Washington Snapshot - June 17, 2016

In response to the horrific attacks in Orlando, Council President and CEO Vikki Spruill and Board Chair Sherry Magill penned an open letter reaffirming the Council’s commitment to advancing diversity, equality, and inclusion in and beyond the philanthropic field, and to continue serving as a resource to the foundations who have mobilized to aid those impacted by the horrific attack.

Our thoughts remain with the victims, families, and those rallying to support them.

News from the Hill

Philanthropy Asks Congress to “Grow Philanthropy Now”

This week, the Council on Foundations—in partnership with our colleagues at the Philanthropy Roundtable and Independent Sector—engaged dozens of philanthropic and charitable organizations to join us on the Hill and speak out on the importance of philanthropy in communities across the country.

Over the course of our meetings with more than 50 Congressional offices, we discussed current legislation that would strengthen our sector’s ability to build healthy and thriving communities, including: the CHARiTY Act (S. 2750), the Grow Philanthropy Act (H.R. 4907), the Private Foundation Excise Tax Simplification Act (H.R. 640), and the Public Good IRA Rollover Act (S. 1159). While we don’t expect a great deal of movement on these bills in this Congress this year, getting our Members of Congress on board right now demonstrates their crucial support as we move forward toward next year’s anticipated tax reform.

Senate Finance Committee, Chairman Orrin Hatch (R-UT), offered his support for the philanthropic and charitable sector in a statement for the Congressional record on the need to make progress toward passing the CHARiTY Act, stating:

These provisions, taken together, will help advance the causes of worthwhile charities by allowing American taxpayers to more freely donate their own resources. That is a good thing in my book, and that is why I intend to help my colleagues on the Finance Committee process the CHARITY Act and enact it into law.

Executive & Regulatory News

Learning Opportunity: How Broadband Access Supports Local Priorities

The National Telecommunications and Information Administration (NTIA) – an agency of the US Department of Commerce – will begin a nine-part series of webinars next month to gather input on their Community Connectivity Initiative. This program – which is part of the White House’s broader ConnectALL Initiative – will look to develop tools to support stakeholders from the public, private, and philanthropic sectors interested in broadband planning. The Council recently hosted a webinar on the ConnectALL Initiative and philanthropy’s role in promoting equitable internet access as a path to economic, workforce, and community development. The NTIA also presented on these efforts at the Council’s 2016 Annual Conference.

The NTIA webinar series will convene stakeholders to discuss the role that broadband plays in achieving local priorities. This input will specifically look to develop and provide communities with a comprehensive self-assessment tool and report to enable communities to better understand how their current policies and programs support broadband connectivity; an index or comparative community connectivity score; technical assistance with broadband planning and implementation; and access to an expanding community of practice.

The Council engages with the NTIA, as well as more than twenty other Federal agencies and departments, through the Federal Liaisons program of our Public-Philanthropic Partnership Office. You can learn more about the work of the Federal Liaisons through our website or by contacting Stephanie Powers, Senior Director for Policy & Partnerships.

Summit Explores Potential of Pay-for-Success in Education

The Department of Education hosted a Pay-for-Success Summit last week, bringing together policymakers, foundations, nonprofits, and academics to discuss the potential applications of emerging tools to finance social services. As readers may know, a pay-for-success program seeks private investors to fund the upfront cost of a novel or innovative social service. Over the course of the project, it is reviewed by independent evaluators. If pre-determined success metrics are met, the private investor is repaid by the responsible government agency with interest. Philanthropic capital can be deployed in a number of ways: as an investment in the project, as a guarantee to attract other investors, as operating support for service providers, or as grants to fund evaluation, to name a few.

Only ten pay-for-success contracts have been executed in the United States to date, but more than 30 are in development. A number of those currently underway relate to early childhood education, including the Salt Lake County pre-school initiative which holds the distinction of being the first such contract in the US to meet its metrics and make a success payment. 

Language in the recently adopted Every Student Succeeds Act (ESSA) promotes further exploration of the tool at the federal level, where it enjoys broad bipartisan support. The Department of Education has also indicated that they intend to explore how the model could be used in adult continuing and technical education, English language instruction, and special education, in addition to expanding on work with pre-school students. The Department indicated that they will soon announce a number of funding competitions to support feasibility studies in communities around the country, generally the first step in designing new pay-for-success deals.

Council members can contact John Cochrane, Associate Director, Social Innovation, for more information on opportunities to engage in these and other pay-for-success initiatives.

Trending in Legal Affairs

IRS Holds Meeting to Discuss Recommendations from the Sector

The past two weeks, the Legal team has been on the road from Portland to Pennsylvania. Sometimes on the road we are asked to teach, other times we are in the audience to listen. 

Last week the Tax Exempt and Government Entities (TE/GE) division of the IRS held two meetings—one in Washington D.C. and one in Dallas, TX. The purpose of these meetings were to discuss the recommendations of the Advisory Committee on Tax Exempt and Government Entities (ACT). These recommendations are meant to inform the activities and priorities of the TE/GE division in the coming year.

The recommendations range across a spectrum of issues related to tax-exempt and government entities, but the specific recommendations pertaining to exempt organizations focus on long-range planning (beginning on page 90 of the report) for the exempt community. Some highlights of these include:

1. Provide clarification for unclear areas of the law or regulatory code. In our conversations with TE/GE, they have acknowledged that certain provisions either may not be as clear as they could be, or the passage has time has raised questions of their relevance today—but they want input from the sector to begin identifying which provisions those are. If you struggle with unclear regulations or provisions, we urge you to tell us about those.
2. Recognize donor advised funds (DAFs) as a priority area for further review and clarification of regulations governing this giving tool. The IRS and Treasury are interested in gathering information about how community foundations use and manage donor advised funds. If your foundation would like to share a success story or a particular challenge you have had due to existing law and regulations, please let us know.
3. Focus on compliance issues for international and cross-border grantmaking by foundations and banks making the transfers.
4. Acknowledgement that the IRS exempt organization team needs sufficient staff to carry out their responsibilities effectively.
5. Dedicate efforts to do more in helping exempt organizations with compliance—including providing tools and resources.
6. Dedicate a concerted focus toward securing and sharing data with the public and state charities officials.

We encourage you to reach out to us with your thoughts and input in response the above recommendations. The Council is here to engage with the IRS on behalf the sector, so your experiences and feedback is crucial for us to provide TE/GE with the most useful information as they develop a plan for moving forward. You can reach us at legal@cof.org, or 202-991-2225.

Access to the Council’s legal team is a valuable member benefit. Council attorneys are available to discuss your legal questions and to provide legal information by telephone, email and through our various publications and newsletters. This information is intended for educational purposes and does not create an attorney-client relationship. The information is not a substitute for expert legal, tax or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.

Philanthropy News and Op-Eds

Giving USA Releases 2016 Report

This week, Giving USA released its newest report on charitable giving during the 2015 year. The report found that giving in the U.S. (from all sources, including: individuals, bequests, foundations and corporations) totaled around $373 billion last year. This is an all-time high.

Giving by foundations and corporations also increased. Foundation giving totaled around $58.5 billion, and made up 16% of total giving last year—a 6.5% increase from 2014. Giving by corporations followed a similar trend with a total of approximately $18.5 billion—a 3.9% increase from 2014.

More highlights from this year’s edition of Giving USA are available online now.