LEGISLATIVE UPDATE
Barbara Worth
April 2010

Nonprofit Group Comes Under Fire for Housing-Loan Program
The Rainy Day Foundation, a nonprofit organization in Washington that helps needy homeowners avoid foreclosure, is now under federal investigation. The government says the charity helped lenders make high-risk loans, leaving the government responsible if the loans go bad. Federal officials argue that the foundation could be hindering federal efforts to protect consumers from mortgage lenders that make too many risky loans.
The Washington Post, April 19, 2010
http://philanthropy.com/blogPost/Nonprofit-Group-Comes-Under/23239/

Foundation Giving Expected to Remain Flat in 2010
According to the Foundation Center, last year's decline of more than 8 percent by the nation’s grant makers signified the steepest drop ever tracked by New York group. Grant dollars fell from $46.8-billion in 2008 to $42.9-billion in 2009. On the other hand, the decline in giving totaled less than half of the 17 percent loss in foundation assets recorded in 2008. Many foundations cut their operating expenses last year or drew more heavily than usual from their endowments to shore up giving.
Debra E. Blum, The Chronicle of Philanthropy, April 16, 2010
http://philanthropy.com/article/After-Last-Year-s-Decline/65153/

Watchdog Group Sues University and Foundation Over Palin Fee
A nonprofit group has sued California State University Stanislaus, in Turlock, and its foundation to force disclosure of information related to former Alaska Gov. Sarah Palin's confidential speaking fee at the university. Citing a privacy clause in Palin’s contract and a state law that protects public university foundations from the Public Records Act, the CSU Stanislaus Foundation has refused to say how much it will pay Palin to speak at a June 25 fundraiser. Californians Aware, a Sacramento nonprofit, argues that the foundation and university are so intertwined that the foundation should also have to comply with the Public Records Act. The lawsuit states that three university officers, the president and two vice presidents, all vetted the Palin paperwork.
Nanette Asimov, The San Francisco Chronicle, April 17, 2010
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/16/BARL1D00G0.DTL

Obamas Donated 6% of Income to Charity
President Obama and his wife, Michelle, last year donated 6 percent of their income of $5.5-million to charity, including $1.4 million garnered from his Nobel Peace Prize which he gave to ten charities. The White House alleged that the federal tax code states "that if the recipient of the Nobel Prize directs the Nobel Committee to donate the prize money directly to charity, as the president did, the recipient does not have to recognize the prize as income on his federal income tax return." Additionally, the president is not permitted to claim a charitable deduction on the value of the prize since it is not included in his income.
Grant Williams, The Chronicle of Philanthropy, April 15, 2010
http://philanthropy.com/blogPost/Obamas-Donated-6-of-Income-to/23139/

Congress Could Consider Creating New Category of Organization, Expert Says
According to Russell Sullivan, staff director for the Senate Finance Committee, as Congress eventually considers making broad changes to the nation's tax structure, proposals could emerge that would take into account a "blurring of the lines" in recent years between nonprofit organizations and for-profit companies. This may lead to some unique proposals to establish “for-benefit corporations," something that is in between a private taxable company that's under our rules of C corporations or S corporations and partnerships but also not under our rules affecting charities. Russell cited the new federal health-care law authorizing state-based cooperatives to sell insurance in their states as an example of a proposal sort of “in between” --neither pure private sector nor a public option. For instance, some green energy companies have a stated purpose to develop or promote a cleaner environment -- they are just doing it through a corporate structure. Historically, the tax code puts an organization into one of two buckets –either a for-profit entity such as a corporate partnership or a tax-exempt organization such as a charity.
Grant Williams, The Chronicle of Philanthropy, April 15, 2010
http://philanthropy.com/blogPost/Congress-Could-Consider/23134/

Maryland Creates New Type of 'Socially Responsible' Corporation
Governor Martin O’Malley, Maryland, has signed legislation creating a new legal structure called a “benefit corporation” for companies that blend business with social and environmental good.
Benefit corporations must create a positive impact on society and that boards of directors need to look beyond shareholders’ interest and instead consider how decisions will affect employees, local jurisdictions, and the environment. Andrew Kassoy, founder of B Lab, a Pennsylvania nonprofit that runs a certification program for socially responsible businesses, commented that this is the first time there is a market-based solution supporting investors and entrepreneurs who want to make money but also want to make a difference!
Nicole Wallace, The Chronicle of Philanthropy, April 15, 2010
http://philanthropy.com/blogPost/Maryland-Creates-New-Type-of/23138/

Social Innovation Fund Grants
The Corporation for National and Community Service said that more than 200 groups had indicated they planned to apply for the $50-million in grants that the Social Innovation Fund will award this year. Officials aren’t saying who or what kind of groups are applying. One applicant, however, has fessed up: New Profit, a charity in Cambridge, Mass., that specializes in providing money to promising nonprofit groups, kind of like the Social Innovation Fund itself. New Profit also happens to be Paul Carttar's new director of the Social Innovation Fund. Who says he will recuse himself from any discussions of the organization during the grant-awards process.
Suzanne Perry, The Chronicle of Philanthropy, April 7, 2010
http://philanthropy.com/article/After-Last-Year-s-Decline/65153/

IRS Phone Number Mistake Gives Donors an Earful
It seems the Internal Revenue Service is putting the "hot" in hotline. A telephone number on the agency's Web site meant to provide information about tax-exempt organizations actually connects callers to a phone-sex operator. The Web page titled "Six Important Facts About Tax-Exempt Organizations," suggests citizens call an IRS number to confirm if a group is qualified to receive a tax-deductible donation. But unless promises of "hot action" and heavy breathing are new tax-code jargon for 501(c)(3)‘s, donors are going to be rather confused.
Ian Wilhelm, The Chronicle of Philanthropy, April 2, 2010
http://philanthropy.com/blogPost/IRS-Phone-Number-Mistake-Gives/22253/