Washington Snapshot - September 2, 2016

Congress IconNews from the Hill

Congressional Leaders Champion Social Investment

Representatives Tom MacArthur (R-NJ) and John Delaney (D-MD) are working to educate their colleagues on the value of social investing and the role of philanthropy in leveraging private capital to create social good. The pair have formed a new caucus, the Congressional Social Investment Taskforce, to support these efforts and promote policies that encourage and incentivize social investment.

Regular readers of Snapshot will recall that Congressman Delaney has been a vocal supporter of pay for success and other forms of innovative social finance. Congressional leaders on both sides of the aisle have shown interest in these models. Bills are active in the House and Senate that would authorize new funding for state and local governments to explore pay for success, and the Department of Education was authorized to begin feasibility studies on the model as part of the Every Student Success Act.

We’ll keep you up to date as these and other efforts continue.

Executive & Regulatory News IconExecutive & Regulatory News

VA Report in the Spotlight this National Suicide Prevention Month

Last month, the Department of Veterans Affairs (VA) released the nation’s most comprehensive analysis of Veteran suicide rates in the United States. The report, which finds that Veterans account for 18% of all deaths from suicide among adults in the U.S., examined more than 55 million Veterans’ records from 1979 – 2014 from every state in the nation.

Along with the release of this report comes new efforts by the VA to prevent suicide among Veterans, including the Veterans Crisis Line, placement of suicide prevention coordinators at all VA medical centers, same-day access for Veterans with urgent mental health needs, and more.

Learn more about these efforts on the Department of Veterans Affairs website.

Legal IconTrending in Legal Affairs

Providing grants to colleges and universities is a central function of many corporate foundations. Company foundations are often asked to provide support to educational institutions that train potential employees. And as a recent inquiry to Legal Affairs demonstrates, as long as the foundation’s support does not materially aid the company in recruiting or training workers, grants may be made to educational institutions without fear of engaging in any self-dealing prohibitions.

To learn more about this issue, you can visit our blog for the full legal explanation.

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.

State Policy IconHappening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

National Council of Nonprofits logo

Minnesota Cities Can’t Tax Tax-Exempt Properties by Calling Assessments “Fees”

Local governments in Minnesota may not impose or evade the property tax exemption of foundations and charitable nonprofits by disguising a tax by calling it a “fee,” the state Supreme Court ruled last month.

In recent years, Minnesota municipalities experiencing fiscal challenges have sought to generate new revenues through creative methods, such as imposing street lighting fees and street maintenance fees. The local governments attempt to circumvent the provision in the Minnesota constitution that expressly exempts charitable nonprofits from taxes by instead calling the assessments “fees” on property owners. Two churches brought a lawsuit contending that the City of St. Paul’s use of a “Right of Way Maintenance Fee” to fund street repairs was not a special assessment benefiting a specific property but a general tax, and subject to constitutional limits. A lower court ruled against the churches, which appealed to the state Supreme Court.

The Minnesota Council of Nonprofits filed an amicus curiae brief in support of the position of the churches and on behalf all Minnesota nonprofits. The state association of nonprofits stated the argument succinctly: “When municipal taxes collected for the provision of general city services are recast as fees, as the City has done with its [right of way] assessment, the privilege and entitlement of tax-exemption is wrongfully and detrimentally eroded.” The Supreme Court agreed in its August 24 decision and reversed the lower court ruling.

This opinion provides clear guidance for maintaining charitable property tax exemptions, and will allow Minnesota foundations and nonprofits to contest a variety of “fees” levied by St. Paul, Minneapolis, and other cities across the state. The case, while limited to the wording of the Minnesota constitution, should also prove persuasive in the 17 other states that embed the nonprofit property tax exemption in their state constitutions. Notably, the Minnesota Court relied on analyses in similar cases arising under state law in Florida, Idaho, and Washington State, suggesting that this latest decision should serve as persuasive authority in future cases elsewhere.

Foundations and nonprofits in every state can point to the Minnesota decision as a solid statement in support of the exemption, especially when local government officials propose new ways to take money from nonprofit and foundation missions to fill their budget gaps.