May 20, 2011

ACR newsletter (5.20.11)

Current Issue

Friday, May 20, 2011

The latest edition of the ACR newsletter is available below.

Washington Roundup

  • Treasury Reaches the Debt Ceiling On Monday, May 16th, Treasury Secretary Timothy Geithner announced that the Treasury had reached the debt ceiling and would take “extraordinary measures” to prevent the United States from defaulting on debt payments. Without Congressional approval to raise the debt limit, the U.S. government would ultimately stop paying its bills. However, Geithner has also announced that the Treasury Department will stop issuing and reinvesting government securities in certain government pension plans, part of a series of steps designed to delay any defaults until August 2nd.

    The debt limit cannot be raised without Congressional approval, and, to date, a deal for raising the debt ceiling has not been reached. Further complicating matters is the fact that the House and Senate schedules over the next few months vary wildly, making it difficult to find time to negotiate in person. Many Congressional staffers think real negotiations won’t begin until the summer.

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  • Heritage Foundation Releases Deficit Reduction Plan
    As previously reported, the Peter G. Peterson Foundation made grants totaling $1.2 million to six think tanks to produce deficit reduction plans that encompass a wide variety of ideas. One of the recipients, the Heritage Foundation, released their plan, Saving the American Dream, last week. The charitable deduction is one of only three tax preferences preserved in their plan on the individual side. In addition, the plan calls for repealing the estate tax and lowering overall income tax rates. The five other think tanks will release their plans at the Peterson Foundation’s 2011 Fiscal Summit on May 25th.

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  • Senator Richard Burr (R-NC) on Senate Finance Committee
    Finally, as we announced on our website, North Carolina Republican Senator Richard Burr will replace Senator John Ensign (R-NV) on the Senate Finance Committee. Senator Burr has long been a supporter of maintaining the charitable deduction, and has co-chaired the Congressional Philanthropy Caucus since its inception in 2008. We expect him to be a terrific addition to the Finance Committee.  Senator Ensign resigned on May 1st and has been replaced by Former Representative Dean Heller (R-NV), who was sworn into the Senate last week. 


In the States


Michigan will join other states that have capped or eliminated charitable incentives in an effort to raise revenue. Last week, the Legislature passed Governor Rick Snyder’s Tax Reform Package, his effort to close a $1.4 billion budget deficit, in a close vote with the Lt. Governor casting the tie-breaker. The governor is expected to sign the bill into law soon and changes to charitable tax credits will be effective January 1, 2012.

This bill is expected to have some impact on charitable giving because it eliminates several charitable incentives. The bill gets rid of the Michigan Business Tax, which includes several charitable tax credits such as the Community Foundation Tax Credit. It also contains numerous changes to the Individual Tax Code, including the elimination of charitable tax credits for public institutions, food banks and homeless shelters, and community foundations.

The Council of Michigan Foundations (CMF) championed the Community Foundation Tax Credit over two decades ago, and Michigan became the first state to offer this kind of credit. In a note to its members, CMF expressed disappointment with this change in tax policy, but is optimistic of opportunities in the future to work with the legislature on new incentives to promote charitable giving.

Consider This…

The Gangs of Capitol Hill
On Monday (May 16th), the federal government hit the debt ceiling of $14.3 trillion. What does that mean? The best analogy we’ve seen is that it is much like maxing out on a credit card. To make matters more difficult, that ceiling can’t be raised without Congressional approval and there is no deal in sight to do that.  So what happens next?

First, we have some wiggle room.  Through various sleights of hand and juggling of commitments, Treasury Secretary Timothy Geithner has told Congress he can extend the date on which we start defaulting on our bills until August 2nd…(continued)

Making Headlines

Here are recent headlines you may find interesting:

Federal
Debate continues on what Congress should do with the charitable deduction:
Recent IRS letters to several major donors signaling that their gifts to politically active nonprofit organizations may be taxed, have drawn the attention and inquiry of members of Congress:



State/Local
5/9 Social Impact Bonds Bring Social Innovation to the Bay State, Huffington Post
Massachusetts experiments with social impact bonds –an arrangement where government attracts private capital to fund critical services in exchange for a capped return to be paid out down the road based on the savings and results of the programs.

5/11 Squeezed Cities Ask Nonprofits for More Money, New York Times
Front-page Times story on the trend of cities and municipalities asking nonprofits to pay more in payments-in-lieu-of-taxes (PILOTs), fees or other assessments.

5/8 Providence Mayor Targets 9 Nonprofits for Tax Collection, Providence News
Plan unveiled by the new mayor of Providence to tax nine tax-exempt hospitals, colleges and universities, in a move that could raise $7 million more in the year.

5/5 With Museums Looking for Revenue, Out-of-Staters Will Get the Bill, New York Times
Consortium of museums plan to generate revenue by charging entry fees to out-of-state attendees on the 52 state-mandated free museum days each year.

5/17 How the Rich are Saving State Governments, Wall Street Journal
Some states are reporting higher-than-expected revenues due to the rebounding stock market.


Social Networking
5/12 Few Charities Are Raising Big Amounts Via Social Media, Says Study, Chronicle of Philanthropy
New survey finds that the fundraising via social media is lackluster for most nonprofits.


Opinion
5/16 The Social and Economic Value of Philanthropy, GazetteXtra (WI)
Op-ed by Sue Conley and Steve Gunderson, president of the Council on Foundations, identifies philanthropy as one key to fixing a broke and broken America. They highlight three policy areas that advance philanthropy: protect the charitable deduction, foster more giving, and promote rural philanthropy.

5/15 Social Entrepreneurs Are Visionaries—but Not Wizards, Chronicle of Philanthropy
NYU Professor Paul Light criticizes the current hype over the idea of social entrepreneurs as the key to ending society’s problems.

5/6 Can You Know Where Charity Dollars Go? Not Easily, NPR
Opinion on how the “Three Cups of Tea” controversy feeds the discussion on whether a donor can really know where their money is being put to use.


Other
The level of control donors retain over the gifts they bestow is drawing national attention as donors are placing increasingly greater conditions on large gifts to colleges and universities.

5/13 Clinton Calls on Nonprofits to Fill Gaps Left by Government and Business, Vancouver Sun
Former President Bill Clinton comments in an address before annual Community Foundations in Canada Conference that while government will always be present, nonprofits are critical in delivering aid where needed.

charitable deduction
112th Congress
deficit reduction
debt ceiling
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