Washington Snapshot - March 13, 2015
Philanthropy Week in Washington is Here!
Empowering Communities. Together.
Mark your calendars: the second annual Philanthropy Week in Washington 2015 kicks off this upcoming Monday, March 16th!
As our readers know, Philanthropy Week in Washington is a week-long series of events and activities hosted by the Council on Foundations to highlight the role of philanthropy in our society. This year’s theme, “Empowering Communities. Together.” emphasizes the critical role of community partnerships in advancing the common good.
From large independent foundations and corporate foundations, to family and community foundations, philanthropy empowers communities. Foundations offer the timely resources, local knowledge, and strategic leadership needed to ensure complex issues are addressed in ways tailored to suit local needs.
As Congress considers tax reform and a new budget, join us in telling them that your community depends on a full set of philanthropic tools to meet pressing needs.
The week will feature the centerpiece event of Philanthropy Week, Foundations on the Hill (FOTH). Philanthropy Week builds upon the longstanding, historical success of FOTH by expanding our programming and audiences and amplifying our message. This year, Philanthropy Week will include visits with our lawmakers including both Capitol Hill and the Administration officials, briefings to members of Congress and staff, a variety of unique educational programming on topics that impact philanthropy, and both traditional and social media outreach.
We are pleased to be working with several partners on these events, including the Forum of Regional Associations of Grantmakers and the Alliance for Charitable Reform, a project of The Philanthropy Roundtable. The traditional Foundations on the Hill visits with Members of Congress and Congressional staff will take place on Wednesday, March 18th and Thursday, March 19th. The Alliance for Charitable Reform’s Summit for Leaders is slated for Wednesday morning, March 18th.
Event Highlight: March 18th Senate Philanthropy Caucus Reception
This week, we’re pleased to share with you details about the Senate Philanthropy Caucus reception on Wednesday, March 18th, from 4:00-6:00 PM ET, in the Hart Senate Office Building room 902.
We welcome Philanthropy Week participants, Congressional staff, and other invited guests to join the Council on Foundations at a cocktail reception to illustrate the power of public-philanthropic partnerships in communities across America.
Foundation boards and staff provide expert knowledge of the challenges and opportunities faced by the communities they serve. These human resources facilitate the capacity of foundations to provide leadership on issues like housing and community development.
The Council on Foundations has partnered with the Secretaries of the Department of Agriculture (USDA) and Housing and Urban Development (HUD) to award outstanding cross-sector partnerships between the philanthropic and public sectors. By strengthening the connection between the public sector and philanthropy, the award highlights the power of collective impact that can be achieved when government and the private sector work together.
Guests will have the opportunity to peruse a showcase of past award winners and speak to the innovative foundation leaders driving these public-philanthropic partnerships.
Please e-mail Brian Horn for more information.
News from the Hill
Senate Finance Announces Portal, Deadline for Tax Reform Comments
The Senate Finance Committee is asking industry groups and the public to submit written comments to the tax reform working groups.
In a news release issued earlier this week, the Senate Finance Committee leaders—Chairman Orrin Hatch (R-UT) and ranking Democrat Ron Wyden (D-OR)—said they would take written comments through April 15, to be submitted to the tax reform working groups dealing with various tax policy topics. Hatch and Wyden also stated that the comments will eventually be made public.
As a reminder, the issues that impact charitable organizations and individual donors fall within the “business” and “individual” working groups. The business working group, which will address tax provisions that impact the business and operations of charitable organizations, is co-chaired by Senators John Thune (R-SD) and Ben Cardin (D-MD). The individual working group, which will address giving incentives for individuals, is co-chaired by Senators Chuck Grassley (R-IA), Mike Enzi (R-WY), and Debbie Stabenow (D-MI).
The Council’s policy team is currently drafting comments for the working groups on behalf of our members. We will share these with our readers once they are finalized.
Social Impact Partnership Act
Representatives Todd Young (R-IN-9) and John Delaney (D-MD-6) reintroduced legislation last week that would authorize a one-time appropriation of $300 million for states and local governments to begin pay-for-success initiatives. Under the Social Impact Partnership Act (H.R. 1336), projects would have to address any of 21 specific program areas, including increasing work and earnings, increasing high school graduation rates, and reducing rates of asthma, diabetes, or other preventable diseases.
A spokesman for Senator Orin Hatch (R-UT) stated that the Senate Finance Committee Chairman “plans to introduce a similar bill this Congress.”
The House Bill would give oversight and payment authority to the White House Office of Management and Budget. Regulation of eligibility and evaluation would be handled by a newly established Federal Interagency Council on Social Impact Partnerships, to be chaired by the OMB Director. More details on the proposed legislation are available from the Social Innovation Research Center.
Representatives Young and Delaney co-sponsored a similar bill in the last Congress. Last month, Representatives Young, Delaney, and Jared Polis (D-CO-2) successfully introduced an amendment to the Elementary and Secondary Education Act (ESEA) allowing states and localities to use pay-for-success programs to support teacher and administrator training.
Trending in Legal Affairs
March Madness Edition: Corporate Foundation Could Be Whistled for Self-Dealing Foul
A large university built a new basketball arena. It was hoping to score an in-kind donation from a utility company. The company rejected the longshot request to perform the free electrical work, and said it would not assist unless it was paid.
The director of the utility company’s foundation then drew up a plan in which the foundation would play pick-and-roll with the university. Wanting to make sure her idea was not out-of-bounds with the IRS, she shot Legal Affairs a question: could the university pay for the work, and since the foundation was already considering a large, multi-year grant to the university, include the cost of the utility work in the grant to reimburse the university?
The Council’s legal team advised the company foundation that the plan was not a slam dunk because the IRS may construe it as an act of self-dealing. When a company foundation expenditure results in a tangible economic benefit for the sponsoring corporation, an act of self-dealing has likely occurred. It can also occur when foundation assets have been used by or for the benefit of a disqualified person.
Here, the IRS may reasonably conclude that the foundation was bounce-passing a business opportunity to the utility company. This indirect benefit provided to the utility company is no less an act of self-dealing by the foundation with a disqualified person (the company) than if the company foundation paid the company directly. Thus, the legal team cautioned that using foundation assets to generate business for the utility company would not only violate the self-dealing rules, but would also serve a substantial non-charitable purpose.
For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs team at legal@cof.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.
Philanthropy News and Op-Eds
Should there be a Time Limit on Recognition?
This week The New York Times ran an interesting opinion piece by Linda Sugin on the value of naming rights and donor relations. This piece is related to a story we shared with you back in December about naming rights and perpetuity.
Prompted by David Geffen’s $100 million dollar gift to rename and renovate Avery Fisher Hall, the home of the New York Philharmonic, Sugin makes the case that naming rights present a significant benefit to the donor and charitable tax deductions should take that value into account. She suggests a policy change to encourage donors to limit the duration of their naming rights: “Congress should provide greater tax benefits to donors who agree to limit the duration of naming rights and only partial benefits to donors who insist on perpetuity.”
Sugin believes that her proposal will “encourage a culture of competitive philanthropy” and will “help make it possible for future philanthropists to be as generous as current philanthropists, or more so.”
This is the first we’ve heard of this policy proposal on limiting naming rights, and we’ll continue to monitor any commentary or traction this idea receives.
New Widget and Link for Donor Advised Funds
Community foundations use donor advised funds as one philanthropic tool to connect donors to the causes they care about in their communities. Nonprofit Quarterly reports that in order to assist donors with thinking about how to best use their donor advised funds, some charities, including the Greater Kansas Community Foundation, have created a new tool called DAF Direct.
This tool – in the form of a widget or a link – can be used by nonprofits on their webpage to allow DAF donors to recommend DAF distributions as donation payment options, in addition to check or credit cards. The link can also be used in online and social media fundraising efforts. With DAF Direct, DAF donors know in advance that a charity is ready and willing to receive DAF distributions, and the charity can even receive the donation directly through the link or widget.
Rick Cohen writes that this tool is a good example of funders “listening to and working with charities to make charitable giving flow to a potentially wider range of charitable recipients while keeping the interests of the donor in the mix.”
Our policy and legal team is interested in your stories about how this tool is working in your community.
