Washington Snapshot will be taking a break next week during the August Congressional recess. We will return on Friday, August 26th.
Your Lawmakers are in Their Home States & Districts!
With Congress in recess, it has been a pretty slow news week on Capitol Hill.
Instead of bringing you news this week, we encourage you to connect with your Members of Congress while they are in your communities. As we discussed on our Washington Update LIVE! webinar this Tuesday, the current Congressional recess presents an ideal opportunity to begin building relationships with your lawmakers and their staff.
White House to Host Broadband Summit
Next week Council staff will be attending the White House ConnectALL Summit for Digital Inclusion. Despite much progress, barriers to internet access still exist in this country, and they disproportionately impact low-income families and rural communities. Households earning less than $25,000 a year are half as likely to have internet access. The ConnectALL Initiative aims to connect 20 million more Americans to broadband by 2020 by bringing together government, the private sector, and philanthropy to tackle key barriers to broadband adoption.
Earlier this summer, the Council co-hosted a conference call to discuss the initiative and philanthropy’s role in it. The presentation slides and a summary of that call are on our website. For more information about how the Council is engaging on this and other White House Initiatives, contact Stephanie Powers, Senior Director for Policy and Partnerships.
Charitable Trusts Available to More People Under New IRS Guidance
For foundations that offer charitable remainder annuity trusts (CRATs), a new revenue procedure (Rev. Proc. 2016-41) offers a sample provision that may be included in the governing instrument of the trust (CRAT). It also provides that the IRS will treat the sample provision as a qualified contingency within the meaning of §664(f) of the Internal Revenue Code.
To learn more about this issue, you can visit our blog for the full legal explanation.
Exclusive from our colleagues at the National Council of Nonprofits.
Scrutiny of Endowments, PILOTs Grow
National and Congressional attention on college and university endowments is growing, generating various policy proposals that could adversely affect the work of nonprofits at the local level. This month, a Washington, DC think tank, The Education Trust, published findings indicating that educational institutions with endowments of $500 million or more tend to enroll fewer low-income students, leading it to assert that “dedicating more endowment assets toward supporting low-income students is sorely needed and is doable.”
Earlier this year, House and Senate tax committee leaders sent letters to dozens of colleges and universities seeking information about endowment practices and support for student financial assistance. They reportedly are planning Congressional hearings in the fall.
Local governments, such as Washington, DC, are piggybacking on the threat of Congressional action to draw attention to their desire to force nonprofit institutions to make “voluntary” payments in lieu of taxes (PILOTs) to provide new revenue for the cities. Last week, the Washington Post and Washington Business Journal accepted without questioning the pronouncements of city officials that Congress will be focusing on PILOTs and that area colleges and universities will be on the hot seat to explain why they don’t pay more to their host communities. In truth, Congress has no jurisdiction over property tax exemptions, which are matters for state and local governments. Indeed, Congressional leaders clearly stated their interest, and jurisdiction, is on the federal implications of the endowment payout questions that they have raised in their letters to the institutions.
Continuing the focus on PILOTs, Boston reported last week that the City is receiving less in payments in lieu of taxes than it demanded from tax-exempt entities. In 2011, Boston launched its plan to divert money from nonprofit missions by demanding "voluntary" annual payments from nonprofits owning property in excess of $15 million. This past year, only 29 of 49 nonprofits contributed the full amount sought by the City, down from 31. The PILOT program generated revenues of $32.1 million, or 68 percent of the $47.4 million elected officials assumed they were somehow entitled.
A recent editorial in the Boston Globe decries the decisions of nonprofits not to make larger voluntary payments. An editorial in the Boston Herald, on the other hand, takes the City of Boston and arch-rival Globe to task for complaining that nonprofits are not making all of the payments in lieu of taxes (PILOTs), stating that “shaming the institutions that don’t — or can’t — pay as much as the city wants is really just grubby.”
UPDATE: Massachusetts Property Tax Exemption Preserved for Foundations, Nonprofits
Massachusetts foundations and nonprofits this month overcame two challenges to property tax exemption found in various drafts of an economic development bill. The Legislature rejected outright a provision that would have required foundations and nonprofits purchasing property currently on the tax rolls to pay property taxes over the course of four years.
The issue arose when UMASS Lowell – a public university which is tax exempt, but not a nonprofit – sought to convert an apartment building into a dormitory. The proposed tax, which had been attached to the economic development bill, drew the strong opposition of Providers’ Council, the Massachusetts Nonprofit Network, and several statewide organizations.
The second challenge remained in the bill until it reached the Governor’s desk. Section 36 of the “Job Creation and Workforce Development bill” allowed for the creation of “community benefits districts” that gave power to groups of property owners, with the approval of the local government, to impose fees and assessments on all manner of tax-exempt entities.
Governor Baker signed the legislation, but used his state constitutional power to veto Section 36, forcing the legislature either to override his veto or allow the law to go into effect without the power to levy discriminatory fee and assessments.
#ReasonsForHope Campaign Reaches 90 Signatories
On Sunday, August 1, the Council joined the Ford Foundation and almost 40 other foundations in a nationwide campaign to encourage the public to share its #ReasonsForHope. In the wake of so much tragedy, we wanted to reinforce that every community is filled with people who are working to make our country better.
Ads ran in The New York Times, The Washington Post, Miami Herald, the Los Angeles Times, and a half dozen other major national papers.
Already, the campaign has given voice to hundreds of stories of optimism over social media – and prompted important conversations to take place. In one particularly inspiring example, Tony Mestres of the Seattle Foundation wrote a reflection titled The Divide, which called on foundations to address systemic problems in their communities pre-emptively rather than waiting until after a tragedy.
Here’s how your foundation can support #ReasonsForHope.
Email ReasonsForHope@cof.org to join 90 foundations and nonprofits in adding your name to this message. You can similarly add your name via the Philanthropy Exchange. After you sign on, your name, organization, and website will be added to our website at www.cof.org/ReasonsForHope.
SHARE YOUR REASONS
As a foundation leader, your story matters. Please consider sharing what inspires you using #ReasonsForHope.
SPREAD THE WORD
Please consider encouraging your grantees to share their #ReasonsForHope.
Thanks to everyone involved for making this a highly successful campaign.