It was a pleasure to see many of our readers this week at the 2014 Fall Conference for Community Foundations. Over 1,500 people from across the country – and around the globe – gathered in Cleveland. We hope those of you who joined us had as valuable of an experience as we did. Below is just a small sample of the many interesting and informative sessions we attended.
Communicating the Value of Community Foundation DAFs
One of the key elements to any effective public policy effort is clear and convincing communications with our elected officials. This issue was tackled before a packed house Monday afternoon as community foundation leaders gathered to explore how to best message the value of their donor-advised funds.
Rebecca Arno, Vice President of Communications at The Denver Foundation, Keith Mahoney, Senior Director for Public Affairs at The Boston Foundation, and Lesley Martinelli, Director of Donor Services at The Dallas Foundation, led a compelling discussion on how community foundations talk about their DAFs.
Rebecca offered examples of materials that The Denver Foundation uses to publicly message their DAFs. Lesley shared how The Dallas Foundation engages their donors to help them speak positively about DAFs in their community. Keith explained how community foundations can translate these messaging lessons to their communications with lawmakers. Community foundations can share their stories of how DAFs have benefitted their community to help lawmakers see that DAFs are unique giving tools that can serve immediate community needs or benefit a community for years to come, he noted.
The Council will continue to create communications tools to channel this and other critical messages.
CEO Preconference, Washington Update, and Legal CLE Sessions
On Saturday, over 50 community foundation CEOs joined the Council for a preconference seminar to discuss policy challenges to donor-advised funds and how the sector can best respond. Input from these foundation leaders will be invaluable in developing the Council’s advocacy strategy moving ahead. We very much look forward to continuing to engage with these leaders as we work together to preserve donor advised funds as tools for long-term invested charitable giving.
Monday the Council’s Policy team and political consultant Matt Dolan of Federal Policy Group gave our traditional Washington Update session to update you on everything you need to know that’s happening in the D.C. policy world. Our experts covered everything from regulatory news, to our advocacy efforts around tax reform, to what you can expect to see from Congress in the lame duck session and beyond.
The Council’ Legal Affairs team also offered seven hours of substantive legal content during the conference, and found a packed house for its session on Agency Funds and Affiliates. Several Community Foundation colleagues discussed the structure and practical aspects of affiliate fund relationships, highlighting what works and what often causes problems. Will Ginsberg, CEO of the Community Foundation for Greater New Haven, also led a thought-provoking discussion about agency funds held as non-component funds. Materials for all the sessions are posted on the conference app.
HUD, USDA, and the Counil Honor Work of Place-Based Foundations
For the third year, the Council and our federal government partners recognized some of the outstanding efforts by foundations throughout the country to collaborate on key projects to improve communities.
On Wednesday morning, Council President and CEO Vikki Spruill, along with HUD Assistant Secretary for Policy Research and Development Kathy O’Regan and representatives of the United States Department of Agriculture (USDA) awarded ten foundations the Secretaries’ Award for Public-Philanthropic Partnerships.
Each of these ten foundations have made significant improvements in housing and neighborhoods, education, health and recreation, transportation, community participation, arts and culture, public safety, sustainability, and economic development across all American geographies – urban, suburban and rural.
“These foundations understand that strong communities connect families with the promise of living the American dream,” said HUD Secretary Julián Castro. “Powerful outcomes occur when the philanthropic and public sectors come together to solve problems, enhance neighborhoods and expand opportunity for others. I commend these honorees for their deep commitment to serving the common good.”
“USDA is proud to partner with foundations on worthy development projects that are improving the quality of life for rural residents and providing them with new economic opportunities. The work that foundations undertake often complements the work that our employees are carrying out at the local level,” Agriculture Secretary Tom Vilsack said.
“I’m proud to offer my congratulations to the winning foundations,” said Vikki Spruill, president and CEO of the Council on Foundations. “Their work serves as a model for others in the field. Philanthropy works across sectors to engage communities in meaningful development and productive action. I am grateful to Secretary Castro and Secretary Vilsack for their leadership in recognizing the impact of foundations across the country, I look forward to continuing our engagement with them in order to push for still greater collaboration.”
In a New York Times letter to the editor published this week, Council President and CEO Vikki Spruill offers a forceful response to an October 5th opinion piece (“A Better Way to Encourage Charity”) by Ray Madoff. Professor Madoff questions the value of endowed institutions. She proposes restructuring the private foundation excise tax and tying it to a foundation’s annual distribution rates as a way to encourage increased giving.
Spruill responded with a vigorous assertion that “endowed funds support communities for generations and have the benefit of a long view.”
“Foundations provide benefits beyond money,” Spruill continued. “They have a more complex role as leaders and conveners, as long-term investors and as repositories of knowledge built over time.
“Policy makers should employ tools that are proved to increase charitable giving — individual giving incentives, public-philanthropic collaboration and reliable tax policy. Whittling away at endowed funds and perpetuity without full consideration of the consequences is an unwelcome path.”
Read Vikki’s full letter on the New York Times website.
Our Message on DAF 5-Year Provision Resonating, but Must Keep Up Momentum
This week, senior House Ways and Means Committee tax counsel Harold Hancock gave remarks suggesting that he and his colleagues could revisit the proposed five-year payout requirement for donor-advised funds (DAFs).
At a meeting of the D.C. Bar Taxation Section, Hancock reported that W&M staff were taking a serious look at this proposal and how to best address the Committee’s underlying policy concern—a mismatch of the charitable tax deduction and when fund dollars flow to charities.
The Council policy team has met numerous times with Hancock and his colleagues, and we’ve invited them to speak at our annual conference in June. The message he delivered here is consistent to what we’ve been hearing since February – this document is a “discussion draft” and the language may be amended as the process advances.
While W&M staff may be willing to adjust the language of this provision, it’s imperative for us to understand and address the underlying motivation behind these provisions. This motivation includes concern about the relationship between the organization and the donor, the policies and procedures form managing the funds, the timing of the contribution to the tax incentive (as noted above), and activity within each fund.
As our members know, the Council strongly opposes this proposal, and is concerned that it signals a distrust of endowed funds and a position against long-term invested charitable giving. We are actively promoting the value of DAFs as unique giving tools that allow donors to serve their communities for years to come. The Council has voiced our opposition to this proposal to Committee staff on repeated visits to Capitol Hill.
While Hancock’s remarks are a signal we’re being heard, we caution foundations that it is not yet time to let our guard down. This proposal remains at play in both Chairman Camp’s discussion draft and in the minds of the tax-writers who will take up tax reform when Chairman Camp retires in January. This provision sets a clear precedent for future versions of tax reform that we need to continue to aggressively confront.
Now is the time to remain vigilant and persist in pushing back on both the 5-year payout provision itself and the underlying skepticism of endowed philanthropy that it signals. The Council is standing by to help you engage with your lawmakers or craft messaging on the value of DAFs.
CRS Questions Incentive Effect of IRA Charitable Rollover
The Congressional Research Service, a nonpartisan research group serving Congress, released a short report last week on some of the provisions in the America Gives More Act (H.R. 4719).
The report discussed the cost of extending the IRA charitable rollover and the enhanced deductions for food inventory and conservation easement donations.
A troubling finding in the report is the suggestion that charitable giving incentives do not have an impact on giving. “There is some debate about the responsiveness of charitable giving to tax benefits, although most evidence suggests that the effect is small,” the authors state.
The report also questions the rationale for allowing a tax deduction for IRA rollover gifts to taxpayers over age 70 ½: “There is no obvious reason for targeting this particular group of taxpayers for an additional incentive. This age group is the group that is required to take distributions from IRAs each year, and could choose to donate distributions to charity, absent this special incentive.”
However, what the report doesn’t make clear is that the IRA charitable rollover allows eligible taxpayers to make transfers directly to charity without first having to recognize the distribution as taxable income. While taxpayers could choose to donate their distributions to charity without the rollover, it has proven popular with donors and a highly effective giving incentive.
The Council is carefully reviewing this report and collecting information, including anecdotes from our members, to push back on the findings.
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 speaking out in support of 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.
In his remarks this week, top House Ways and Means staffer Harold Hancock indicated that he is optimistic that the private foundation excise tax simplification, part of the America Gives More Act, will pass this year. “We're just waiting for the Senate to see the light and take it up,” Hancock said. This is a positive sign that momentum is building for a lame duck vote on the Act!
The Council’s advocacy toolkit has everything you need to help Congress “see the light” and 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.
Can a Charitable Grant Incidentally Benefit a Third Party?
While grants to nonprofits are charitable, there are times when an unintended third party also benefits from the grant, prompting questions to our Legal Affairs team that query whether the grant is legally allowed.
For example, a community foundation recently received a grant proposal from a nonprofit to build a multi-purpose, moveable shed on a privately-owned ski mountain. The purpose of the shed was to provide youth with outdoor adventure experiences where they could learn about ecosystems. The owners of the mountain agreed to allow the nonprofit to use the property free of charge. The proposal appeared to be a charitable endeavor, but the foundation was hesitant to make the grant because it feared doing so would benefit the private property.
Our interpretation is that the community foundation could move forward with the grant. The benefits to the private landowner, if any, would be incidental to the charitable purpose of constructing the shed for youth education. We advised the foundation to ensure the charitable investment in the shed was adequately protected, and recommended they speak with local counsel on ways to do so.
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 email@example.com.
Nonprofit Employment Statistics from BLS
The Aspen Institute’s Nonprofit Data Project—an effort of the Program on Philanthropy and Social Innovation, shared with us new, specially-released research that they obtained by working with the Bureau of Labor Statistics (BLS) on nonprofit employment.
The data shows that in 2012, nonprofit organizations comprised more than 10 percent of all private sector employment in the country, accounting for 11.4 million employees. In some states, more than 15 percent of private sector jobs are nonprofit.
Most nonprofit jobs (68 percent) are in health care and social services, followed by education (16 percent). Particularly striking is the finding that nonprofit employment steadily increased from 2007 through 2012, even as private employment fell overall during that period due to the recession. This data is compelling, and can help us communicate the value of the sector to lawmakers and the public.
However, BLS will only release this information annually if the nonprofit sector can make the case that it is useful. Aspen Institute urges foundations and charities to demonstrate your interest in the data by sending brief comments to the Bureau of Labor Statistics telling them why this information is useful to you, and asking them to release the research annually.
Election 2014 - How Beltway Politics Shape the Legislative Outlook
Join us on Friday, November 7 from 1:00-2:00 pm ET for a webinar as we get a run-down of 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’s 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.
What's New with National Standards
Join us on Wednesday, November 12 from 3:00-4:00 pm ET for a webinar update on the National Standards program. This program will highlight the value of National Standards to your community foundation, and discuss the program revisions that go into effect in January 2015.
Community foundations voluntarily self-regulate their operations through the National Standards for U.S. Community Foundations™. Two thirds of the community foundation field participate in the program. Every five years, the community foundation field selects representatives to review the National Standards. 2015 marks the tenth anniversary of the first community foundations receiving their accreditation; therefore the National Standards Action Team, the Community Foundation National Standards Board, and the Council on Foundations took this moment to reflect on ensuring the National Standards reflect effective and legal practices of the field as well as provide a streamlined submission process.