Washington Snapshot - June 27, 2014

We want to remind our readers that we will not be publishing Snapshot next week, in light of the Fourth of July holiday. We wish you all a happy Fourth!

Congress IconNews from the Hill

Republican Lawmakers Slam IRS Over Lost E-mails

We told you last week about the fury on Capitol Hill over thousands of e-mails that the IRS maintains it lost. The e-mails were related to the investigation of the Tea Party targeting controversy, and include messages from numerous officials involved in the scandal—in particular, former Director of the IRS Exempt Organizations Unit Lois Lerner.

IRS Commissioner John Koskinen was subpoenaed to testify before the House Oversight and Government Reform Committee about the matter. During the hearing on Monday, Committee Chairman Darrell Issa (R-CA-49) accused the Commissioner of deceiving Congress and attempting to cover-up evidence that the agency did target Tea Party groups. “You worked to cover up the fact that there were missing e-mails … and only came forward … after you were caught red-handed,” Issa said during the hearing.

The U.S. Archivist David Ferriero, who heads the National Archives and sets record retention policy for government agencies, said recently that the agency did not follow the law when it failed to inform the Archives that the e-mails had been lost. Yesterday, Republicans on the Senate Finance Committee appealed to Chairman Ron Wyden (D-OR) to hold a hearing on the issue in the near future. Tensions escalated further when it was revealed that Lois Lerner suggested auditing Republican Senator Chuck Grassley (IA) because of a speaking invitation he received from a certain nonprofit group.

The IRS has blamed out-of-date technology and inadequate archiving capacity for the e-mail debacle, while many Republican lawmakers insist that the IRS’s failure to produce the e-mails is intentional.

Education Tax Incentives Hearing

On Tuesday, the Senate Finance Committee held a hearing on “Less Student Debt from the Start: What Role Should the Tax System Play?”. The hearing focused on the rising cost of tuition and the corresponding increase in student loan debt that today’s students face – and how the tax code could help through incentives like credits and deductions.

In his opening statement, Chairman Ron Wyden (D-OR) signaled his commitment to tax reform, emphasizing that “[t]oday’s hearing is just one of our committee's challenges in our bipartisan effort to fix America's tax code. It is an especially important one, and we are determined to get it right.” The Chairman also noted: “Because the tax code is like an ecosystem, changes in one area almost always have big effects on others. That’s why tax reform must be comprehensive – it has to include both individual and business policies.”

Congress Focuses on Highway Trust Fund

The Highway Trust Fund, a pot of federal dollars set aside for federally-funded transportation projects all over the country – is in danger of running out of funds to pay its obligations in August if Congress does not act to renew its funding. The issue has both the House and Senate preoccupied, with various proposals surfacing from each chamber to pay for renewing the Fund’s coffers.

On Tuesday, Senate Finance Committee Chairman Ron Wyden (D-OR) offered a plan to pay for the Fund through the end of December, called the Preserving America’s Transit and Highways (PATH) Act. Chairman Wyden’s proposal would obtain revenue through five different sources. The largest revenue source is a change in how inherited IRAs are paid out to heirs—requiring IRA accounts to be paid out within five years of the death of the account holder in most cases. This provision would raise $3.7 billion in revenue over 10 years, according to the Joint Committee on Taxation.

The important link for our members and the nonprofit sector is that Chairman Wyden offered the EXPIRE Act – the bill that includes the expired “tax extenders,” including three charitable tax extenders – as an amendment to the PATH Act. Senate Finance Ranking Member Orrin Hatch (R-UT) criticized the Chairman’s plan for not including “a sizeable amount of reductions in wasteful and low-priority spending,” Roll Call reports. The plan failed to receive enough Republican support in the Senate Finance Committee yesterday, so the Senate left for a week-long recess without considering the bill.

Meanwhile, House Speaker John Boehner (R-OH-8) has indicated that he prefers a longer-term solution to the Fund’s solvency issues—9 to 12 months. Lawmakers have floated numerous ideas for replenishing the Fund, including raising the federal gas tax and cutting back U.S. Postal Service. So far, no proposal has generated significant bipartisan support—giving lawmakers just a few weeks after the July 4th recess to fix the fund shortfall.

State Policy IconHappening in the States

Nonprofit Revitalization Act Takes Effect in New York

Last December, we told you about the enactment of New York’s Nonprofit Revitalization Act, the first change to how nonprofit organizations are regulated in the state in nearly 40 years. The Act goes into effect on July 1st, and many New York organizations are anxiously waiting to see if, and how, these provisions could change how they do business.

The law was jointly created by state policymakers and nonprofit leaders to update practices that generally reflect trends within the sector. It is aimed at ensuring the sound financial management of nonprofits, helping to prevent conflicts of interest, strengthening the attorney general’s enforcement power, mandating board independence, and enhancing good governance practices. It is also intended to promote efficiency and reduce unnecessary burdens for nonprofits in the state of New York.

Some of the changes about to go into effect include: limiting committee structure types; simplifying the incorporation process; keeping nonprofit administration separate from governance; requiring detailed reporting on transactions that could present a conflict of interest; and mandating audits for nonprofit organizations over a certain size.

Some of the changes about to go into effect include: limiting committee structure types; simplifying the incorporation process; keeping nonprofit administration separate from governance; requiring detailed reporting on transactions that could present a conflict of interest; and mandating audits for nonprofit organizations over a certain size.

News IconPhilanthropy News and Op-Eds

Impact Investing Policy Report Released

On Wednesday, the U.S. National Advisory Board to the Global Social Impact Investment Taskforce (NAB) released a highly-anticipated report, “Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing – and Why it’s Urgent.” The report makes concrete federal policy recommendations to spur impact investing domestically. Comprising 27 private investors, entrepreneurs, foundations, academics, impact-oriented organizations, nonprofits, and intermediaries, the NAB stems from the June 2013 G8 (now G7) meeting and was created to focus on U.S. policies that could promote the growth of impact investing as a means of addressing pressing social problems. Council members at The Case Foundation, Kresge Foundation, Living Cities, Rockefeller Foundation, F. B. Heron Foundation, John D. and Catherine T. MacArthur Foundation, and the Ford Foundation shared their knowledge and insights as NAB members.

The report identifies 3 main strategies for maximizing the potential of impact investing in the United States: removing regulatory barriers to unlock private impact investments; increasing the effectiveness of government programs; and providing incentives for new private impact investment. It also identifies 2 policy areas to support these strategies: encouraging and supporting innovative impact enterprises and impact investment opportunities and standardizing metrics and improving data access.

To unveil the report, the White House held a roundtable on impact investing that included Council President and CEO Vikki Spruill, the NAB members, senior Administration officials, and private sector impact investing leaders – including several Council members. Participants discussed opportunities to increase the capital available for impact investing and many of the public officials and private sector participants also committed a combined $1.5 billion to a new impact investing pledge. Several Council members announced commitments, which you can read about here.

In conjunction with the release of the report, NAB held a briefing for Hill staffers on Wednesday, at which NAB members explained the importance of furthering policies that promote impact investing. Congressmen Todd Young (R-IN-9) and John Delaney (D-MD-6) – co-sponsors of the Social Impact Bond Act (H.R. 4885) – also offered their perspectives on the value of impact investing.

If you have any questions or want to share whether the report’s recommendations resonate with you and your foundation, contact Laura Tomasko at the Council.

IRS Form 990 Lawsuit Advances

Last Friday, Judge William Orrick – federal judge for California’s Northern District – denied the IRS’s motion to dismiss the lawsuit filed against them by Public.Resource.org that would require the agency to make Form 990 returns more easily available to the public. Judge Orrick ruled that the agency’s provisions regarding the release of Forms 990 – despite their aim to protect donor confidentiality – are not immune to the Freedom of Information Act (FOIA).

According to FOIA, federal agencies must make records available upon request, so long as the document requested is readily reproducible. Public.Resource.org had previously requested specific tax documents from the IRS that had been posted online as digital images – making them difficult to search. The dismissal of the IRS’s motion will allow the lawsuit to move forward.

Upcoming NASCO Conference

The National Association of Attorneys General/National Association of State Charity Officials' Annual Conference, “The Evolving Role of Charitable Regulation in the 21st Century,” will take place on October 6, 2014 at the Hyatt Regency Capitol Hill in Washington, D.C.

This year’s conference discussions will focus on how charitable regulation is evolving and adapting to the ever-changing nonprofit landscape. Topics will include emerging issues under UPMIFA, regulator-sector opportunities for collaboration in addressing disaster relief, examining the way charities are evaluated by watchdog agencies, and questioning whether charities are, in the traditional sense, still charitable.

More details coming soon!

News from the Council

Council Launches Philanthropy Exchange

Expanding your peer network and connecting with those who have the answers to your questions is difficult, but online tools have made it easier. They have streamlined the process to enable you to search for specific people you want to connect with and to cast a wider net where you can ask questions.

The Council’s tool, the Philanthropy Exchange, offers Council on Foundations’ members a private online network that connects them virtually with their peers to discuss topics of shared interest, share resources, and develop stronger relationships that advance their work.

Log in now (using the same login as the Council website) to see questions about tax reform, e-filing of Form 990s, and more. If you don’t know your username and password for the Council website, please contact membership@cof.org. If you have any questions about the Exchange, e-mail Allison Carney at allison.carney@cof.org. Or, if you want to stop by her office hours, join her every Wednesday from 12:00 to 1:00 PM ET at https://imeet.com/cof/counciltech.