Washington Snapshot - February 21, 2014

BREAKING: Senate Philanthropy Caucus Briefing During Philanthropy Week

The Council on Foundations is pleased to report that Senators Chuck Schumer (D-NY) and Richard Burr (R-NC) will be chairing the Senate Philanthropy Caucus for the 113th Congress.

During Philanthropy Week in Washington, March 3rd through 7th, the Senate Caucus will host its first event of the year—a roundtable discussion on “Philanthropy and Government: Partnerships in Times of Less.” The event will take place from noon to 1:00 PM on Tuesday, March 4th, in Hart Senate Office Building room 902.

As all levels of governments continue to face diminished budgets, the reality is clear – there will be strains on public budgets for the foreseeable future. Paradoxically, many citizen services and public infrastructure needs are forecasted to grow. Public policymakers will be challenged to find the right balance between both the investments and the deficit reductions needed for stronger growth.

Six years after the Great Recession of 2008, many economic and social issues remain unaddressed; communities across the U.S. are dealing with a range of issues – from aging infrastructure and an under-prepared workforce to declines in manufacturing and the transfer of resources from rural America. Foundation leaders will show how American philanthropy is bringing new ideas and an evolving field of social finance tools to bear on the challenges facing the country.

The Senate Philanthropy Caucus was originally established in 2008 to inform Senators and their staff about the important role foundations play in communities around the world. This year, the Caucus will host a series of discussions and briefings on the dynamic role of philanthropy as a convener, catalyst, collaborator, and partner across a wide and diverse range of issue and interests.

To RSVP for the roundtable event, please contact Brian Horn at brian.horn@cof.org.

Thanks to everyone who participated in our second Philanthropy Week webinar on Wednesday. We hope it was informative and gave you a good sense of what to expect from the environment on Capitol Hill during your visit. Check out the Philanthropy Week website for the slides and recording of that webinar, along with an abridged video version of our first webinar, “Creating Effective Stories that Lawmakers Will Remember.”

Check out a full listing of what is happening during Philanthropy Week below!

Tuesday March 4, 2014

Senate Philanthropy Caucus Roundtable Discussion, “Philanthropy and Government: Partnerships in Times of Less”

Welcome Networking Reception

Join us in the early evening for drinks and light hors d'oeuvres to meet and reconnect with colleagues from across the country.

Wednesday March 5, 2014

Alliance for Charitable Reform Summit for Leaders

A half-day event to learn more about what you can do to protect the charitable deduction and educate lawmakers about the critical role of charitable organizations in a free society.

Looking into the Crystal Ball: Future of State and Federal Tax Incentives for Charitable Giving

Programming hosted by Forum of Regional Associations of Grantmakers' PolicyWorks for Philanthropy Initiative, with lunch hosted by the Council on Foundations

Foundations on the Hill

Thursday March 6, 2014

Foundations on the Hill

Friday March 7, 2014

Twitter Chat

The Council on Foundations will co-host a twitter chat with The Chronicle of Philanthropy. This chat will touch on a variety of topics including: perspectives on the president’s proposed budget and its impact on the sector, a look at the current policy debate around philanthropy’s role in the economy and creating jobs, the challenges of responding to increase demand when resources are limited, and the increasing importance of public philanthropic partnerships.

This chat will be part of the #cf100 series of Twitter chats, marking the 100th anniversary of community foundations.

We look forward to seeing you in Washington very soon!

Tax Policy News

BREAKING: Camp tax reform plan expected next week

House Ways and Means Committee Chairman Dave Camp (R-MI-4) is expected to release a tax reform proposal next week—possibly Wednesday. We’re hearing that the reform plan may propose a top individual tax rate that is above 30 percent and a top income tax rate for corporations of 25 percent. While it is uncertain how the Chairman plans to move this proposal forward, it is a very significant event because we will see, for the first time, details of his plan.

The Council will scour the draft for provisions specific to philanthropic and charitable organizations and report to our readers.

We also hear that House Republican leaders have asked Chairman Camp to make every effort to ensure that the plan is distinguished as his proposal and not one backed by the Republican Party. This move is intended to deflect any possible negative blowback before the midterm elections in November. POLITICO reports that the proposal is not expected to be bipartisan, and that Democrats stand prepared to rebut it. This is a signal that Chairman Camp sees value in making public his specific views of tax reform but likely has realistic perspective on the chances of passage this year. Nonetheless, this proposal sets down markers for current and future tax revisions. Recall that Senator Camp is in the last year of his term as Ways and Means Chairman.

As we reported to our readers in late 2013, Camp planned to release a tax reform plan in 2013, but was asked by House Republican leadership to hold off until after budget issues were resolved.

More tax extenders buzz

We’ve been talking a lot about the IRA charitable rollover and the other charitable “tax extenders” over the past few months. As our readers know, the package of 55 "tax extenders," including the IRA charitable rollover and other giving incentives, expired at the end of 2013. Council staff and our political advisors have been working hard to get information about whether Congress will pass “tax extenders” as part of a broader tax reform package or as a separate bill in 2014. New Senate Finance Chair Senator Ron Wyden (D-OR) told reporters this week that he is making the “tax extenders” a priority: “My hope is that we can get them re-enacted promptly,” he said, “[t]hen use them as a bridge to more comprehensive reform.”

Despite Senator Wyden’s optimism, based upon what we’re currently hearing, we do not expect passage of an extenders package before the 2014 midterm elections. However, we know the IRA rollover and other charitable tax extenders are particularly important to our community foundation readers, and we will continue to actively advocate for these measures at every opportunity, including during Philanthropy Week in Washington.

Polarized views on IRS political activity rules

The New York Times editorial board endorsed the controversial proposed rule changes governing the political activity of 501(c)(4) organizations this week, in stark contrast to the rule’s outspoken critics on both the right and the left.

"The best thing the I.R.S. can do is to ignore both sides and proceed swiftly ahead, making its proposed rules even stronger to squeeze the influence of money out of politics,” said the board. The editors go even further, stating: “If anything, the I.R.S. rules, which should be sped up to have some effect on the November elections, ought to be stronger. The same prohibitions against political activity should also apply to business leagues like chambers of commerce, and to unions, both of which are organized under different sections of the tax code that allow concealment of donors. The rules should be far more explicit that no amount of political activity is acceptable for any group that refuses to disclose contributors."

In response to the piece, House Ways and Means Chairman Dave Camp (R-MI-4) issued a statement criticizing the position of the New York Times. “Over the past few years, the IRS has systematically targeted conservative groups, threatened conservative donors with higher taxes and leaked confidential taxpayer information. This has already had a chilling effect in the conservative community. The last thing any newspaper should endorse is granting the IRS more power to suppress engagement in the democratic process and the exercise of First Amendment rights,” Camp said.

The Council will submit comments on this rule to the IRS by the February 27th deadline, focusing on the likely impact of the rules on 501(c)(3) organizations. While the Council is not pursuing co-signers, we encourage you to contact the Council’s Policy Analyst Katherine LaBeau if your organization would like to submit the Council’s comments on behalf of your organization, with a cover letter indicating that your organization shares the Council’s views.

IRS 2013 Changes to Form 990-PF

The IRS has announced changes to the Form 990-PF, the annual information return required to be filed by private foundations, beginning with tax year 2013. The most significant change, affecting most private foundations, is a requirement to use specific codes, provided in the form instructions, to classify the exact foundation status of each grantee. The 990-PF instructions include references to additional guidance for determining whether a grantee is a type I, type II, type III functionally integrated, or type III nonfunctionally integrated supporting organization. The instructions also clarify which amounts approved or set aside for future payment to grantees should be reported by the private foundation. The purpose of the changes is to create uniformity in reporting and provide greater information regarding the tax status of grantees. The changes are listed in the “What’s New” section on the form instructions.

Other changes of note include revised instructions to clarify the reporting of program-related investments and a requirement for attachments to state whether controlled entities are excess business holdings.

We encourage you to contact Suzanne Friday, our Legal Counsel, with any questions.

State Activity

State legislatures have been quite active in 2014 so far, with numerous states considering bills that would change how states regulate nonprofits. We are keeping close tabs on this activity, and the Council is particularly watchful for trends that are emerging both in the traditional “bell weather” states and those that seem to be emerging across several states.

This week, the news out of Oregon is that Oregon House Bill 4081—which we told you about two weeks ago unanimously passed the Oregon House. The bill would give the state Department of Justice the authority to order noncompliant nonprofits to file annual reports with the state. The Oregon Senate Judiciary Committee also voted to send it to the full Senate for a vote.

The bill also imposes a $2,000 penalty on nonprofits that willfully fail to file their annual reports, and is aimed at catching organizations that willfully skirt their filing obligations, rather than smaller organizations with limited resources that may miss a deadline from time to time. It has been endorsed by the Nonprofit Association of Oregon.

Keep in Touch!

Please feel free to reach out to any of us on the public policy team with any comments or concerns, or to share an issue, article, event, or op-ed you’d like to see covered in a future Washington Snapshot.