ACR News 10.31.14—Lincoln’s Ghost…and a Policy Update

>> Federal: Lincoln’s Ghost
>> Federal: Washington Roundup
>> Federal: ACR Advisory Council on the Hill
>> Federal: How Philanthropy Changed My Life
>> Consider This: Consider This: Tax Reform Following the Midterms
>> Top Reads: Donor-Advised Fund Spend-Down Proviso May Be Cut From Future Tax Overhaul Drafts


Lincoln’s Ghost

While we typically lead off the newsletter with the Washington Roundup, today it gets bumped in favor of a Halloween “Did you know?” about Abraham Lincoln’s ghost, courtesy of National Geographic.

“While staying at the White House in the 1940s, British Prime Minister Winston Churchill—who disliked sleeping in the Lincoln Bedroom—emerged naked from a bathtub and walked into an adjoining room. There, he supposedly ran right into Lincoln, who was leaning on the mantle above the fireplace. They looked each other in the face, to Churchill’s embarrassment, and Lincoln abruptly vanished, according to an account in Mark Nesbitt’s book Civil War Ghost Trails: Stories from America’s Most Haunted Battlefields.”

Happy Halloween!


Washington Roundup

As the midterm election approaches, Capitol Hill is nearly deserted—to the delight of the ghosts who haunt the Hill’s hallways—as lawmakers remain focused on their campaigns at home. Off the Hill, at a conference hosted by the D.C. Bar Association last week, House Ways and Means Committee majority tax staff said the Committee is still receiving feedback on Chairman Dave Camp’s (R-MI) tax reform discussion draft from “all kinds of stakeholders.” One staffer added that the Committee is open to altering some provisions, singling out the five-year spend-down requirement for donor-advised funds as an area they are “definitely looking at.” ACR has worked on this issue since the draft was released and we are encouraged to see that our outreach has made an impact.

Another Camp tax staffer also spoke at the event and said there’s “a good chance that [tax reform] will move forward in the next Congress” under a new Chairman. He pointed to ongoing interest from Senate Finance Committee Chairman Ron Wyden (D-OR) as another positive sign of continuing momentum on tax reform. While Chairman Camp will no longer be Chair in the next Congress, we do expect the next presumed Chair, Rep. Paul Ryan (R-WI), to have a keen interest in tax reform as well.

Meanwhile, speculation continues as to whether current Senate Minority Leader Mitch McConnell (R-KY) will push to complete all must-pass legislation before the end of the year—should Republicans take control of the Senate—or wait to take up those issues next year. Among these issues is passing tax extenders, or annually expiring tax provisions, which include the IRA charitable rollover provision. We will continue to keep you updated as the process unfolds.


ACR Advisory Council on the Hill

As you may recall, the ACR Strategy Committee met with Ways and Means tax staff in July to discuss our reaction to the Camp draft. Last week, ACR’s Advisory Council also met with committee staff to provide more technical feedback on ACR’s concerns with the draft, and to propose a few alternatives for the Committee to consider as work toward tax reform continues.


How Philanthropy Changed My Life

We would like to share one more video from the Annual Meeting of The Philanthropy Roundtable, which was held a few weeks ago in Salt Lake City, Utah. The concluding session, “How Philanthropy Changed My Life,” featured three American leaders who owe their successes to the creative giving a free society makes possible. Jason Tejada, one of over 139,000 Children’s Scholarship Fund recipients, chronicled his journey in New York City from Incarnation School to Columbia University to a career in finance. Another speaker was Jack Horner, curator of paleontology at the Museum of the Rockies and one of the scientists portrayed in the movie “Jurassic Park.” Jack’s Hell Creek Project, largely underwritten by philanthropy, led to fossil discoveries that have significantly advanced understanding of the growth of dinosaurs. The final speaker was Brent Adams, who founded the animation department at Brigham Young University. With the help of philanthropy, he confronted that pedagogical challenge and created a multi-disciplinary model across the engineering, computer science, and fine arts colleges at BYU.


Consider This: Tax Reform Following the Midterms

With less than a week to go before the election, we don’t know for sure if Republicans will take control of the Senate, but we suspect they will. What does that mean for general policy and tax reform in particular?

If Republicans do take control of the Senate, we believe that leadership in both the House and Senate will want to put some semi-controversial issues away during the lame duck – issues like funding the government beyond December 11 and extending tax provisions like the IRA charitable rollover. While that may be the goal, things are often easier said than done.

On tax reform, the bar seems to be set high. Congressman Jeb Hensarling (R-TX), a leader in the House, went so far as to say that if Republicans take the Senate, “it’s a put-up or shut-up moment for us” on tax reform. On the Senate side, the presumed Chair of the Finance Committee if Republicans take control, Orrin Hatch (R-UT), has made it clear that tax reform is his top priority. His Democratic colleague, current Senate Finance Committee Chairman Ron Wyden (D-OR), has been making pitches for tax reform as well. Even a former high ranking Obama Administration official, Gene Sperling, has chimed in to say that corporate tax reform might be doable in the next Congress. We take that as a signal that the Administration is thinking seriously about tax reform.

Regardless of which party is in control, we expect significant activity on taxes next year. However, as we know, dragging something far-reaching across the finish line for a Presidential signature is going to be tricky.


Top Reads


Please feel free to email us at info@acreform.com if you have any questions, stories or topics you would like us to include in our newsletter.


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Philanthropic Achievement of the Week

2002 - Boosting Electronic Health Records

PAW22
Electronic health records that are consistent, interchangeable, and accessible by consumers and health professionals from anywhere will be essential to many future advances in health care, including medicine that is personalized to the patient, better quality control, and reduction of duplication and waste that inflates prices. It’s estimated that electronic health records could save more than $100 billion in unnecessary medical costs.

Back in 2002, when universal electronic records were just starting to be discussed seriously, the Markle Foundation put up $2 million to launch Connecting for Health. The foundation acted as a neutral convener on this contentious topic, bringing together computer experts, medical professionals, insurers, government, and other interested parties—rejecting no one who wanted to participate. When the effort began to show promise, the Robert Wood Johnson Foundation became a partner and put additional millions into supporting regular exchanges of information among participants.

In 2003, Health and Human Services Secretary Tommy Thompson announced, while offering thanks to the Markle Foundation, that the standards produced out of the Connecting for Health meetings would be adopted by the federal government as it moved toward personal electronic health records. Duke University’s philanthropy center concluded that because of its inclusive and neutral approach, the Markle Foundation’s contribution was crucial. “The value added by Markle’s participation has been widely recognized. As a private foundation, Markle was able to fill a key niche: that of the convener. No other entity, public or private, would have been able to conduct the discussions that led to the Connecting for Health standards.”

Donor-Advised Fund Spend-Down Proviso May Be Cut From Future Tax Overhaul Drafts

By Diane Freda, Bloomberg BNA

Reproduced with permission from Daily Tax Report, 204 DTR G-7 (Oct. 22, 2014). Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033)

Oct 21 - A five-year spend-down requirement for donor-advised funds might be eliminated in future drafts of the Tax Reform Act of 2014, a House Ways and Means senior staff member said.

“I think it is possible,” Harold Hancock, tax counsel on the committee’s majority staff, said of the controversial DAF proposal currently contained in Rep. Dave Camp’s (R-Mich.) discussion draft.

“This is an area we are definitely looking at,” Hancock told practitioners Oct. 21 at a D.C. Bar Taxation Section panel discussion. He said the main motivation of the many exempt proposals in the draft isn’t to generate revenue, but to address policy concerns.

The provision would subject DAFs to a 20 percent excise tax on contributions that aren’t distributed within five years of receipt.

“The fundamental concern is the timing mismatch of the deduction,” said Gordon Clay, legislation counsel with the nonpartisan Joint Committee on Taxation.

Donors to DAFs get an upfront deduction and there is no requirement that distributions be made from individual accounts. While some DAF accounts make distributions on a regular basis, others make no distributions at all, and Clay said it is the latter scenario that lawmakers are worried about. The timing mismatch between the upfront deduction and when money is paid out from DAFs in the form of grants to other public charities has led to concerns about “asset parking.”

Groups including the Alliance for Charitable Reform and the Jewish Federations of North America have fought the proposal, saying among other things that it will drive donors toward private foundations (108 DTR G-1, 6/5/14).

Single Excise Tax Rate

The provision most likely to succeed in the upcoming lame-duck congressional session is one imposing a single 1 percent rate of excise tax on net investment income for private foundations, Hancock said.

“We’re just waiting for the Senate to see the light and take it up,” he said.

The provision was included in H.R. 4719, which passed the House with bipartisan support. Hancock said the Ways and Means Committee wants it to be part of the discussions on whether to make extenders legislation permanent (153 DTR G-5, 8/8/14).

To contact the reporter on this story: Diane Freda in Washington at dfreda@bna.com

To contact the editor responsible for this story: Cheryl Saenz at csaenz@bna.com

ACR News 10.17.14—Wyden, Hatch, and Boehner Comment on Tax Reform

>> Federal: Washington Roundup
>> Federal: Annual Meeting Completed
>> Consider This: Powerful Imagery
>> Top Reads: Give to Charity Like Bill Gates…Without Being Bill Gates


Washington Roundup

Senate Finance Committee Chairman Ron Wyden (D-OR) made a pitch for tax reform last week, urging Congress to renew the expired tax extenders so it can “get to work on a comprehensive overhaul of the tax code and lift the fog of uncertainty from taxpayers.” As you may recall, the Senate’s extenders package includes the IRA charitable rollover. The Wall Street Journal recently reported Congress is “likely to extend the expired rule” as a part of the final extenders bill.

On October 5, House Speaker John Boehner (R-OH) published a list of “five key things we should do as a nation,” and included tax reform as one of those items. “If we do these five things in a meaningful way…we can bring jobs home and reset the foundation of our economy for generations to come,” Boehner wrote. This is an important roadmap of the priorities for 2015-16 from House leadership.

Also last week, Senate Finance Committee Ranking Member Orrin Hatch (R-UT), who would take over as Chair of the committee should Republicans control the Senate next year, said tax reform would be a central focus of his agenda in a Republican-controlled Senate. Hatch noted his reform efforts would promote simplicity and fairness and eliminate the exemptions, exclusions, deductions, and credits that have “excessively riddled” the tax base. He did not mention any specific tax incentives.


Annual Meeting Completed

Last week, The Philanthropy Roundtable completed the 2014 Annual Meeting in Salt Lake City, Utah. The Annual Meeting is the Roundtable’s premier event for philanthropic decision makers committed to strengthening our free society and to exploring, collaborating, and solving our nation’s greatest problems through meaningful and effective philanthropy. This year’s meeting featured George Will as the keynote speaker and Jon Huntsman, Sr. as the recipient of the 2014 William E. Simon Prize for Philanthropic Leadership, among the many noted speakers and panelists. The Alliance for Charitable Reform conducted three panels at this year’s meeting.

Below is a five minute video of the opening remarks from Adam Meyerson, president of The Philanthropy Roundtable. Make sure to check our website and YouTube channel in the weeks to come for more videos from this year’s Annual Meeting.


Consider This

Earlier this month, the New York Times published an op-ed on whether or not lowering the private foundation excise tax on investment earnings makes sense. We won’t get into the pros and cons of that discussion, but our hackles were certainly raised by the characterization of private foundations in that piece as “warehouses of wealth.”

That’s powerful imagery. Think Ebenezer Scrooge on Christmas Eve counting money and chasing do-gooders out of his office who have the audacity to ask for donations for the poor. Like we said, powerful imagery—but also inaccurate.

The assets judiciously managed by private foundations allow them to have significant impact both today and over a long period of time. Issues like advances in cancer research, global health, and long-term investments in K-12 education are just a few of the issues served by a lasting strategy from private foundations. It is giving with a huge impact – what we describe as transformational giving.

Characterizing private foundations as “warehouses of wealth” is a skewed vision. It is incumbent upon us to set that right by making it clear that there is a lot of good done and bad averted by the work completed by private foundations.


Top Reads


Please feel free to email us at info@acreform.com if you have any questions, stories or topics you would like us to include in our newsletter.


Looking for ARCHIVES of this newsletter? Click here.

Philanthropic Achievement of the Week

1997 - Violence-Free Zones

Philadelphia memorial

In the 1980s, Sister Falakah Fattah and her husband, David, used the House of Umoja, a neighborhood group they founded, to help Philadelphia’s gangs negotiate truces and reduce violence. Robert Woodson of the Center for Neighborhood Enterprise (CNE), an “intermediary” that helps local nonprofits, documented the principles involved and prepared manuals, training programs, and other resources that could be used to set up similar “violence-free zones” in other strife-torn neighborhoods. The key to the system is to find young adults who grew up locally and overcame the same challenges that still face students in troubled neighborhoods. CNE puts these “youth advisers” through background checks (no youth or sexual crimes) and drug, alcohol, and health testing, then trains them in identifying, mediating, and solving various types of conflicts. Once trained, the advisors are hired by local nonprofits and spend their days at schools focusing on the most troublesome students. The same students who lead disruption can, with coaching by advisors they respect, learn to turn their leadership skills in more productive directions.

In 1997 CNE, local sponsor the Alliance of Concerned Men, and advisers they trained negotiated a peace agreement in Washington, D.C., between two warring groups at the Benning Terrace public-housing development, where dozens of youths had been killed. The murders ended completely. Other locales where private donors like the Bradley and Marcus Foundations and public agencies have funded violence-free zones include Milwaukee, Atlanta, Baltimore, Dallas, Richmond, and Prince George’s County in Maryland. Tracking studies done at Baylor University and elsewhere have found clear drops in attacks, increases in school attendance, and other positive effects from these interventions.

Description at the Center for Neighborhood Enterprise, cneonline.org/reducing-youth-violence-the-violence-free-zone          
Manhattan Institute Social Entrepreneurship Award, 2008, manhattan-institute.org/pdf/SE2008.pdf
2010 Baylor Case study of Milwaukee program, baylorisr.org/wp-content/uploads/case_milwaukee_revised.pdf

ACR News 10.03.14—The Fight for the Ways and Means Gavel

>> Federal: Washington Roundup
>> Federal: Fight for Ways and Means Gavel Continues
>> Federal: Letter to Ryan
>> Federal: Previewing the 2014 Annual Meeting of The Philanthropy Roundtable
>> Federal: The Effects of a 100 Percent Charitable Deduction
>> Federal: TPC Field Seminar Series
>> Top Reads: Tax breaks worth billions set to expire unless Congress acts


Washington Roundup

As you may recall, after passing a short-term budget bill to fund the government through December 11, both the House and Senate recessed until after the November elections. They are expected to return to Washington on Wednesday, November 12. 


Fight for Ways and Means Gavel Continues

Earlier this week, Representative Kevin Brady (R-TX) announced he will challenge Representative Paul Ryan (R-WI) for the chairmanship of the tax-writing Ways and Means Committee next year. Recall that current Chairman Dave Camp (R-MI) is retiring at the end of this session. Representative Ryan said he would wait until after the midterm elections before beginning his public campaign for the seat.

The winner of the gavel will be influential, as House Speaker John Boehner (R-OH) said on September 28 that tax reform is “doable” during President Obama’s final two years in office. After the new Congress is sworn in next year, the Speaker said that he plans to seek more “common ground” with the President on a few key issues. We expect tax reform to be high on his list.


Letter to Ryan

The Charitable Giving Coalition sent a letter on behalf of its coalition members, including ACR, to House Budget Committee Chairman Paul Ryan (R-WI) two weeks ago thanking him for his comments supporting the value of the charitable deduction. Ryan has voiced opposition to imposing a cap on the charitable deduction in recent interviews.

The coalition also reiterated concerns in the letter over provisions in Chairman Camp’s (R-MI) draft tax reform bill implementing a two percent adjusted gross income (AGI) floor on the charitable deduction. Chairman Camp’s bill also proposed streamlining upper AGI limitations for charitable gifts, and requiring gifts of property to be evaluated according to basis value (the asset’s base price) instead of fair market value.


Previewing the 2014 Annual Meeting of The Philanthropy Roundtable

The Philanthropy Roundtable Annual Meeting is quickly approaching. On October 9 and 10 we’ll be in Salt Lake City, Utah to explore meaningful and effective giving that solves our nation’s greatest problems.

Click below for a five minute video interview with Lindsay Miller, managing director of events for The Philanthropy Roundtable, discussing what’s in store.


The Effects of a 100 Percent Charitable Deduction

In the August 22 edition of the ACR newsletter, we shared a story about Puerto Rico adopting a 100 percent charitable deduction in 2011. The deduction led to a 70 percent increase in the number of individuals who made charitable donations in Puerto Rico, according to a report released by the Flamboyan Foundation.

The Flamboyan Foundation is a private, family foundation focused on improving educational outcomes for children in public schools in Washington, D.C. and Puerto Rico, according to its website. The Alliance for Charitable Reform recently interviewed Kristin Ehrgood, president of the Flamboyan Foundation, about the implementation of the tax deduction, the results of the Flamboyan Foundation’s study, and how studying donor behavior could help expand charitable giving in Puerto Rico.


TPC Field Seminar Series

On Tuesday, October 7, our colleagues at The Philanthropic Collaborative are co-hosting another Field Seminar Series event with The Wasie Foundation and Broward College in Fort Lauderdale, Florida. These seminars are designed to convene grantmakers, charities, and local leaders to equip them with proven tools and resources to effectively communicate the sector’s value at all levels of government. Tuesday’s event will focus on the positive impacts, both economic and social, of helping survivors of human trafficking to successfully and fully reintegrate into society. More information and the invitation can be found here.


Top Reads


Please feel free to email us at info@acreform.com if you have any questions, stories or topics you would like us to include in our newsletter.


Looking for ARCHIVES of this newsletter? Click here.

ACR Blog: (VIDEO) The Effects of a 100 Percent Charitable Deduction


In the August 22 edition of the ACR newsletter, we shared a story about Puerto Rico adopting a 100 percent charitable deduction in 2011. The deduction led to a 70 percent increase in the number of individuals who made charitable donations in Puerto Rico, according to a report released by the Flamboyan Foundation.

The Flamboyan Foundation is a private, family foundation focused on improving educational outcomes for children in public schools in Washington, D.C. and Puerto Rico, according to its website. The Alliance for Charitable Reform recently interviewed Kristin Ehrgood, president of the Flamboyan Foundation, about the implementation of the tax deduction, the results of the Flamboyan Foundation’s study, and how studying donor behavior could help expand charitable giving in Puerto Rico.

Continue reading…

 

Philanthropic Achievement of the Week

1997- Olin College of Engineering

College of Engineering

Franklin Olin didn’t finish school, but he was mechanically gifted and studied on his own so that at age 22 he passed the entrance exam for Cornell University, where he studied engineering. He proved to be a natural entrepreneur, and when Olin died in 1951 his bequest made his foundation one of the largest in the nation. For years, the F. W. Olin Foundation supported science and engineering projects; then the trustees decided to create a brand-new college to offer students Franklin-Olin-style twists on engineering. The Olin College of Engineering, chartered in Needham, Massachusetts, in 1997, particularly aimed to make its engineers more creative, more entrepreneurial, more interdisciplinary and comfortable working in teams, and equipped with better communications skills. All of these elements were lacking in traditional engineering training.

The foundation committed $200 million to start the fledgling school—at the time a record in higher education. They located Olin adjacent to Babson College, one of the nation’s top-ranked entrepreneurship schools, and 25 percent of Olin students are simultaneously taking classes at Babson or nearby Wellesley College. To help produce a culture of change and innovation, faculty members are untenured. Only 16 percent of applying students are admitted, and 41 percent of alums go on to advanced study. Olin graduates soon ranked among the top winners of National Science Foundation graduate fellowships and Fulbright scholarships.

When it closed its doors for good in 2005, the Olin Foundation transferred the balance of its endowment—over $250 million—to the college. With a total of $460 million in gifts from its founder, the college gives all students a half-tuition scholarship. Olin’s fresh approach to engineering has inspired wide interest and imitation. More than 50 universities send observers to the campus annually. Nine are now revising their programs along Olin’s lines. At the University of Illinois at Urbana-Champaign, all engineering freshmen have begun following a program that borrows from Olin courses.

Could these changes have been triggered without creating a new privately funded model college? The college’s founding president, Richard Miller, is doubtful. “The National Science Foundation spent around $100 million over 10 years to provoke this kind of change on large campuses in the 1990s. After five or six years, they ended it—concluding that its penetration into universities was disappointing…. I view Mr. Olin as a great example…. He was an entrepreneur, he was educated as an engineer, and he was motivated to do things to create opportunities for others. We are doing all that we know how to do to inspire the graduates of Olin to follow along that path.”

Philanthropy magazine article, philanthropyroundtable.org/topic/excellence_in_philanthropy/new_u

Federal | State | Proper Oversight

Opinion: Dark Money

In an editorial published Wednesday by National Review Online, Bill Zeiser, a Ph.D. student at Hillsdale College, takes on the task of explaining the critical role of anonymous giving to philanthropic privacy. Zeiser cites an article authored by Adam Meyerson, president of The Philanthropy Roundtable, about the misconceptions surrounding so-called ‘dark money,’ the role anonymous donations play in upholding freedom of association, and the necessity of protecting a charitable donor’s identity in a thriving civil society.

“So-called ‘dark money’ illuminates our society,” writes Adam Meyerson of the Philanthropy Roundtable, a nonpartisan organization dedicated to protecting donor intent. He points to the 1958 Supreme Court case of NAACP v. Alabama, in which the Court unanimously ruled that if the civil-rights organization were forced to disclose its membership, supporters might be subjected to “economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility,” thereby restraining “their right to freedom of association.” Meyerson extended this justification to philanthropic privacy, reminding critics of both DonorsTrust and Tides that “the right to privacy enjoyed by contributors to donor-advised funds is no different than the right to privacy that governs the overwhelming majority of charitable giving.” Meyerson listed some of the reasons donors might wish to remain anonymous, including “to protect themselves from unwanted solicitations, to protect their children from knowledge of their family’s wealth,” and most resoundingly to protect their “freedom to support controversial organizations without fear of reprisal or ostracism” like NAACP donors of old.”

Click here to read Zeiser’s full editorial.

ACR Blog: The 2014 Philanthropy Roundtable Annual Meeting

The Philanthropy Roundtable Annual Meeting is quickly approaching. On October 9 and 10 we’ll be in Salt Lake City, Utah to explore meaningful and effective giving that solves our nation’s greatest problems.

Click below for a five minute video interview with Lindsay Miller, our managing director of events, discussing what’s in store.