We are delighted with the level of interest we’ve received for our inaugural Council on Foundations Public Policy Seminar! The event, which takes place on Saturday, June 7th, from 9:30 am-4:30 pm at the Washington Hilton in Dupont Circle, is a preconference to our 2014 Annual Conference: Philanthropy Exchange.
We’ve designed this seminar for our members and colleagues who work in policy and advocacy. This intensive one-day workshop will dive into the art of developing an effective strategy to address complex, multi-issue legislation. We will use Ways and Means Chairman Dave Camp’s Tax Reform Act of 2014 as our launching off point for the discussion.
Space for this event is limited, and but a few slots remain. For more information or to express your interest in participating, please contact firstname.lastname@example.org as soon as possible.
Congressman Paulsen Introduces Bill to Simplify Private Foundation Excise Tax
On Tuesday, Congressman Erik Paulsen (R-MN-3) introduced H.R. 4691, a bill that would simplify the private foundation excise tax to a flat rate of 1 percent—a position the Council has long supported. Congressman Paulsen originally introduced this bill in 2011, along with Congressman Danny Davis (D-IL-7), who is an original co-sponsor on H.R. 4691 as well. This bill could be marked up by the House Ways & Means Committee as early as next week. Check out the Council’s press release on the bill.
Council President and CEO Vikki Spruill issued a statement commending Congressman Paulsen for his leadership on this issue:
The Council applauds Congressman Paulsen for recognizing the importance of simplifying the private foundation excise tax. This bill echoes the excise tax simplification proposed by Chairman Camp in his comprehensive tax reform proposal, a provision which the Council strongly supports. The single, flat rate of 1 percent will greatly simplify compliance for private foundations, improve efficiencies, and remove grantmaking disincentives.
Private foundations dedicate valuable time and resources to managing the complex, two-tiered tax—resources that would be better spent addressing the needs of communities across America. And, the tax can actually serve to disincentivize increased grantmaking in a calendar year, which is particularly devastating when late-year emergencies or disasters occur, and foundations step in to help communities in need.
The Council looks forward to working with Congressman Paulsen and his staff to advance this bill.
IRA Charitable Rollover Permanence Bill - Markup likely Next Week
As our readers know, we strongly support the recent legislation introduced by Congressmen Aaron Schock (R-IL-18) and Earl Blumenauer (D-OR-3), H.R. 4619, which would make the IRA charitable rollover permanent. The bill is co-sponsored by Congressmen Mike Kelly (R-PA-3), Todd Young (R-IN-9), Pat Tiberi (R-OH-12), Dave Reichert (R-WA-8) and Tom Reed (R-NY-23). Chairman Camp contemplates including the IRA charitable rollover among the few provisions that he would like to permanently extend, and H.R. 4619 was introduced towards this specific purpose. And, the bill could be marked up by the House Ways and Means Committee as early as next Thursday.
We’re also hearing that bills to permanently extend the enhanced deduction for food inventory and the enhanced deduction for conservation easements could be marked up next week as well. POLITICO PRO covered the likely markup of all of the charitable tax extenders in a piece yesterday, “Ways and Means Set to Debate Charitable Tax Extenders Next Week.” Thursday’s markup could also include a bill introduced by Congressman Mike Kelly (R-PA-3) that would allow donations to be made until April 15th and be deducted the prior tax year.
The Council has been working closely with the sponsors of H.R. 4619, and we will continue to support these Members and others who sign on as Congress continues to debate the tax extenders.
Talks Continue in Senate on Extenders
On the Senate side, last week we shared the news that the Senate failed to advance the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, the tax extenders bill that passed the Senate Finance Committee last month. The bill was halted on the Senate floor because Senate Majority Leader Harry Reid (D-NV) opted not to permit amendments on the grounds that they were not “germane” to the extenders, including a controversial amendment from Senate Republicans that would repeal the Affordable Care Act’s medical device tax.
Yet, the EXPIRE Act is by no means dead. Majority Leader Reid and Senate Finance Chairman Ron Wyden (D-OR) are working together to determine what amendments—if any—they’ll permit moving forward. Conversations between Senators Reid, Wyden, and Finance Committee Ranking Member Orrin Hatch (R-UT) could open the door to a limited number of amendments to be considered on the floor. Majority Leader Reid is adamant that a medical device tax amendment is out of the question, but has indicated that he is open to amendments so long as they are germane to the extenders bill.
Agreement on Workforce Innovation and Opportunity Act
Yesterday, the Senate Health, Education, Labor, and Pensions (HELP) Committee announced an agreement on the Workforce Innovation and Opportunity Act (WIOA), a compromise between the SKILLS Act (H.R. 803), which passed the House of Representatives in March of 2013, and the Workforce Investment Act (WIA) of 2013(S. 1356), which passed the HELP Committee in July of 2013. WIOA has been overdue to be renewed for more than a decade.
Senator Tom Harkin (D-IA), who led the compromise effort, emphasized the job training opportunities that would be created for middle-class workers. He also explained how the bill will benefit workers with disabilities: “[t]his bill makes groundbreaking changes that will raise prospects and expectations for Americans with disabilities, many of whom, under current law, are shunted to segregated, subminimum wage settings without ever receiving the opportunities and skills to succeed in competitive, integrated employment,” Harkin said in a press release.
IRS Will Revise 501(c)(4) Rules
In news that broke yesterday evening, the IRS has announced that it will rewrite its controversial proposed rules on 501(c)(4) political activity. The rules attempted to create a more bright-line rule on which activities qualify as promoting social welfare for 501(c)(4) organizations.
The IRS received a record number of comments on the proposed rules—more than 150,000—most from groups and individuals who thought that the rules went too far in restricting (c)(4) activity. “It is likely that we will make some changes to the proposed regulation in light of the comments we have received,” the IRS said in a statement.
As our readers will recall, the Council submitted comments on the proposed rules back in February, emphasizing our concern that the proposed rules would chill the civic engagement efforts of 501(c)(3) organizations, depriving the public of invaluable tools to create an informed and active democratic citizenry.
Private Letter Ruling of Interest
In a Private Letter Ruling (PLR) released last week, the IRS granted a private foundation an additional five years to dispose of excess business holdings.
Generally, a private foundation and its disqualified persons are permitted to hold twenty percent of the voting stock in a business enterprise, with any excess constituting excess business holdings subject to an excise tax. A foundation typically has five years to dispose of excess business holdings, but the IRS has discretion to permit an additional five-year disposal period.
In this ruling, the agency determined that disposing of the holdings within the initial five-year period would not be possible, except at a price substantially below fair market value, and permitted an additional five-year disposal period.
Connecticut Legislation on Benefit Corporations
The Connecticut legislature recently passed legislation establishing benefit corporations as new legal structures for social enterprises—businesses created to tackle social or environmental problems. Connecticut joins dozens of other states that now permit the benefit corporation as a corporate structure in order to allow companies to focus on addressing these social concerns while remaining profit-driven.
As Connecticut lawyer Hillel Goldman explained in a hearing on the bill, “[u]nlike traditional corporations where the fiduciary duty of the officers and directors is to maximize shareholder profit, the fiduciary duty for officers and directors in a benefit corporation is to maximize the dollars going to the organization’s social mission.” This law could give social-minded Connecticut entrepreneurs flexibility in deciding how to structure their social enterprises.
Private Foundation Assets Growing
Foundation Source’s new report, The 2014 Annual Report of Private Foundations, found that assets at small to medium-sized private foundations grew by 14 percent in 2013, and that these organizations distributed more than 7 percent of their assets that year—or $148 million total.
The survey looked at private foundations with assets less than $50 million. These organizations account for 98 percent of all U.S. foundations and about 30 percent of all foundation assets in the United States, reports The Chronicle of Philanthropy.
One interesting note: the report states that more than one-third of the foundations surveyed distributed 10 percent or more of their assets to charities throughout the year.