We are thrilled that spring has finally arrived here in Washington, D.C.! The cherry blossoms are in bloom, and tourist season has begun!
Since next Friday is Good Friday, we will be sending you Snapshot on Thursday afternoon.
Last week we brought you up to speed on Senate Finance Committee activity on a tax extenders bill, which included the IRA charitable rollover and the enhanced deductions for conversation easement and food inventory donations. The bill—known as the EXPIRE Act—passed the Finance Committee, but remains in limbo. At the same time, the House Ways and Means Committee pursues its own extenders legislation. Senate Majority Leader Harry Reid (D-NV) may bring the EXPIRE Act to the Senate floor for a vote shortly after the two-week recess that begins today, BNA reports. It’s not clear if amendments will be allowed when the bill is considered on the Senate floor.
Meanwhile, House Ways and Means Committee Chairman Camp (R-MI-4) held the first in what will likely be a series of hearings on the tax extenders this week. The specific topic of the hearing was “the Benefits of Permanent Tax Policy for Job Creators,” and it focused on the expired business tax extenders that Chairman Camp included in his tax reform draft that was released in February. In the course of the hearing, Representative Jim McDermott (D-WA-7) asked if amendments could be offered at a future markup to address tax extenders that were not included in Chairman Camp’s tax reform proposal. The Chairman said that he had not made up his mind on that issue.
At this point, it is unclear if the Chairman will choose to move forward with only the seven business tax extenders that are in his tax reform draft. We are working closely with our Hill team and House Ways and Means staff to ensure that the charitable tax extenders—particularly the IRA charitable rollover—are included in the Ways and Means extenders bill.
Additionally, the Council will use this hearing as an opportunity to submit a statement for the record that will emphasize the importance of the IRA charitable rollover for philanthropic organizations and the economic benefits foundations produce for our country. We will share this statement with you in a future Washington Snapshot, and will keep you posted on any extender developments as they unfold.
Lois Lerner in More Hot Water
For months now, the House Ways and Means and Oversight and Government Reform Committees have sought to take concrete action against former IRS official Lois Lerner for her alleged role in the IRS 501(c)(4) targeting controversy that erupted last spring. This week, the Ways and Means Committee announced that it would send a letter recommending criminal charges against Lerner to the Department of Justice. If Lerner was charged and convicted of the recommended charges listed in the letter, she would face up to 11 years in prison.
In the letter, the Committee listed the three specific acts by Lerner that they believe may have violated criminal statutes. First, the Committee alleges that she used her position to improperly influence agency action against only conservative organizations, denying these groups due process and equal protection under the law. Second, Lerner is accused of impeding official investigations by providing misleading statements in response to questions from the Treasury Inspector General for Tax Administration (TIGTA). Finally, the Committee claims that Lerner risked exposing confidential taxpayer information (and may have actually exposed such information) by using her personal e-mail to conduct official business.
The Oversight and Government Reform Committee voted yesterday to hold Lerner in contempt of Congress, saying in a Committee report that she “refused to comply with a congressional subpoena for testimony before the Committee on Oversight and Government Reform relating to her role in the Internal Revenue Service’s treatment of certain applicants for tax-exempt status.” The contempt vote stems from Lerner twice invoking her Fifth Amendment right not to testify at hearings before the Committee. Oversight Chairman Darrell Issa (R-CA-49) contends that Lerner’s insights are central to understanding how events unfolded throughout the IRS’s 501(c)(4) targeting activities.
Grassley Prods IRS on Nonprofit Hospitals
Senator Chuck Grassley (R-IA), who has long held a keen interest in nonprofit accountability and transparency, is inquiring into the IRS’s progress in enacting oversight measures for nonprofit hospitals that were set out in the Affordable Care Act (ACA). The ACA reforms were enacted after Senator Grassley undertook an extensive review of nonprofits in which he found that the business practices of for-profit and nonprofit hospitals are often indistinguishable.
In a letter dated April 4, Senator Grassley asked IRS Commissioner John Koskinen for an update on the regulations required to implement many of the nonprofit hospital provisions within the ACA. He also asked about the status of public guidance on the new requirements and a required annual report to Congress regarding nonprofit hospitals. The IRS has until April 18th to provide the information the Senator requested.
501(c)(4) Regulations on Slow Track
As many of our readers likely recall, the comment period on the IRS’s proposed regulations on 501(c)(4) political activity closed in February with a record-breaking number of public comment submissions. Most of these commenters were vehemently opposed to the proposed rule as it is currently drafted.
As Nonprofit Quarterly reports, IRS Commissioner John Koskinen publicly stated that because it received more than 147,000 public comments, the IRS will likely spend the remainder of 2014 sorting through these comments. The agency is not likely to schedule a public hearing on the proposed regulations during 2014 or take any further action, Koskinen suggested.
Until the IRS moves forward with the proposed regulations, the current regulatory regime for 501(c)(4) political activity remain in force. Current law requires that 501(c)(4) organizations designate 50 percent of their resources and activities towards social welfare activities, with a “facts and circumstances” test determining whether an activity constitutes social welfare or political campaign intervention. The Nonprofit Quarterly piece points out that there are already indications the IRS will revise the proposed regulations, in light of the tremendous public backlash the agency has received.
Volunteerism Rates Hit Record Low
The Chronicle of Philanthropy reports that the rate of volunteerism in America was 25.4 percent in 2013, with 2 million fewer Americans donating their time to nonprofits as volunteers than the previous year. Prior to 2013, volunteerism in the United States was generally about 25 to 26 percent of the population. “No one is sure why” the decline has occurred, the Chronicle article states, though experts have asked whether some combination of the recession, lack of nonprofit capacity to recruit and train volunteers, inadequate foundation giving, or statistics that fail to capture new types of volunteering are to blame.
Interestingly, there is evidence that demand for volunteers by nonprofits has not kept up with the public’s willingness to volunteer. For instance, nearly 11.6 million people visited the volunteer site VolunteerMatch in 2013, but there were less than 140,000 volunteer spots posted on the site in 2013. To boost the capacity of nonprofits to take on more volunteers, the Chronicle reports that volunteer advocates are campaigning to get more foundations to fund volunteer management projects at nonprofits.
While there may be an excess supply of willing volunteers, Independent Sector’s annual estimate for the national value of a volunteer hour for 2013 found that the dollar value of volunteer time is rising. The hourly value of volunteer time in 2013 is $22.55, up from $22.14 in 2012. Independent Sector’s estimate also breaks down the value of volunteer time by state, with D.C. volunteers quantified at the highest value of $38.69, and Arkansas the lowest at $18.93. The annual estimate allows nonprofits and volunteers alike to understand their impact in dollars.
Survey Finds Many Nonprofits Still Struggle
The NonProfit Times published an article this week detailing the results of the Nonprofit Finance Fund’s 2014 State of the Nonprofit Sector Survey. The annual survey included responses from more than 5,000 nonprofits around the country.
The critical takeaway from the survey findings is that nonprofits across the country have yet to recover from the lingering effects of the recession. Eighty percent of nonprofits responding reported an increase in demand for services for the sixth straight year, and 56 percent were unable to meet demand in 2013 – the highest reported in the survey’s history. Furthermore, only 11 percent of respondents expect 2014 to be easier than 2013 for the people they serve.