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.

 

Philanthropic Achievement of the Week

1937- The Guggenheim

Guggenheim


Solomon Guggenheim was born into a wealthy mining family, and expanded his fortune through his own mining ventures. He turned to philanthropy full time after the First World War. The Solomon R. Guggenheim Foundation was launched in 1937 “to promote the understanding and appreciation of art, architecture, and other manifestations of visual culture, primarily of the modern and contemporary periods, and to collect, conserve, and study the art of our time.” It opened its first museum in 1939, showcasing samples of Guggenheim’s unusual collection. The foundation consistently promoted Solomon’s interest in the current, the abstract, and the unusual, even in its buildings.

Frank Lloyd Wright was commissioned to design a larger home for the museum in 1943. It was finished in 1959 and opened as the renamed Solomon R. Guggenheim Museum. A spiraling cylinder, the building is one of the most iconic of modern structures.

The collection continued to grow through the ‘50s and ‘60s, and during the 1970s Peggy Guggenheim (Solomon’s niece) added her own considerable collection of abstract and Surrealist art. Upon Peggy’s death in 1978, the foundation began to expand to multiple sites around the world (the Spanish and upcoming Abu Dhabi locations designed by architect Frank Gehry). Today, the collective aggregate of what is colloquially known as the Guggenheim represents one of the most formidable assemblages of modern art and architecture in the world.

The Guggenheim, History, guggenheim.org/guggenheim-foundation/history

CGC Thanks Ryan in Letter for Comments Supporting Charitable Deduction

Coalition Also Expresses Concern Over Floor, AGI Limitation, Evaluation

The Charitable Giving Coalition sent a letter to House Budget Committee Chairman Paul Ryan (R-WI) today thanking him for his comments supporting the value of the charitable deduction. Ryan has voiced support in recent interviews for avoiding a cap on the charitable deduction.

The coalition also reiterated concerns in the letter over proposed provisions in House Ways and Means Committee Chairman Dave Camp’s (R-MI) Tax Reform Act of 2014 that would implement a two percent floor on the charitable deduction, streamline adjusted gross income limitations, and require gifts of property to be evaluated according to basis instead of fair market value.

Click here to read the full letter.

ACR News 09.19.14—Congress Returns, Camp Plan Effect on Charitable Giving

>> Federal: Washington Roundup
>> Federal: Tax Extenders Delayed
>> Federal: Urban Institute Releases Report
>> Federal: Consider This
>> Top Reads: Study finds Camp’s tax reform would reduce charitable giving


Washington Roundup

Congress returned to Washington last week after the summer recess, but only briefly. Members will leave town late this week to return to their districts to campaign before the elections on November 4. During this short work period, leadership in both the House and Senate addressed only a few ‘must-do’ items. These included a bill to fund the government beyond the end of September to avert a government shutdown. On Wednesday, the House passed its bill to keep the government open through December 11, which also included provisions to address the recent Ebola crisis, renewed the operating authority for the Export-Import Bank through June 30, 2015, and extended the Internet Tax Freedom Act through December 11. The Senate passed the bill without amendments on Thursday, 78 to 22.


Tax Extenders Delayed

Congress officially delayed action on tax extenders, the 60-plus annually expiring tax provisions, until after the November elections. The issue received some attention this week when the House introduced a comprehensive jobs package that contained four popular corporate tax extenders that the House made permanent earlier this year. But the Senate did not take up the legislation during this work period.

As for the rest of these tax extenders, the House remains committed to its approach of addressing each provision individually and making select extenders permanent. As you may recall, in July, the House passed H.R. 4719 – the America Gives More Act – which would make permanent three charitable tax extenders: the IRA charitable rollover, the enhanced deduction for conservation easements, and the enhanced deduction for food donations. H.R. 4719 also included two other provisions that are not tax extenders but have long been ACR priorities: the streamlining of the private foundation excise tax to a flat one percent rate, and giving donors until April 15 to make charitable donations for the previous calendar year. 

Senate Finance Committee Chairman Ron Wyden (D-OR), however, said he remains committed to passing a two-year extension of expired tax incentives, much like the bill he negotiated with Ranking Member Orrin Hatch (R-UT) and passed out of committee last April. As of now, it is unclear how the House and Senate will reconcile their two approaches but some Senate aides speculate that there could be an appetite in the Senate for permanently extending a few select provisions – the ones with the most bipartisan support – and authorizing a two-year renewal for the rest.


Urban Institute Releases Report

Last week, the Urban Institute released an analysis of the impact that House Ways and Means Chairman Dave Camp’s tax reform draft would have on charitable giving. The study found that the full combination of Chairman Camp’s proposed changes could decrease charitable giving between $17 billion and $34 billion per year. More specifically, the study found that implementing just the 2% of adjusted gross income (AGI) floor, combined with a lower maximum limit for cash gifts of 40% of AGI, would decrease giving by up to $10.6 billion. These are staggering numbers and reinforce the need to continue to communicate with lawmakers about the importance and need for the charitable deduction.

As you may recall, Urban Institute Fellow Dr. Eugene Steuerle, one author of this new report, is also a member of the ACR Advisory Council. In an interview with ACR in July, Dr. Steuerle explained how the tax policy included in the draft affects the charitable sector and offered his thoughts on provisions that would help strengthen it.


Consider This

With fewer than 50 days to go, we appear to be in a near coin toss for control of the Senate.

So what is really at stake in November? Not the continued Republican control of the House because that seems like a done deal. It is all about the Senate and the set-up for the Presidential election in 2016. Although we obsess over any tidbit related to the toss-up Senate seats, we know in our heart that the stakes are not nearly as high as our level of focus.

Make no mistake about it, controlling the Senate means, to a large degree, controlling the conversation. The majority party schedules the time of the Senate floor for legislation it wants to bring up and also shapes the committee hearings, including the witnesses called to testify. However, even if the Senate does flip, the margins will almost certainly be so close that it will be near impossible to get very much done. And there is a better than even chance that if Republicans take back control of the Senate in 2014, Democrats will wrestle back the chamber in 2016 because of the number of seats that will be up for grabs. In 2014, 20 Democrats and 13 Republicans are up for election while in 2016 that flips to 10 Democrats and 24 Republicans.

What will it mean to us if Republicans take control of the Senate and Senator Hatch (R-UT) takes the gavel of the Finance Committee? While both Senator Hatch and current Chairman Wyden (D-OR) can be expected to pursue tax reform in the next Congress, both have been true friends of our sector and we don’t expect much to change. Despite the dysfunction in Washington, we will continue to press our issues in a bipartisan, bicameral way and look to them for help in that regard.


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.