Non-profit

American Bar Association Endowment

Location:

CHICAGO, IL

Tax ID:

36-2384321

Tax-Exempt Status:

501(c)(3)

Budget (2019):

Revenue: $11,954,428
Expenses: $11,285,594
Assets: $157,016,269

Executive Director:

Joanne Martin

The American Bar Endowment (ABE) is a charitable organization that provides low-cost insurance programs for members of the left-of-center American Bar Association (ABA) and their families. ABE then uses donated dividends from the insurance programs to provide grant funding for other nonprofit organizations involved in legal policy activism, including the left-of-center American Bar Foundation (ABF) and the American Bar Association Fund for Justice and Education (ABA/FJE). [1]

In 1986, the Supreme Court ruled against ABE in United States v. American Bar Endowment.  The lawsuit found that ABE, which at the time forced members to donate dividends as a condition of the insurance programs, was running an anticompetitive business unrelated to its charitable purpose, meaning that ABE owed taxes on all profits from the dividend program. Since the decision, ABE has made the contribution of dividends voluntary, so that members can write-off the dividends as charitable contributions on their personal tax returns and ABE can count most income received from dividends as tax-exempt contributions. [2]

Grantmaking Activity

American Bar Endowment provides group-rate life insurance, disability insurance, and supplemental insurance plans for ABA members and their families. ABE designs programs that offer dividends to plan holders, then encourages members to donate the dividends back to ABA in order to claim a personal tax credit. ABE then uses those donations to provide grants to other organizations to fund law-related research and public service projects. [3] ABE reports that nearly 85% of its members choose to donate their dividends. [4] Since its founding in 1955, ABE has delivered more than $300 million in grant funding. [5]

ABE mainly provides funding to other organizations associated with the left-of-center ABA, including the American Bar Association Fund for Justice and Education (ABA/FJE). The president of ABA referred to ABE as “the largest unrestricted donor to the ABA/FJE” and the “backbone” of the ABA’s charitable efforts. [6] The ABA/FJE funds free legal services for groups including veterans, low-income defendants, and disaster survivors seeking to access entitlement benefits. [7] In recent years, the ABA/FJE has become especially active in supporting left-of-center immigration policy, providing access to pro bono legal counsel for illegal immigrants to assist them in claiming asylum. The ABA/FJE also provides law school scholarships to low-income, minority students. [8] In 2019, ABE provided its largest grant to the FJE, amounting to $3,393,769. [9]

In 2019, ABE provided its second-largest grant of $3,243,269 to the American Bar Foundation (ABF), a charitable organization also associated with the ABA that supports left-of-center legal research and policy. [10] [11]

In 2017, ABE began its application-based “Opportunity Grants” initiative to fund grassroots programs and organizations that seek to provide increased legal services and implement policy changes within the justice system. Past grant recipients have included left-of-center organizations, such as the ABA Commission on Immigration, Tennesseans for Alternatives to the Death Penalty, and the Public Interest Law Initiative. [12] [13] [14] In 2021, the Opportunity Grants program provided $18,000 to the Georgia State College of Law Immigration Clinic to support its program which trains attorneys in advocating for illegal immigrants. [15]

United States v. American Bar Endowment

In 1980, the Internal Revenue Service (IRS) audited American Bar Endowment, finding a tax deficiency. At the time, individuals were forced to donate any personal dividends they received from insurance plans to ABE as a condition of their use of the low group rates, rather than choosing to do so voluntarily. The IRS claimed that ABE’s insurance plan was therefore unrelated to ABE’s purpose as a charitable organization, meaning that all ABE profits from insurance dividends were subject to taxation. [16]

ABE paid the tax, then brought a suit against the IRS in claims court demanding a full refund. Several ABE plan members also sued, arguing that they should have received tax deductions for the dividends which had been taken and given to ABE. The claims court initially sided with ABE, claiming that ABE was not in competition with other non-charitable insurance companies and that the insurance program was designed as a fundraising effort for its charitable programs, making it related activity. [17]

Lawyers for the IRS appealed the case all the way to the United States Supreme Court, which ruled against ABE in a six-to-one decision. The Supreme Court held that the dividends program was non-voluntary for members and therefore created “precisely the sort of unfair competition that Congress intended to prevent” through the unrelated business income tax because it allowed ABE the luxury to operate at lower profit margins than non-charitable insurance competitors. [18]

The Supreme Court further held that the individual claimants who sued the IRS for tax deductions could not claim charitable deductions because ABE made contributions mandatory as a condition on joining the insurance program. This meant that individuals displayed no “charitable motivation” in donating their dividends, so they could not claim the credit. [19]

The decision had a lasting impact on ABE fundraising. ABE has since made the dividends donation program voluntary, allowing ABE plan members to demonstrate charitable intent and collect a tax credit if they choose to donate their dividends. By making donations voluntary, ABE has also avoided most taxes on contributions, reporting just $64,041 in taxes in 2018 on nearly $12 million in revenue. [20] [21]

People and Funding

Joann Martin is executive director of ABE. Martin became executive director in 2016, working as only the fourth executive director in the nearly 80-year history of ABE. Martin has spent over 40 years working within the ABA and its related organizations, previously working as general counsel to ABE and as an administrator and researcher with ABE for 21 years. [22]

ABE is funded almost entirely by contributions made from insurance dividends, grants by individual donors, and investment income. [23] As of 2021, 64% of all ABE grants are funded by member dividends. [24]

References

  1. “About ABE.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/about-abe/. ^
  2. Wixon, Barbara E. “Recent Developments: United States, Petitioner v. American Bar Endowment Et Al.: Supreme Court Finds Charitable Organization’s Insurance Program Taxable.” University of Baltimore Law Forum 17, no. 1 (1986): 13–14. https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1400&context=lf. ^
  3. “About ABE.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/about-abe/. ^
  4. Byrd, Brittany K. “Charitable Mission.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/charitable-mission/. ^
  5. “The American Bar Endowment Surpasses $300 Million.” Pro Bono Net. American Bar Association, March 17, 2021. https://www.militaryprobono.org/news/article.727426-The_American_Bar_Endowment_Surpasses_300_Million_in_Total_Grants_After_Rece. ^
  6. American Bar Endowment. “American Bar Endowment Awards Nearly $7.4 Million To 2018 Grant Recipients.” PR Newswire. Cision US, June 27, 2018. https://www.prnewswire.com/news-releases/american-bar-endowment-awards-nearly-7-4-million-to-2018-grant-recipients-300629081.html. ^
  7. Rives, Jack L. “Fund for Justice & Education.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/charitable-mission/aba-fund-for-justice-and-education-fje/. ^
  8. “Fall 2020 Impact Report.” American Bar Endowment. Accessed May 3, 2021. https://www.americanbar.org/content/dam/aba/administrative/fund_justice_education/2020-fall-impact-report/fje_2020impactreport_online.pdf ^
  9. “American Bar Endowment.” Return of Organization Exempt from Income Tax, Form 990, 2018 Schedule I, Part II. ^
  10. “American Bar Endowment.” Return of Organization Exempt from Income Tax, Form 990, 2018, Schedule I, Part II. ^
  11. Mehrotra, Ajay K. “American Bar Foundation (ABF).” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/charitable-mission/american-bar-foundation-abf/. ^
  12. “2019 Opportunity Grant Recipients.” American Bar Endowment. Accessed May 3, 2021. https://abendowment.org/wp-content/uploads/ABE_Opportunity_Grant_Recipients_2019_091019.pdf ^
  13. “2018 Opportunity Grant Recipients.” American Bar Endowment. Accessed May 3, 2021.https://abendowment.org/wp-content/uploads/ABE_Opportunity_Grant_Recipients_2018_091019.pdf ^
  14. “2020 Opportunity Grant Recipients.” American Bar Endowment. Accessed May 3, 2021.https://abendowment.org/wp-content/uploads/ABE_Opportunity_Grant_2020-Recipients-030420.pdf ^
  15. American Bar Endowment. “American Bar Endowment Awards Nearly $7.4 Million To 2018 Grant Recipients.” PR Newswire. Cision US, June 27, 2018. https://www.prnewswire.com/news-releases/american-bar-endowment-awards-nearly-7-4-million-to-2018-grant-recipients-300629081.html. ^
  16. Wixon, Barbara E. “Recent Developments: United States, Petitioner v. American Bar Endowment Et Al.: Supreme Court Finds Charitable Organization’s Insurance Program Taxable.” University of Baltimore Law Forum 17, no. 1 (1986): 13–14. https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1400&context=lf ^
  17. Wixon, Barbara E. “Recent Developments: United States, Petitioner v. American Bar Endowment Et Al.: Supreme Court Finds Charitable Organization’s Insurance Program Taxable.” University of Baltimore Law Forum 17, no. 1 (1986): 13–14. https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1400&context=lf ^
  18. Wixon, Barbara E. “Recent Developments: United States, Petitioner v. American Bar Endowment Et Al.: Supreme Court Finds Charitable Organization’s Insurance Program Taxable.” University of Baltimore Law Forum 17, no. 1 (1986): 13–14. https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1400&context=lf ^
  19. Wixon, Barbara E. “Recent Developments: United States, Petitioner v. American Bar Endowment Et Al.: Supreme Court Finds Charitable Organization’s Insurance Program Taxable.” University of Baltimore Law Forum 17, no. 1 (1986): 13–14. https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1400&context=lf ^
  20. “About ABE.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/about-abe/. ^
  21. “American Bar Endowment.” Return of Organization Exempt from Income Tax, Form 990, 2018 Part IX, Line 24b. ^
  22. “American Bar Endowment Names New Executive Director.” Detroit Legal News, June 14, 2016. http://www.legalnews.com/detroit/1426361. ^
  23. “American Bar Endowment.” Return of Organization Exempt from Income Tax, Form 990, 2018. Part VIII, Lines 1f and 3. ^
  24. Byrd, Brittany K. “Charitable Mission.” American Bar Endowment (ABE), October 6, 2020. https://abendowment.org/charitable-mission/. ^
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Nonprofit Information

  • Accounting Period: June - May
  • Tax Exemption Received: March 1, 1944

  • Available Filings

    Period Form Type Total revenue Total functional expenses Total assets (EOY) Total liabilities (EOY) Unrelated business income? Total contributions Program service revenue Investment income Comp. of current officers, directors, etc. Form 990
    2019 Jun Form 990 $11,954,428 $11,285,594 $157,016,269 $22,156,474 Y $6,581,077 $0 $3,512,027 $292,412 PDF
    2018 Jun Form 990 $15,131,062 $11,325,069 $152,599,343 $13,272,516 Y $8,435,636 $0 $3,289,351 $275,031 PDF
    2017 Jun Form 990 $13,922,083 $9,948,920 $146,774,957 $15,440,942 Y $7,181,960 $0 $2,819,946 $308,197 PDF
    2016 Jun Form 990 $12,419,690 $12,885,667 $134,138,879 $15,835,751 Y $6,179,781 $0 $3,053,606 $472,666 PDF
    2015 Jun Form 990 $14,809,110 $10,350,789 $140,251,742 $16,526,100 Y $5,500,349 $0 $2,799,000 $444,287 PDF
    2014 Jun Form 990 $14,863,227 $10,704,159 $140,688,309 $17,924,096 Y $8,096,892 $0 $2,596,789 $449,349 PDF
    2013 Jun Form 990 $12,155,468 $9,720,849 $124,244,954 $17,038,673 Y $5,860,746 $0 $2,915,707 $442,193 PDF
    2012 Jun Form 990 $8,950,575 $10,620,627 $115,268,381 $17,787,200 Y $7,430,078 $0 $2,709,102 $401,542 PDF

    Additional Filings (PDFs)

    American Bar Association Endowment

    321 N CLARK STREET
    CHICAGO, IL 60654-7598