Washington Snapshot - October 10, 2014

Congress IconTell Congress: Pass the America Gives More Act

While your lawmakers are home in October to ask for votes, make sure you ask them to pass the America Gives More Act provisions into permanent law during the lame duck!

Even though Congress has adjourned, we must keep up the momentum on the America Gives More Act (H.R. 4719). Over the past few weeks, countless foundations and charities from across the country have told their lawmakers how important the America Gives More Act provisions are for the charitable sector. We have to keep that drumbeat going.

When Congress comes back in November, they will only have about three work weeks remaining in the year, and we need to push for a floor vote during that time.

The Council’s advocacy toolkit has everything you need to make your voice heard. We’ll be revising it for fall advocacy activity, so look for new materials coming soon. In addition, our colleagues at the National Council of Nonprofits have created a very useful website with details on H.R. 4719 and ways you can speak out.

Congress IconIRS Urges Action on Extenders or Risk Tax Season Delay

IRS Commissioner John Koskinen wrote a letter to Senate Finance Committee Chairman Ron Wyden (D-OR) explaining that the agency may need to delay the 2014 tax filing deadline because Congress has not yet acted on the tax incentives known as extenders. As a reminder, the charitable tax extenders are included in the America Gives More Act (H.R. 4719).

Koskinen told Chairman Wyden that a filing extension may be necessary to allow taxpayers to adjust their tax liability to reflect these tax incentives, if they are enacted. This delay could slow the issuance of tax refunds to those expected to receive them, Koskinen noted.

“It is important that Congress decide whether or not to extend these expired provisions as early as possible when Congress returns and no later than the end of November. Making this decision in a timely manner will allow the IRS to implement Congress’s decision without disruptions and delays to the 2015 filing season, and it will provide certainty for millions of taxpayers who are affected by the expired provisions,” the letter said.

Events IconRemoving Barriers to Cross-Border Grantmaking

For more than 20 years, the Council has played a key role in working to reduce barriers to cross-border philanthropy. We are committed to working with grantmakers, the Federal government and multilateral institutions, think tanks, global philanthropic networks, and other partners to facilitate a favorable regulatory environment for foundations doing work overseas.

One of these partners, the Charity & Security Network—a leading expert in this space—has made us aware of two regulatory processes commencing this fall with significant implications for cross-border grantmaking. The two proceedings will be conducted by the Financial Action Task Force (FATF), an obscure but powerful intergovernmental group that sets international anti-terrorist financing and money laundering standards. Grantmaker participation in these processes will be essential to ensure a favorable legal environment for the work of foundations and their grantees abroad.

First, FATF will conduct an evaluation of U.S. compliance with its standards, including a review of anti-terrorism regulations for nonprofits. Over the past two years, the Charity & Security Network has been working with an international coalition of nonprofits that has succeeded in getting FATF to adopt language that calls on governments to respect human rights and humanitarian standards in nonprofit regulations, and to ensure that its rules protect legitimate nonprofits and are proportional and flexible. It is up to our sector to make sure the review of U.S. regulations addresses these standards.

Second, the FATF’s “Best Practices Paper” on anti-terrorist financing regulations for nonprofits, which is outdated and problematic, is being revised. FATF has expressed its openness to input from the nonprofit sector in the revision process.

On Tuesday, October 21 from 12:00-2:30 PM ET, the Charity & Security Network will hold a roundtable at the Open Society Foundation in D.C. with expert speakers from an international nonprofit working group on FAFT. The speakers will provide background, and attendees will have an opportunity to discuss how our sector can best provide input into the proceedings to get the best possible outcome.

The Council will attend the meeting, along with our outside legal experts who’ve participated in our work for several years.

The first hour will be available by conference call (the background presentations and Q&A). If you are interested in participating contact Kay Guinane, Director, Charity & Security Network, at kguinane@charityandsecurity.org.

Legal IconTrending in Legal Affairs

Crowdsourcing, Charitable Solicitation Laws and the "Charleston Principles"

Most state nonprofit corporation laws require that charitable organizations register and file annual reports with their state’s attorney general or a similar agency prior to operating or starting charitable solicitations. This is meant to ensure the integrity of charities operating in the state and guard the public against fraudulent organizations.

While state laws are clear that charitable organizations must disclose direct public support from solicitation received in that state, what about crowdsourcing and funding sites such as Kickstarter and Indiegogo? The popularity and ease of fundraising using these sites has prompted several Council members to ask whether their community foundations would need to register in other states as solicitors.

The legal team looks to the “Charleston Principles” for the answer. Under these principles developed by the National Association of State Charity Officials (NASCO), a charity is not required to register in a state if the only solicitation they do there is considered “passive activity.” A mere presence on a website, or even a “donate now” link, is considered passive activity—so long as this is the foundation’s only activity in that state.

We remind all Council members that the Legal Affairs team is an important resource that may help with both the day-to-day and the big, confounding issues that come your way. In future issues of Washington Snapshot, we’ll continue to cover legal questions that are trending among our members. In the meantime, don’t hesitate to reach out to us at legal@cof.org.

News IconPhilanthropy News and Op-Eds

Philanthropy and Disaster Response at NASCO Conference

Several staff from the Council’s legal and policy team attended the National Association of State Charity Officials (NASCO) 2014 Annual Conference earlier this week. Among a variety of compelling sessions, the Council listened to the OceanFirst Foundation, the Jessie Ball duPont Fund, the Center for Disaster Philanthropy, and Michael Foerster of the Pennsylvania Attorney General’s office brainstorm ways that philanthropy and state officials can better coordinate resources to respond to disasters.

Mark Constantine of the Jessie Ball duPont Fund called attention to his foundation’s publication, Creating Order From Chaos: Roles for Philanthropy in Disaster Planning and Response. This helpful guide shares what the foundation learned through its response to the Alabama tornadoes in 2011. When the tornadoes struck, foundation staff “realized that they did not know enough about how public and private systems work, about where, when and how they intersect, or about organized philanthropy’s proper role.” They published what they learned from the experience in order to ensure that other foundation staff did not find themselves in the same position.

In his remarks, Bob Ottenhoff of the Center for Disaster Philanthropy said that regulators could develop and share best practice guidelines for donors and nonprofit organizations that respond to disasters would aid in advance planning—preventing confusion and lack of coordination once a disaster hits.

Katherine Durante of the OceanFirst Foundation in New Jersey shared her organization’s experience responding to Hurricane Sandy. She emphasized the importance of having a plan in place to respond to disasters before they hit. Durante also encourage regulators to do more to educate donors about fraudulent charities that could try to take advantage of the disaster chaos to prey on victims.

American Generosity Post-Recession

A new study from the Chronicle of Philanthropy found that between 2006 and 2012, lower-and middle-class Americans increased their charitable contributions as a percentage of their income, while the wealthiest Americans gave less. Chronicle editors attribute this change to the impact of the Great Recession.

This change in giving has impacted urban environments the most, with 36 of the largest cities in the country experiencing significant drops in charitable giving. Interestingly, the report looked at tax information for itemizers in every county in the country to hone in on which areas are the most generous. It found that residents of Utah give the largest percentage of their income to charity. North Dakota experienced the sharpest decline in charitable giving, while Nevada saw the largest increase.

A few states profiled in the study have spoken out to defend their reputations as less-than-charitable. Opinion pieces from Ohio and Maine explain that the data is not comprehensive. Douglas Kridler, President and CEO of the Columbus Foundation in Ohio, notes that the study does not take into account the generosity of donors who do not itemize—a majority of the giving population.

LLCs and Local Property Taxes

An Idaho nonprofit organization, recognized as a 501(c)(3) under Federal law, was recently found liable for local property taxes because its property—while dedicated exclusively to charitable purposes—is held by a single member limited liability company (LLC).

The Idaho Supreme Court determined that because the LLC leased the property to the nonprofit, it was irrelevant that it was only used charitably. Rather, the deciding factor was that it was leased by an LLC—regardless of the property’s use.

Discussing the implications of the case, a Forbes writer suggests that “[t]he lesson in this case seems to be that we need to be a little more careful about the effects that using Limited Liability Companies can have.”

Events IconEvents

CEO Retreat: Donor Advised Funds and Public Policy, Preconference in Cleveland

Attention Community Foundation CEOs:

Join your colleagues in Cleveland on Sunday October 19th from 10am to 4:30pm for a discussion about donor advised funds and tax policy.

Through our conversations with community foundation leaders and other stakeholders, we’ve heard an increasing demand for a high-level in-person meeting with community foundation leaders on how to best respond to harmful policy proposals—specifically, a proposed 5-year payout for all donor advised funds. Community foundation leaders attending the retreat will assist in developing a multi-year tax reform campaign for community foundations. The second half of the retreat will provide opportunities for robust discussion and networking.

Participation in this event is limited to community foundation CEOs.

Explore Climate Change Impacts at the Fall Conference

Are environmental issues of greater interest to you? If so, join the discussion about what community foundations can do to tackle these important issues in Cleveland on Sunday October 19th from 10am-4pm.

The Council’s Public-Philanthropic Partnership program is hosting a dynamic program on the pivotal role that community foundations can play in helping their communities confront the challenges of climate impacts. Federal scientists from universities and the federal government will join two panels of community foundation leaders to explore creating integrated systemic responses that promote resilience.

New Webinar Announced: Election 2014 - How Beltway Politics Shape the Legislative Outlook

Join us on this webinar as we get a run-down off everything that happened on Election Day 2014 from National Journal’s Political Editor, Josh Kraushaar. Josh will cover the most closely watched congressional elections in districts around the country, and offer his expert analysis of the outcomes of the races you care about.

Will the election outcome effect tax reform prospects for 2015? What about the fate of charitable tax extenders like the IRA rollover? Does new Ways and Means Committee leadership change Congress’ tax-writing priorities? Ken Kies of the Federal Policy Group and Rob Leonard of Akin Gump Strauss Hauer & Feld, will address these questions and more, and will comment on how the midterm election results will impact what happens (or doesn’t happen) in Washington for the next two years.