Apr 21, 2011

ACR newsletter (4.21.11)

Current Issue

Friday, Thursday, April 21, 2011

HAPPY 1ST ANNIVERSARY
One year ago we launched this newsletter to keep our supporters and friends informed about what’s happening in Washington, around the country, and in the news. We have strived to provide a fresh perspective on issues in the philanthropic sector. Thank you to our readers for your support.

We mark this one-year anniversary with a refreshing of our newsletter. In this and coming editions you can expect new, interactive features and greater substantive content reorganized in a way that we hope will be useful to you in your work. We welcome your feedback.

Cheers!

The latest edition of the ACR newsletter is available below.

Washington Roundup


Congress is currently on Easter recess and will return to work on Monday, May 2nd. Following are updates from Capitol Hill:

  • Deficit Reduction Since our last newsletter, President Obama has signed H.R. 1473, a spending deal containing $40 billion in cuts and funds the government through September 30th, the end of the 2011 fiscal year. After signing that legislation, nearly all discussion in Washington has turned towards comprehensive deficit reduction, often in conjunction with raising the “debt-ceiling,” (the amount the federal government is legally allowed to borrow). On Wednesday, April 14th, the President outlined his deficit reduction plan that seeks to trim $4 trillion from the deficit over the next 12 years. As The New York Times reports, Obama’s plan uses a mix of spending reductions and tax reform in order to accomplish this goal, but does not include cuts to entitlement programs such as Medicare and Medicaid. President Obama also appointed Vice President Biden to head a bi-partisan group of Senators and Representatives to work out a compromise deficit reduction deal (see below).

    Before adjourning for Easter recess (April 18-29), the House of Representatives passed Budget Committee Chairman Paul Ryan’s (R-WI) budget proposal, H.Con.Res. 34, which contains more aggressive cuts than the President’s plan. It seeks to cut $4.4 trillion from the federal deficit over the next decade. The bill passed without any Democrat support and gained all but four Republican votes. While it is not expected to pass in the Senate, Politico reports that the bill “amounts to a huge political bet that the budget-cutting fervor will blow public opinion the Republicans’ way and voters will embrace deep cuts to entitlement programs, federal spending and changes to the tax code.” Whether public support will grow for this Republican spending plan is questionable.  In the meantime, a recent poll conducted by the Washington Post finds that a majority of Americans do not favor entitlement reform as a means to reduce the deficit.

    Another group that is gaining headlines during the deficit reduction debate is the so-called “Gang of Six,” a bi-partisan group of Senators — Mark Warner (D-VA), Saxby Chambliss (R-GA), Mike Crapo (R-ID), Dick Durbin (D-IL.), Kent Conrad (D-ND), and Tom Coburn (R-OK) — that have come together to tackle deficit reduction. As of now, the group has not released a comprehensive plan, despite widely publicized meetings and press conferences. Politico reports that members of the “Gang” acknowledge that the clock is ticking and further delay may risk the group being left behind in further policy discussions. We do expect them to release the framework of a deal before action on the debt ceiling is needed in early July.

    Finally, The New York Times reports that, per the suggestion of the President, another “Gang” has been deputized to work on reducing the deficit. To date, Senators Jon Kyl (R-AZ), Max Baucus (D-MT), and Daniel Inouye (D-HI) have been appointed by Senate leadership, and Majority Leader Eric Cantor (R-VA), Rep. Chris van Hollen (D-MD), and Rep. James Clyburn (D-SC) will join from the House. As the article notes, “if one counts Mr. Biden, presumably the group could then become the Gang of Six Plus One or even the Gang of Seven.” Given the strong ideological divide among the members of this latest gang, their discussions are likely to be contentious and difficult.

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  • Tax Reform
    As we have previously reported, tax-writing committees for both the House and the Senate are conducting 40 hearings this year to examine all aspects of comprehensive tax reform. Last week, the Senate Finance Committee held a hearing that explored global tax administration, which essentially examined how other countries collect their taxes. During the hearing, Ranking Member Orrin Hatch (R-UT) asked the witnesses about the Canadian system of incentivizing charitable giving, which occurs through a tax credit instead of a deduction. Also last week, the House Ways and Means Committee held a hearing that explored the burden of tax incentives on individual payers. Amidst a discussion on corporate tax incentives, witnesses unanimously agreed that the biggest burden for all taxpayers is uncertainty. They cited the expiration and renewal cycle of the IRA charitable rollover as an example of how tax payer behavior can hinge on Congress’s action.

    In addition, Investment News report that several financial companies have seen a spike in charitable giving in the beginning of this year due to the tax rate compromise reached between Congress and the White House at the end of 2010. Furthermore, Gallup released a poll that found that a majority of Americans are more opposed to eliminating the charitable deduction as a means to tackle deficit reduction than other highly-favored tax incentives. USA Today penned an article citing this poll when analyzing the attack on tax incentives contained in the deficit reduction plans released so far. Put together, these articles represent our long-held view that the tax code does indeed affect charitable giving, and we plan to highlight this in our visits on Capitol Hill.


Consider This…

The Supreme Court Tackles the Public Money Argument
Here’s something we’ve just started to digest – the April 4th decision by the U.S. Supreme Court in the Arizona Christian School Tuition Organization v. Winn case.

In a 5-4 decision, the Supreme Court ruled that Arizona taxpayers don’t have the right to challenge an Arizona state law which allows state income tax credits for charitable contributions that go to religious schools. What does this mean in practical terms and why should the philanthropic community care?
(keep reading)

Making Headlines

Here are recent headlines you may find interesting:

Federal
4/18 The Rise of HINTS - High Income, No Taxes, Wall Street Journal
Reporting on the growing number of high-income earners who legally pay no federal income taxes due to a combination of factors including losses from business holdings and charitable deductions.

4/15 Foundations Pay Price for Being Too Generous, New Hampshire Public Radio
Reporting on a radio interview with an executives from the New Hampshire’s Endowment for Health and Council on Foundations about how outdated current IRS code for taxing foundations is.


State/Local
4/17 Community Foundations Know Their Local Needs, The Denver Post
The Denver Post reports on the increasing popularity of community foundations for philanthropists to address needs directly in their community.

4/11 Oregon Senate Passes Bill On Charitable Donations, OPB News
The Oregon Senate passed legislation that makes charitable contributions ineligible for tax deductions if a charity spend more than 70 percent of its money on administration and fundraising.


Social Innovation
4/8 Why Social Innovators Should Avoid Government Dollars, Washington Post
Paul Light opines on why those with innovative ideas to address social problems should not seek to partner with government.


Nonprofit Boards
Following the release of a report on compensation of nonprofit board members, Massachusetts Attorney General Martha Coakley plans to file legislation that will prohibit nonprofit board compensation without permission from her office. She is targeting large nonprofit organizations (such as nonprofit hospitals and health providers) that provide generous compensation for board service.



Diversity on Foundation Boards
The launch of the D5 Coalition, a new five-year campaign to increase the level of diversity, equity and inclusion within philanthropy, is drawing interest across the sector. Some 18 philanthropic organizations (from regional associations of grantmakers to private foundations) have set out to achieve changes in leadership, funding and data by 2015.


public money
112th Congress
tax reform
deficit reduction
debt ceiling