Take Action Now on Extenders
Hundreds of thousands heard the message!
Yesterday marked the kickoff in a series of days over the next three weeks when the Council and our colleagues in the field will commit 5 minutes for philanthropy, and connect with Members of Congress about reinstating the expired charitable “tax extenders.”
Individuals and charitable organizations across the sector joined us on Twitter to reach lawmakers using the hashtag, #Act4Good—encouraging them to demonstrate their support of philanthropy by taking swift action on “extenders.” With the engagement of our members and colleagues, tweets with the #Act4Good hashtag reached hundreds of thousands of people!
But, the effort must continue! With two weeks left in this session of Congress, we need your help!
Urge Congress to demonstrate support for philanthropy by making these charitable extenders permanent, and by including additional provisions that would expand the IRA charitable rollover to allow gifts to donor advised funds and simplify the private foundation excise tax in an end-of-year "extender" package.
Don’t miss our next day to engage! Join us in taking 5 minutes on Tuesday, December 8th to email your lawmakers.
To learn more about this advocacy initiative, and the current status of "extenders," join us this Friday, December 4th for our Washington Update: End-of-Year Hill Activity webinar. Click here to register now!
In addition, our colleagues at Independent Sector circulated an open letter, which the Council signed, to leadership in the House and Senate urging their support for making permanent the three charitable tax extenders: 1) IRA charitable rollover, 2) enhanced deduction for contributions of food inventory, and 3) enhanced deduction for contributions of conservation easements.
Bill Introduced to Simplify Car Donations
Representative Todd Young (R-IN-9) recently introduced the “Charitable Automobile Red-Tape Simplification Act”, or “CARS” Act.
Currently, when a car is donated for charitable purposes, the donor may claim a deduction for the amount the car is sold for by the charity. Under this structure, the donor must wait to claim a deduction until the charity is able to sell the car. According to a statement by Young, this delay in time between the donation and claiming a deduction has contributed to a decline in donations of cars to charity by 83.1% since 2004.
This new bill would simplify the process for donating cars with a fair market value between $500 and $2,500. Under this proposed structure, as long as donors of cars within this value range both “1) obtain a valuation from an authorized online valuation service (such as Kelley Blue Book), and 2) the receiving charity verifies the physical condition of the vehicle,” a deduction may be claimed at the time of donation.
Co-sponsor of the bill, Linda Sanchez (D-CA-38) noted that, “By making this simple change to the charitable automobile donation process, the CARS Act will make it easier for people to donate their cars to charities that provide… critical services.”
Comments for IRS Gift Substantiation Proposal Due Soon
As our readers will recall, the IRS has proposed a new rule on an alternative way for charitable organizations to acknowledge charitable gifts. In lieu of a contemporaneous written acknowledgment, the rule would allow charities to file an information return by February 28th each year that includes taxpayer identification information for donors who contribute $250 or more, and provide a copy of the return to these donors.
The Council believes this rule is problematic. We’ve identified donor privacy concerns with the reporting of personal donor information like Social Security numbers. The rule would create a “slippery slope,” with the IRS ultimately treating this reporting as mandatory or as a best practice. Collecting personal information from donors would also be a significant administrative burden for nonprofits with potentially low success as donors may hesitate to provide the necessary information in a timely manner.
Comments on this matter will be due by December 16th. The Council is finalizing comments, and will be submitting them in the coming days. Several of our colleague organizations are also submitting comments. For more information about sending your own comments, click here.
If you have questions, or would like more information on this topic, please feel free to email our Policy Director and Counsel, Katherine LaBeau at: firstname.lastname@example.org.
Update on Financial Action Task Force (FATF)
As you may know, the Financial Action Task Force (FATF) is seeking to update its Interpretive Note (IN) to FATF Recommendation 8, which sets standards for how countries can implement counterterrorism regulations that apply to nonprofits.
Laws inspired by Recommendation 8 can often be overly restrictive and deter grantmaking and charitable giving in many countries, and this is a great opportunity to revisit the standards that lead to these laws. This process could result in a much more civil society-friendly Interpretive Note that would help reduce restrictions to cross-border grantmaking in individual countries.
In response to a public consultation solicitation, the Council submitted comments on November 27th urging FATF to revise the IN to reflect an approach that is proportionate to the actual risk posed by individual charitable organizations. “As countries impose restrictive counter-terrorism regimens with disproportionate burdens to entry for grantmakers, millions of charitable dollars are diverted elsewhere or simply not granted at all,” we explained in our comments.
Donor Initiated Funding and the Public Support Test
The Legal Affairs team was recently contacted with an interesting question. A donor with a donor advised fund at a small community foundation holds a yearly fundraising event. To date, the donor has always assumed full responsibility for the event, collected all contributions and donated the proceeds to the community foundation as a lump sum. The community foundation acknowledges the contribution as a single gift from the donor.
However, as the success of the event grows each year, the money raised has become a significant portion of the community foundation’s annual income. The concern now is that by treating the contribution of the event proceeds as a single donation from the donor, will the community foundation be at risk for failing its public support test and “tipping” into private foundation status?
The Council’s legal team responded that community foundations generally have two options when it comes to donor initiated fundraising events. First, they can treat the event as a foundation-sponsored event and individual contributions can be treated as gifts directly to the community foundation. All individual donors would receive tax receipts or gift acknowledgement letters (noting any goods or services received in exchange for the contribution) and the individual donors can receive the appropriate tax deduction. However, foundation sponsored events can be a lot of work for the foundation, not to mention potential liability concerns associated with holding events.
The second option is to treat the event as a private event hosted by the donor. The contributions collected by the donor would be aggregated and the donor makes a single gift to the community foundation. Only the donor/fund holder would be entitled to receive the tax receipt or gift acknowledgment letter and any corresponding tax deduction. This option relieves the foundation of the administrative work and potential liability concerns but can lead to the tipping problem described above. Additionally, individuals contributing to the event do not share in the tax benefit.
In this case, the tipping problem was a real concern and the community foundation was at risk for failing the public support test. Therefore, transitioning the event to a foundation-sponsored fundraiser was the best option.
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.
Exclusive from our colleagues at the National Council of Nonprofits.
Governors Order Nonprofits to Deny Services to Syrian Refugees
More than 30 governors have declared that their states will not accept refugees from Syria, claiming security concerns following the Paris terrorist attacks, and several are attempting to block nonprofits' efforts to assist in refugee resettlement efforts pursuant to existing government contracts. Recently, New Jersey Governor Christie instructed nonprofit organizations to notify the state of any Syrian placements in the state. Likewise, Indiana Governor Pence ordered state agencies to stop resettlement procedures for Syrian refugees, and Indiana’s Division of Family Resources reportedly sent letters to two nonprofits, demanding that they suspend resettlement efforts for families due to arrive soon.
The Texas Health Commission this week filed suit against the nonprofit International Rescue Committee and the federal government in an attempt to force the nonprofit to comply with an order from Governor Abbott that nonprofits not assist Syrian refugees. Aid to refugees from other countries is not affected by the Governor’s order, raising equal protection and national origin concerns, among many others.
The federal government informed many nonprofits last week that the actions and objections of the governors are not controlling. "States may not deny (Office of Refugee Resettlement) funded benefits and services to refugees based on a refugee's country of origin or religious affiliation,” wrote Robert Carey, director of the office. He went on to explain, “Accordingly, states may not categorically deny ORR-funded benefits and services to Syrian refugees," adding that states and agencies that do not comply would be violating the law and "could be subject to enforcement action, including suspension or termination."
The refugee challenge raises larger and recurring concerns about government infringement on the independence of nonprofit organizations based on contractual relationships. Earlier this year the New York Senate and Assembly passed a bill that would have defined as “public employer” any nonprofit that receive at least 50% of its budget from municipal, state, or federal sources. Governor Cuomo recently vetoed the bill that would have imposed costly workplace violence assessments and mitigation programs on the grounds that it was vague and did not also apply the extra costs and burdens on for-profit businesses.
Domestic Philanthropy and Sustainable Development Goals
The Council is excited to announce two events this month that will explore how local philanthropy can support the universal sustainable development goals, in Little Rock and San Francisco. Speakers at both events will discuss how this new universal framework, adopted by the United Nations in late September, is relevant to the domestic programs of funders, including ongoing work to improve education, health, and workforce development programs, as well as to reduce poverty and inequality across the United States.
The Council’s president and CEO, Vikki Spruill, also recently published an article in the Alliance Magazine which discusses how American foundations can see themselves in these Sustainable Development Goals.
As she says, “The SDGs offer one of the broadest and most unifying global frameworks for eradicating poverty everywhere. Countries can work together on global poverty but each country, including the US, must also focus domestically, especially given the 15 per cent of Americans that live in poverty today. What remains unclear is whether US philanthropic organizations working on domestic issues, from community foundations to corporate giving programs, can see themselves in the SDGs.” We look forward to discussing this in detail with funders in Little Rock and San Francisco later this month.
You can learn more about what funders should know about the SDGs on the Council website.
White House Briefing on Syrian Refugee Crisis
On Tuesday December 1st, the Council connected our members to the White House for a briefing about the Syrian refugee crisis. Hosted by the President's Senior Adviser Valerie Jarrett who discussed the US government’s response to the crisis, the 30-minute call included discussion with several corporate funders about how they are responding to the crisis and connected our members with Interaction (the largest alliance of U.S.–based international NGOs who focus on disaster relief and sustainable development) who described how different NGOs are currently responding on the ground. The main take-aways from the discussion included:
- The UPS Foundation shared details of its commitment to providing financial, in-kind, and volunteer support to aid refugees in partnership with various NGOs.
- Airbnb described its efforts to provide travel credits to relief workers helping refugees, in addition to launching a donation site to match contributions for relief-worker accommodations.
- InterAction highlighted its recently launched Hope for Syria fund and donation site, which will evenly distribute donations directly to humanitarian assistance organizations, which provide the much needed financial assistance to Syrian refugees in the region and domestically.
You can find out more information about the Syrian crisis and the government’s response at aidrefugees.gov and can also reference the Council’s regularly updated resource page about the refugee crisis.