively closing off this method. Firms could also invert by merging with a foreign company if the original U.S. stockholders owned less than 80% of the new firm.

Chief Sustainability Officers: Who Are They and What Do They Do?

September 12, 2014 Comments off

Chief Sustainability Officers: Who Are They and What Do They Do? (PDF)
Source: Harvard Business School Working Papers

While a number of studies document that organizations go through numerous stages as they increase their commitment to sustainability over time, we know little about the role of the Chief Sustainability Officer (CSO) in this process. Using survey and interview data we analyze how a CSO’s authority and responsibilities differ across organizations that are in different stages of sustainability commitment. We document increasing organizational authority of the CSO as organizations increase their commitment to sustainability moving from the Compliance to the Efficiency and then to the Innovation stage. However, we also document a decentralization of decision rights from the CSO to different functions, largely driven by sustainability strategies becoming more idiosyncratic at the Innovation stage. The study concludes with a discussion of practices that CSOs argue to accelerate the commitment of organizations to sustainability.

New Remote Control Report: US Special Operations Command Contracting: Data-Mining the Public Record

September 12, 2014 Comments off

New Remote Control Report: US Special Operations Command Contracting: Data-Mining the Public Record
Source: Oxford Research Group

A new report that analyses a US procurement database to shed light on the activities of US military special operations contracting has found that private corporations are integrated into some of the most sensitive counter-terrorism activities.

US Special Operations Command Contracting: Data-Mining the Public Record, commissioned by the Remote Control project, examines federal spending by the US Special Operations Command (USSOCOM) through transaction records. The report, by Crofton Black, is the first to mine the Federal Procurement Data System, an open access database, to look into the financing of US counter-terrorism operations. The dataset has revealed that corporations are integrated into some of the most sensitive aspects of special operations activities: flying drones and overseeing target acquisition, facilitating communications between forward operating locations and central command hubs, interrogating prisoners and translating captured material, and managing the flow of information from regional populations to the US military presence and back again.

Among the report’s focal points are a group of transactions in the dataset referencing “ISR” (intelligence, surveillance and reconnaissance services). Over two thirds of these were with US corporation Boeing, with performance divided between Afghanistan, Iraq, the Philippines and the US. By looking at key references in the dataset, the report reveals how contractors are involved with drone operations in Afghanistan and a US counterinsurgency campaign in the Philippines.

The report also uncovers the role in interrogation operations of Shee Atika, a company whose provision of translation services accounts for one of the largest single transactions in the dataset ($77 million), raising concerns over the mechanisms for ensuring effective accountability and oversight in these operations.

DHS OIG — CBP Did Not Effectively Plan and Manage Employee Housing in Ajo, Arizona

September 11, 2014 Comments off

CBP Did Not Effectively Plan and Manage Employee Housing in Ajo, Arizona (PDF)
Source: U.S. Department of Homeland Security, Office of Inspector General
From email:

Customs and Border Protection (CBP) vastly overpaid for an overly elaborate employee housing project in remote Ajo, Arizona, a new Department of Homeland Security, Office of Inspector General, report has found.

OIG Report No. OIG 14-131, “CBP Did Not Effectively Plan and Manage Employee Housing in Ajo, Arizona,” found that CBP paid an average of $680,000 each to build 21 single-family homes in Ajo, where home prices average $86,500. The units are for CBP employees stationed on and near the U.S.-Mexico border.

Specifically, the OIG found that CBP:

·Paid a premium price for land;
·Built two- and three-bedroom family-style houses rather than the recommended one -bedroom apartment-style housing; and
·Included nonessential items and amenities in the project without adequate justification.

“This is a classic example of inadequate planning and management leading to wasteful spending,” said Inspector General John Roth. “This project could have been completed at much less cost to the taxpayers.”

‘Competitiveness’ Has Nothing to Do with it

September 9, 2014 Comments off

‘Competitiveness’ Has Nothing to Do with it
Source: Social Science Research Network

The recent wave of corporate tax inversions has triggered interest in what motivates these tax-driven transactions now. Corporate executives have argued that inversions are explained by an “anti-competitive” U.S. tax environment, as evidenced by the federal corporate tax statutory rate, which is high by international standards, and by its “worldwide” tax base. This paper explains why this competitiveness narrative is largely fact-free, in part by using one recent articulation of that narrative (by Emerson Electric Co.’s former vice-chairman) as a case study.

The recent surge in interest in inversion transactions is explained primarily by U.S. based multinational firms’ increasingly desperate efforts to find a use for their stockpiles of offshore cash (now totaling around $1 trillion), and by a desire to “strip” income from the U.S. domestic tax base through intragroup interest payments to a new parent company located in a lower-taxed foreign jurisdiction. These motives play out against a backdrop of corporate existential despair over the political prospects for tax reform, or for a second “repatriation tax holiday” of the sort offered by Congress in 2004.

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