In this Week’s Edition of Snapshot…
- Tax Reform Update: Council staff meets with Chairman Brady, there is a new member of Ways and Means, and tax bills are not in short supply
- The Council sends a letter to Congress about the “Johnson Amendment”
- A number of the President’s Cabinet Nominees have been confirmed
- The United Nations faces a possibility of decreased funding from the U.S.
- In the States: State-Level Opposition to Attacks on Foundation and Nonprofit Nonpartisanship
Yesterday, the Council’s Executive Vice President for External Affairs, Chris Gates, met with Ways and Means Chairman Kevin Brady (R-TX). Mr. Brady confirmed that his intentions are still to pass a comprehensive tax reform bill out of the House in time for the Senate to consider a bill before the August recess. Regarding the charitable deduction, the Chairman noted that there was strong support for this provision on both sides of the aisle, and that he is interested in finding ways to encourage more giving. Chris also raised the importance of allowing for distributions IRA charitable rollovers to donor advised funds and simplifying the private foundation excise tax, as well as sharing the Council’s opposition to the repeal of the “Johnson Amendment.”
Chairman Brady was also present at Georgetown Law’s Institute of International Economic Law & International Tax Policy Forum Conference on Tax Competition, where he delivered the keynote address on tax reform in the 115th Congress. His remarks reiterated many of the ideas that he and other Republicans have laid out as goals for tax reform, including lowering corporate and personal income tax rates and a provision called boarder adjustability (which is a cause of contention between House Republicans, Senate Republicans, and the White House).
On Tuesday, House Democrats selected Representative Judy Chu (D-CA) to fill the vacant seat on the Ways and Means Committee left by recently departed member, Xavier Becerra (D-CA), who retired from Congress last month to become California’s Attorney General.
Representative Chu released a statement that said, in part, “I believe my strong background in tax reform work on the state and local level will help me effectively contribute to this committee. In this new position, I will work to create a tax system that is fair to all Americans while fighting against loopholes and exemptions that protect the wealthiest few from paying their fair share.”
Additionally, Ways and Means Committee member Erik Paulsen (R-MN) reintroduced his Interest for Others Act (H.R. 894), which he had previously introduced in the last Congress. This bill would allow individuals to roll over (or, exclude from their gross income) the earned interest from savings accounts or money market dividends (up to $50) to a “qualified program”—which would then direct those dollars to a charitable 501(c)(3) organization.
Should this bill be put up for consideration, it would likely get rolled into the package of forthcoming tax reform legislation.
Another bill, the Permanently Repeal the Estate Tax Act of 2017 (H.R. 451), was also recently introduced by Representative Bob Latta (R-OH) in the House.
As the name suggests, this bill proposes a repeal of the current tax which is assessed on the taxable estate of a deceased individual. It would apply to estates of decedents who died after December 31, 2016.
Similar to the Interest for Others Act, this bill will likely be considered in conjunction with comprehensive tax reform. Given the strong support for this provision by House Republicans—in particular, Speaker Paul Ryan (R-WI) and the Tax Reform Task Force led by Ways and Means Chairman Kevin Brady (R-TX)—the chances are good that this will be incorporated as part of a package of tax reform provisions that is being assembled in the House.
This morning, the Council sent a letter to every Member of Congress stating our deep concern for the recent sentiment and activity around the repeal or alteration of the “Johnson Amendment.”
As we noted last week, the Johnson Amendment prohibits 501(c)(3) organizations from “participating in, or intervening in (including the publishing and distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”
For more on this issue, including analysis of current legislation that would alter the amendment, potential executive actions that would do the same, and what a possible repeal of this restriction would mean for the philanthropic sector, click here for our background paper.
If you have any questions, or would like to speak to us about this issue, please feel free to contact us at email@example.com.
On Tuesday, the Senate voted 51-50 on party lines to confirm Betsy DeVos as the next Secretary for the Department of Education. Vice President Mike Pence cast the tiebreaking vote—the first time in history that has ever happened with a vote on a cabinet nominee. Senate Democrats were united in their opposition against DeVos, and were joined by Republican Senators Lisa MurKowski (R-AK) and Susan Collins (R-ME).
According to Politico, “After an all-night vigil on the Senate floor, Democrats were still trying to pick off a third Republican vote to derail the nomination right up until the count. Walking into the chamber just before noon [Feb. 7], West Virginia Democrat Joe Manchin buttonholed Nevada Republican Dean Heller to try to persuade him to vote with Democrats, but was unsuccessful.”
Also confirmed was Senator Jeff Sessions (R-AL), nominated by President Trump to be the next Attorney General. After a bitter fight, that included a “dramatic rebuke of Sen. Elizabeth Warren (D-MA), who Republican senators deemed had violated Senate rules forbidding one member from impugning another,” Sessions was confirmed by a mostly party-line vote of 52-47 (only Democrat Sen. Joe Manchin of West Virginia crossed party lines and voted yes).
Alabama Governor Robert Bentley (R) appointed Alabama Attorney General Luther Strange to replace Sessions in the Senate. Mr. Bentley is expected to be sworn-in as the newest member of the Senate today.
In January 2017, we saw a number of proposed bills, as well as a draft Executive Order, that threaten to reduce or substantially change American support for the United Nations (UN).
The United States is currently the single largest contributor to the UN’s regular and peacekeeping budgets—meaning that any changes in US funding could drastically impact UN operations. The implications of reduced US government support could lead to philanthropy being seen as an alternative funding source for UN activities, including peacekeeping, nonproliferation, counterterrorism, human rights, and development around the world.
Analysts have also raised concerns about how the current anti-UN rhetoric may negatively impact American foreign policy.
There are three key legislative and executive activities currently proposed which could impact US funding to the UN, if passed:
1. The Safeguard Israel Act (H.R. 769) proposes prohibiting voluntary or assessed contributions to the UN until the President certifies to Congress that UN Security Council Resolution 2334 has been repealed.
2. Draft Executive Order “Auditing and Reducing U.S. Funding of International Organizations” proposes a 40% decrease in US voluntary funding for international organizations and funding cuts related to Palestinian Membership at the UN.
3. The American Sovereignty Restoration Act (H.R. 193), introduced by Representative Mike Rogers (R-AL), proposes to terminate U.S. membership in the United Nations. This bill is introduced each year but is more concerning in 2017, given the context of a Republican-controlled House, Senate White House.
Late last week, Council staff joined NGOs, foundations, think tanks, and advocacy groups at an event hosted by the UN Foundation to discuss the current political environment surrounding US support for the UN. For more information, please visit the Better World Campaign website.
Exclusive from our colleagues at the National Council of Nonprofits.
Should community/family/private independent/other foundations be constantly hounded by politicians and their operatives seeking official endorsements by foundations, contributions from foundation assets, hosting of partisan fundraising events, and more? Would it help advance your mission to have an endless stream of primary election and then general election candidates — for everything from local school boards, city councils, and county offices to all state and federal offices — continually beseeching you and your board members for the foundation’s formal support? And do you want politicians placing foundations under microscopes looking more closely at foundation assets and activities, initially with an eye for ways for you to give them even more help, but later raising questions if you don’t support them?
Those are just a few of the possible consequences if President Trump follows through with his vow last week at the National Prayer Breakfast to “get rid of and totally destroy the Johnson Amendment,” the provision in Section 501(c)(3) that, for more than 60 years, has successfully protected foundations, charitable nonprofits, and religious congregations from being politicized and weaponized to benefit politicians and paid political consultants. His threat is not an idle one. Legislation is before Congress seeking to totally repeal (H.R.172) or substantially weaken (S.264; H.R.781) the crucial protection. While much of the rhetoric and news coverage so far has focused on demands of (some) religious groups to get to be both tax-exempt and heavily partisan, these bills would affect all 501(c)(3) organizations.
Nonprofits across the country quickly saw the danger to their independence and integrity, prompting numerous state associations of nonprofits to express their opposition, including the Arkansas Nonprofit Alliance, California Association of Nonprofits, Hawai’i Alliance of Nonprofit Organizations, Kentucky Nonprofit Network, Minnesota Council of Nonprofits, New Jersey Center for Non-Profits, North Carolina Center for Nonprofits, and Oklahoma Center for Nonprofits to alert their members to the grave threat. The National Council of Nonprofits swiftly expressed “strong opposition” to this attack on civil society. A growing number of groups are opposing politicization as well, including religious groups (e.g., Baptist Joint Committee for Religious Liberty and Interfaith Alliance) and others (e.g., BoardSource and Independent Sector).
To keep the nonprofit and foundation community informed, the National Council of Nonprofits has created a dedicated webpage on Protecting Nonprofit Nonpartisanship with analyses and other resources on this serious challenge to foundation and nonprofit independence and integrity. Please share statements, analyses, and other resources that we can share with the broader community.