Washington Snapshot - May 9, 2014
The IRA Charitable Rollover - Working Toward Permanence & Expansion
Yesterday, Congressman Aaron Schock (R-IL-18) and Congressman Earl Blumenauer (D-OR-3) introduced H.R. 4619, legislation to make the IRA charitable rollover, which expired December 31, 2013, permanent. The Council has been working closely with the sponsors of H.R. 4619, and welcomes this important legislation to make permanent the recently expired tax code provision permitting tax-free distributions from individual retirement plans for charitable purposes. The Council also appreciates the ongoing commitment of Congressman Schock, Congressman Blumenauer, and others to continue their work to expand the IRA charitable rollover. This will provide donors additional flexibility to donate their assets to a full range of organizations - including donor advised funds, supporting organizations and private foundations - that are engaged in strengthening our communities and serving our neighbors in need.
The Schock/Blumenauer bill is the first step of a two-step process toward IRA charitable rollover permanence and expansion
The first step, legislation to make the IRA charitable rollover permanent, is part of an effort, led by House Ways and Means Committee Chairman Dave Camp (R-MI-4), to prioritize the 55 recently expired Internal Revenue Code provisions and extend only those that have the greatest policy merits. The practice in recent Congresses has been to extend virtually all of the expired tax provisions for two years at a time. Camp proposes, instead, to extend only a fraction, perhaps 15 or so, of those 55 provisions, but to extend those high priority provisions permanently. Accordingly, Camp held a markup on April 29th at which the Ways and Means Committee approved seven bills that would permanently extend various expired tax provisions relating to businesses. In addition, Camp is planning another markup in the coming weeks that would permanently extend a similar number of expired tax provisions relating to individuals. Chairman Camp contemplates including the IRA charitable rollover among the few individual tax provisions that the Committee would act to extend, and H.R. 4619 was introduced for that specific purpose.
The second step is the continued effort, led in the House by Congressman Schock and Congressman Blumenauer, to advocate the broader reforms to the IRA charitable rollover, such as expanding the types of entities to which rollover contributions may be made, that were included in legislation introduced by retired Congressman Wally Herger (R-CA) in the last Congress, and by Senator Charles Schumer (D-NY) in this Congress. Although those broader reforms are beyond what Chairman Camp proposes to do in the package of bills making certain expired provisions permanent, the initial Schock/Blumenauer bill nonetheless is, itself, a significant step forward. H.R. 4619 both provides permanence to a provision that always had been temporary, and it places the IRA charitable rollover among the few expired tax provisions that Chairman Camp supports extending.
The Council will continue working with Congressman Schock, Congressman Blumenauer, and other supporters of the IRA charitable rollover to further advance much-needed legislation relating to that provision.
New Dates-"Tax Reform: Charting the Future of Philanthropy" Webinars
Thanks to all of our readers who have already registered for our upcoming tax reform webinar series! We are looking forward to engaging with you on Chairman Camp’s tax reform proposal and hearing the insights and opinions of our expert guests.
Organizers are now hoping to incorporate important new research into the webinar content, so we have decided to move the dates of our webinars by a few weeks in order to make the series. The new dates will be in late June and early July. We’re finalizing logistics and will announce the new dates very soon. If you’ve already registered for the webinars, you’ll be receiving an email notifying you of the change and inquiring if you’d like to join the webinar on the new dates. We hope this date change isn’t an inconvenience. We want to bring you the most relevant and timely information.
If you’re attending our Annual Conference: Philanthropy Exchange, please join us at our Washington Update session on Monday, June 9th, and other public policy programs. Our policy experts are developing programing that will have little overlap, so that you get a breadth of information and a variety of expertise in your conference experience. We want each of the conference session to add to your understanding of the issues and increase your enthusiasm for getting involved.
We hope that you will still be able to participate! In the meantime, please feel free to reach out to us anytime at govt@cof.org if you have any questions!
Happenings on the Hill
House Holds Lois Lerner in Contempt
On Wednesday, the House voted to hold Lois Lerner, former head of the tax exempt organizations division of the IRS, in contempt of Congress and request a special prosecutor to investigate the IRS’ targeting of conservative groups applying for 501(c)(4) tax-exempt status. This is in reaction to a story we have been reporting for almost a year, when Lerner admitted that IRS employees had been singling out certain applications. As you will recall, Lerner plead her Fifth Amendment right not to testify during a hearing on the matter before the House Committee on Oversight and Government Reform. House Republicans are also urging the Justice Department to pursue criminal charges against Lerner and appoint a special prosecutor to investigate the IRS.
Meanwhile, House Democrats on the Oversight and Government Reform Committee released a report on Tuesday which they claim demonstrates that the increased scrutiny of conservative groups was not attributable to the White House or any political pressure. Rather, they state that the targeting of these tax exemption applications are due IRS employees “needing better guidance on how to process the applications.”
Senate Discussed Social Impact Bonds
On May 1, the Senate Budget Committee’s Governance Task Force held a hearing on social impact bonds (SIBs), a new financing mechanism for social programs where government agencies pay for programs if they meet or exceed agreed upon outcomes. Testimony ranged from an academic who is a strong proponent of the model to a more dubious state budget analyst. Several members of the Council are currently involved in the nearly thirty SIB projects in various stages of development throughout the country. It is important to keep in mind that while there was a mix of excitement and skepticism expressed at the Senate hearing, the majority of the SIB action is taking place at the state and local levels.
The Council has been tracking the conversation on SIBs over the past three years and recently published an issue brief with the Center for American Progress on the importance of networks in SIBs. For more information or to discuss your SIB questions and concerns, contact Laura Tomasko at the Council.
Philanthropy News and Op-Eds
Florida Nonprofit Overhaul Bill Awaits Governor's Signature
Throughout the past few months, we’ve discussed sweeping reforms proposed by Florida Agriculture Commissioner Adam Putnam that would alter how Florida regulates nonprofits. This week, the reform bill was passed by the state legislature, and Florida Governor Rick Scott is expected to sign it into law.
The reforms take a variety of steps aimed at increasing transparency of Florida nonprofits, and include: requiring nonprofits to provide more detailed financial and operational information to the state, to be posted on a website created by the Department of Agriculture and Consumer Services; creation of a statewide database with information about each nonprofit operating in the state, including violations of state law; and new levels of oversight of professional fundraisers in the state.
The bill was introduced in the aftermath of an investigation by the Tampa Bay Times and the Center for Investigative Reporting, which found lax enforcement allowed unscrupulous nonprofits and for-profit telemarketers working for them to operate in Florida and elsewhere. The Florida Nonprofit Alliance played a critical role in helping to draft the bill, and has pushed for its enactment.
Maine Law Partially Removes Charitable Deduction Cap
The state of Maine enacted a $27,500 cap on itemized deductions, including the charitable deduction, effective in 2013. This year, the Maine Association of Nonprofits (MANP) pushed for a carve-out of the charitable deduction from the cap, and their efforts paid off when a bill partially removing the cap became law last week.
While it does not preserve the full value of the charitable deduction for the 2015 and 2016 tax years, this compromise bill phases out the cap entirely by 2017. LD 1664, “An Act To Encourage Charitable Contributions to Nonprofit Organizations,” is being hailed as a positive step for nonprofits within the state. Despite this positive step, MANP promises to continue to work to eliminate the charitable deduction cap entirely before 2017.
Combined Federal Campaign Donations Dip Sharply
Federal workers cut back significantly on their donations to the Combined Federal Campaign (CFC) this year, the Washington Post reports. The question is why did donations plunge? A Post survey asked federal workers this very question. In response, some federal workers explained that they halted giving because of the federal pay freeze and personal budgeting concerns, others were concerned about how the money gets distributed to charities, and still others chose to give through other venues. Regardless of the reason for the decline, “contributions... fell by nearly 19 percent in 2013, while the number of participants dropped by about 23 percent during the same period.”
