LEGISLATIVE UPDATE
Barbara Worth
October 20, 2009
Senate Committee Passes Health-Care Bill with Charity Provisions
The Senate Finance Committee passed health-care legislation that
would allow small charities to receive a tax credit to help them
provide health insurance to their employees. The bill — approved
by a 14-9 vote, with support from one Republican, Olympia Snowe
of Maine — would also require nonprofit hospitals to conduct “a
community health needs assessment” at least once every
three years and take other steps. The legislation does not include
two other measures affecting nonprofit work that had been proposed
by committee members: a move to limit the tax break for charitable
donations for some wealthier donors to pay for health-care changes,
and a measure to alter how nonprofit groups justify their pay
levels. The Senate will now merge the finance committee bill
with another health-care bill adopted by the Health, Education,
labor and pensions Committee before the the issue goes to the
full Senate for a vote.
Suzanne Perry and Grant Williams, The Chronicle of Philanthropy,
October 13, 2009
http://philanthropy.com/news/updates/index.php?id=9811 Proposed Charity-Compensation and Governance Amendments Put
on Hold
Sen. Charles E. Grassley, the senior Republican on the Senate
Finance Committee, put the two amendments he proposed to the
committee’s health-care bill affecting executive compensation
and governance at charities on hold. He did add comments on the
record and reserve rights to propose new language at a later
date, either as part of the health-care bill or to another piece
of legislation. The finance committee is expected to take a final
vote on the health-care bill next week. Grassley also proposed
eliminating a “safe harbor” provision in IRS rules
that allows executive compensation at charities to be deemed
reasonable if the group follows certain steps.Instead, it would
require certain charities to disclose what type of comparable
data they used to determine compensation for their executives.
He added another amendment to clarify that the IRS has the right
to ask questions about governance and management practices on
the revised Form 990 informational tax return.
Suzanne Perry, The Chronicle of Philanthropy, October 2, 2009
http://philanthropy.com/news/government/
Majority of Local United Ways Report Declines in Donations
57 percent of local United Ways reported a decline in contributions
last year, as compared to 34 percent in 2007. Similarly, the
number of United Ways reporting that donations increased in
2008 fell sharply, from 55 down to 32 percent. The local United
Way with the largest decline was in Erie, Pa.
Holly Hall, The Chronicle of Philanthropy, October 9, 2009
http://philanthropy.com/news/updates/index.php?id=9689
Stanford Puts $1 Billion of Its Assets on the Block to Make
Up Endowment Losses
Stanford University, which lost a quarter of its endowment last
year, has put on the block as much as $1 billion of hard-to-sell
investments ranging from private equity to real estate as it
seeks to raise cash. Stanford, which has one of the nation’s
largest nonprofit endowments at $12.6-billion, is offering 10
to 20 percent shares in its non-liquid investments in an effort
to raise as much as $1-billion in cash. With the market for such
holdings dried up, universities that saw their endowments battered
by risky investments have had little luck unloading them, the
paper says. Stanford’s innovative approach in selling only
minority interests will be closely watched by universities to
see if demand has rebounded.
Craig Karmin and Peter Lattman, The Wall Street Journal, October
5, 2009
http://online.wsj.com/article/SB125452509356560725.html?mod=djemTMB
Washington Charities Say Budget Cuts Put Homeless at Risk
D.C. Council members and shelter providers were stunned to learn
this week that the Fenty administration has cut $20 million
from the city's homeless services budget for fiscal 2010. Advocates
said the funding decrease likely will result in shelters being
closed, forcing hundreds of adults and children onto the streets
within months. A coalition of service providers that get city
money said more than 100 families in temporary and transitional
shelters are at risk of being evicted if the funds are not
restored.
Darryl Fears, Washington Post, October 3, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/02/AR2009100205292.html
Coalition Urges Congress to Offer Relief on Pensions
Independent Sector, a national coalition of charities and foundations,
has asked Congress to ease rules that require charities and other
employers to make certain payments to “defined-benefit” pension
funds. The Pension Protection Act of 2006 made significant revisions
to the so-called minimum funding rules for employers that provide
pension plans with defined benefits, or specific amounts of money,
to retired workers. Nonprofit groups strive to meet the significantly
increased minimum funding obligations imposed by the Pension
Protection Act while maintaining programs upon which individuals
and communities rely. With the current economy and significant
stock market decline, those pension funding obligations turned
into a critical problem, threatening the survival of the organizations,
not merely the pension plans.
Grant Williams, The Chronicle of Philanthropy, October 1, 2009
http://philanthropy.com/news/government/
Budget Center Defends New Proposals to Limit Charitable Deductions
The Center on Budget and Policy Priorities has taken issue with
a coalition of nonprofit leaders that criticized a Congressional
proposal to cap the tax breaks for charitable donations at
35 percent as a way to help pay for a health-care overhaul.
Robert Greenstein, executive director of the liberal think
tank, argues that limiting the value of deduction for charitable
organizations would create a disincentive for affluent individuals
to donate. President Obama has proposed letting tax cuts enacted
during the Bush Administration expire in 2011, which would
raise the top tax rates to 36 percent and 39.6 percent — up
from today’s 33 percent and 35 percent. He also proposed
capping the tax breaks for itemized deductions at 28 percent.
Acting now to keep the tax subsidy at 35 percent would remove
that incentive. If anything, therefore, the proposal would
accelerate donations, not delay them.
Suzanne Perry, The Chronicle for Philanthropy, October 1, 2009
http://philanthropy.com/news/government/
IRS Clarifies Lobbying Rules for Community Foundations
A new ruling from the Internal Revenue Service may get more community
foundations involved in supporting advocacy efforts. According
to the Alliance for Justice, a Washington group that advises
nonprofit groups about lobbying issues, the IRS has clarified
the rules that govern how community funds and other grant-making
charities can provide support for nonprofit organizations that
lobby lawmakers.
Federal law prohibits private foundations from lobbying, except
on issues that affect their own existence. But federal regulations
allow foundations to make “general support grants” to
charities that lobby if the grants are not earmarked for lobbying — even
if part of the money winds up supporting lobbying work. Such
government rulings on complex legal issues apply only to the
organizations that asked and paid for them; however, the rulings
give other groups insights into the IRS’s thinking.
Ian Wilhelm, The Chronicle for Philanthropy, October 1, 2008
http://philanthropy.com/news/government/
Gates Allocates $400-Million for Charity Loans And Other Investments
In answer to today’s soft economy, the Bill & Melinda
Gates Foundation is exploring alternatives to traditional grant
making and has set aside $400-million for loans, investments,
and other financial vehicles to further its charitable efforts.
Although the Gates Foundation’s assets declined about 20
percent last year with its endowment of around $30.2-billion,
it still remains the wealthiest philanthropy in America. While
other large grant makers like the Ford Foundation have made so-called
program-related investments before, the move by Gates is significant
since its $400-million commitment could potentially dwarf that
of all other philanthropies combined.
Ian Wilhelm, The Chronicle of Philanthropy, September 30, 2009
http://philanthropy.com/news/updates/index.php?id=9688
IRS Releases Tips for Attachments to the Form 990 Tax Return
The Internal Revenue Service released another filing tip to help
nonprofit organizations prepare their Form 990 federal informational
tax return. The redesigned IRS Form 990 for the 2008 tax year
created a “core form” to be filed by all organizations
and a series of schedules that some groups must also submit on
such topics as executive compensation and noncash contributions.
The IRS included a Schedule O for reporting any information that
does not fit on the core form or the other schedules. The form
was redesigned, in part, to promote uniform reporting and to
provide a structured format for attaching information to the
form. Some software companies have had difficulty designing software
for paper filing that conforms with the new 990 Form. For the
2008 tax year, the IRS will not penalize filers of Form 990 paper-filed
returns for including separate statements or attachments generated
by software that would not normally be allowed.
Grant Williams, The Chronicle of Philanthropy, September 28,
2009
http://philanthropy.com/news/government/
Study Urges More Government Recognition of Nonprofit Disaster-Recovery
Work
A recent Rand Corporation study observed that government policies
need to do more to recognize the valuable role that nonprofit
groups play in helping regions recover from disasters like Hurricane
Katrina. Groups like the United Way and American Red Cross have
proven they can be important assets after a disaster, but their
roles are often poorly defined and not supported by state and/or
federal guidelines. These groups are especially good at “human
recovery,” or helping people rebuild their lives and support
networks following a disaster — an effort that can take
years. The study concluded that “human recovery” is
not well defined at federal, state, or local levels. For example,
the law does not specifically identify case management and services
as expenses eligible for federal aid, and requires states to
come up with matching funds for rebuilding — a difficult
task when recovering from disasters like hurricanes that can
happen one after another.
Suzanne Perry, The Chronicle of Philanthropy, September 24, 2009
http://philanthropy.com/news/government/
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