Washington Snapshot - December 20, 2013
Happy holidays! The Council’s Public Policy team wishes you and your loved ones a joyous and festive winter break!
Council letter featured in The New York Times
As we reported last week, Council president & CEO Vikki Spruill authored a letter to the New York Times editors responding to Ray Madoff’s New York Times op-ed that brought up the idea that some nonprofits are more “charitable” than others. This week, the Times published Spruill’s piece.
In her piece, Spruill fires back against Madoff’s critique, emphasizing that her academic perspective contrasts starkly with the experience of those on the front-line of the sector. “[F]or people in communities across the country who rely on nonprofit services everyday—the charitable deduction is a lifeline,” Spruill told the editors. She further challenges Madoff’s contention that donor advised funds (DAFs) are not charitable: “DAFs enable donors to make sustained, strategic investments in their communities,” she emphasized.
Council Announces Philanthropy Week in Washington
Save the Date! - Philanthropy Week in Washington 2014
The New Year is nearly upon us and spring will be here sooner than you think!
If you’re looking to participate in an important event and amplify the voice of philanthropy, then you won’t want to miss “Philanthropy Week in Washington 2014”! Make your plans to come to Washington, D.C. the first week of March.
"Philanthropy Week in Washington,” hosted by Council on Foundations, is the new theme for a week of activities – some very familiar and others new. The week will begin and end with communications activities using both traditional and social media. The main activities in Washington D.C. will be conducted mid-week (March 4th-6th) so that participants can both enjoy a variety of events and make effective use of their time here in the nation’s capital.
Many of you have participated in Foundations on the Hill (FOTH) over the years – and it’s not going away! FOTH, hosted by the Forum of Regional Associations of Grantmakers with strong and ongoing support from the Council, will be the primary, Capitol Hill-focused event during which delegations from across the country visit with their Members of Congress (March 5th and 6th). “Philanthropy Week” seeks to offer those participating in FOTH a comprehensive and impactful Washington experience. It will add a unique element of education and relationship-building for leaders of both community and private foundations.
“Philanthropy Week” will also include the Alliance for Charitable Reform Summit for Leaders, the half day informational seminar that has gained in popularity and prominence over the past several years. This year’s Summit will take place on the morning of March 5th.
And, early in 2014 we’ll be announcing exciting new Washington D.C.-based events for the calendar.
Also, this year we’ve secured a fabulous hotel in a central, vibrant location. We will send more details about the opening of the hotel block and registration in the beginning of January.
Now, more than ever, we must protect and enhance philanthropy in America. Philanthropy has been a pillar of our society from the time of our founders. Let’s continue to educate federal lawmakers on the imperative role of philanthropy before proposals that could alter tax policy and uproot the sector’s ability to advance the public good take hold.
“Philanthropy Week” will bring the entire sector together to demonstrate the vital role of charitable giving and its inextricable link to thriving communities. We’ll tell policymakers and the public about philanthropy at work in the daily lives of their constituents – from providing shelter and feeding the hungry to expanding access to education and health care to creating jobs, strengthening the economy and fostering innovation.
In the coming months we will also be providing you with a series of educational and preparatory communications, including webinars in January and February.
Together, we will educate our country’s leaders about philanthropy and ensure it continues to improve lives, solve problems and brighten futures.
We look forward to seeing you in March!
Budget agreement passed
Last week we shared with you some details about the budget agreement reached by Senate Budget Committee Chairman Patty Murphy (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI-1).
Last night the Senate passed the agreement, and the President is expected to sign it into law. Be on the lookout for a statement about the agreement from Council president & CEO Vikki Spruill after it is signed!
The agreement sets out government spending levels for fiscal years 2014 and 2015, and replaces a portion of the across-the-board spending cuts known as “sequester” for both military and non-military spending. In order to partially pay for a higher federal budget, the agreement increases the “September 11” security fee that airline passengers pay when they purchase tickets, and requires civilian federal workers to contribute more towards their pensions.
The agreement doesn’t touch any charitable giving incentives in the tax code or increase taxes, and some in the nonprofit world are breathing a sigh of relief about the deal. Steve Taylor, senior vice president of public policy at United Way Worldwide, a Charitable Giving Coalition member, was quoted expressing his relief. “With sequestration, we felt like our hands had been tied around our advocacy with Congress. With this deal, we may still have one hand tied behind our back, but at least we have one is free. We really are hoping that this is a start to getting back on track, so that we can do our work,” Taylor said.
Tax Policy Happenings
Koskinen confirmed as IRS Commissioner
Just this morning, the Senate voted to confirm John Koskinen as the next IRS Commissioner. Koskinen served as a deputy director in the Office of Management and Budget during the Clinton Administration and is a former head of Freddie Mac. He is known in Washington for his ability to step into tough situations and turn them around. He will replace current Acting Commissioner Danny Werfel, who will step down at the end of the month.
Senator Baucus nominated ambassador, as tax reform discussion drafts continue
On Friday, President Obama officially announced the nomination of Senator Max Baucus (D-MT), long-standing Chairman of the Senate Finance Committee, to be Ambassador to China. This will undoubtedly affect the momentum for comprehensive tax reform in 2014.
Senator Baucus is continuing to release tax reform discussion drafts, including a draft that consolidates tax breaks for energy efficiency. The Senator is gathering input on his tax reform discussion drafts through January.
So far, we have interest in the tax administration draft, which proposes requiring all tax-exempt organizations to electronically file their Form 990s. We are seeking feedback on what this 990 e-filing requirement would mean for Council members, and would value your opinion. Please contact our policy analyst Katherine LaBeau if you would like to weigh in.
Little progress on tax extenders
The IRA charitable rollover is one of dozens of “tax extenders” set to expire at the end of 2013. In years past, an extenders bill has often been passed the following calendar year and applied retroactively. This year leadership of the tax writing committees in both the House and Senate has expressed a preference for only taking up the extenders in the context of comprehensive tax reform. That said, Senate Majority Leader Harry Reid (D-NV) tried to push a package of extenders through the Senate before they departed for the holiday break, but the move was blocked by Senate Republicans. And as we’ve reported in past weeks, Senator Chuck Schumer (D-NY) introduced a stand-alone IRA charitable rollover bill, the Public Good IRA Rollover Act, which would expand the rollover and make it permanent law.
We know this provision is particularly important to our community foundation members, and we will continue to follow policy developments on the IRA charitable rollover closely.
IRS 501(c)(4) political activity regulations
Over the past few weeks, we’ve been covering the new Internal Revenue Service (IRS) proposed regulations on the political activity of 501(c)(4) organizations. The regulations create a more bright-line rule about what political activities do not qualify as promoting social welfare for 501(c)(4)s. Currently the IRS applies a “facts and circumstances” test to make this determination.
The IRS is soliciting public comments on the proposed guidance. Of particular interest to Council members, the IRS seeks comments on whether similar guidance should be developed to define political activities for other types of tax-exempt organizations. Comments are due by February 27, 2014, and may be submitted electronically via the Federal eRulemaking Portal.
We continue to scrutinize the proposed regulations closely, particularly the potential implications for 501(c)(3) organizations. If your organization plans to comment, or if you wish to express your views on the rules for the Council’s consideration, please contact Katherine LaBeau.
New IRS publications for exempt organizations
Are you up-to-date with your IRS guidance publications? This fall, the IRS revised two publications relevant to tax exempt organizations. Our Legal team encourages you to check out these documents to make sure your organization is using the most recent IRS guidance. Publication 526, Charitable Contributions was released on November 12, 2013, and Publication 557, Tax-Exempt Status for Your Organizationwas released on December 11, 2013.
Thune-Wyden Letter on the Charitable Deduction
As we’ve reported, Senators John Thune (R-SD) and Ron Wyden (D-OR) are circulating a letter to Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), the Chairman and Ranking Member of the Finance Committee, urging them to preserve the full value of the charitable deduction as they make decisions on tax reform. The letter is still circulating in the Senate for additional signatures, and we’re pleased to report that interest in the letter is gaining momentum every day.
We want to extend a sincere “thank you” to over 230 of our members and our colleagues at regional associations who have already contacted their Senators and asked them to sign on to the letter. We know your outreach makes a difference. We’ll continue to report on this letter, including the list of signatories, when Senators Thune and Wyden make that information public.
Other News in Philanthropy
The Nonprofit Revitalization Act of 2013 was signed into law by Andrew Cuomo, the Governor of New York, last night. The Act includes substantial reforms to enhance governance and oversight of nonprofit organizations in the state, and will “make New York a model for nonprofit governance and oversight,” said Attorney General Eric Schneiderman.
Attorney General Schneiderman convened a Leadership Committee on Nonprofit Revitalization, consisting of 32 nonprofit leaders, that provided the recommendations behind the law. The law will help to ensure the sound financial management of nonprofits, help prevent conflicts of interest, strengthen the attorney general’s enforcement power, mandate board independence, and enhance good governance practices. It is also intended to promote efficiency and reduce unnecessary burdens for nonprofits in the state of New York.
David Etzwiler Washington Post op-ed
New chief executive of the Siemens Foundation, David Etzwiler, had an op-ed featured in The Washington Post this week. Etzwiler talks about where his love of philanthropy stems from: “We were constantly challenged in my family to think hard about social issues. My parents modeled how to build big visions, rally teams and drive results in the organizations they led,” he said. Etzwiler says that he is “excited to be at the front edge of making great philanthropy even better and to marry the passions of the employees and the great business assets to the biggest issues of today.”
Impact of a deduction cap on blue states
Howard Husock of the Manhattan Institute previewed his new study on blue state charity in Forbes this week. The study looks at the Administration’s proposed 28 percent cap on the value of the charitable deduction, and the impact this policy would have specifically in primarily Democratic states. As Husock explains, “[t]he new top tax rate [of 39.6 percent] means that the most affluent households will be paying more in taxes and have less disposable income for charitable donations, while the proposed deduction cap hurts the marginal incentive to give.”
Husock’s study finds that the cap would disproportionately affect those in high tax brackets, who primarily live in northeastern, mid-Atlantic, Great Lakes states, or California. He believes that decreasing the tax incentive to give will impact charities in those states significantly. “If blue state donors would be hit, it stands to reason that so would blue state not-for-profit organizations—including universities, hospitals and museum—that rely on philanthropic support,” Husock says.
Rebutting critiques of the sector
As we reported last week, several op-eds have appeared recently that question whether all nonprofit organizations deserve to benefit from the charitable deduction. Last week we shared Robert Reich’s blog post in his personal blog, in which he takes issue with how our tax laws define what is “charitable” and suggests that organizations that help the poor are more “charitable” than cultural institutions or universities, for example. This week, Kevin Williamson of the National Review took aim at Reich’s post. Williamson passionately argues that charities aren’t the only institutions that support “frivolities” like art and cultural pursuits—governments do it too. And, his argument goes, progressives who try to curb excess spending and influence of the wealthy by limiting charitable giving incentives, for example, do so out of envy, rather than the pursuit of equity.
Other voices, particularly from the right, have begun to respond as well. Ben Boychuk’s op-ed in the Sacramento Bee echoes much of Williamson’s argument that progressive calls for limiting the scope of the nonprofit sector to organizations that serve the poor are rooted in envy. Boychuk also believes that “[g]overnment cannot, and should not, do everything. There are a whole host of social functions in this relatively free, mostly open, more or less self-governing society simply better left to private associations – or put more simply, you and me.” The editors of the Washington Examineralso published an op-ed in opposition to caps that would limit the charitable deduction to specific kinds of charities. They laud Senators Thune (R-SD) and Wyden (D-OR), along with the letter’s other signatories, for speaking out to oppose limits to the deduction.
Daniel Pinkerton of Minneapolis wrote into the Minneapolis Star Tribuneto voice his concern over Reich’s piece. Reich “assumes that people who give money to, say, a symphony orchestra or a theater are doing so in order to hobnob with their friends. He assumes this because he also assumes that there is no actual worth in pursuing or attending the arts,” Pinkerton says. “These are both mighty big assumptions to make. Donors could just as easily be giving because they feel that exposure to good music will make a difference in people’s lives.”
Snapshot Holiday Schedule
Washington Snapshot will not be published on December 27th and January 3rd in light of the Christmas and New Year holidays. Look for us again on Friday, January 10th!
Keep in Touch!
Please feel free to reach out to any of us on the public policy team with any comments or concerns, or to share an issue, article, or op-ed you’d like to see covered in a future Washington Snapshot.
