Washington Snapshot - October 16, 2015

Due to the Columbus Day holiday and this week’s Congressional recess, today’s edition of Washington Snapshot will be slightly abbreviated.

News from the Hill

Upcoming Philanthropy Caucus Briefing

As our readers know, the Council on Foundations has been very active in reviving the Philanthropy Caucuses in the House and Senate. Next Wednesday, the Philanthropy Caucuses will participate in a briefing on Capitol Hill—organized in partnership with Independent Sector—that will highlight opportunities, such as #GivingTuesday, that promote and encourage charitable giving.

The briefing will also emphasize the importance of taking action on charitable “tax extenders” before the year’s end by featuring speakers from the philanthropic and nonprofit sectors whose work is supported directly by these provisions.

The event will feature remarks from two of the Caucus co-chairs, Senator Richard Burr (R-NC) and Representative Pat Tiberi (R-OH-12), as well as from Representatives Tulsi Gabbard (D-HI-2), and Debbie Dingell (D-MI-12).

If you are in the DC-area and are interested in attending, please RSVP here.

Uncertainty for Speaker of the House Persists

With no obvious front-runner following Kevin McCarthy’s (R-CA-23) withdrawal from the race for Speaker of the House, the wheels continue to spin for finding a candidate who can secure support from the 218 votes necessary. There is still speculation as to whether Representative Paul Ryan (R-WI-1) will enter the race, though he has reiterated his intent to remain Chairman of the Ways and Means Committee.

Stay tuned for further updates!

Happening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

Employment Law Issues on Local and State Policy Tables

Local and state policymakers increasingly are legislating in the areas of wages, benefits, and workplace safety and are applying new standards to nonprofit and foundation employers.

The Universal Paid Leave Act, introduced last week and reportedly on a fast track for prompt passage, would provide 16 weeks of paid family and medical leave for covered employees in Washington, DC. The program would be funded initially through a one-percent payroll assessment on all DC employers with the exception of the federal and District governments. If enacted, employees could trigger benefits after working six month for a covered employer, half the period for qualifying for benefits under the federal Family and Medical Leave Act.

Several cities have adopted local minimum wage hikes above the federal rate of $7.25 per hour, and the application to nonprofit employers has been inconsistent. Last month, Los Angeles County Supervisors rejected a proposal to exempt smaller nonprofits from a planned increase in the minimum wage to $15 per hour by 2021. The proposed exemption would have applied to nonprofits with fewer than 25 employees, and to seasonal workers and workers in job-training programs. A similar exemption was approved by the Los Angeles City Council. Higher local minimum wages have also been enacted in Seattle and New York City.

The state of Missouri, on the other hand, has taken a different approach to minimum wage standards, enacting a law prohibiting local municipalities from enacting higher rates within their jurisdictions. The move effectively ends wage hike efforts in Kansas City and this week a state court struck down a St. Louis wage hike based on the new statute.

Nonprofit employers are also targeted by policymakers for additional responsibilities that are not equally applied to for-profit employers. New York’s Governor is expected to sign legislation requiring nonprofits receiving at least 50 percent of their revenues from governments to establish violence prevention programs in their facilities. The bill extends only to nonprofit contractors and grantees the requirement that currently exists for public sector employers. Earlier this year, Pennsylvania enacted a law requiring employees and volunteers who work with children to obtain criminal background checks and child abuse clearances.

Philanthropy News and Op-Eds

OMB Director Discusses the Future of Pay-For-Success

At an event hosted by the Urban Institute, OMB Director Shaun Donovan discussed the future of pay-for-success funding and his efforts to promote this model at the Federal level. Pay-for-success contracts seek private investment to pay for social services, often with philanthropic support. The investors are repaid by a government agency, with a return, if the funded program delivers on specific benchmarks. The government funds its payment through cost savings generated by the positive outcome. The model is touted as an innovative way to provide scalable funding to service organizations, and it has garnered support from across the political spectrum. Our readers will recall that Director Donovan also spoke about pay-for-success and place-based initiatives during this year’s Philanthropy Week in Washington.

Donovan held out efforts to use pay-for-success and other data driven policy projects to take on issues as diverse as veterans homelessness, early childhood education, and rising healthcare costs. For its part, the Urban Institute has recently launched an initiative, with support from the Laura and John Arnold Foundation, to study the possibility and promise of the model. Though only seven pay-for-success deals have been launched in the US to date, proponents are hopeful that the early experience will lead to growing interest in the approach.

One early instance of success with this model occurred in Salt Lake County. Mayor Ben McAdams spoke about an early-childhood education intervention—funded through pay-for-success—which succeeded in expanding access to preschool and reducing the number of students assigned to special needs classes later in their educations. Building on that success, the County is looking to launch several new pay-for-success programs centered on maternal and child health and criminal justice recidivism. The Community Foundation of Utah is supporting these efforts.

Despite the optimism, some speakers at the event sounded notes of caution. Antony Bugg-Levine, CEO of the Nonprofit Finance Fund (NFF), suggested that there are still relatively few nonprofits ready to take on the demands of a pay-for-success project. NFF serves as a consultant for nonprofits and as a financial intermediary on pay-for-success projects. It should be noted that one of the first US pay-for-success projects, the Riker’s Island project, recently ended having failed to achieve its target outcomes.

For more information about pay-for-success, and how philanthropy is involved, contact John Cochrane, Associate Director for Social Innovation.

Legal Battle Highlights Unique Challenges to Impact Investing

The Wall Street Journal this week reported on the legal hurdles faced by the Abell Foundation stemming from their impact investing program. The foundation “invests directly in companies working on sustainable energy projects and co-owns more than a dozen patents,” according to the report. One of those patents—for components used in hybrid cars—is now the subject of several lawsuits with Ford and Hyundai, as well as a third with Toyota that has been settled. The auto manufacturers are challenging Abell’s patent, and attempting to get out of royalty payments that amount to roughly $100 for every hybrid sedan the companies sell in the United States.

Thus far the Foundation has been successful defending its patent in court, but the incident highlights one of the risks of direct investments in technology companies. Despite the challenge, however, Abell’s President Robert Embry still encourages other foundations to pursue impact investing, provided they have the capacity to evaluate projects effectively. “It’s increased the scale of what we can do,” he said. “We think what we’re doing is important.”