May 17, 2013

ACR News 5.17.13—Scandals Freeze Legislation on Capitol Hill

>> Federal: Scandals Freeze Legislation on Capitol Hill
>> Federal: Tax Reform Options Paper
>> Federal: The Next Steps in Tax Reform

Washington Roundup

>> Scandals Freeze Legislation on Capitol Hill
>> Tax Reform Options Paper
>> The Next Steps in Tax Reform

Scandals Freeze Legislation on Capitol Hill

Most of official Washington is denouncing the recent revelation that the Tax-Exempt Division of the Internal Revenue Service (IRS) inappropriately flagged conservative political groups for additional scrutiny of their applications for tax-exempt status in the midst of the 2012 election. The optics are awful, even if intentions weren’t. The revelation has created a firestorm here in DC and the President, along with IRS officials, is taking a lot of heat for his Internal Revenue Service.

Here is what we know so far: in the summer of 2010 a group of IRS officials based in Cincinnati, OH developed criteria for identifying overly politicized 501(c)(4) applicants, which included words like “tea party” and “patriot.” In July 2011, the director of the IRS told these officials to stop and use more politically neutral criteria. In January 2012, that same group of IRS officials changed the test back without approval because, according to an internal investigative report, “they believed the July 2011 criteria were too broad.” Three months later, a new IRS director demanded the test be revised again.

While it appears that the improper conduct eventually stopped, as a consequence of these actions, many organizations waited more than 13 months for a decision on their tax-exempt status. In some cases these groups were also asked for additional information, including Facebook posts and what books their members were reading. Overall, nearly 75 conservative groups were singled out for extra review.

The Acting IRS Commissioner, Steve Miller, tendered his resignation Wednesday night.

So far, at least two House Committees (including Ways and Means) and the Senate Finance Committee will hold hearings, and Senate Majority Leader Harry Reid (D-NV) promised that “the Senate will quickly take appropriate action.”

If one scandal weren’t enough, the President’s Justice Department is taking heat for a press scandal. The Associated Press (AP) reported that the Department of Justice (DOJ) seized telephone records of AP journalists over a two month span. The reason? Officials familiar with the case said the seizure was part of an investigation of a leak involving a May 2012 AP story about a counter-terrorism operation in Yemen, in which the CIA foiled a plot to detonate a bomb on a U.S.-bound airplane.  Attorney General Eric Holder said, “this was a very serious leak. A very, very serious leak. It put the American people at risk, and that is not hyperbole. It put the American people at risk.”

The investigation was carried out by the FBI under the supervision of the Deputy Attorney General James Cole, and Holder recused himself from the DOJ investigation to prevent any conflict of interest.  Holder was on Capitol Hill Wednesday for a House Judiciary Committee hearing on this issue.

What does this mean for President Obama’s second term? To give it some perspective, currently one third of the Committees in the House of Representatives are investigating the Obama administration in some capacity. In the end, these issues will be resolved but at some cost to the President’s political capital.

So how could these scandals and natural distractions affect tax reform? Mississippi GOP Sen. Roger Wicker, one of the targets of the White House’s charm offensive, said the controversies dominating conversation in Washington this week could hurt efforts to reach bipartisan deals on the budget and tax reform.

“I can’t imagine that this IRS scandal and the controversy surrounding the overreach and intimidation by the IRS will do anything but pour cold water on the president’s attempt to raise taxes as part of a grand bargain,” Wicker said on MSNBC. “So yes, it will hurt the president in that respect.”

While tax reform appears ripe for bipartisan cooperation, Wicker said the IRS scandal “very well might” set that effort back as well.

Tax Reform Options Paper

As you know, on May 6th the Joint Committee on Taxation (JCT) released its summary of tax reform options as part of the House Ways and Means Committee’s Tax Reform Working Group process. In a statement, Chairman Camp said “Over the past two-plus months the Joint Committee on Taxation has worked tirelessly alongside Ways and Means Committee Members of the 11 Tax Reform Working Groups. The release of today’s report reflects the hard work of Members and staff. This document provides an important and comprehensive overview of the tax code, an overview of some of the most commonly referenced previous tax reform proposals and summarizes the views of more than 1,300 submissions offered to the Ways and Means Committee by key stakeholders. The Committee will dig into its details over the coming weeks.”

The report listed the findings of the working groups and public comments received during the open comment period – reviewing many options but offering no substantive detail on specific provisions. The document provided a thorough overview of present law, then summarized previous tax reform proposals from the National Commission on Fiscal Responsibility in 2010 (aka Simpson-Bowles), the 2005 President’s Advisory Panel on Federal Tax Reform, and the recent White House economic recovery advisory board. It also summarized suggestions from think tanks like the Bipartisan Policy Center and the Center for American Progress, as well as congressional proposals, including the Wyden-Coats tax reform plan of 2011. Finally, the report outlined the suggestions and comments received by the working groups through roundtable discussions and the web portal.

Several options addressing charitable giving and the tax-exempt sector were included in the report. The report noted that “several comments urge Congress to retain the charitable deduction in its present form. Other comments argue that the value of present-law incentives for charitable deductions should not be reduced, or that Congress should proceed with caution when considering changes to the deduction to ensure that changes do not cause a reduction in the overall level of charitable giving. Other comments more specifically oppose recent proposals to limit the deductibility of charitable contributions.” It’s important to note that the document also outlined feedback supporting changes to the charitable deduction, including the imposition of a 28% cap and allowing a non-itemizer deduction.  There was no mention of eliminating the charitable deduction outright. This section also noted feedback calling for elimination of the Pease rule and carving out charitable deductions from Pease.  Interestingly, JCT also mentioned that “other commentary urges Congress to resist calls to treat certain section 501(c)(3) charitable organizations, such as cultural organizations, differently from organizations that serve basic human needs of food and shelter.”  The second section included called for streamlining the private foundation excise tax on investment income to a flat one-percent.

ACR submitted a comment letter to the Ways and Means Committee on three topics: preserving the charitable deduction, streamlining the private foundation excise tax, and excluding charitable contributions from the Pease provision. In the letter, ACR reiterated our position that “As Congress moves towards tax reform, [ACR is] hopeful Congress will strongly consider policies that will lead to more giving while carefully guarding against policies that could unintentionally thwart giving.”
In sum, the report is an exhaustive compendium of relevant options for tax reform. The purpose of the small working groups was to gain buy-in from Members on both sides of the aisle, and indeed this exercise has generated some genuine bipartisan goodwill. At the end of the day, what Chairman Camp is really shooting for is getting something out of his committee that is bipartisan – which in the current political climate means only a handful (if that) of Democratic supporters.

The Next Steps in Tax Reform

Both tax-writing committees are continuing to move the ball down the field with respect to tax reform. First off, the two lawmakers leading this effort, Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Committee Chairman Baucus (D-MT), recently launched a web portal to give taxpayers the opportunity to tell the tax-writers what a modern-day tax code should include (or not include). The Chairmen, “Max and Dave” as they are referring to themselves in this new endeavor, released a statement saying “we are dedicated to writing bills in an open and transparent fashion. No cutting deals behind closed doors. You get a say, employers get a say, and our colleagues — your representatives and senators — will get a say. There are skeptics who question the prospects for bipartisan tax reform. We know we face some fierce headwinds. People from across the spectrum are trying to turn tax reform into a political weapon, which could end up killing any chance at success.” This public outreach effort signals increased emphasis on undertaking tax reform in both chambers, and represents what the Chairmen call a “clean slate approach” – the whole tax code has been scrubbed and they are now adding provisions back in on a piecemeal basis.

Now that the Joint Committee on Taxation’s report has been released, it is clear that the Ways and Means Committee is pivoting from information-gathering to more substantive analysis. We understand that Chairman Camp is continuing to push for a bill to be released before the August recess, which could be tied to an increase in the federal government’s debt limit. The government is due to hit the latest debt ceiling limit on May 18th. After that date, the Treasury Department can use “extraordinary measures” to extend that date until September or even October. A recent report also indicated that federal tax revenue is up due to higher rates and an improving economy, and spending is down due to the sequester, so the date could be even later. This means that the debt ceiling debate will bleed into the fall, and it is likely that Congress will adjourn for August recess without reaching a deal.

On the Senate side, the Finance Committee is moving at a slower pace and is still in the fact-finding stages. The weekly Members-only briefings continue, most recently discussing tax provisions related to community development. Given the current pace, we are expecting the meeting regarding the charitable deduction and the sector as a whole to take place in early to mid-June. As always, we will keep you updated with their process.

ACR Blog & Video Roundup

  • A Clean Slate for Tax Reform?
  • Senator Jerry Morgan (R-KS) Speaks on Senate Floor, Urges for Protection of Charitable Deduction (VIDEO)
  • Philanthropist and Businessman Earle I. Mack on Preserving Charitable Giving (VIDEO)

    • For regular updates from our blog, follow us @ACReform on Twitter.

    Top Reads


    Visit Charitable Deduction Central for news, opinion, background and updates on efforts to protect the charitable deduction.

    Looking for ARCHIVES of this newsletter? Click here.

    Charitable Deduction

    May 17, 2013

    Charitable Giving Coalition Submits Letter to House Ways and Means Committee

    Urges Congress to Leave Charitable Deduction Intact

    WASHINGTON, D.C. – Reducing the value of the charitable tax deduction will hurt America’s communities and millions of people who rely on generous donors, the Charitable Giving Coalition told congressional leaders. As federal lawmakers deliberate comprehensive tax reform, their actions could unravel the positive impact of the 100-year-old tax incentive that encourages giving.

    The Coalition responded to a report by the Joint Committee of Taxation outlining options for tax reform in a letter to Rep. David Camp (R-Mich.), chair of the House Ways and Means Committee and Rep, Sandy Levin (D-Mich.), the committee’s ranking member. The Coalition is unified in an effort to make sure lawmakers clearly understand that giving will decline significantly and communities will suffer if they tamper with the charitable deduction.

    “We are particularly concerned about options on the table that would unravel the charitable deduction and hurt our communities,” the Coalition’s letter said. “…certain tax reform proposals would be exceptionally harmful to the charitable sector, in particular, the Administration’s 28 percent cap on itemized deductions, hard dollar caps, converting the charitable deduction into a tax credit, and imposing a floor threshold for charitable contributions.”

    The report is part of an effort of 11 working groups that were established earlier this year by the committee to address comprehensive tax reform. It summarizes various options for changes in tax policy, including several that impact the charitable deduction. The Coalition letter makes a strong case that any changes to existing policy will reduce giving significantly and increase economic hardship for communities and individuals in need. For example:

  • A 28 percent cap included in President Obama’s budget proposal would reduce donations by billions of dollars. One study – according to the Urban-Brookings Tax Policy Center – estimates more $9 billion in lost charitable donations.
  • A dollar cap on itemized deductions would likely be exceeded by many taxpayers before they are even able to claim a charitable deduction.
  • Replacing the charitable deduction with a 12 percent tax credit would result in a loss of more than $9 billion per year in donations.
  • Imposing a 2 percent adjusted gross income floor on the charitable deduction would result the loss of $3 billion a year in donations.

    • “We simply cannot afford to experiment further with deduction for charitable contributions,” the letter continued. “Such a move would severely disrupt the crucial work of nonprofits in our communities – developing medications, improving education and health, protecting the environment, creating jobs, enhancing arts and culture and much more.”

    The Coalition is a diverse group of more than 60 nonprofits, foundations and other charitable organizations. As part of its ongoing effort to educate lawmakers and the public about what is at stake, the coalition launched ProtectGiving.org last month. This week, the Coalition launched a Twitter account – @ProtectGiving.

    As the tax reform debate continues, the Coalition plans to be an active in making sure lawmakers understand what is at stake for communities and charitable giving, including through new platforms launched last week. House Ways and Means Chairman Dave Camp and Senate Finance Committee Chairman Max Baucus launched TaxReform.gov, a new website seeking input on the issue. The new website was developed in partnership with the Joint Committee on Taxation and details efforts to address tax reform and engage the public in the debate. In addition to TaxReform.gov, a new Twitter account also launched – @simplertaxes.

    Charitable Deduction | Federal | Multimedia | Federal Legislation

    May 14, 2013

    Senator Moran: Maintain the Charitable Deduction


    On Wednesday, May 8, 2013, Senator Jerry Moran (R-KS) spoke on the Senate floor about the importance of maintaining the charitable tax deduction.

    Charitable Deduction | Multimedia

    May 8, 2013

    Earle I. Mack on Preserving the Charitable Deduction

    via South Florida Business Report


    Earle I. Mack recently appeared on the South Florida Business Report (SFBR) to discuss what might happen should tax reform come at the cost of the charitable deduction. David Weir, SFBR host, sat down with Mack to gauge just what a change in the code could really mean. In Mack’s words, changing the charitable deduction would result in an “economic disaster.” He expressed that now is definitely not the time to de-incentivize charitable giving.

    Mack is a philanthropist and businessman who currently resides in Florida. He is a former U.S. Ambassador to Finland and former chairman and CEO of the New York State Council of the Arts. Mack is deeply involved in philanthropic causes and has made countless contributions over the years, specifically to the arts and Drexel University.

     

    Charitable Deduction | Federal | Press Releases | Federal Legislation

    May 6, 2013

    PRESS RELEASE: Congressional Tax Reform Working Group Report is Released

    Focuses on 1,300 Suggestions for Reform

    WASHINGTON, D.C.— The Joint Committee on Taxation (JCT) released a report this week addressing the findings of 11 House Ways and Means Committee tax reform working groups, including the Charitable/Exempt Organizations working group. In addition to the working group findings, the 568-page report also provides a summary of various suggestions made by lawmakers, businesses and individuals during a public comment period. The Alliance for Charitable Reform (ACR) submitted a letter for the public record focusing on issues to expand charitable giving including preserving the charitable deduction, streamlining the Private Foundation (PF) excise tax, and modifying the Pease limitation on the charitable deduction.
     
    Chairman David Camp (R-MI) and Rep. Sander Levin (D-MI) announced the working groups in mid-February. Camp and Levin offered the following statement upon the report’s release:

      “Over the past two-plus months the JCT has worked tirelessly alongside Ways and Means Committee Members of the 11 Tax Reform Working Groups.  The release of today’s report reflects the hard work of Members and staff.  This document provides an important and comprehensive overview of the tax code, an overview of some of the most commonly referenced previous tax reform proposals and summarizes the views of more than 1,300 submissions offered to the Ways and Means Committee by key stakeholders.  The Committee will dig into its details over the coming weeks.”

    This report will play an extremely important role as tax reform moves forward. As part of the public record, it will remain a source of information for lawmakers to consult as they begin crafting comprehensive tax policy changes. The report also shines light on the input the working group received in its private sessions with members of the philanthropic community. The JCT report provides background on current law (pp 19-58) and specifically identifies comments received on charitable deductions (pp 491-97.)

    ACR hopes the report will aid lawmakers in continued support of preserving the charitable deduction, a key focus of the charitable community as it has been widely considered as a source of revenue for government spending or to pay down the deficit.  ACR, along with the Charitable Giving Coalition, has been very vocal in stressing to lawmakers that the charitable deduction is different, the benefit is to the recipient of charity, and that it must be protected.

    You can read ACR’s full letter to the Committee here.

    ACR, a project of The Philanthropy Roundtable comprised of nonprofit leaders and groups, serves as a leading voice on opposing legislative or regulatory proposals that could diminish private giving.
    For more information about ACR contact Molly Edwards at .(JavaScript must be enabled to view this email address) or at 202-822-8333.

     

    May 3, 2013

    ACR News 5.3.13—Senate Finance Committee Chairman to Retire

    >> Federal: Senate Finance Committee Chairman Baucus to Retire
    >> Federal: Debt Ceiling and Tax Reform
    >> Federal: Special Elections
    >> Consider This: Chances of Tax Reform Just Went Up

    Washington Roundup

    Congress is out on recess this week and will return on Monday, May 6th. Before leaving town, both the House and Senate struck a deal to end furloughs that affected air traffic controllers and created heavy airline delays across the country. These furloughs were a response to sequestration. Many expect other federal agencies are queuing up to make their case to Congress for a reprieve from cuts to their programs. The Senate also completed work on the Market Place Fairness Act, a bill that would force Internet retailers to collect sales taxes from their customers.  Prospects of this bill passing the House are not bright.

    >> Senate Finance Committee Chairman Baucus to Retire
    >> Debt Ceiling and Tax Reform
    >> Special Elections


    Senate Finance Committee Chairman Baucus to Retire
    The most talked-about headline in Washington last week was the announcement that Senate Finance Committee Chairman Max Baucus (D-MT) will retire from the Senate at the end of his term in 2014. In a statement, Chairman Baucus said he will “double-down” on issues important to Montana as well as simplifying and improving the tax code. 

    As for how his retirement impacts tax reform, we believe it increases the chances for a comprehensive deal because the Chairman is relieved of one big political anchor – a re-election campaign. Finance Committee Ranking Member Orrin Hatch (R-UT) said in response to the announcement, “I would think his colleagues will want to help [Baucus] in every step of the way and our colleagues will want to help him too. We can come up with tax reform… I can’t speak for him, but I know [tax reform] is a very high priority.”

    Baucus’ counterpart in the House, Ways and Means Committee Chairman Dave Camp (R-MI), also steps down as Chairman at the end of 2014 (Republicans have term limits for committee leaders). So the two lead tax-writers in Congress now have the same deadline to enact tax reform before their gavels change hands – the end of 2014. According to reports the two Chairmen meet every week to discuss tax reform, and even spoke by phone after Chairman Baucus’ announcement.

    So who is next in line? After Chairman Baucus, Senator John Rockefeller (D-WV) is the most senior Democrat, but he is also retiring in 2014, leaving Senator Ron Wyden (D-OR) as the presumptive Chairman or Ranking Member (this depends on whether Democrats retain control of the Senate after the elections in 2014). Senator Wyden is a strong supporter of overhauling the tax code, and is the co-author of the Wyden-Coats tax reform plan, introduced in 2011 (and before that the Wyden-Gregg bill). The bill is a comprehensive rewrite of the tax code, including a proposal to consolidate the number of individual income tax brackets from six to three: 15 percent, 25 percent and 35 percent. It is important to note that this bill would repeal all itemized deductions, but maintains the home mortgage interest deduction and the charitable deduction.

    We understand Wyden and Coats are readying their bill to reintroduce it again this year.
     
    Debt Ceiling and Tax Reform
    As you may recall, in January Congress temporarily suspended the debt ceiling until mid-May after which the Treasury Department will be able to employ ‘extraordinary measures’ to avoid defaulting on the government’s interest payments. Previous official estimates have said Treasury would be out of options in July or August, and some newer Wall Street projections estimate that date could be pushed as late as October. So get ready for another showdown – the President needs the debt ceiling raised by Congress and the Republicans will likely use this opportunity to push for one of their big priorities. Increasingly we’re hearing it could be tax reform. 

    As you would expect, top Democrats – including House Budget Committee Ranking Member Chris Van Hollen (D-MD) and Senate Budget Chairwoman Patty Murray (D-WA) are opposed to the idea. 

    As of now, House Republicans and Democrats are continuing to spar over whether tax reform should raise revenues, and we are not expecting any substantive action on legislation until that issue is resolved. And the debate will continue on Monday, May 6th, when the Joint Committee on Taxation (JCT) releases its report on options for tax reform as part of the Ways and Means Committee’s small working group process. Our friends on the Committee have reiterated that this report is merely a summary of options and will not be considered as policy suggestions. 

    The Committee will then conduct two briefings to review the JCT report on May 8th and May 17th. The first meeting will focus on the options for charitable and exempt organizations, debt, equity and capital, education and family benefits and energy. The second briefing will focus on reform possibilities for financial services, income and tax distribution, international policies, manufacturing, pensions and retirement, real estate and small business and pass-through entities. The chairs and vice chairs of each working group will give a 10-minute presentation to “describe what they learned from various conversations, meetings, and other events held as part of the working group process,” according a memo sent to committee staffers.

    Bottom line, we don’t expect any sound recommendations from the report, but rather an extensive list of options that the full committee can then consider for its tax reform bill later this year.

    In addition, the Senate Finance Committee is continuing their weekly closed-door meetings on tax reform issues when they are in session. Last week the Committee released its fourth options paper on energy and infrastructure tax issues.


    Special Elections
    On Tuesday, Rep. Ed Markey (D-MA), who has served in the U.S. House of Representatives for 36 years, beat Rep. Steve Lynch (D-MA) in the Democratic primary for Massachusetts’ special Senate election to replace now-Secretary of State John Kerry. Rep. Markey will face Republican Gabriel Gomez, a former Navy SEAL, in the general election on June 25. Preliminary polls suggest that Rep. Markey is favored to win.

    Another race to watch is the 1st district in South Carolina where former Governor Mark Sanford (R) will face off against Elizabeth Colbert Busch (D) on May 7th. The National Republican Congressional Committee recently pulled funding from Gov. Sanford’s campaign after news broke regarding his ongoing personal issues and an April 19th poll from Public Policy Polling shows Busch with a nine point lead heading into the home stretch. 

    Consider This


    Chances of Tax Reform Just Went Up
    In news that surprised much of official Washington last week, Max Baucus, the senior Senator from Montana, announced that after 35 years in Congress, he would not be seeking reelection in 2014. In tax world, that news wasn’t just surprising, it hit like a thunderbolt, given that the Democratic Senator is also Chairman of the Senate Finance Committee. 

    So what does that mean for tax reform? We’re pretty sure it means the chances of tax reform have just gone up – maybe not by a whole lot, but they’ve almost certainly increased. With a potentially tough election off the table, the Senator is freed up to pursue tax reform and he has made it very clear that is what he intends to do. A very senior advisor to the Senator had simple advice for us on tax reform, “Get ready!”

    With House Ways and Means Chairman Camp due to step down as Chair in 2014 and Senate Finance Committee Ranking Member Hatch not expected to seek reelection in 2018, there are a lot of unencumbered players in the tax reform debate. That bodes well for getting something done.

    Chairman Baucus has made it clear he’d like to leave Congress with tax reform as one of his signature “legacy” items. Never underestimate the willingness of members of Congress to grant other members of Congress “legacy” legislation. Why? Because someday those willing members of Congress may retire themselves and they’d appreciate a legacy item or two. 

    We expect the pace on tax reform in the Senate to pick up in the next few months. Stay tuned.


    For regular updates from our blog, follow us @ACReform on Twitter.

    In Case You Missed It


    “An Open Letter from Economists on the Charitable Deduction”—An open letter, signed by over 225 renowned economists, was featured in the April 25 print version of Politico. View the letter and full list of signees here.

    Top Reads


    Visit Charitable Deduction Central for news, opinion, background and updates on efforts to protect the charitable deduction.

    Looking for ARCHIVES of this newsletter? Click here.

     

    Charitable Deduction

    Apr 25, 2013

    Politico: Open Letter from Economists on the Charitable Deduction

    APRIL 25—The following letter was included on page 20 in today’s print version of Politico.

    An Open Letter from Economists on the Charitable Deduction

    As Congress and the Administration deliberate fundamental tax reform, a variety of voices will fairly claim their tax situation is unique, deserving of special treatment. However, only the charitable deduction can make this case without reservation or equivocation. It truly is unique in purpose and consequence, and should be retained in any income tax reform.

    For every other tax incentive, the tax benefit follows some action or aspect relating directly to and benefitting the taxpayer. A donor making a charitable deduction, in contrast, benefits neither the taxpayer nor the receiving institution, but rather the population that institution serves, whether unwed mothers, the environment, education, or religious engagement.

    The social safety net comprises strands from government at all levels interwoven with services provided by national philanthropic organizations like the Red Cross, and local organizations addressing local needs. As a society we reap tremendous benefits in cost and effectiveness by relying extensively on these private institutions. Parsimonious with their resources, their efforts are often leveraged many times over by dedicated, unpaid volunteers inspired to support their communities in ways and to a degree federal programs cannot hope to match. One needn’t disparage federal social safety net programs to acknowledge the tremendous advantages to society, and the important budgetary savings, from relying on volunteer-driven, private, philanthropic organizations across the country. These organizations and volunteers would not achieve the same kind of success without the charitable deduction and the generous support of philanthropic Americans.

    A charitable donation is a selfless act. It is also an economic act, transferring resources from the donor to those in need. And according to the Joint Committee on Taxation last year individuals gave away almost $218 billion. As the resources no longer remain with the donor, it would be illogical to tax the donor on those resources as though they remained the donor’s property. As Congress advances fundamental tax reform, as professional economists we urge all negotiating parties to preserve the charitable deduction as a proper, beneficial, and socially cost-effective feature of the federal individual income tax and contributor to a civil society.

    Respectfully,

    • Rudy Penner, Former Director, CBO
    • Edward C. Prescott, Nobel Laureate in Economics, Arizona State University
    • Tyler Cowen, George Mason University
    • N. Gregory Mankiw, former Council of Economic Advisers chair (President George W. Bush), Harvard University
    • J.D. Foster, Heritage Foundation
    • John Greenhut, Texas A&M University, Commerce
    • Sanjai Bhagat, University of Colorado
    • Roger B. Porter, Harvard University
    • Don M. Chance, Louisiana State University
    • Richard E. Just, University of Maryland
    • James VanderHoff, Rutgers-Newark
    • Dennis Halcoussis, California State University, Northridge
    • Roger B. Betancourt, University of Maryland
    • Gregory Burge, University of Oklahoma
    • Amy Glass, Texas A&M University
    • R. L. Promboin, University of Maryland
    • Tom Nisbett, The Nisbett Group
    • Steven G. Craig, University of Houston
    • Robert Feenstra, University of California, Davis
    • David L. Goldenberg, Farleigh Dickinson University
    • Mark Isaac, Florida State University
    • Edward D. Emery, St. Olaf College
    • Gregory D. Hess, Claremont McKenna College
    • Daniel Hamermesh, University of Texas, Austin
    • Richard E. Ericson, East Carolina University
    • Lance Howe, University of Alaska
    • Martin F. Grace, Georgia State University
    • Patricia Hughes, St. Cloud State University
    • Scott Harrington, University of Pennsylvania
    • Peter Lewin, University of Texas, Dallas
    • Kathy Krynski, Kenyon College
    • Warren L. Jones, Western Illinois University
    • Scott Drewianka, University of Wisconsin, Milwaukee
    • George Langelett, South Dakota State University
    • Ronald W. Jones, University of Rochester
    • Muhammad Q. Islam, Saint Louis University
    • Kristina M. Lybecker, Colorado College
    • Stephen M. Miller, University of Nevada, Las Vegas
    • Richard Rawlins, Missouri Southern State University
    • Eric Rasmusen, Indiana University
    • Wilbur Monreo, U.S. Treasury Department, retired
    • Thomas Mayer, University of California, Davis
    • Kevin McCabe, George Mason University
    • Clifford S. Russell, Vanderbilt University
    • Robert I. Lerman, American University
    • Richard Schmalensee, MIT
    • Patricia Dillon, Scripps College
    • Richard Sheehan, University of Notre Dame
    • Douglas M. Patterson, Virginia Tech
    • Stephen R. Lewis, Jr., Carleton College
    • Bernard Baumohl, The Economic Outlook Group, LLC
    • Jody Lipford, Presbyterian College
    • Leslie E. Papke, Michigan State University
    • William McEachern, University of Connecticut
    • Markos J. Mamalakis, University of Wisconsin, Milwaukee
    • Todd P. Steen, Hope College
    • Robert Wisner, Iowa State University
    • Richard Timberlake, University of Georgia
    • Bruce Wydick, University of San Francisco
    • John P. Tiemstra, Calvin College
    • June O’Neill, City University of New York
    • Kenneth Elzinga, University of Virginia
    • Earl L. Grinols, Baylor University
    • Michael Smitka, Washington and Lee University
    • Thomas B. Petska, IRS, retired
    • Richard W. Stratton, University of Akron
    • J. Gregg Whittaker, William Jewel College
    • Michael Woodford, Columbia University
    • Marina v.N. Whitman, University of Michigan
    • Larry Harris, University of Southern California
    • Bruce Webb, Gordon College
    • David L. Cleeton, Illinois State University
    • Stacie E. Beck, University of Delaware
    • Robert A. Baade, Lake Forest College
    • Donald E. Campbell, College of William and Mary
    • Steven Cobb, Xavier University
    • James Barth, Auburn University
    • James D. Adams, Rensselaer Polytechnic Institute
    • Susan Christoffersen, Philadelphia University
    • Richard J. Cebula, Jacksonville University
    • Andrew R. Blair, University of Pittsburgh
    • Christopher C. Barnekov, FCC, retired
    • Michael Adler, Columbia University
    • Anup Agrawal, University of Alabama
    • Peter Brust, University of Tampa
    • David L. Chicoine, South Dakota University
    • Michael Brennan, UCLA
    • Gregory Givens, University of Alabama
    • Lawrence R. Cima, John Carroll University
    • Paul Pieper, University of Illinois, Chicago
    • Suzanne Heller Clain, Villanova University
    • Kent Olson, Oklahoma State University
    • G. Geoffrey Booth, Michigan State University
    • Timothy F. Slaper, Indiana Business Research Center
    • Patricia Brynes, University of Illinois, Springfield
    • John A. Sorrentino, Temple University
    • Douglas E. Morris, University of New Hampshire
    • Walton Padelford, Union University
    • Stephen W. Salant, University of Michigan
    • Judith W. Mills, Southern Connecticut State University
    • Oded Palmon, Rutgers University
    • Bonnie Wilson, Saint Louis University
    • Alan Rufus Waters, California State University, Fresno
    • Pai-Ling Yin, MIT
    • David Ranson, H.C. Wainwright and Co. Economics Inc.
    • J. Dewey Daane, Vanderbilt University
    • George M. Perkins, Bates College
    • Noralyn Marshall, Risk Management Advisors
    • A. Seddik Meziani, Montclair State University
    • Robert A. Strong, University of Maine
    • Robert Seeley, Wilkes University
    • Marc J. Melitz, Harvard University
    • Wallace Oates, University of Maryland
    • Lee E. Ohanian, Hoover Institution

    • Erik Thorbecke, Cornell University
    • Mario J. Miranda, Ohio State University
    • Neil T. Skaggs, Illinois State University
    • Steve Gardner, Baylor University
    • Joseph A. McKinney, Baylor University
    • David E. Mills, University of Virginia
    • John Ruggiero, University of Dayton
    • Adel S. Z. Abadeer, Calvin College
    • Kenneth Carrow, Indiana University
    • George G. Pennacchi, University of Illinois, Urbana-Champaign
    • Mario J. Crucini, Vanderbilt University
    • Arnold R. Cowan, Iowa State University
    • Frank Egan, Trinity College
    • C.  Barry Pfitzner, Randolph Macon College
    • Michael P. Niemira, International Council of Shopping Centers
    • Peter Arcidiacono, Duke University
    • J. Jay Choi, Temple University
    • Robert Whaples, Wake Forest University
    • Joe Kennedy, Kennedy Research LLC
    • John Volpe, Catholic University
    • Claudia Goldin, Harvard University
    • Art Goldsmith, Washington and Lee University
    • Ananda R. Ganguly, Claremont McKenna College
    • James S. Hanson, Wilamette University
    • John M. Heineke, Santa Clara University
    • Neil E. Harl, Iowa State University
    • Paul M. Jakus, Utah State University
    • K. C. Fung, University of California, Santa Cruz
    • King Hurlock, Calvert Investment Counsel
    • Dianne Wilner Green, Green Acres Technology
    • Peter Karl Kresl, Bucknell University
    • Kishore G. Kulkarni, Indian Journal of Economics and Business
    • W. J. Lane, University of New Orleans
    • Thomas S. Nesslein, University of Wisconsin, Green Bay
    • Lee Meyer, University of Kentucky
    • Kang Park, Southeast Missouri State University
    • Jonathan E. Leightner, Georgia Regents University
    • Martha Pass, Carleton College
    • C. M. Rendleman, Southern Illinois University
    • Keith Malone, University of North Alabama
    • Robert S. Rycroft, University of Mary Washington
    • Tony Prato, University of Missouri
    • Hamid Mohtadi, University of Wisconsin, Milwaukee
    • John F. Olson, College of St. Benedict
    • Daniel Heath, Georgetown University
    • P.J. Hill, Wheaton College
    • David M. Nelson, Western Washington University
    • Andrew Samwick, Dartmouth College
    • Mark Ottoni-Wilhelm, Indiana University
    • Spiro E. Stefanou, Pennsylvania State University
    • Raymond Sauer, Clemson University
    • Jingyo Suh, Tuskegee University
    • Martin Shubik, Yale University
    • Randal Verbugge, Georgetown University
    • Edward Tower, Duke University
    • Richard Curtin, University of Michigan
    • Virginia Wilcox-Gok, Northern Illinois University
    • David Zilberman, University of California
    • Tom Willett, Claremont Graduate University
    • Philip Trostel, University of Maine
    • Subarna K. Samanta, College of New Jersey
    • Evangelos Otto Simos, University of New Hampshire
    • William Schulze, Cornell University
    • Douglas T. Breeden, Duke University
    • Baizhu Chen, University of Southern California
    • Nancy Bertaux, Xavier University
    • Kalyan Chatterjee, Pennsylvania State University
    • John P. Bonin, Wesleyan University
    • Arthur Blakemore, Arizona State University
    • Samuel K. Andoh, Southern Connecticut State University
    • Byron Brown, Michigan State University
    • Carl Campbell, Northern Illinois University
    • Douglas O. Cook, University of Alabama
    • Case Sprenkle, University of Illinois, Urbana-Champaign
    • William Beranek, University of Georgia
    • John H. Boyd III, Florida International University
    • Tareque Nasser, Kansas State University
    • Robert Alexander, Sweet Briar College
    • Philip Brock, University of Washington
    • Christine Chmura, Chmura Economics and Analytics
    • Nelson C. Mark, University of Notre Dame
    • Cyrus Bina, University of Minnesota
    • Leo J. Navin, Bowling Green State University
    • Matthew Mitchell, University of Toronto
    • Steve Morse, University of Tennessee
    • Stephen D. Cohen, American University
    • Rajnish Mehra, Arizona State University
    • Scott Linn, University of Oklahoma
    • Shyam Sunder, Yale University
    • Robert C. Wolf, University of Wisconsin, La Crosse
    • Donald J. Oswald, California State University, Bakersfield, retired
    • Dennis Muraoka, California State University, Channel Islands
    • Bonnie Wilson, Saint Louis University
    • Stephen D. Younger, Ithaca College
    • Chee Ng, Fairleigh Dickinson University
    • Richard T. Selden, University of Virginia
    • Teresa Tharp, Valencia College
    • Martin C. Spechler, Indiana University
    • Richard MacMinn, Illinois State University
    • Philip Rothman, East Carolina University
    • Robert E. Moore, Georgia State University
    • H. L. Nagel, St. Johns University
    • John A. Powers, University of Cincinnati
    • Elliott Parker, University of Nevada, Reno
    • Mark Weinstein, University of Southern California
    • Charles K. Rowley, George Mason University
    • Michael Sykuta, University of Missouri, Columbia
    • Larry C. Peppers, Washington and Lee University
    • Andrew Light, Liberty University
    • Mukti Upadhyay, Eastern Illinois University
    • Lawrence Southwick, University of Buffalo

    Apr 19, 2013

    ACR News 4.19.13—What Happens Next in Tax Reform?

    >> Federal: President’s Budget and Reaction from the Hill
    >> Federal: Finance Committee Continues Tax Reform Effort
    >> Federal: New Bill to Protect Charitable Giving
    >> Federal: Ways and Means Committee Wraps Up Working Groups
    >> Consider This: What Happens Next in Tax Reform?

    Washington Roundup

    Our hearts and prayers go out to all those affected by the tragedy in Boston this week. Amid the horror, the American spirit of giving has been on full display as complete strangers have offered up their homes, their blood, their money and resources to help those in need. We hope for a speedy healing process for all those who have been physically and emotionally afflicted by this senseless tragedy.

    This week in Washington all eyes were on the Senate as Members addressed gun control and immigration.  Earlier this week, the Senate voted down legislation that would require background checks before purchasing firearms, and Majority Leader Harry Reid took gun legislation off the table for the time being. Also, earlier this week it was announced that a small, bipartisan group of Senators had struck a deal on an immigration reform package that will be taken up for debate in the Senate next week. Also in the headlines was the President’s budget and its impact on donors and charitable giving.  And behind the scenes Congress’s tax-writing committees toiled away on tax reform efforts.

    >> President’s Budget and Reaction from the Hill
    >> Finance Committee Continues Tax Reform Effort
    >> New Bill to Protect Charitable Giving
    >> Ways and Means Committee Wraps Up Working Groups

    President’s Budget and Reaction from the Hill
    As you know, President Obama released his FY2014 budget proposal on Wednesday, April 10th.  Again this year he called for a 28% cap on all itemized deductions, including the charitable deduction, for the top 2% of taxpayers.  The proposal is the same as it’s been for the past 4 years, but because the tax rates have increased as of January 1st, the impact of the 28% cap is much greater – which means the hole in charitable giving created by this proposal is much deeper.  How much deeper?  Numbers have ranged anywhere from $6 billion to $11 billion in potential losses to charity. This is based solely on the cap and the new difference in tax rates and does not take into account other factors that may impact giving. ACR again, as in years past, opposed this proposal and we continue to work with our Charitable Giving Coalition partners to have our voices heard in Congress about the importance of the charitable deduction. ACR also signed a letter the Coalition sent to the President asking him to reconsider his plan to cap the charitable deduction.

    While the President is taking a lot of heat from some members of his own party on his budget, at least the conversation is moving on Capitol Hill after years of irregular order.  During his Committee’s hearing this week, Ways and Means Chairman Dave Camp (R-MI) said he was encouraged by the President’s call for comprehensive tax reform in the budget but noted that “this budget is a first step, but America can do better than what the president is proposing here.”  Newly confirmed Treasury Secretary Jack Lew echoed Chairman Camp’s support for tax reform, specifically revenue-neutral corporate tax reform, but added that the Administration is committed to raising revenue through tax reform on the individual side. That’s important to the charitable sector because one of the major revenue raisers is this 28% cap on itemized deductions.  This will reduce the deductions for those in the top tax bracket by nearly 1/3 and would deal a devastating blow to charitable giving. 

    On the Senate side, Finance Committee Chairman Baucus (D-MT) voiced his support for raising revenue, saying “it seems the president is working to carve a middle ground, just like I am working to do when we close loopholes and simplify the tax code.”  Republicans, including Ranking Member Orrin Hatch (R-UT), did not share that opinion and said the problem is still government spending.  Speaking on entitlement spending, Hatch said that President Obama did not go far enough in paring costs for government programs and called the intended olive branch to the GOP, modified calculation for Social Security benefits (chained CPI), a “small step.”

    Overall, this budget proposal signals that the President is perhaps open to some compromise on a bigger deal – one that will include tax reform.  Both Chairmen of the Congressional tax writing committees, Chairman Camp and Chairman Max Baucus, insist tax reform is very much alive and doable, and are moving ahead, so it is important the charitable community remains engaged. 
     
    Finance Committee Continues Tax Reform Effort
    On Thursday April 11, the Finance Committee released the second options paper as background for their second closed door session on tax reform.  This paper examines options relating to Business Investment and Innovation and can be viewed here.  A third paper was issued Thursday, April 18 that discusses ways to reshape education and family policies in the tax code.  According to a summary, this paper lists marriage penalties and bonuses, the rising cost of higher education, and simplifying dependent tax credits as possible areas for reform.
    The Finance Committee is committed to 10 topics for meetings and papers, with meetings every Thursday morning while they are in session.  The remaining topics are: families, education, and opportunity; infrastructure, energy, natural resources; types of income, investment, tax structures; economic security, health, retirement, & insurance; international competitiveness; economic and community development; tax exempt organizations and charitable giving; and non-income tax issues and related reforms.

    Given that the charitable issues session is ninth (out of ten) and that the Committee seems to be taking them in order, that would put the charitable session in mid-June at the earliest. We will keep you posted on any developments.

    New Bill to Protect Charitable Giving
    Last week, Representatives Jim Sensenbrenner (R-WI) and Jim Matheson (D-UT) introduced a bill, H.R. 1479, that would carve out the charitable deduction from being subjected to the Pease limitation.  In a press release, Congressman Sensenbrenner said “Charitable deductions should be exempt from political attack as we work to restructure our tax code. Americans appreciate the significance of our philanthropic sector as charity is engrained in America’s moral fiber. We must continue to encourage communities to take care of one another rather than instill ever-growing reliance on government.”

    We applaud this bi-partisan bill and look forward to working with their office and our colleagues in the sector to advance this legislation. 


    Ways and Means Committee Wraps Up Working Groups
    The Ways and Means Committee’s process to gather input from the public drew to a close on Monday, April 15th.  By that date, the public was invited to submit comments on tax reform through a web portal. (Click here for ACR’s press release.) The work being done by each of the 11 Ways and Means Working Groups on Tax Reform also concluded on Monday. 

    Well over 100 documents were submitted through the web portal, including one from ACR. The next step is for the Joint Committee on Taxation (Congress’s internal tax department) to compile a final report on the progress of the Working Groups and public input submitted through the web portal.  The report is expect to be delivered to the Ways and Means Committee on Monday, May 6th. 

    At this point it is unclear what, if any, significance this report will have except to be a comprehensive record of public input.  The significance of the Working Group process has been to invest the Ways and Means Committee members – both Democrats and Republicans – in comprehensive tax reform.  Initial feedback from Members is that it was a valued exercise both from a relationship-building perspective (with each other) and from an education perspective.  Chairman Camp has repeatedly said he wants the Committee to release a tax reform bill and get it on the House floor in 2013.  We will continue to keep you up to date as the process continues. 

    Consider This


    What Happens Next in Tax Reform?
    What happens next in tax reform?  Well, for starters, the portal is officially closed.

    What portal you might ask?  That would be the online device the House Ways and Means Committee set up to take comments on tax reform.  You can take a look here.  As you can see, the comments range from lofty “big” ideas to more parochial “fixes.’  The comments are directed at the eleven tax reform working groups set up by Chairman Camp.

    So what happens next?  By early May, Chairman Camp has tasked the Joint Committee on Taxation to come up with a report that describes current law in each of the eleven areas and summarize the comments that came in as well as the information gathered by each of those working groups.  One of those groups is charitable/exempt organizations and we’ve been working with that group to advance our views. 

    In this age of hyper-partisanship, Joint Tax is non-partisan.  Put another way, they are a committee staffed by pure tax wonks.  The information won’t be in the form of recommendations but it will still be interesting to see what they pick and choose to include about charitable organizations.  That, in a sense, is putting options on the table. 

    Meanwhile, the Senate Finance Committee continues their closed door sessions on tax reform.  We don’t expect them to get to tax exempt organizations and charitable giving until June or July. Stay tuned.

    ACR Blog Roundup

    For regular updates from our blog, follow us @ACReform on Twitter.

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    Visit Charitable Deduction Central for news, opinion, background and updates on efforts to protect the charitable deduction.

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    Further Reading

    Charitable Deduction | Federal | Press Releases | Federal Legislation

    Apr 19, 2013

    PRESS RELEASE: ACR Submits Letter to Ways & Means Charitable/Exempt Organizations Working Group

    Focuses on Charitable Deduction, PF Excise Tax and Pease Limitation

    WASHINGTON, D.C.— The Alliance for Charitable Reform (ACR) submitted a letter for public record this week to the House Ways and Means Charitable/Exempt Organizations Working Group, focusing on issues important to the philanthropic community including the charitable deduction, the Private Foundation (PF) excise tax, and the Pease limitation on itemized deductions for certain taxpayers. 

    The Charitable/Exempt Organizations Working Group is part of the Ways & Means Committee’s process to move forward on tax reform. Preserving the charitable deduction has been a key focus of the charitable community as the deduction has been widely considered as a source of revenue for government spending or to pay down the deficit.  ACR, along with the Charitable Giving Coalition, has been very vocal in stressing to lawmakers that the charitable deduction is different, the benefit is to the recipient of charity, and that it must be protected.

    ACR’s letter also focused on the PF excise tax, which was originally intended to fund the enforcement and oversight of nonprofit organizations at the IRS.  The two-tiered tax includes a complex formula that has the perverse and unintended consequence of deterring foundations from increasing their contributions to charity in times of great need.  Additionally, the tax revenue collected has not been solely dedicated to charitable oversight and has been directed to other parts of the government. ACR supports establishing a flat rate of 1 percent, which will eliminate the perverse consequence. 

    While cuts, caps or limits to the charitable deduction are ill-advised, so are other taxes on charitable giving, like the Pease limitation.  This tax reduces the value of itemized deductions, including the charitable deduction, for taxpayers with incomes over $250,000 a year.  Not only does this Pease limitation add complexity to the code, but it also decreases the incentive to give.  ACR supports a carve-out from the Pease limitation for the charitable deduction which could encourage more giving to charity.

    You can read ACR’s full letter to the Committee here.

    ACR, a project of The Philanthropy Roundtable comprised of nonprofit leaders and groups, serves as a leading voice on opposing legislative or regulatory proposals that could diminish private giving.
    For more information about ACR contact Alison Hawkins at .(JavaScript must be enabled to view this email address) or at 202-822-8333.

    Charitable Deduction | Federal | Federal Legislation

    Apr 16, 2013

    Untouchable Status of Charitable Deduction Dwindling Under Tax Reform Pressure

    by Diane Freda, Bureau of National Affairs

    Reproduced with permission from Daily Tax Report, 73 DTR G-6 (Apr. 16, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033)

    APRIL 16 - The charitable deduction will be a target when tax reform negotiations get under way on Capitol Hill, and it does not matter which political party prevails, one of several pundits at an April 15 Urban Institute forum said.

    “The kinds of public programs that do good things for worthy people are under very severe assault, and not just under the Ryan budget, but at the hands of President Obama’s budget as well,” said William Galston, senior Brookings Institution fellow and a former Clinton administration official.

    For the fifth consecutive year, Obama’s fiscal year 2014 budget has proposed to limit the value of the charitable deduction at 28 percent for high-income taxpayers (70 DTR GG-5, 4/11/13). House Budget Committee Chairman Paul Ryan (R-Wis.) proposed a Republican budget resolution for FY 2014 that does not include a similar cap, but would curb tax expenditures in other ways.

    The net political effect of the end of the year deal on the Bush tax cuts was to take further increases in marginal tax rates off the table, Galston said. “What that tells me is that base-broadening will be the name of the game in tax reform, whether the reform is revenue-neutral or revenue-raising.”

    As fiscal pressures mount, the charitable deduction, which may previously have received special consideration because of its philanthropic purpose, is not likely to remain sacrosanct

    Not Picking on Charities

    “The fickle finger of fate is pointed in the direction of the sector,” he concluded. “You’re not being singled out for special abuse, but neither are you automatically exempt from contributing what some legislators consider your fair share.”

    While charities like to think of themselves as do-gooders, the idea that their activities should be protected because they help the poor and needy will go out the window as lawmakers hunt and scratch for every conceivable dollar to fill the gaping revenue hole.

    There is now bipartisan acceptance of the debt-to-gross domestic product ratio as an indicator of fiscal sustainability, as well as bipartisan acceptance of the need to at least stabilize that ratio over the next decade, if not get it down, Galston said. The United States has now witnessed the single largest increase in that ratio in the entire post-war period.

    In the face of growing pressure for fiscal restraint at the federal level, relentless entitlement spending, and less defense and non-defense discretionary spending in Obama’s 2014 budget, he suggested that every tax expenditure will be on the table.

    Separate Approach Needed for Each Tax Expenditure

    Obama’s one-size-fits-all approach to dealing with tax expenditures has not found universal acceptance.

    “The problem with using the same rule for all tax expenditures is that they are different programs with different purposes and different incentive structures,” Eugene Steuerle, an Urban Institute fellow, told BNA. Steuerle was one of more than a dozen public policy experts who spoke on the Urban Institute panel on charity, the government, and tax reform.

    The charitable deduction would ideally provide incentives at the margin, he said, encouraging people to give more. But that same approach would not work with health insurance, for instance, where the government is providing a subsidy designed to encourage people to buy insurance, but not necessarily the biggest or most expensive plan. “With one tax incentive, you might want a cap, and with another you might want a floor,” he said, where employing an across-the-board cap applies the same rules to every tax expenditure that is an itemized deduction.

    Ugly Statistics

    If the charitable deduction were capped at 28 percent, Arthur Brooks, president of the American Enterprise Institute, said his best estimates indicate that all charitable giving would decline by 4.5 percent in the first year it was enacted.

    Secular giving to nonreligious organizations would decline by 7 percent, he predicted. Giving to religious organizations would decline by 1 percent; giving from people who itemize would decline by 9 percent; and giving to organizations that get their contributions from the top 1 percent of the income distribution would fall by 24 percent.

    “It’s a big deal,” he said. “You’re a hospital, you’re a university, you’re a think tank, the effect would be catastrophic if these estimates are even close to reality, and I am quite convinced that they are.”

    While attempts to define what “charity” is eluded some members of the panel, Alex Reid, an attorney with Morgan, Lewis & Bockius, and a former legislation counsel for the Joint Committee on Taxation, defined it simply as “generating public benefit, without significant private benefit.”
    He said the charitable deduction should not be considered a subsidy at all, because subsidies involve government control.

    “The tax law quite correctly leaves the definition to the marketplace, to the American people, and how the American people want to help out,” he said. “But the government’s role is to be a neutral arbiter to insure that charities are organized and operated to perform a public benefit, and the private benefit is screened out to the extent possible.”