Since Congress is out of session this week, today’s edition of Washington Snapshot will be slightly abbreviated. Congress will return next week!
Ways and Means Making Progress on Tax Reform Plan
Ways and Means Chairman Kevin Brady (R-TX) recently indicated that a tax reform framework could be released by the end of June.
Chairman Brady, who also serves as the Chairman of Speaker Paul Ryan’s (R-WI) Task Force on Tax Reform, told Tax Notes that this task force will release its “consensus blueprint” after holding additional Congressional hearings to explore approaches to tax reform. Senior Ways and Means Committee staff echoed this sentiment during an Urban-Brookings Tax Policy Center event last week that Council staff attended.
Related, the House Ways and Means Subcommittee on Tax Policy will hold the third in a series of hearings on tax reform next Thursday, May 12th. Chairman of the Subcommittee, Representative Charles Boustany (R-LA), announced that this hearing will be used for Members to present their ideas for improving the tax code, noting that “[t]his hearing is a welcome opportunity for all Members to bring forward those ideas.”
This serves as a reminder that tax reform remains top-of-mind for the Ways and Means Committee. The Council remains directly engaged on this issue, and will provide updates as this continues to develop.
Race-Based Scholarships and Proving an Applicant's Status
A community foundation was recently approached by their local Black Heritage Council about creating a scholarship program for African American high school students in the community. The community foundation was supportive of establishing this type of scholarship, but had administrative reservations about how to define or prove an applicant’s “African American” status.
Seeking guidance, the community foundation contacted the Council’s Legal Affairs team.
The Legal team acknowledged that proving one’s status—race, gender or other self-identifying classifications—is always a difficult task, and quite honestly, can be awkward for the foundation to administer.
In order for a scholarship selection process to be fair and “nondiscriminatory,” as required by law, it is best to have an ‘objective qualifier’ that is easy to measure—such as family income in need-based scholarships. Racial or ethnic background, however, is not necessarily objective and is more difficult to prove.
The Legal team advises that it is permissible to use racial classifications as a criterion for scholarships, but—due to the complexity of self-identification and providing proof of that—cautions against the foundation being the entity to decide who fits within those classifications. In some instances, foundations have considered the culture and demographics of their own communities and applicant pool to supplement a racial classification qualifier with nonracial qualifiers to support this process.
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.
California Bill Seeks to Mandate Website, Fundraising Text for Organizations Throughout the U.S.
California legislation seeks to force every nonprofit in the country that solicits funds in California (which means every organization with a “Donate Now” button) to put a link on its home page, and print a disclosure on all other solicitation materials, directing potential supporters to the California Attorney General’s website. The legislation gives vague instructions on what the government website must provide, putting nonprofits at the mercy of an elected partisan’s changing views on what is “appropriate” on such things as overhead, compensation, and advocacy – as well as which charitable causes are worthy.
If enacted in California, it is anticipated that other states would pass copycat laws that would mandate space on nonprofit home pages and draw multiple Attorneys General into debates about the appropriateness of nonprofit data and missions. After initially failing to pass one committee, the bill has been revived and referred to another committee of the State Assembly. It will likely be the subject of a hearing this month.
CalNonprofits issued a call to action urging nonprofits in the state to contact members of the Assembly Appropriations Committee to alert them to the adverse impact of the legislation. See the CalNonprofits letter in opposition and fact sheet. More than 600 organizations listed in the Fact Sheet have come out against the legislation, including the three regional associations of grantmakers in the state, 35 state associations of nonprofits from throughout the country, and 53 organizations with “foundation” in their names.
Shareholder Activism Targets Lobbying Disclosure
The Charlotte Observer reports on how the sisters of two Catholic Orders are attempting to organize a shareholder motion to require Duke Energy to make additional disclosures of its lobbying activity. The religious groups, which own Duke stock through their endowments, are seeking to “understand the policy initiatives that are being furthered by the use of those monies.”
Nonprofits and other institutional investors, increasingly looking to align financial assets with social purpose, can use this type of shareholder engagement to influence the policies and governance of the companies they invest in.
The proposal in question for Duke Energy seeks to require the company to make lobbying disclosures above and beyond those required by law, but other recent nonprofit-led shareholder engagements—including some foundation led efforts—have targeted issues around environmental impact, community economic development, corporate social responsibility, and more.
Council members interested in how to include shareholder engagement as part of their investment policies can contact John Cochrane, Associate Director, Social Innovation (firstname.lastname@example.org).