International Tax Reform Blueprint Forthcoming
Despite the condensed Congressional session due to the upcoming elections, Speaker Paul Ryan (R-WI) asserts that his Task Force on Tax Reform will release a substantive blueprint for tax reform before the end of this month.
Though this blueprint is not expected to directly translate into legislation, Speaker Ryan has noted that “it’s going to be a clear explanation of policy changes that are needed” in the tax code. Our readers will recall that the committee in charge of developing this blueprint is chaired by Ways and Means Committee Chairman Kevin Brady (R-TX).
Chairman Hatch Follows-up with Private Museums
Late last year, Chairman Orrin Hatch (R-UT) of the Senate Finance Committee sent a letter to a number of private museums seeking information on how art is made available to the public, and what privileges the founders and donors receive. Recently, he sent a follow-up letter to those museums summarizing the responses he received to his initial inquiry.
This initial letter was sent out of concern that private museums--classified as 501(c)(3) charitable organizations--were straying from their charitable purpose and providing only limited benefit to the public.
The Chairman's follow-up letter expresses both relief and concern about the practices of private museums. His primary concerns stem from the accessibility of certain museums to the public, and the nature of relationships between donors and the museums which he says, "perhaps merit further scrutiny."
FEMA Releases National Preparedness Report
The 2016 National Preparedness Report, released by FEMA this week, provides all levels of government, the private and nonprofit sectors, and the public with practical insights into preparedness to support decisions about program priorities, resource allocations, and community actions.
The report, now in its fifth year, utilizes more than 450 data sources to assess progress towards 32 core capabilities of disaster prevention, protection, mitigation, response, and recovery. Disaster recovery capabilities continue to present the biggest challenges to states and territories. A total of six core capabilities were identified as national areas in need of improvement: cybersecurity, economic recovery, housing, infrastructure systems, natural and cultural resources, and supply chain integration and security.
For a comprehensive summary of the report, fact sheets, and a copy of the full report go to: https://www.fema.gov/national-preparedness-report.
DAFs & “Pledging” Allegiance to Donors
The legal team discourages making grants from donor advised funds (DAFs) to fulfill charitable pledges. While the issue of what constitutes a “legally binding pledge” is a matter of state law, the legal team believes that such a payment could constitute an act of self-dealing—potentially leading to an excise tax.
But sometimes pledge prohibitions can get awry. This is especially so if a significant and unrelenting donor informs the foundation, after-the-fact, that he/she made a multi-year pledge to a charity, and seeks to satisfy them through the donor’s advised fund.
While the Council’s legal team believes foundations should remain steadfast in denying grants to satisfy pledges, we understand there are times donor relations and donor stewardship can dictate the way foundations operate. As such, if a foundation decides to acquiesce to a donor’s pledge request, the legal team recommends informing the pledged organization that any grants from the fund are not “pledges.” Furthermore, it is recommended that the grant be accompanied with a letter from the foundation (on foundation stationary) with the following or something similarly worded:
We have been informed by our donor, _____, that s/he plans to make a recommendation from his/her donor advised fund in the amount of $_____. According to foundation policy, grant recommendations made by the donor are subject to the availability of funds, as well as approval by the foundation board.
This notification is being provided as a courtesy and shall not be interpreted as a binding or enforceable pledge by the donor or the XYZ Foundation.
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.
The Personal Side of State Budget Intransigence
It is easy enough to say the 11-month budget impasse in Illinois just got personal – the nonprofit run by the Governor’s wife recently joined a lawsuit against him and several members of his administration over failure to pay state human service providers for work they’ve already performed but not been paid for since July 1, 2015. But the harm has been personal all along for the people losing services and nonprofit employees losing jobs, income, and benefits as the result of the refusal by politicians to reach agreement on a spending plan. This point was made clear in a report released last week by the Pennsylvania Association of Nonprofit Organizations (PANO) and others that identified the impact of the Commonwealth’s 10-month budget standoff, which only ended in April.
More than 17,000 people in Pennsylvania received no or reduced services due to the budget impasse, the survey found. 135 nonprofits reported having to borrow a total of more than $170 million to continue operations while not getting paid by the state. Anne Gingerich, PANO’s Executive Director, translating the numbers into personal terms, revealed the state’s budget “stalemate literally kept domestic violence victims in the communities where their abusers had access to them, stalled training for those seeking jobs and forced food banks to distribute less nutritious food.” The announcement of the survey results concluded with this warning: “Without an on-time budget in 2016-17 with funding at levels appropriate to meeting citizen’s needs, nonprofit organizations will most likely need to curtail critical services—as they continue to address the impact of the previous year’s impasse.”
Budget standoffs for the 2017 fiscal year continue past their legislative due dates in Illinois, Pennsylvania, and other states. In some states, such as Michigan and New Jersey, budget deliberations have dragged out due to unexpected revenue shortfalls. Negotiations over a final budget agreement continue in West Virginia where politicians are struggling to strike the right balance between spending cuts and new taxes. Alaska lawmakers reached a last-minute agreement during a special session to fill a $3.2 billion budget hole only a day before layoff notices were sent to state employees.
This week, Forefront issued a statement expressing frustration that Illinois legislators missed the deadline for reaching a budget agreement, lamenting that “Illinoisans wake up this morning with more of the same: politics over policies.” Another organization was even more blunt: “Our clients suffer, our staffs are stressed and nervous, and a sector that represents a large portion of Illinois’ economy and jobs is under threat.” Forefront, the state association of nonprofits and regional association of grantmakers formerly known as Donors Forum is urging concerned citizens to contact elected officials to deliver a simple message: “The Governor and our legislators have a job to do. Our communities and local businesses rely on a state budget before election day.”