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/
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