Private Philanthropy Update - June 2018
Last week, I travelled to Detroit, Michigan to meet with the Hudson-Webber Foundation, Ralph C. Wilson Jr. Foundation and the Skillman Foundation.
The time I spend in the field with members is always enlightening. It gives me a closer glimpse into the opportunities and challenges our members are facing in their work and the communities they serve.
For example, in my meeting with Skillman Foundation Program Director David R. McGhee, I was taken aback by the statistics he shared with me about the Detroit Public School System. He said that more than 32,000 children travel outside of Detroit to attend school and shared how 30 days before the 2017-2018 school year opened there were 425 teacher vacancies. I pictured the cafeterias that he said were filled with students because they did not have teachers. To most these statistics look grim but to the Skillman Foundation it’s an opportunity.
The Skillman Foundation is committed to an Opportunity Agenda for Detroit children. Education, Economy and Equity. Through their education work, they believe the Detroit Public School System is in a stage of transition and poised for success. Learn more about how their Education Ecosystem will help get them there.
I was inspired after my meeting with David. And I was walking on cloud nine after my time with the Hudson-Webber Foundation and Ralph C. Wilson Jr. Foundation. I wish I had more space to share what I learned in my meetings with them. Just know, you all are doing incredible work.
Later this month, I will be visiting New York City and would love to find time to meet with as many of you as possible while I am there. If you are interested in meeting, please email me at talia.rivera@cof.org.
Sincerely,
Talia Rivera
Director, Private Philanthropy
Council Legal Team Shares Response to Recent WSJ Article on Private Foundations
A recent Wall Street Journal article cast a negative light on private foundations by describing isolated instances where certain private foundations provided financial benefits to insiders. Each of these situations highlight the importance of understanding the self-dealing rules that are applicable to all private foundations and described in Section 4941 of the Internal Revenue Code. The self-dealing rules impose a penalty tax on disqualified persons who engage in acts of self-dealing. Generally, disqualified persons are substantial contributors to a foundation, foundation managers and certain family members of major contributors and managers. As such, there is a lengthy list of transactions that are absolutely prohibited, but there is an almost equally long list of exceptions to the self-dealing rules.
Where private foundations often get in trouble with the self-dealing rules is when they assume and apply exceptions provided in Treasury Regulations and IRS Private Letter Rulings (PLRs) to their own situations without a thorough legal review. Unlike IRS Revenue Rulings that deal with specific factual situations that may affect any taxpayer, regulations only provide examples, and a PLR is issued at the request of an individual taxpayer. As such, regulations are not intended to cover every situation and PLRs have precedential value only to the specific taxpayers to which they are issued.
For these reasons, the Council’s legal team advises private foundations to consult competent legal counsel when determining whether any of the self-dealing exceptions apply to their particular situations or to altogether avoid transactions that may be ripe for scrutiny or viewed by the public as improper. Feel free to contact Suzanne Friday, senior counsel and vice president of legal affairs, at Suzanne.Friday@cof.org or Staff Counsel Bryan Del Rosario at bryan.delrosario@cof.org if you have further questions.
Upcoming Events and Webinars
Three-Legged Stool: Evaluation, Monitoring and Feedback | June 13, 2018| Webinar
Almost all foundations and nonprofits want a better understanding of how their funding, services and products are (or are not) making a difference in real people’s lives and how they might be improved.
In this webinar, Fay Twersky, Director of Effective Philanthropy at the William and Flora Hewlett Foundation, we will be introducing a new framework for measurement in the social sector. It is a three-legged stool consisting of: (1) evaluation; (2) monitoring; and (3) feedback from your ultimate beneficiaries. Benilda Samuels, Chief Marketing and Communications Officer at Nurse-Family Partnership, will draw on examples of how this plays out in practice at the Nurse-Family Partnership.
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Lunch with Legal Counsel: Private Foundations and DAF’s | June 20, 2018| Webinar
The administrative costs of operating a private foundation often prove too burdensome and can easily swamp the grantmaking activity of private foundations, especially the smaller ones.
In this latest version of our “Lunch with Legal Counsel” series with Bryan Del Rosario, Staff Counsel of Legal Affairs. Bryan will discuss the “tipping” issue in IRS Notice 2017-73 as well as ways private foundations can use donor advised funds to advance, enhance and effectuate their charitable missions.
Inclusive Economic Prosperity in the Midwest | August 28-29, 2018| Minneapolis, MN
The Council on Foundations and our partners, The Minnesota Council on Foundations and the McKnight Foundation, invite you to a dynamic two-day convening where we will consider the factors that make up a healthy local and regional economy that strives to be inclusive and promotes innovation. Our task will be to delve into the role foundations can play in this unique approach to creating a regional economic innovation ecosystem. Immerse yourself in the economic drivers of the Midwest and what constitutes an innovation ecosystem. Exchange ideas with subject matter experts and peers on topics such as community leadership, capitalization and impact investing, resource alignment, and competitive talent development.
Recent Private Philanthropy News
Former Microsoft CEO Steve Ballmer talks climbing the economic ladder in Spartanburg
The Council on Foundation’s Inclusive Economic Prosperity Convening in Spartanburg, South Carolina featured Former Microsoft CEO Steve Ballmer. Over the course of an hour-long session, Ballmer offered his take on the way data could help unlock new answers to age-old problems.
Is Chan Zuckerburg Initiative the Future of Philanthropy?
The for-profit LLC is poised to become the preferred vehicle for the nation’s elite philanthropists. Will the public gain from added investment in social good, or lose from ceding even more power to the wealthy?
Business Case for Racial Equity
A study released by the W.K. Kellogg Foundation (WKKF) and Altarum concludes that economic growth in Michigan could be far greater and provides a blueprint for boosting the state’s economy.
Next Steps on DEI: Collecting Better Data for Greater Impact
When the McKnight Foundation released its Statement on Diversity, Equity, and Inclusion (DEI) in January, we promised to keep everyone posted on any subsequent changes in our policies and practices.
Share Your Story
If you’re interested in submitting a blog about your work, what you’re learning, or any thought-provoking questions with your colleagues, feel free to contact me at talia.rivera@cof.org for the guidelines.
