America Gives More Act Setback
Yesterday, the Senate passed two trade bills by replacing the language of H.R. 644, the America Gives More Act, with trade provisions. This legislative practice of taking a bill that has passed one chamber, gutting the language and replacing with a different measure is not uncommon in Congress. In this case, it's certainly unfortunate for the America Gives More Act, to pass two trade bills that would allow Republican and Democratic Senators to reach a consensus on the larger trade package being considered in the Senate.
The Senate wanted to advance those trade bills quickly, and in order to do so, they needed to use House-passed bills that were already on the Senate calendar. As a result, H.R. 644, and another bill, H.R. 1295, the IRS Bureaucracy Reduction and Judicial Review Act, were stripped of their original language and used as vehicles to pass trade bills.
As a reminder, H.R. 644 passed the House in February. It included simplification of the private foundation excise tax to a flat rate of one percent, made the IRA charitable rollover permanent, and made permanent the enhanced deductions for conservation easement and food inventory donations.
What's Our Next Step?
The use of the H.R. 644 bill number is a minor setback, not a dead end, on the path to making the provisions in the America Gives More Act permanent law. The charitable provisions from H.R. 644 are still very much at play!
Champions in the House and Senate are still very committed to passing these charitable provisions as quickly as possible. Senators have made clear that the choice to use the H.R. 644 shell for the trade bill in no way reflects their views on the charitable giving incentives. Rather, they emphasized that while they prioritized the trade agreement this week, they will refocus attention on the charitable provisions later this summer.
The House will need to originate a bill again, as they have consistently for the past year. Top House Ways and Means Committee members have expressed a strong commitment to taking up these provisions again as soon as possible.
The Council and the large group of our colleague organizations who are fighting for this legislation are undeterred. The message remains the same—tell your lawmakers to pass the charitable provisions in the America Gives More Act as swiftly as possible!
Senate Tax Reform Working Groups - Consensus Possible?
Earlier this month the Council submitted comments to both the Individual and Business Senate Finance Committee Tax Reform Working groups, sharing our policy priorities for future tax reform. The Committee has released the public comments, but has not yet come forth with proposals or recommendations for tax reform.
Last week, the Working Groups began briefing their Senate Finance Committee colleagues on discussions of their work over the past few months. Senate Finance Committee Chair Orrin Hatch (R-UT), expects the Working Groups to make recommendations on tax code reform. Working Group activity is scheduled to conclude by the end of the month. We could see tax reform recommendations early this summer
One member questions whether there will be enough consensus to move forward. Senate Republican Whip and Finance Committee member John Cornyn, (R-TX), has commented, "So far we are not seeing the commitment to actually doing anything." He added that the White House is not invested in tax reform, and that there is a conflict between congressional Republicans who want to lower the top marginal tax rates, and the Administration, which would prefer revenue-raising tax code changes.
We will keep our readers posted on the Working Groups’ progress and any tax reform recommendations they release.
Foundation and non-profit leaders gathered at the National Red Cross Building in Washington, D.C. on May 12 to announce another $126 million has been committed to support veterans and military families through the Philanthropy-Joining Forces Impact Pledge (P-JFIP). The Pledge has a goal to gather commitments from corporate funders and foundations to invest $500 million over five years in veterans and military philanthropy
The May 12 announcement builds on the 2014 inaugural effort of the founding partners of the P-JFI pledge, the Bristol-Myers Squibb Foundation, the Blue Shield of California Foundation, the Robert R. McCormick Foundation, and the Lincoln Community Foundation in Nebraska. Tuesday’s event, hosted by the Council on Foundations and the Veterans Philanthropy Exchange, was a celebration of work completed, of new commitments and pledges made, and of effective strategies and accomplishments. New Pledges were adding to the April 2014 Pledge commitments of $170 million.
The convening’s plenary program featured Council on Foundations President and CEO Vikki Spruill, Veterans Affairs Secretary Robert McDonald, Brigadier General Ivan Denton of the National Guard Bureau, Lee Woodruff, Co-founder of the Bob Woodruff Foundation, Sen. Elizabeth Dole of the Elizabeth Dole Foundation, and Col.(Ret.) Miguel Howe of the George W. Bush Institute.
Secretary McDonald told the audience that the philanthropic sector’s support is crucial and that the public sector must address the transition needs of veterans and military families in partnership with the private sector.
The six new pledge members include: Conrad N. Hilton Foundation, The Jewish Women's Foundation of New Jersey, Lockheed Martin Corporation, New York State Health Foundation, Walmart and the Walmart Foundation, and the WebMD Health Foundation.
To learn more about this important work, check out www.cof.org/veterans.
Coincidence or a Dubious Undertaking: Why Public Charities Should Follow Private Foundation Rules
First, let’s all take a collective sigh of relief now that scholarship season is over.
Recently, the Council’s legal team was contacted by a community foundation regarding a scholarship they had just administered. The scholarship was set up earlier in the year by a donor who restricted the criteria to 1) the highest-ranking senior at an area high school, and 2) who will matriculate to XYZ College. Whether it be coincidental or a subterfuge of benevolence on the part of a self-dealing donor, it was the donor’s grandchild who happened to be the highest-ranking senior who was also enrolling at XYZ College. The foundation was never made aware that a relative would apply for the scholarship. Worried that the award to the grandchild would be in contravention of IRS rules relative to scholarships and/or create a public relations firestorm, the foundation sought guidance from the legal team.
The legal team advised that it was unaware of any IRS rules that prohibited relatives of a donor from applying for a scholarship funded by that donor. The community foundation, a public charity, would not be subject to the private foundation rules relating to grants to individuals (IRC § 4945).
The more concerning matter, however, was that granting the scholarship may appear a dubious undertaking.
Indeed, both the legal team and the foundation acknowledged that there is the perception of conferring a private benefit. The scholarship was conveniently set up the year the grandchild was to graduate high school. And the grandchild was to enroll at the restricted college. All this could very well cause one to wonder whether the scholarship at the community foundation was really a directed and earmarked grant to the relative.
If the foundation was willing to re-administer the scholarship, the legal team recommended removing the “highest-ranking senior” criterion thereby broadening the charitable class. And, the legal team advised that while public charities are not required to follow the private foundation rules on scholarships, they may consider instituting such policies to avoid similar problems in the future.
For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs team at email@example.com.
Access to the Council’s legal team is a valuable member benefit. Council attorneys are available to discuss your legal questions and to provide legal information by telephone, email and through our various publications and newsletters. This information is intended for educational purposes and does not create an attorney-client relationship. The information is not a substitute for expert legal, tax or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.
Update on California Law Change
Last week, our legal team brought you a piece exploring a case in California where the Ninth Circuit Court of Appeals upheld a California regulation requiring charities that are registered to solicit contributions in California file an unredacted copy of IRS Form 990 Schedule B.
This week, Forbes wrote a detailed piece explaining the case and the arguments involved. If you have questions about this issue we encourage you to reach out to Council’s Legal Affairs team at firstname.lastname@example.org.