Washington Snapshot - September 16, 2016

News from the Hill

Ways & Means Subcommittee Holds Hearing on University Endowments

As our readers will recall, we reported last week that the Ways and Means Oversight Subcommittee was set to hold a hearing to scrutinize college and university endowments this week.

The hearing, featuring testimony from representatives of the Cato Institute, Berea College in Kentucky, Washington College in Maryland, American Institutes for Research, and the Urban Institute. Chairman Peter Roskam (R-IL) continued to express concern for rising student tuition costs and reiterated his opinion that colleges and universities should be doing more with their endowments to offset these costs. Though, he did acknowledge that a “one-size-fits all policy solution” may not be the answer and, following the hearing, shared in an exchange with Vice President of Public Policy, Hadar Susskind, his willingness to engage around this issue as we approach tax reform.

Our policy team will remain engaged with Chairman Roskam, as well as with Congressman Tom Reed (R-NY) who continues his work to draft his Reducing Excessive Debt and Unfair Costs of Education (REDUCE) legislation—which envisions that colleges and universities with endowments larger than $1 billion must distribute a portion of the investment income from endowments be used as tuition relief for students. Some recent speculation also suggests that, when introduced, this bill could include Form 990 disclosure requirements to collect information on the compensation of investment managers of these endowments.

Trump Shares Additional Insight into his Tax Plan

Yesterday, Republican presidential candidate Donald Trump shared additional details about his Tax Plan. Our policy team has identified several items in this proposed plan that could impact charitable giving and the philanthropic sector, including:

• A cap on itemized deductions,
• An increase to the standard deduction, and
• Elimination of the estate tax.

A cap on itemized deductions would likely impact the way individual taxpayers choose to use the charitable deduction when filing their taxes, and an increase to the standard deduction would decrease the number of middle class Americans who might otherwise take advantage of the charitable deduction. Eliminating the estate tax would likely affect the number of donors who make charitable bequests from their estates.

The Council has shared our 2016 Philanthropy Platform—detailing our policy priorities—with both the Trump and Clinton campaigns, and will continue to monitor new developments to their tax proposals. Additionally, we will continue our work to engage with whichever candidate is elected during the transition process to ensure that philanthropy is a key stakeholder in federal policymaking.

Senate Passes Bill to Improve Water Infrastructure

Yesterday, the Senate passed the Water Resources Development Act of 2016 (S. 2848)—which would authorize nearly $10.6 billion for water infrastructure projects across the country.

If passed by the House, this bill would make investments in harbor dredging, maintenance of locks and dams, flood control measures, ecosystem restoration, and other water-related programs. Notably, this bill includes a package of provisions that would specifically address the drinking water crisis in Flint, Michigan, and implement preventative measures that would help mitigate the risks of a similar situation in communities across the country.

Koskinen Impeachment Hearing Postponed

Politico reported on Thursday that House Freedom Caucus Chairman Jim Jordan (R-OH) and Judiciary Committee Chairman Bob Goodlatte (R-VA) have reached a deal that would postpone the vote to impeach IRS commissioner John Koskinen. The Chairman will testify before the judiciary panel next week but an impeachment vote will not occur before the elections.

Trending in Legal Affairs

DAFs: Appointed or Designated Advisors & Their Advisory Privilege

What to do when an organization sets up a DAF, but designates a particular individual to make grant recommendations – that was the question a community foundation faced this week. In this case, the advisor wanted to fund a project of a private non-operating foundation; did Expenditure Responsibility need to be exercised?

To learn more about this issue, you can visit our blog for the full legal explanation.

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.

Happening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

Voting Rights Under Attack in the States

New voting restrictions in at least 15 states, and confusion caused by incomplete media coverage of litigation in at least 10 more, could discourage voting by many individuals served by foundations and nonprofits.

In recent weeks, judges have prevented implementation of unconstitutional voting laws in Alabama, Georgia, Kansas, Michigan, North Carolina, North Dakota, Texas, Wisconsin, and elsewhere from taking effect. Many of the new voting laws were blocked in part because of the motivation behind them: racial discrimination to gain a partisan advantage. A three-judge panel unanimously prevented enforcement of North Carolina’s new law "that restricted voting and registration in five different ways," deliberately “target[ing] African Americans with almost surgical precision” in an effort to suppress black turnout at the polls. A federal judge found that new voting laws in North Dakota impose “a disproportionately negative impact on Native American voting-eligible citizens.” The Fifth Circuit Court of Appeals agreed with a trial judge’s findings that a Texas voter-ID law “burdens Texans living in poverty” and had a discriminatory effect against African-American and Hispanic voters.

The court actions preserve voting rights, but there is concern that the uncertainty caused by the on-again, off-again restrictions will have the effect of discouraging the targeted voters – people of color and low-income individuals – from exercising their constitutional rights. Community leaders have a unique opportunity to help ensure that everyone who wants to vote gets to vote.

An immediate, nonpartisan step all can take to help counter the confusion about current election laws is to sign up today to participate in National Voter Registration Day that takes place on September 27. This single day of coordinated field, technology, and media efforts is designed to create pervasive awareness of voter registration opportunities – allowing volunteers to reach tens of thousands of voters who are otherwise out of reach. The special registration day is a nonpartisan effort by the National Association of Secretaries of State, Nonprofit VOTE, and hundreds of other organizations across America—including the Council on Foundations and the National Council of Nonprofits.

Read “In a Year of Intimidating Voters, It’s Never Been More Urgent for Nonprofits to Get Out the Vote,” an op-ed in the Chronicle of Philanthropy by Tim Delaney, President and CEO of the National Council of Nonprofits, for more information about these current voting rights challenges and the importance of the 2016 elections to the work of foundations and nonprofits.

Philanthropy News and Op-Eds

Ford Foundation Moves to Integrate Disabilities into Inequality Focus

In a blog post this week, Ford Foundation President, Darren Walker, made clear a desire to “integrate an inclusive perspective [on disabilities] across all of our grantmaking.” Disabilities had been left out of Ford’s grantmaking focus on inequality, a fact that multiple individuals and organizations within the sector were quick to point out.

Walker closed, writing, “For my part, I am hopeful. By demanding and expecting more of ourselves and our institutions, we can deliver more for others. By listening more to each other, we can continue to forge a more just way forward, together.”

To read the full post, check out the Ford Foundation’s website.

An Objective Comparison of the Clinton and Trump Foundations

A recent piece in GuideStar’s Blog provides an objective analysis comparing the Clinton and Trump Foundations.

Authored by GuideStar President and CEO, Jacob Harold, the piece points out some key distinctions:

• The Trump Foundation is legally considered a private, non-operating foundation—whereas the Clinton Foundation is legally considered a public charity.
• The Clinton Foundation has a staff of 486 employees, whereas the Trump Foundation has no employees.
• The Clinton Foundation discloses information and metrics about its programs, beyond what the law requires, earning it GuideStar’s top transparency rating of platinum. The Trump Foundation provides only its Form 990, providing no additional insight into operations or outcomes of its programs.