Washington Snapshot - March 6, 2015
Philanthropy Week in Washington is 2 Weeks Away!
Empowering Communities. Together.
Mark your calendars: the second annual Philanthropy Week in Washington kicks off on 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: Alliance for Charitable Reform Summit for Leaders
Each week between now and Philanthropy Week, we will highlight one event being hosted during the week. This week, we’re pleased to share with you more about the Alliance for Charitable Reform’s 2015 Summit for Leaders, 8:00 AM to 10:50 AM on Wednesday, March 18th.
The Summit for Leaders will explore what’s ahead in the philanthropy policy world. This year’s event will feature an engaging game show theme in the way the material is presented to the audience. In the first session, modeled after “What’s My Line?”, four speakers will deliver four different messages about the charitable deduction and audience members will vote for the most persuasive message.
The second session will feature Congressional staff asked to answer “Jeopardy”-style questions on what lies ahead with tax reform and how our sector can inform the debate.
Finally, the “Dating Game” session will explore the special relationship between grantmakers and communities. Speakers will share stories of place-based philanthropy and discuss how those stories can build strong and sustained relationships with federal, state, and local public officials.
Register here for the Summit for Leaders!
News from the Hill
Senate Democrats Urge White House Action on Tax Reform
A handful of Senate Democrats have been pushing the White House to take executive action on certain tax policy reforms, The Hill reports. Senators Bernie Sanders (I-VT) and Ron Wyden (D-OR) have both called upon the Administration to address corporate tax breaks and avoidance strategies in the current code.
Sanders, the ranking member on the Senate Budget Committee, called corporate tax loopholes such as the provision that allows for inversions (mergers with overseas companies to avoid U.S. taxes) “unacceptable and outrageous” and stated that he believes that the President possesses the authority to address the problem through executive action.
In a report to the Treasury Department, Senator Wyden identified financial maneuvers like “wash sales” and "basket options” that significantly reduce tax liability for wealthy Americans, which the Administration could address without Congress. Wyden said that his suggestions were nothing new and were ideas that the Treasury Department had previously considered. “These are areas where Treasury has indicated an interest some time ago,” he said. He also addressed the question of whether his push for executive action signaled that we was pessimistic about the ability of this Congress to pursue comprehensive tax reform, stating that he was “not at all” pessimistic.
Interestingly, Senators Wyden and Sanders’ push for executive action on tax policy comes during a heated debate over the President’s executive action on immigration reform. We will continue to follow the Administration’s progress on tax policy proposals and keep you up-to-speed.
Senators Rubio and Lee Introduce "Pro-Growth, Pro-Family" Tax Plan
Earlier this week, Senators Marco Rubio (R-FL) and Mike Lee (R-UT) put forth a tax reform proposal that they are dubbing “pro-growth” and “pro-family.” Significantly, the Senators would keep only the mortgage interest deduction and the charitable deduction, while eliminating all other deductions. The text of the plan is available here.
On the individual side of the code, Rubio and Lee seek to consolidate the seven current tax brackets to 15 and 35%, and making the individual deductions that they would keep available to all tax-filers—not just those who itemize. This would allow all taxpayers to take advantage of the charitable deduction, which would encourage more charitable giving. They also propose to repeal the standard deduction and replace it with a $4,000 tax credit for couples, and $2,000 for singles.
On the corporate side, the plan calls for lowering the maximum corporate tax rate, ensuring that corporate profits are only taxed in the country where they are earned, and “removes the current bias against capital investment.”
In their Wall Street Journal editorial laying out their plan (subscription only), the Senators express their motivation behind the proposal. “We believe that America’s best days are still ahead. But we also recognize that restoring the shared prosperity that comes from a strong economy requires reforming the most antiquated and dysfunctional government policies, beginning with the federal tax system,” they state.
Neither Senator sits on the Senate Finance Committee, where a tax reform proposal in the Senate would originate, so the fate of this proposal is unclear. However, it is an indication of where some Senate Republicans would prioritize tax code reforms, and other Senators could use it as a source of reform ideas.
We will continue to track this tax reform proposal and let you know if it advances.
Trending in Legal Affairs
Scholarships from Supporting Organizations
Recently, a supporting organization to a community foundation wanted to set up a scholarship fund. The organization did not want to set up a large program, but did want to make a couple of annual awards to local high school students pursuing a college education. The community foundation inquired: Can a supporting organization at a community foundation award scholarships?
The Council Legal Team advised that a supporting organization may award scholarships if it satisfies the “operational test.” Does the supporting organization provide support to persons who are part of the class of individuals normally served by the community foundation? In this case, if the community foundation normally granted out scholarships to college-bound high school seniors—which was likely—then the supporting organization would be permitted to do same.
The Council’s legal affairs team advises community foundations with similar inquiries to take an active role in the implementation of their programs. Foundation staff should participate with the supporting organization and donor(s) in the initial meetings, because the foundation has an interest in seeing that the funds are used appropriately and granted in an objective and nondiscriminatory basis.
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
Cross-Border Philanthropy in Peril in Some Places
One of our crucial partners in the Council’s global philanthropy work, Doug Rutzen of the International Center for Not-for-Profit Law, which seeks to create a legal environment to strengthen civil society throughout the world, published an article this week in the International Journal of Not-for-Profit Law on challenges that nonprofits in some countries face in receiving charitable dollars from overseas.
In his insightful and well-researched piece, Rutzen explores restrictions that countries across the globe have put in place that limit the ability of civil society to thrive. Rutzen offers compelling examples of these restrictions in action. Russian bird group was deemed a “foreign agent,” he writes. “Ethiopian human rights organizations were forced to curtail their activities because of a government-imposed cap on foreign funding.”
For more, we encourage you to read the full piece.
