Washington Snapshot - June 20, 2014
News from the Hill
Senate Tax Reform Hearings
As we told you last week, Senate Finance Chairman Ron Wyden (D-OR) and Ranking Member Orrin Hatch (R-UT) have announced three hearings on tax reform that will take place this summer. Chairman Wyden also stated this week that he hopes that comprehensive tax reform will occur before August 2015.
The first hearing, now scheduled for 10:00 AM ET on Tuesday, June 24th will look at whether the tax code should play a role in reducing the amount of student loan debt that students accrue. The other two hearings—on taxpayer protection and modernizing the corporate tax code—have not yet been scheduled.
Lost Lois Lerner E-mails
Many members of Congress are fuming over an IRS revelation last week that the agency had lost tens of thousands of e-mails related to the investigation of the Tea Party targeting controversy. The IRS says that the e-mails of up to six officials involved in the scandal have been erased, including the official at the center of the controversy, former Director of the IRS Exempt Organizations Unit: Lois Lerner.
Commentators are asking: how can e-mails be lost in 2014? Some Republican Congressmen have dubbed it an IRS cover-up, while the IRS insists that the e-mails were lost because of a combination of outdated technology with inadequate archiving capacity and hard drive crashes. IRS Commissioner John Koskinen has been subpoenaed to testify before the House Oversight and Government Reform Committee about the matter on June 23rd.
Social Impact Bond Act Introduced in House
On Wednesday, Congressmen Todd Young (R-IN-9) and John Delaney (D-MD-6) introduced the Social Impact Bond Act (H.R. 4885). Social impact bonds (SIBs), also known as Pay for Success, are public-private partnerships that harness private sector investments to scale up proven social programs, with payments made by government if, and only if, outcomes are met or exceeded.
The bill would offer these incentives for state and local governments to pursue SIBs: the federal government would pay up to half the cost of a feasibility study, contract with state and local governments to pay for an independent evaluation, and pay a pre-negotiated amount above the cost of implementation if outcomes are achieved. While past Presidents’ budgets have proposed a Pay for Success Incentive Fund at the Department of Treasury with a similar goal of spurring SIB activity at the state and local levels, the Social Impact Bond Act is the first federal legislative attempt to do so.
This announcement comes on the heels of what should be a big week for impact investing public policy. Yesterday and today, the Social Impact Investment Taskforce, announced at last year’s G8 Summit, meets in London to share policy recommendations to catalyze the development of the impact investment market.
This coming Wednesday, the US National Advisory Board to the Social Impact Investment Taskforce is expected to release their recommendations.
We will share the report with you in next week’s Snapshot. In the meantime, if you have any comments or questions, you can contact Laura Tomasko, who leads the Council’s impact investing work.
NOTICE Act Introduced in Senate
In May, Senator Dan Coats (R-IN) introduced the NOTICE Act (S. 2351), which would require the IRS to notify charities at least 60 days before their tax exempt status would be automatically revoked if they fail to file their annual Form 990s for the third consecutive year. It would also allow the IRS to retroactively reinstate a charity’s tax exempt status if the organization did not receive this required notice, and subsequently filed its Form 990 for that year.
The Council will continue to monitor the bill and provide updates on future developments.
Executive & Regulatory News
Political Activity Rules Could be Expanded, Commissioner Says
IRS Commissioner John Koskinen suggested in an interview this week that the second draft of the controversial regulations on the political activity of 501(c)(4) social welfare organizations could be broadened to include labor unions and trade associations.
During a speech for the Center for Public Integrity, Koskinen said of the new regulations, expected to be released sometime early next year: “There are three issues: What should be the definition, to whom should it apply and how much … can you do before you jeopardize your exemption? The next resolution will differ from the first draft because it will deal with all three questions.”
As we mentioned in May, the IRS announced that it would scrap the proposed regulations—which received a record-breaking number of comments, mostly negative—and start over with a new draft.
Philanthropy News and Op-Eds
2013 Giving USA Numbers Released
On Tuesday of this past week, The Giving Institute and the Lilly Family School of Philanthropy at Indiana University released their annual Giving USA report – an analysis of giving trends for the prior year.
According to the report, contributions totaled at $333.17 billion in 2013 with 15% coming from foundations, 72% from individuals, 8% from bequests, and 5% from corporations. In aggregate, total giving in 2013 increased by 4.4% from 2012, and giving from foundations increased by 5.7%. As a percentage of GDP, charitable giving accounted for 2%. Although contributions are not quite yet back to pre-recession levels of 2007, the amount of giving in 2013 was as high as it has been since that point.
To see more from Giving USA 2014, you can purchase a copy of the full report or download a free version of the highlights from the report from the Giving USA website.
Form 990 Data Availability
A lawsuit has been filed against the IRS by Public.Resource.Org, an open records group that aims to require the IRS to make all Form 990 data readily available for free. Currently, the IRS publicly releases a limited amount of information that nonprofits provide in their Form 990s, including sources of financial support, assets and revenue, spending on overhead and programs, and compensation to top-paid executive officials. The information that is publicly available, however, is not machine-readable or easily searchable. Furthermore, to access an entire Form 990, a member of the public must subscribe to a database like GuideStar.
The Aspen Institute’s Program on Philanthropy and Social Innovation has been a leader on this issue through The Nonprofit Data Project. Aspen has convened leading figures in the field of nonprofit research and data since 2007 to discuss and assess the nonprofit data collection system in the U.S. A report that they issued in January 2013 concluded that widely-available, usable Form 990 data would benefit the sector, researchers, and the public through increased transparency, reduced fraud, improved information accuracy, innovation and business opportunities, and understanding community resources in relation to community needs.
Can Philanthropy "Fix" Democracy?
In an op-ed in The Chronicle of Philanthropy, Gary Bass and Katherine Blair of the Bauman Foundation pose that philanthropy has a key role to play in preventing the redistricting of voting districts. The authors view redistricting as a voting rights issue—a matter of basic justice and fairness that makes our election system less democratic and contributes to the partisan divide.
“Changing redistricting practices could be one of the most important steps we take to make sure the federal government starts working again,” they say. Voting districts that are not representative result in policies that do not accurately reflect the wishes and needs of those within that district, they say. Bass and Blair argue that philanthropy can help restore the democracy within our election system by funding initiatives that limit elected officials’ discretion when they undertake redistricting efforts.
