Republicans Seize Control of Congress
What an exciting midterm election week! Regardless of which candidates you were routing for, Election Night is always eventful.
Republicans emerged as the new Senate majority with 53 seats, as of this morning’s count. Democrats hold 45 seats (the two Independent senators caucus with the Democrats so they are included in the count). Two seats remain undecided. Alaska has not declared winners, and Louisiana will go to a run-off election in December.
Republican Senator Mitch McConnell (KY), who defeated challenger Allison Lundergan-Grimes (D), will assume the Senate Majority Leader position currently held by Harry Reid (D-NV). Both the House and Senate are now controlled by Republicans, with a Democratic Administration through 2016. This dynamic could prove challenging. As Republicans in Congress seek to advance bills to promote their agenda, a veto threat from the White House will loom in the background.
Meanwhile, every congressional tax-writer—members with seats on the House Ways and Means Committee and the Senate Finance Committee—held onto their seats. Senate Finance Committee member Mark Warner’s (D-VA) race was just called on Friday afternoon when challenger Ed Gillespie (R) conceded. Warner only beat Gillespie by 16,727 votes. Senator Orrin Hatch (R-UT) will become Chairman of the Senate Finance Committee, replacing Senator Ron Wyden (D-OR) who will become the Ranking Member.
In the aftermath of the elections, Representative Paul Ryan (R-WI-1) officially announced his intent to seek the chairmanship of the House Ways and Means Committee. Representative Kevin Brady (R-TX-8) plans to challenge Ryan for the gavel. Brady has more seniority in the House but perhaps less national name recognition. We’ll keep you posted on who wins the coveted chairman’s spot.
House Speaker John Boehner (R-OH-8) and soon to be Senate Majority Leader Mitch McConnell (R-KY) co-authored an op-ed in The Wall Street Journal on Wednesday outlining their priorities for the next Congress. Among the several items they outline is tax reform, and the need to address “the insanely complex tax code…”
At the state level, there was further unseating and a lot of action. For a great assessment of the State gubernatorial and legislative races, we refer you to Politico’s “Election Central” which provides good state-by-state analysis.
There were also ballot initiatives at play in several states, such as minimum wage hikes and the legalization of marijuana possession. The state of Kansas voted “yes” to a state constitutional to allow nonprofits to hold fundraising raffles in the state. Churches, schools, and other nonprofits fought to get the initiative on the ballot after Kansas Governor Sam Brownback (R) vetoed legislation to allow charity raffles last year. Under the amendment, charities will not be permitted to sell raffle tickets through electronic gambling or vending machines or to hire professional firms to run their raffles.
What Does This Mean for Tax Reform?
While it’s too soon to know exactly what the Republican leadership will prioritize starting in 2015, leaders in the field are beginning to speculate about whether they will choose to tackle tax reform.
Sue Santa, the Council’s Senior Vice President for Public Policy and Legal Affairs, told the Chronicle of Philanthropy: "I don’t know if a Republican-controlled congress can present to the president a bill he could sign. Nevertheless it will be a very important marker for what’s ahead with tax reform."
Steve Taylor, Senior Vice President for Public Policy at United Way Worldwide said “there is a ‘fair chance’ that a tax bill will be completed.” Taylor continued, “Senator Hatch told the United Way point blank that if the Republicans took over the Senate, Republicans would enact tax reform in 2015.”
Yet, as other commentators are pointing out, Democrats and Republicans still disagree on fundamental questions such as whether a reformed tax code should raise revenue for the federal government and which tax incentives should be kept. Enacting comprehensive tax reform would require both parties to make significant compromises.
For more on how the elections would affect other issues nonprofits care about, take a look at the Nonprofit Quarterly’s piece on how Republicans might address other policy issues that nonprofits care about, from immigration reform, to climate change, to raising the federal minimum wage.
Congress returns to D.C. next week! After they return on November 12, your members of Congress will only have about three work weeks remaining in the year.
The America Gives More Act is the most significant bill for the charitable sector in years. The bill has already passed the House and the Senate has signaled strong support for several of its provisions. This means we have a genuine opportunity to get lawmakers to include the bill in the tax extenders package expected to be enacted before the end of the year.
While there is a good chance of the provisions in the Act being passed, political insiders are speculating that Congress will look to extend them for 2 years instead of making them permanent. As our readers will recall, the Senate Finance Committee’s EXPIRE Act (S. 2260) extended the tax extenders—including the IRA rollover and the other charitable provisions—for 2 just years. And, the Senate bill does not include the private foundation excise tax simplification or extension of the giving deadline to April 15.
We want these provisions to become permanent law to create certainty for donors and foundations alike—it’s critical that foundations urge their lawmakers to include the permanent charitable provisions in the America Gives More Act in any tax extenders package they consider during the last few weeks of the year!
Join your colleagues in the field in speaking out.
Taking action can be as simple as sending an e-mail to your lawmakers asking for their support for the bill. The Council has created a short handout on the Act, along with draft e-mail language to send to your lawmakers. The handout also includes links to contact information for each congressional office.
Jonathan Greenblatt, current Special Assistant to the President and Director of the Office of Social Innovation and Civic Participation at the White House, will become the new director of the Anti-Defamation League. Greenblatt will succeed current director Abe Foxman next July. In his role with the White House, Greenblatt has led the Administration’s strategies on national service programs such as AmeriCorps, civic engagement, social finance and impact investing. He has often served as a liaison between the Administration and philanthropy and the nonprofit sector.
The Council has worked closely with Jonathan and his colleagues over the years, and we wish him the best in his new post.
Is Your Foundation a Commodity Pool Operator?
Several community foundation members contacted the Legal Affairs team with concerns about new rules coming out of the Dodd-Frank law that they feared would impact them. These rules may obligate some charities to register with the Commodity Futures Trading Commission (CFTC) as a Commodity Pool Operator (CPO) or as a Commodity Trading Advisor (CTA).
In the wake of the Dodd-Frank Act, the CPO and CTA registration rules have been amended so that some foundations may now be subject to registration requirements. However, to fully understand and address this concern, the Council engaged experienced outside counsel to assist in researching the matter.
What we’ve learned is that whether a foundation must register as a CPO or CTA is a very fact-specific determination. It requires careful analysis and consideration of several factors, including whether the foundation is investing assets that belong to other organizations and whether its investment portfolios include commodities. The Council is happy to share its research in more detail at the request of our members.
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 firstname.lastname@example.org.
Hudson Institute's Bradley Center Hosts Final Panel on Philanthropy
Several members of the Council’s Public Policy and Legal Affairs team attended the final event at the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal this week. The final panel looked at “The Historical Split Between Charity and Philanthropy.” Professor David Hammack of Case Western Reserve University, Benjamin Soskis of George Mason University, Scott Walter of the Capital Research Center, and Patty Stonesifer of Martha’s Table, discussed the traditional distinction between charitable organizations and philanthropists and philanthropic institutions. The panel focused on a monograph Soskis prepared for the occasion: Both More and No More: The Historical Split between Charity and Philanthropy.
In Soskis’ words, the history of American philanthropy teaches us “that it is possible to seek more charity and the end of charity with equal vigor; that there is virtue in thinking big and in thinking small; that the imperatives of charity and philanthropy can both guide a single institution; and that there is ample space for each in the human heart.”
The Council on Foundations is deeply saddened that the Center is closing its doors after 12 years. Under the expert leadership of Bill Schambra, the Bradley Center has provided unique, thought-provoking discussion on all aspects of philanthropy and the nonprofit sector, from a variety of disciplines and points of view. The closure of the Bradley Center leaves a void in the field, and the Council aims to host programming that will help fill that space. We wish Bill the best of luck and sincerely hope we have not heard the last of his pithy and thoughtful views on our world.
Foundation Center Releases New Report
This week Foundation Center released the 2014 edition of their report, Key Facts for U.S. Foundations. Among the many facts in the report, foundation giving grew to $54.7 billion in 2013 and foundations accounted for 16% of all private giving in the United States. Some fun facts from the reports: New York is home to the most foundations and over one quarter of U.S. foundations are located in the South.
Join us next 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.