Delayed Release for Hatch Corporate Integration Proposal
Our readers will recall that Chairman Orrin Hatch (R-UT) of the Senate Finance Committee was expected to release his corporate integration proposal before the August Congressional recess.
As it turns out, the proposal was not released prior to the close of the Congressional session. The Joint Committee on Taxation (JCT) is still conducting their analysis of the proposal and its release will likely be delayed until later this summer, Hatch reported this Wednesday to Tax Notes. He noted, however, that once JCT completes its analysis and provides an estimate for the proposal, it will be released as quickly as possible.
We have reported on the potential negative impact a corporate integration proposal might have on the philanthropic sector, and Chairman Hatch has committed to addressing the concerns of the tax-exempt sector in his proposal.
We will continue to monitor this proposal, and provide updates as they are available.
IRS Publishes Regulations for 501(c)(4)s
This Tuesday, the IRS published regulations that will impact both existing 501(c)(4) organizations, and those that were established after July 8, 2016.
These regulations implement a new part of the Internal Revenue Code that was passed into law with the Protecting Americans from Tax Hikes (PATH) Act in December of 2015. It will require all 501(c)(4) organizations formed after July 8, 2016 to submit IRS Form 8976 within 60 days of being established—“established” meaning, the time at which either an organization’s articles of incorporation were approved by a state official or governing principles were adopted by the organization’s directors or members.
Any 501(c)(4) organizations formed before July 8, 2016 that have not yet filed a Form 990 and have not applied for recognition of 501(c)(4) status, will also be required to file Form 8976 by September 6, 2016.
Israel Passes Controversial New ‘NGO Transparency Law’
This Monday, the Israeli Knesset passed a law that will substantially impact civil society in Israel. The ostensible purpose of the law is to increase “transparency” with NGOs working in Israel by requiring them to publicize if they receive more than 50% of their funding from foreign state entities. Specifically, NGOs receiving more than 50% of funds from foreign government sources will have to:
- Report themselves as a foreign-funded organization to the State Registrar, which in turn will publish a list to its website. This process has existed for some organizations that receive foreign funding since 2011.
- Include in published reports, letters to state officials and employees, and during discussions with the Knesset that the organization is foreign-funded.
- “Prominently” announce its status as a foreign-funded organization in public media that furthers the organization’s mission, such as billboards, TV and newspaper advertisements, and websites.
The law is widely seen as a move by the Netanyahu Administration to silence human rights organizations and NGOs who are critical of the government. The law specifically targets a small number of organizations who are perceived to be working in opposition to the government; 25 of the 27 organizations expected to be affected are left-wing or human rights groups. Many of these groups receive their funding from European governments.
The Israeli government maintains that this new law protects “national honor” and avoids an “absurd situation” in which foreign governments could meddle in Israeli internal affairs. Right-wing NGOs in Israel maintain that this law is about removing “foreign intervention” from Israel’s laws and society, yet the largest right-wing NGOs will not be impacted by the new regulation. A recent report from Peace Now, a pro-two state solution organization, brings into question impacts of “transparency” from the law, since the 9 largest right-wing organizations in Israel will not be impacted and therefore will not be required to reveal their sources of funding.
U.N. Secretary General Ban Ki-moon has called the law “troubling,” while others claim it violates freedom of expression and human rights. Peace Now has announced a plan to challenge it in court. The U.S. State Department predicted it could have a “chilling effect…on NGO activities.” The law will go into effect on January 1, 2017.
The law currently applies only to organizations receiving a majority of their funding from foreign governments. Experience has shown that similar laws that restrict foreign government funding often lead to regulations and restrictions on foreign philanthropic funding as well.
Read more here:
The Legal Team is Available to Answer Members’ Questions!
Multiple events over the last few weeks have unfortunately caused an increase in inquiries to our legal department regarding how foundations can assist individuals affected by local tragic events.
Community foundations can be particularly helpful during these times and can provide the organizational structure for accepting and delivering assistance to individuals, families and even businesses affected by natural disasters and other tragedies.
While the rules can be complicated regarding proper administration of emergency assistance funds, the Council’s legal team is always available to offer our members guidance and help ensure legal compliance.
This week, rather than highlight a specific legal question, we want to remind our members that the legal team is available as a resource and can answer specific questions when needed.
For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs Team at firstname.lastname@example.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.
Exclusive from our colleagues at the National Council of Nonprofits.
North Carolina Moves Toward Performance Assessments for State Programs
A measurability assessment, conducted by an independent evaluator, would include various metrics to determine whether the program in question is addressing the need that it is designed to meet. The measurability assessment would also require programs to produce a logic model that utilizes the standards developed by the W.K. Kellogg Foundation to help organizations “enhance their program planning, implementation, and dissemination activities.”
The assessments authorized by the legislation would apply to nonprofits providing services pursuant to grants or contracts funded through the identified state programs.
This North Carolina measure is similar to a “results-based accountability bill” that Vermont enacted two years ago that identifies eight population-level outcomes with performance measures to help the Legislature in decision making.