The Philanthropy Roundtable is deeply concerned about recent remarks made by Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, before a leading regional association of grantmakers:
LOS ANGELES— Adam Meyerson, president of The Philanthropy Roundtable, highlighted the importance of the charitable deduction in preserving our nation’s civil society in his opening remarks at the organization’s annual meeting last Thursday.
States that have tinkered with one of the most sacrosanct of all tax write-offs – state income tax deductions and credits for charitable contributions – have seen their local charities suffer the backlash. Their decisions offer insight for other states and for federal officials who are contemplating reducing or eliminating tax incentives for charitable giving.
ACR Summit for Leaders 2013, March 19, Washington, D.C.
State and local governments are under increased budget pressure exacerbated by recent, and likely further, federal spending cuts. In many cases, states are curtailing tax breaks to raise more revenue, raising tax rates and fees, and are cutting their own spending. This panel will identify some of these trends.
On Thursday, May 26, 2011, the Massachusetts Senate passed an amendment as part of the Senate budget to prohibit public charities from providing board compensation without prior approval from the state Attorney General. The amendment also provides that the AG may review executive compensation and, if the AG does a review, must report findings to the legislature. This budget measure did not survive conference committee negotiations. Nonetheless, it remains a priority of the state attorney general. The provision on board compensation is similar to a bill sponsored by Senator Mark Montigny and Representative Martha Walz earlier in the session.
Governor Neil Abercombie of Hawaii signed into law legislation capping all deductions on residents with certain income levels. For 2011 through 2015, singles in Hawaii with adjusted gross income (AGI) above $100,000 will only be allowed to claim $25,000 for charitable giving and other deductions, and couples with AGI above $200,000 will be allowed $50,000. This bill is similar to legislation vetoed by the former governor in 2010 but has a lower threshold, capturing more taxpayers.
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The Chronicle of Philanthropy reports on reactions of Massachusetts foundations to efforts to prohibit compensation of nonprofit board members:
Here’s an excerpt:
The measure arose from a proposal backed by Martha Coakley, the Massachusetts attorney general, that followed a public outcry over five-figure stipends for directors of the state’s four nonprofit health insurers, two of which voluntarily suspended board compensation.
The bill has moved swiftly in recent weeks after it was attached to the state budget bill that passed the Massachusetts Senate last month
Beth Smith, executive director of the Hyams Foundation, said she had been following the attorney general’s report on nonprofit health insurers but did not realize until recently that the proposed law could apply to her foundation as well. The Hyams Foundation paid 10 of its dozen board members a total of $134,125 in 2009.
“A number of our trustees come from the nonprofit sector, including grass-roots groups, and immigrant communities and low-income communities. It might affect our ability to attract some people if they really need to make a tradeoff in terms of their own income and lives.” Ms. Smith said. “If the law passes, the board will have to have an important conversation about it. I’m not sure what the board would decide to do.”