Just as we were preparing to send Snapshot to our readers, we received word that Speaker of the House, Representative John Boehner (R-OH-8) will retire from Congress at the end of October. This announcement came during a meeting with GOP leaders this morning.
The Council would like to thank Speaker Boehner for his service to the country, as well as his support of the philanthropic sector throughout his tenure in Congress.
Pope Calls for Cooperation for Common Good in Address to Congress
For a couple of hours on Thursday, the work on Capitol Hill came to a pause so that Members of Congress could attend the historic address of Pope Francis. We, too, took a few moments away from our work to watch with great interest. The Pope delivered a powerful address. We were particularly moved by these few lines that remind our Congress why they are elected, and echo the values of philanthropy:
“Each son or daughter of a given country has a mission, a personal and social responsibility. Your own responsibility as members of Congress is to enable this country, by your legislative activity, to grow as a nation. You are the face of its people, their representatives. You are called to defend and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common good, for this is the chief aim of all politics. A political society endures when it seeks, as a vocation, to satisfy common needs by stimulating the growth of all its members, especially those in situations of greater vulnerability or risk. Legislative activity is always based on care for the people. To this you have been invited, called and convened by those who elected you.”
Just Released: Final International Grantmaking Rules
In 2012, the Department of Treasury and the IRS issued proposed regulations applicable to private foundations seeking to make grants to foreign organizations using equivalency determinations. At the time, the Council submitted comments in support of the rules, and urged Treasury and the IRS to consider making additional clarifications to the rules that apply to international grantmaking.
Today, Treasury and the IRS published a final version of these rules in the Federal Register. The final regulations take up many of the issues that the Council has asked Treasury to address for years in an effort to reduce barriers to global grantmaking for foundations. We commend Treasury for finalizing these rules.
Council President and CEO Vikki Spruill was quoted in a Bloomberg piece [subscription only] on the rules: “These final regulations will allow foundations to confidently rely on equivalency determinations provided through shared repositories like NGOsource,” Spruill stated.
The regulations, Reliance Standards for Making Good Faith Determinations, broaden the range of professionals on whose written advice a private foundation may rely for equivalency determinations for grants overseas. They also clarify that sponsoring organizations of donor-advised funds may rely on the rules for international distributions from DAFs, and narrow the circumstances in which a grantor can make use of a grantee affidavit to make a good faith determination of equivalency.
When the proposed rules were issued in 2012, TechSoup Global and the Council launched the first equivalency determination repository. NGOsource was established in 2013 upon interpreting the proposed regulations as paving the way for these repositories. These final regulations will further strengthen grantmakers’ confident reliance on equivalency determinations through repositories.
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.
Exclusive from our colleagues at the National Council of Nonprofits.
Property Tax Exemptions Under Review in the States
A meeting yesterday of the Montana Revenue and Transportation Interim Committee brings to the forefront recurring questions about nonprofit "community benefit" and property tax exemptions. Whether brought up in study committees convened by legislatures or in court cases, reconsideration of what it means to be a tax-exempt entity is a trend worth watching carefully.
The Montana study committee is focused on the community benefit brought by nonprofits. A background brief provided by committee staff suggests that the definition of “community benefit” centers on hospitals. The panel’s work follows a bill enacted earlier this year requiring owners of tax-exempt property to reapply for their exemption(s) in 2016.
Earlier this month, the Wyoming Joint Revenue Interim Committee continued its investigation of exemptions for nonprofits by reviewing an analysis of econometric modeling. A hearing in May focused on the criteria for determining whether a nonprofit’s use of a particular property satisfies the public policy underlying the exemption.
The attention in the states is not limited to legislatures reconsidering and recrafting existing statutes. A constitutional amendment on nonprofit property tax exemption pending in Pennsylvania arose as a result of a 2011 state Supreme Court decision denying property tax exemption to a Jewish camp on the grounds that it did not satisfy the court-made test for the exemption. That case, and the legislative response, reflect similar actions in Illinois and Minnesota where the state Supreme Courts denied tax exemptions to a day care center and a major hospital, respectively, on the grounds that the nonprofits’ operations did not comport with new interpretations of state laws. (See summaries of those cases and the resulting legislation.)
Most recently, a judge in New Jersey rejected the longstanding property tax exemption of a hospital chain, ruling that the profits made and compensation paid by hospitals no longer fit the statutory definition in state law. The same judge allowed a case to continue against Princeton University in which local residents sued to revoke the institution’s tax exemption on the grounds that Princeton shares patent royalties with professors and engages in other profit-making activities.
New Resource for Foundations on Mission-Driven Advocacy
Our colleagues with Alliance for Justice’s Bolder Advocacy initiative released a new resource for foundation advocacy this week: the Philanthropy Advocacy Playbook. This resource is meant to provide guidance for foundations on how to work advocacy into their everyday activities.
Included in the resource is information about the rules of advocacy for foundations, examples of how advocacy can be used as a strategy for pursuing organizational initiatives and mission, and tips for building organizational buy-in for adopting advocacy efforts.
As a reminder, the Council’s Advocacy Toolkit also includes information about navigating the rules of advocacy and lobbying that apply to all types of foundations. For more information, contact our Legal Affairs team.
Higher State Taxes Means Less Giving, New Report Says
On Wednesday, the American Legislative Exchange Council (ALEC) released a new report, State Factor: The Effect of State Taxes on Charitable Giving. The report explores patterns of philanthropic giving by states over a period of time.
An economic analysis of these trends finds that “When all state taxes are considered, a 1 percentage point increase in the total tax burden is associated with a 1.16 percentage point drop in charitable giving per dollar of state income.” To read the full report, click here.