Washington Snapshot - October 30, 2015

Congress IconNews from the Hill

Ryan is Elected Speaker of the House

Yesterday afternoon, Representative Paul Ryan (R-WI-1) was elected as the next Speaker of the House. This marks the conclusion of a month-long process for the GOP to select a viable candidate for this position.

With Ryan’s ascension to the Speakership, the position of Chairman of the powerful House Ways & Means Committee is now vacant. As our readers know, the Ways & Means Committee has jurisdiction over all of the tax policy decisions that impact the structure and operations of charitable organizations. In the interim before a new Chair is selected, Representative Sam Johnson (R-TX-3) will step in to temporarily lead the tax-writing committee. Currently, there are two individuals running to replace Ryan as Chairman: Representatives Pat Tiberi (R-OH-12), co-chair of the House Philanthropy Caucus and a strong supporter of the charitable sector, and Kevin Brady (R-TX-8).

It is expected that a new Chairman will be chosen next week. Stay tuned for updates!

Congress, White House Reach 2-Year Budget Deal

This week, it was announced that Congressional leaders and the White House had struck a 2-year budget deal. The deal is an important step towards creating more certainty around federal funding and eliminating some potential fiscal battles down the road. The President is expected to sign the bill into law before the November 3rd debt limit deadline.

The deal provides an additional $80 billion in spending over the next 2 years, over the amounts previously set by sequestration. It also raises the debt ceiling, an item on Congress’s list of “must-dos” this fall. The House passed the plan on Wednesday, over the strong objections of Republican lawmakers associated with the Freedom Caucus.

Senate Majority Leader Mitch McConnell (R-KY) has begun the procedural process necessary for the Senate to vote on the agreement, which is expected to occur before the November 3rd deadline to raise the debt ceiling.

Prior to being elected Speaker of the House, Representative Paul Ryan (R-WI-1) expressed his support for the deal, stating: “What has been produced will go a long way toward relieving the uncertainty hanging over us, and that’s why I intend to support it. It’s time for us to turn the page on the last few years and get to work on a bold agenda that we can take to the American people.”

Executive & Regulatory News IconExecutive & Regulatory News

Political Activity Regs Coming in 2016, Koskinen Says

At a Tuesday Senate Finance Committee hearing, IRS Commissioner John Koskinen explained that he hoped to issue revised proposed regulations on nonprofit political activity early next year and finalize the regulations as swiftly as possible. He also stated that the regulations will not impact activity related to the 2016 presidential elections, since they will likely not become effective until 2017.

As our readers will recall, the IRS issued proposed regulations governing the political activity of 501(c)(4) organizations in 2013. The proposed rulemaking received a record-breaking number of public comments, many opposed to the rule as written. In our own comments to the IRS, the Council expressed concern about how an evolving regulatory environment for nonprofit political activity would impact 501(c)(3) organizations. This new proposed rulemaking is an effort to address the public comments, and is expected to regulate the political activity of all 501(c) organizations. We anticipate that this rule will directly address 501(c)(3) activity, and will be closely scrutinizing it and preparing to respond.

Meanwhile, some Republican Members of the House moved to initiate impeachment proceedings against Koskinen this week for the IRS’s handling of the nonprofit targeting scandal. The move is considered by many to be largely political and likely to move forward.

Legal IconTrending in Legal Affairs

As a reminder, Council attorneys, Suzanne Friday and Bryan Del Rosario will host the second of Legal Affairs’ quarterly “Legal Lunch” series for members. The discussion topics will range from donor advised funds, to corporate foundations and self-dealing, as well as the laws relative to planned giving from the charity’s point of view, and much more.

Stay tuned for more information!

For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs team at legal@cof.org.


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.


State Policy IconHappening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

National Council of Nonprofits logo

State Budget Impasses Demanding Innovative Solutions from Nonprofits, Foundations

Sunday, November 1 marks the four month anniversary of two states operating without budgets and revenue shortfalls elsewhere are causing policymakers to propose drastic cuts to programs typically performed on behalf of governments by nonprofits. The challenges to nonprofit operations, impact, and sustainability are growing, and several state associations of nonprofits, in conjunction with foundations, are working to develop short-term remedies as they look to more sustainable solutions.

In Pennsylvania, many nonprofits have not been paid for services since July 1. The Pennsylvania Association of Nonprofit Organizations is hosting weekly calls among nonprofits to provide updates, share experiences, and brainstorm ideas for finding their collective voice. While working with national and local groups to develop long-term solutions, PANO most immediately is leading discussions including crowdfunding as a temporary funding source, how to secure lines of credit, and employment law questions.

As in Pennsylvania, the Illinois state legislature has yet to pass a budget, and contracts with nonprofits have stopped being paid unless the state is forced by court order or mandate. Donors Forum, the state association of nonprofits, is working with the foundation community to develop some stopgap solutions. Efforts are underway to generate an emergency response fund to promote advocacy and to host a briefing with the foundation community to raise awareness about the impact of the budget impasse on communities.

Although the Connecticut Legislature and Governor reached agreement on a budget for the 2016 fiscal year, revenues have come in less than projected, forcing the Governor to rescind previously authorized spending. Social services programs and a few other items were targeted for severe, immediate cuts designed to close a $103 million shortfall and more cuts were predicted. CT Nonprofits and the #PeopleMatter Coalition have experienced some success in communicating the message to policymakers and the public that “further cuts to nonprofit providers will be devastating to our communities, the individuals and families we serve, and the state economy.”

Finally, the news from Delaware is cautiously optimistic, at least when it comes to preparedness. The state is experiencing a revenue shortfall of $50 million and anticipating budget gaps of between $150 million and $200 million in the coming fiscal year. To get ahead of looming budget shortfalls, Delaware Alliance for Nonprofit Advancement (DANA) and several other groups have been meeting regularly as the “Delaware Revenue Solutions Working Group.” The Working Group has produced a working paper and compiled an Advocacy Toolkit that includes key milestones in the budget process to track progress, advocacy ideas, a calendar of public meetings, and more. Their work is focusing on bringing all of the parties to the table before the crisis hits, and to keep people talking rather than suffering the intransigence seen in Illinois and Pennsylvania.

News IconPhilanthropy News and Op-Eds

Chronicle Profiles DAF Giving

The Chronicle of Philanthropy’s annual Philanthropy 400 list for this year illustrates that donor advised funds are a form of private giving that supports the country’s largest charities. For the 2015 list, United Way Worldwide remains in the number one spot, bringing in the most revenue from private support, followed by Fidelity Charitable Gift Fund in the number two spot.

Also this week, the Chronicle of Philanthropy profiled donor advisors with Fidelity Charitable to explore how donors use donor advised funds (DAFs) to think about gifts.

The Council on Foundations and the Council of Michigan Foundations enlisted the Urban Institute to conduct a study about how community foundations use donor advised funds as one tool to connect donors to the causes that matter most. This information is available on the Council’s website.