ACR NEWSLETTER

ACR newsletter (7.15.11)

Current Issue

Friday, July 15, 2011

The latest edition of the ACR newsletter is available below.

Washington Roundup

As we reported in our last newsletter, Washington is still focused on what to do about the debt limit before August 2nd – the date the Treasury has told us we will start running out of money to pay our debts.  Negotiations have picked up in the last two weeks, but as of yet, there is still no deal. 

Here is the latest update from Capitol Hill:

Deficit Reduction/Debt Ceiling Talks

• Multiple Plans This morning, Washington Post’s Ezra Klein outlined the 5 plans on the table: (1) a $4 trillion deal that combines elements of broad tax reform and spending cuts (the President’s original proposal); (2) a $2 trillion deal with smaller tax increases and spending cuts; (3) a smaller deal of roughly $1.5 trillion that doesn’t include taxes or cuts to health spending; (4) the McConnell deal (more below); (5) a new Reid/McConnell deal, which combines McConnell’s mechanism for raising the debt ceiling with about $1.5 trillion in spending cuts and an expedited process for considering further spending cuts (detailed below).

  This report comes on the heels of Thursday night’s negotiations, after which the President gave Congressional leaders “24 to 36 hours” to come to an agreement. In a slight reversal of his previous stance, Speaker of the House John Boehner (R-OH) said Thursday that he was open to a plan that would allow the President to raise the debt ceiling on his own, one similar to Senator McConnell’s plan announced Tuesday.

  While there are no negotiations at the White House today, President Obama said that he will not hesitate to call negotiators back to the table over the weekend.  He will also hold a press conference at 11:00AM EST today to discuss recent developments.

  Note:  We will post updates on this issue on the ACR website.

 

• McConnell Plan
  As negotiations between the White House and Congressional leaders continue to sputter, Senate Minority Leader Mitch McConnell (R-KY) announced a last-ditch plan on Tuesday that would give President Obama the authority to raise the debt ceiling on his own. According to Senator McConnell, the proposal would authorize the President to unilaterally raise the debt ceiling and borrow additional funds in three tranches: the first tranche, $700 billion, the second tranche $900 billion, the third tranche $900 billion. Each request would be subject to a vote in both the House and Senate.

  Senator McConnell acknowledged that the plan was “not [his] first choice,” but with the looming deadline and no compromise in sight, many Democrats have reacted positively to this idea. Senate Majority Leader Harry Reid (D-NV) called the plan a “serious proposal” and said that he would continue talking with the Minority Leader about the details. Republicans in the House, however, have not been so kind. House Majority Leader Eric Cantor (R-VA) said that a plan without spending cuts will not “get through the House right now.” These new developments and the intensity of the negotiations suggest a deal is likely to be reached by August 2nd.

Consider This…

A Passionate Plea for Principled Tax Reform
It seems as if all eyes in Washington (and beyond) are focused on what to do about the debt ceiling.  Yet, at the same time, the House Ways and Means Committee and the Senate Finance Committee have been slogging through a series of hearings and briefings on fundamental tax reform.  Those efforts are laying the groundwork for pursuing serious tax reform.  And the timing on that effort may be sooner than we originally thought.

With that in mind, we’d like to draw your attention to a very well-crafted and thoughtful speech on tax reform by the Ranking Member of the House Ways and Means Committee, Sandy Levin (D-MI)...(continued)

Making Headlines

Here are recent headlines you may find interesting:

Charitable Deduction: The fate of the charitable deduction hangs in the balance as the debate over the debt limit continues, even though House Republicans maintain a steadfast position that tax increases or other changes to the tax code should not be included in a deficit reduction deal. To bolster defense of this tax provision, the Association of Fundraising Professionals conducted a survey of their membership and found that capping itemized deductions, as the President had proposed in his FY2012 budget, would have a “significant impact” on giving. AFP’s findings are in line with the CBO report released in June, and echoes the sentiment that Americans oppose changes to the charitable deduction more than any other form of deduction, which was found in the Gallup poll last April.

Proposed changes to the charitable deduction have sparked interest throughout the country. The Seattle Times editorial board argues against any cuts to the charitable deduction in the personal income tax code. They admit that among the debt-reducing measures which they support such as cuts to defense and entitlements, they draw the line at the charitable deduction. In a Charlotte Observer op-ed, two philanthropic leaders come to the defense of the charitable tax deduction, noting that changes to charitable tax policies would have direct affects on the nonprofit sector and the economy. The nonprofit sector provides immeasurable good in communities and is a job growth engine, generating employment for millions across the country.

IRS Investigations: The New York Times reports that the Internal Revenue Service has suspended its investigation into whether several donors would have to pay a 35% gift tax on large contributions made to politically active tax-exempt organizations. As we’ve reported, the IRS announced their investigation earlier this year and it drew criticism from House and Senate Republicans. Senator Orrin Hatch (R-UT) and Representative Dave Camp (R-MI) each sent letters to the IRS requesting more information on the investigation.

Massachusetts: We’ve reported that during consideration of the state budget, the Massachusetts Senate included a provision in their version of the bill that would have prohibited compensation of board members of public charities. This measure did not survive conference committee negotiations.  Nonetheless, it remains a priority of the state attorney general as the Chronicle of Philanthropy notes. A stand alone bill (HB 3516) with the same language as the Senate budget amendment was also introduced this year; it is not currently moving.

Oregon: Efforts to increase controls on fundraising organizations were halted when a measure supported by the AG in Oregon did not pass the House Committee on Revenue due to opposition from the committee co-chair. As we’ve

reported, SB 40 would have penalized nonprofits that did not spend a certain percentage of revenue on program expenses. 

Hawaii: Forbes reports that recently, Governor Neil Abercombie of Hawaii signed into law legislation (SB 570) 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.

Darin McKeever of the Bill and Melinda Gates Foundation guest blogs on the Tactical Philanthropy website in a two-part series about research the foundation is funding related to issues impacting the charitable sector. In Part 1, he explains the process behind deciding on which area to focus. In Part 2, he delves more deeply into the three primary initiatives, including lessons learned and their accomplishments.

Recently, two top leaders announced that they are leaving their positions this year, adding to the number of high-level resignations in the philanthropic sector.

Council on Foundations: Steve Gunderson announced his resignation as president of the Council, effective September 1, 2011. In his open letter to colleagues, Gunderson says, “[s]ome will tell you there is never a good time for transition in leadership. I don’t agree. After a series of conversations with the Board Leadership, I have concluded that this is the right time for a transition in the leadership of the Council, and the right time for me to begin the next chapter of my professional service.” ACR wishes Steve great success in his future endeavors and looks forward to continuing our work with colleagues at the Council through this transition and into the future.

Urban Institute: Robert Reischauer, president of the Urban Institute, announced that he will leave his post at the end of 2011. Reischauer, a former director of the Congressional Budget Office, served at the helm of Urban Institute for eleven years.

In related news - Chronicle of Philanthropy: Two-thirds of Nonprofit Leaders Plan to Leave in 5 Years, Study Finds.

Social Media: A Huffington Post op-ed by Jason Pugatch, Associate Director of Young Storytellers Foundation, suggests that use of social media features (such as Facebook “like’s”) by corporations as part of their philanthropic endeavors is turning philanthropy into a popularity contest and it is not based on program merit.