As a reminder to our readers, Washington Snapshot will be taking a break next week and the week of the 28th.
With many Members of Congress out of town and back home in their districts for the August recess, much of the action has shifted away from Washington and toward local communities. We strongly encourage our readers to seize this opportunity and connect with your lawmakers!
Whether you schedule a meeting with them in their district office, write an op-ed for your local paper, tweet at them, or invite them to attend a community event you are involved in—now is the time to convey to them the value of philanthropy in their hometowns and urge them to support policy that strengthens its impact.
Specifically, ask them to support legislation that includes the provisions from the America Gives More Act, including: making permanent the IRA charitable rollover, simplifying the private foundation excise tax, and providing enhanced deductions for contributions of food inventory and land conservation easements. Also make sure to ask them to come to personally see the great work you’re supporting in their communities.
To assist you in this process, the Council has released a refreshed edition of our August Advocacy Toolkit. As always, the Council’s Public Policy Team is here to help. Please do not hesitate to reach out to our Policy and Legislative Associate, Serena Jezior, with questions or for additional resources.
Senate Finance Committee Releases Report on IRS Targeting Controversy
The investigation, stemming from a suspected mismanagement of audits for conservative social-welfare groups that came to light in May of 2013, and involved a major setback when key email correspondence of Lois Lerner, then Director of the Exempt Organizations Division at the IRS, was lost.
The report found that no laws were broken, though, Republicans and Democrats on the committee present differing opinions on the motivations for these actions by the IRS. We still expect that the IRS will issue new rules regarding the activity of 501(c)4 and (c)3 organizations at some point this year.
JCT Weighs in on Extenders
This week, the Joint Committee on Taxation (JCT) released its “Dynamic Score” for the 2-year “tax extender” package that was passed by the Senate Finance Committee last month. As our readers will recall, the package contained several charitable provisions, including the IRA charitable rollover and deductions for contributions of food inventory and land conservation easements.
In its report, the JCT finds that, though this package would not be revenue neutral if it were passed, it would produce a “temporary boost to the economy” that would “dull the effect.”
The Joint Committee on Taxation is a group that includes members from both the House Ways and Means and Senate Finance Committees, and serves as the primary congressional resource for informing these committees of the economic impacts of proposed tax legislation.
Appropriations Committees Vote to "Zero Out" the Social Innovation Fund
In recent months, the Appropriations Committees in both the House and Senate voted to “zero out” the budget of the Social Innovation Fund (SIF) for fiscal year 2016. The SIF is a program, administered by the federal Corporation for National and Community Service, that makes grant awards to grantmaking intermediaries like foundations, who then match their federal grants dollar-for-dollar and host competitions to select nonprofits to receive the funds.
This week, former Director of the SIF, Paul Carttar, wrote an open letter to Congress to share his thoughts on the impact of this action, urging Congress to consider the full extent of potential implications of this before passing it into law.
IRS Releases 2015-16 Priority Guidance Plan
The Treasury Department released its priority guidance plan for 2015-2016 on July 31st, including several items that impact tax-exempt organizations. As our readers will recall, the priority guidance plan identifies and prioritizes tax issues that the agency aims to address through regulations or revenue rulings, revenue procedures, notices, and guidance throughout the upcoming year. The Council submitted comments to Treasury back in May, outlining issues important to our members that we’d like them to prioritize for the coming year. The Council’s public policy and legal team has a strong working relationship with IRS decision-makers, and we seize every opportunity to communicate the priorities of our members and the philanthropic field to regulators.
The 2015-2016 plan prioritizes items the Council requested in our comments, including:
- Guidance on mission-related investments—specifically, whether foundations may apply the three-part program-related investment test to mission-related investments; and
- Guidance on the statutory provisions related to donor advised funds, which became law in the Pension Protection Act of 2006 (PPA).
The plan does not include several of the updated guidance items we asked to be included, such as guidance on economic development as charitable activity as applied to foundation sponsored student loan forgiveness programs in addition to or in replacement of scholarship programs; updated guidance on economic development as charitable activity generally; and an update to Revenue Procedure 92-94 (which governs equivalency determinations for gifts to foreign organizations).
Also of interest to our readers in the plan is the issuance of final regulations on section 509(a)(3) Type III supporting organizations, which have been proposed and temporary since 2009. The plan also includes guidance on charitable contributions of inventory; specifically, updated guidance on the enhanced charitable deduction for contributions of property if the property is used by the donee “solely for the care of the ill, the needy, or infants” and certain other requirements are met.
Finally, the plan added guidance on qualified contingencies of charitable remainder annuity trusts. A charitable remainder annuity trust generally must terminate after a fixed term (not more than 20 years), upon the death of an income beneficiary, or upon the occurrence of a “qualified contingency.” However, the current rules give trustees the authority to terminate the trust early without jeopardizing the trust’s tax-exempt status.
For more information on the 2015-2016 priority guidance plan, please contact Policy Director and Counsel Katherine LaBeau.
Nonprofit Leaders Request Extension on DOL Proposal
On Wednesday, the Council joined 146 organizations from across the nonprofit and philanthropic sector in submitting a letter to the Department of Labor (DOL) requesting a 2-month extension on the comment period for a proposed change to regulations under the Fair Labor Standards Act (FLSA).
The letter underscores the magnitude of the potential implications that this policy change could have on charities’ ability to serve their communities, and informs that a “secondary, higher-level analysis of these rules’ impact” will require more time.
If granted, this extension would push back the comment deadline to November 3rd. For more information on submitting comments, click here.
Exclusive from our colleagues at the National Council of Nonprofits.
North Carolina Tax Debates Reflect Nonprofit Challenges Across the Country
Legislators in North Carolina remain hard at work this month debating tax policy proposals that the nonprofit and philanthropic communities have experienced in recent years, throughout the United States. This week, the Senate tax-writing committee voted to remove language from a bill that would have severely reduced the nonprofit sales tax exemption and added charitable donations to a cap on itemized deductions.
With this positive action to preserve charitable giving incentives, if it holds, North Carolina will follow Kansas and Vermont in rejecting curbs to important state tax incentives in 2015. The Maine Legislature went the opposite direction this year by adding charitable giving to an existing cap on itemized deductions; it did, however, reject numerous attempts to reduce property tax exemptions for nonprofits.
As the giving incentive challenges appear to be abating in North Carolina, a renewed effort was launched in that state to adopt a Taxpayer Bill of Rights (TABOR) bill that seeks to limit taxes and the spending power of the legislature. In recent years, TABOR proposals have been considered in Arizona, Colorado (where it was enacted), Maine, as well as North Carolina in 2012 and 2014. Nonprofits typically have united in opposing TABOR in other states where it has been introduced.
The North Carolina version of TABOR would amend the state constitution to cap the individual income tax rate at 5 percent, limit growth of state spending to the total of inflation plus state population growth, and create an Emergency Savings Reserve Fund that could only be spent upon two-thirds votes of the House and Senate.
Concerns about the proposal focus on the likelihood that new taxes could be imposed on nonprofit and philanthropic assets and the potential offloading of public services onto the social sector as revenues fail to meet growing needs. The North Carolina TABOR bill is up for a Senate vote next week. If it passes the Senate and House by 60 percent majority votes, it would be placed on the ballot of a March 2016 primary election as a constitutional amendment.
A Spotlight, Philanthropy, Collaboration, and Community Engagement
This week, the Chronicle of Philanthropy featured an article that examines two recent movements that have gained major traction in advancing their causes through advocacy and civic engagement: the Global Poverty Project and #BlackLivesMatter movement.
This piece highlights the growing trend of socially driven movements, and the role that philanthropy can play in supporting these causes. It contrasts the Global Poverty Project—a highly organized and structured movement—with the #BlackLivesMatter movement, which is much more informal and evolved largely through online channels.
The idea at the heart of this article builds on the theme of “Leading Together” which kicked-off at the Council’s Annual Conference, and was further expanded upon in a piece by the Council’s President and CEO, Vikki Spruill, in a piece in the Huffington Post earlier this summer where she wrote: “In order to make real progress, we must harness our own individual strengths for the common purpose. Aligning funding strategies and sharing resources across sectors will ensure that philanthropy’s transformative impact on society will approach its full potential.”