ACR NEWSLETTER

ACR newsletter (6.3.11)

Current Issue

Friday, June 3, 2011

The latest edition of the ACR newsletter is available below.

Washington Roundup

The Senate concludes a week-long recess today (June 3rd) and the House will leave for a week-long recess starting on Monday (June 4th). Following are updates from Capitol Hill:

• Congressional Budget Office Report on the Charitable Deduction As you may have seen, last week the non-partisan Congressional Budget Office released a report that analyzed the impact various proposals to change the tax treatment of charitable donations would have on charitable giving. The CBO looked at 11 options and grouped them into 4 categories: retaining the current deduction for itemizers but adding a threshold of giving (floor) that must be reached before allowing the deduction; allowing all taxpayers to claim the deduction, with or without a floor; replacing the deduction with a nonrefundable credit for all taxpayers, equal to 25 percent of a taxpayer’s charitable donations, with or without a floor; replacing the deduction with a nonrefundable credit for all taxpayers, equal to 15 percent of a taxpayer’s charitable donations, with or without a floor.

  According to the CBO’s modeling, adding a contribution floor to any of the approaches listed above, relative to the same proposal without a floor, would reduce the total amount donated to charity and could drastically alter the timing of taxpayer donations—depending on a taxpayers’ motives for donation. This report, as requested by the House of Representatives, greatly underscores the arguments we have been using with policymakers in Washington.

 

• Peterson Foundation Solutions Initiative
  As we reported in our last newsletter, the Peterson Foundation released the six deficit reduction plans they funded as part of their 2011 Solutions Initiative. The proposals were unveiled last week during the Foundation’s annual Fiscal Summit, which also featured President Bill Clinton and members of the Senate’s Gang of Six as keynote speakers.

  The six plans addressed all aspects of Federal spending and revenue-raising, including reforming the current tax code. While the charitable deduction was not targeted for elimination in any of the plans, several think tanks advocated reforming the current tax deduction to a refundable tax credit. The American Enterprise Institute, the Bipartisan Policy Center, the Roosevelt Institute Campus Network, and the Center for American Progress all called for eliminating most itemized deductions, and changing the charitable deduction to a flat-15% refundable tax credit. The Economic Policy Institute proposed capping other itemized deductions at 15%, but called for a 25% refundable tax credit for charitable donations. Finally, the Heritage Foundation proposed eliminating all tax deductions and credits except the charitable deduction, the home mortgage interest deduction, and the higher education tax credit.

  It is clear that no one plan will be completely adopted by Congress, but certain aspects of each will undoubtedly be analyzed as part of the deficit reduction debate on Capitol Hill and upcoming budget and tax reform debates. The details of each individual plan can be found here.

 

• Debt Ceiling
  On Tuesday night (May 31st), the House of Representatives held a vote on a bill that would raise the debt limit without a reduction in federal spending. As expected, the bill did not pass and demonstrated that Congress is still a long way from any agreement on this issue. The following morning (June 1st), House Republicans met with President Obama to discuss budget issues. That meeting produced little. There is now more focus on the so-called “Biden Group” to produce a budget compromise, but with the Senate out of session this week there is little chance for a deal in the short term. Furthermore, the Washington Post reports that on Thursday (June 2nd) Moody’s Investors Service warned that it may soon downgrade the US credit rating as a result of mounting concerns that the government will default. Such a downgrade would cause greater volatility in the financial markets, impacting endowments and foundations’ investments.

State Alert

Recently we learned that the Massachusetts Senate passed an amendment to ban public charities in the state from providing board compensation without first gaining approval from the state Attorney General’s Office and limit the executive compensation of public charities to no more than $500,000.00 per year. This measure was introduced by State Senator Mark Montigny, who worked with state Attorney General Martha Coakley to introduce similar legislation in the House earlier this spring (see this week’s Consider This). The amendment was as part of the Senate’s version of the state budget.

Under the definition of “public charity” in the Commonwealth of Massachusetts, private foundations may be swept into this amendment. We will continue to keep you posted of developments. Please contact Sue Santa (.(JavaScript must be enabled to view this email address)) with questions or concerns.

News coverage:

• 5/27 Senate Passes Rule Restricting Nonprofit Board Pay, Boston Globe
• 5/23 Pols Aim to Ban Money for Nonprofits’ Boards, Boston Herald

Consider This…

Mass. Nonprofit Board Compensation & Executive Pay Under the Gun
Here’s something that has been flying under the radar in Massachusetts that could be of great concern to some in the foundation community and beyond.

First, consider that the definition of a public charity in Massachusetts is very broad – indeed it draws in private foundations as well as health insurers. Second, consider that Massachusetts is leaving no stone unturned in trying to tamp down health care costs.  Combine that with a nonprofit health insurance company in Massachusetts where the Board of Directors is being paid as much as $90,000 a year and an ousted nonprofit health insurance executive is receiving $11 million in severance, and you’ve got a recipe for policy trouble… (continued)

Making Headlines

Here are recent headlines you may find interesting:

Federal
Reporting on the six deficit reduction plans unveiled at the Peter G. Peterson Foundation as part of its Solutions Initiative:

Social Networking
5/27 Giving to Charity by Managing Your E-Mail, New York Times
Stephanie Strom reports on GiveBackMail, a new service that promises to give 25 percent of its profit to charity if users will route their e-mail activities through its website.

Opinion
Steve Gunderson, president of the Council on Foundations, response to a recent article (below) in National Review about the Giving Pledge and the efforts of Bill gates and Warren Buffett.

• 5/25 Defending Philanthropy from its Detractors, National Review
• 5/18 Gates, Buffett, and Misguided Philanthropy, National Review

Other
Controversy has been stirred by recent cases emerged regarding donor privacy and the control donors retain over the use of their gifts.

• 5/26 Deal on CSU, UC Foundation Disclosures, San Francisco Chronicle
• 6/1 Grant Donors’ Goals are to Advance Learning, Orlando Sentinel

5/23 George Soros on Philanthropy, Chronicle of Philanthropy
In an interview with George Soros about philanthropy and the future of leadership at the Open Society Foundation.

5/19 The World’s Biggest Givers, Forbes
Forbes has compiled a list of the top philanthropists who have already donated at least $1 billion each to charities or foundations.

5/16 ECFA Assembling Panels of Religious Sector, Nonprofit Representatives, ECFA.org
The Evangelical Council for Financial Accountability seeks members for a nonprofit advisory panel to provide input on accountability and policy issues affecting nonprofit organizations in response to a report released early 2011 by Senator Charles Grassley (R-IA) focused on the financial practices of high-profile nonprofits.