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Nonprofit Issues

Diversity of Thought: Jefferson’s Influence on Philanthropy

“I deem it the duty of every man to devote a certain portion of his income for charitable purposes; and that it is his further duty to see it so applied and to do the most good for which it is capable.” -Thomas Jefferson

April 13 marks the 271st birthday of one of our nation’s most prominent founding fathers: Thomas Jefferson. While Jefferson clearly advocated for charity during his life, perhaps his most well-known philanthropic-related effort came when he offered his vast personal collection of books to reestablish the Library of Congress. In August 1814, invading British troops had burned down the Capitol building, which also housed the Library of Congress. In January 1815, Jefferson sold his personal collection of 6,487 volumes for $23,940—more than doubling the size of the Library’s collection that was lost in the fire. Jefferson knew that his collection would be controversial because it contained many books considered outside the realm of congressional matters. Jefferson’s volumes covered science, art, literature, and architecture, and several of them were printed in foreign languages. Jefferson was expanding the intellectual scope of the library and argued that there is “no subject to which a Member of Congress may not have occasion to refer.” Jefferson believed the Library of Congress should be a repository of knowledge drawn from many sources in order to promote the most robust discourse in the legislative chambers.

The Alliance for Charitable Reform advocates for policy and legislative proposals that protect philanthropic freedom and promote private charitable giving in order to preserve the wide range of charitable causes Americans have always supported.  A free and vibrant civil society summons its members to create and lead organizations, programs and institutions out of a sense of higher purpose that transcends their own interests and base motives. Today, with the Tidal Basin’s cherry blossoms at peak bloom, ACR celebrates our third President’s birthday, his contribution to the Library of Congress, and his commitment to diversity of thought.

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Nonprofit Issues

Wyden Reaffirms Support for Charitable Deduction, Troubled by Floor Proposal

Wyden_photoLast week, Senate Finance Committee Chairman Ron Wyden (D-OR) publicly voiced concern over a proposal of a “giving floor” on the charitable deduction at the annual meeting of the National Council of Nonprofits. He also reiterated his stance that the charitable deduction is a “lifeline, not a loophole.” From the National Council of Nonprofits:

“Senate Finance Committee Chairman Ron Wyden (D-OR), speaking April 1 at the annual member meeting of the National Council of Nonprofits, made his clearest statement of support for charitable giving tax incentives and for the work of charitable nonprofits in their communities. Reiterating that he sees the charitable deduction as a “lifeline, not a loophole,” Wyden stated his conviction that reforming the tax code “does not mean throwing overboard the charitable deduction.” He went on to state that he is troubled by the concept of a “giving floor,” rejecting a proposal in the discussion draft from House Ways and Means Committee Chairman Dave Camp (R-MI) to require giving of at least two-percent of a person’s adjusted gross income before claiming a charitable deduction.”

The comments offer significant insight as to the Finance Committee Chairman’s thoughts on the floor included in House Ways and Means Chairman Dave Camp’s (R-MI) tax reform discussion legislation released just last month. The Senate Finance Committee, which has jurisdiction over tax issues in the Senate, has yet to release any comprehensive tax reform proposals.

Chairman Wyden also asserted that the nonprofit sector is an economic multiplier, provides for economic mobility, and that the sector is “on the right side of history.” This article from the National Council of Nonprofits has more on Chairman Wyden’s remarks.

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Camp Not Seeking Reelection

Camp


House Ways and Means Chairman Dave Camp (R-MI) announced Monday that he would not be seeking reelection this year.

“Serving in Congress is the great honor of my professional life. I am deeply grateful to the people of the 4th Congressional District for placing their trust in me. Over the years, their unwavering support has been a source of strength, purpose and inspiration,” Camp said in a statement.

Chairman Camp’s leadership of the House Ways and Means Committee was set to expire at the end of this Congress due to term limits. He released his discussion draft of tax reform legislation on February 26. According to his statement, he remains committed to accomplishing all he can with the time he has left in office.

“During the next nine months, I will redouble my efforts to grow our economy and expand opportunity for every American by fixing our broken tax code, permanently solving physician payments for seniors, strengthening the social safety net and finding new markets for U.S. goods and services,” Camp said.

Current Budget Committee Chairman Paul Ryan (R-WI) remains the likely candidate to take the helm of the House Ways and Means Committee following Camp’s retirement.

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Nonprofit Issues

State Lawmaker in Michigan Looks to Reinstate Charitable Deduction

Due to the lack of action on federal tax policy, many states have taken on the task of rewriting portions of their tax code.  Michigan is just such an example.

State Senator Tonya Schuitmaker introduced legislation last month that would reinstate tax credits for charitable donations that were eliminated in 2011. Schuitmaker’s bill would allow a 50 percent credit of the amount donated to certain charitable organizations, such as community foundations, food banks and homeless shelters.

“I think it’s important to promote charities, and one way to do that is the charitable tax deduction,” Schuitmaker was quoted as saying by WKZO.

The Council of Michigan Foundations cites a study from the Johnson Center at Grand Valley State University that the elimination of tax credits for charitable donations has resulted in:

• A 51 percent decrease in $400 donations in 2012
• A 28 percent decrease in $200 donations in 2012
• A 27 percent decrease in all donations $400 and below in 2012
• A total loss of more than $1.15 million in 2012

Should Schuitmaker’s bill advance to become law, Michigan would follow a similar course as Hawaii, which lifted its cap on charitable deductions that was instituted in 2011. According to an article by the Pew Charitable Trusts, the cap brought in $12 million in revenue for Hawaii but cost charitable organizations $50-$60 million in donations. Hawaii Governor Neil Abercrombie signed a bill removing the cap in July 2013.

How or if this trend translates to the federal level remains to be seen; but we are encouraged by these states that recognize the importance of private charitable giving.

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Congress to Consider Tax-Related Typhoon Haiyan Legislation

Later today the House of Representatives will begin consideration of a bill seeking to boost charitable giving for recovery efforts related to Typhoon Haiyan, which devastated the Philippines last November. H.R. 3771, the Philippines Charitable Giving Assistance Act, is sponsored by Rep. Eric Swalwell (D-CA) and would allow contributions for Typhoon Haiyan recovery efforts made before April 15, 2014 to count as charitable deductions for tax year 2013. With many taxpayers about to complete tax filing for 2013, this could significantly boost relief efforts.

“This legislation I’m sponsoring will provide another incentive for Americans to donate and donate now — when their help is needed most,” Swalwell was quoted as saying by The Hill

The legislation serves as another illustration of how Congress recognizes that tax policy directly affects charitable giving, particularly when it comes to the timing and size of charitable gifts. For example, President Barack Obama’s proposed cap of 28 percent on all charitable contributions could cost the charitable sector as much as $9.4 billion in charitable giving in the first year alone. On the contrary, Representative Dave Camp’s (R-MI) proposed consolidation of the private foundation excise (PF) to a streamlined one percent would eliminate the current two-rate structure of the tax, which has the practical effect of deterring foundations from increasing their grants during times of great need.

“Members of Congress have long acknowledged that tax policy does indeed influence private charitable giving, for better or worse,” Joanne Florino, senior vice president for public policy at The Philanthropy Roundtable, said. “This [Typhoon Haiyan] legislation and other provisions such as the charitable deduction, the private foundation excise tax, and the IRA charitable rollover all play a significant role in how much and when people give.”

H.R. 3771 will require a two-thirds majority vote to pass the House and be sent to the U.S. Senate for consideration.

For those who want to contribute to Typhoon Haiyan relief efforts, please read this feature in which Philanthropy Roundtable members and friends discuss organizations with long experience in delivering disaster relief around the globe quickly, effectively, and efficiently.

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Photos from the 2014 ACR Summit for Leaders

Suzy DeFrancis
Suzy DeFrancis, chief public affairs officer for the American Red Cross, participates in a panel discussion at the 2014 ACR Summit for Leaders.

To see other photos from the 2014 ACR Summit for Leaders, click here.

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Live Blog: 2014 ACR Summit for Leaders

This is a live blog providing updates from the 2014 ACR Summit for Leaders.

We’re just a few minutes from starting. We’ll have a few opening remarks followed by the congressional panel, which is off the record.

Some comments from Adam Meyerson’s opening remarks:

“A vibrant private sector generates the wealth and income that makes philanthropy possible.”

“It’s clear we still have work to do with members of Congress.”

“We must preserve the full value of the charitable deduction which encourages others to give their money away for the benefit of others.”

The congressional panel is just beginning. This is off the record so stay tuned for more updates from the final two panels.

The second panel is: Making the Case for the Charitable Sector. It features:

Laurie Norton Moffatt, director/CEO, Norman Rockwell Museum
Mason Rummel, president, James Graham Brown Foundation
Steven Woolf, senior tax policy counsel, The Jewish Federations of North America
Suzy DeFrancis, chief public affairs officer, American Red Cross
Sandra Swirski, executive director, Alliance for Charitable Reform (moderator)

DeFrancis: Charitable giving allows nonprofits to provide a literal army of volunteers.
DeFrancis: 63 million Americans volunteer once a year. Give 50 hours annually.
DeFrancis: While volunteers provide service for free, it is not free to manage volunteers. Private giving supports the infrastructure that allows to deploy these volunteers.

Moffatt: We are a driver of the larger economy, including manufacturing, health and other creative.
Moffatt: It’s important to understand what your elected officials’ platforms are.
Moffatt: Inventory your regional assets. Determine who are your allies, invite them to the table and share your vision.

Rummel: All of our work is based upon partnerships. We do not do this work in isolation.
Rummel: The nonprofit community is who makes us (foundations) viable.
Rummel: This is about impact. We are trying to create impact.
Rummel: Consequences of tinkering with the charitable deduction are gaps in services, diminished capacity, even closure.

Woolf: It’s the charitable contribution dollars that really keeps the lights on.
Woolf: We get 80% of our money in the last six weeks of the year, proving the correlation between giving and tax policy.
Woolf: Contributions should not be subject to tax because the individual is not consuming anything, he//she is giving it away.
Woolf: The charitable contribution is the only provision where no benefit flows back to the individual.

The final panel is: Two Perspectives on Tax Reform and Private Giving Incentives. It features:

Howard Husock, vice president for policy research, Manhattan Institute (also Forbes contributor). 
Stephen Moore, chief economist, Heritage Foundation (former Wall Street Journal editorial board member)
Joanne Florino, senior vice president for public policy, The Philanthropy Roundtable (moderator)

This panel is an examination of the arguments favoring lower rates in tax reform.

Howard Husock, vice president for policy research, Manhattan Institute (also Forbes contributor). 
Stephen Moore, chief economist, Heritage Foundation (former Wall Street Journal editorial board member)
Joanne Florino, senior vice president for public policy, The Philanthropy Roundtable (moderator)

Moore: I would favor is getting rid of all the deductions…you need to do that to write tax overhaul.
Moore: I believe that there is no question in my mind that when tax rates are lower, the economy is better.
Moore: When we have cut tax rates, the value of all deductions is also cut.
Moore: If we could have a true flat tax with no deductions, I would think that charities would not be hurt.

Husock: I think that it’s very important for us to have as a goal to keep charitable giving at least steady, if not increased.
Husock: For the fifth year in a row, the President has proposed to hold the deduction at 28%. We can be pretty darn sure that this would decrease giving.
Husock: The cap proposal would disproportionately affect the blue states, where many people itemize.
Husock: I think the fire is coming from the idea that there are certain types of charities that are good.

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Nonprofit Issues

Camp Tax Reform Bill to be Unveiled

Camp

House Ways and Means Chairman Dave Camp (R-MI) will release his tax reform bill next week, according to a report from Politico.

“The Michigan Republican wrote his party’s tax panel members to make it official: He is moving forward with a proposal, the product of several years’ work,” the Politico article stated.

Although many believe it is still very unlikely that the bill will advance to markup much less get a vote in the House, it does not diminish the significance of the release. The document will become a template for future reform tax reform bills. As Politico put it:

“Some close to Camp say he has little to lose and wants to put out a marker for future tax reform efforts, in the vein of the first Treasury Department proposal issued by Ronald Reagan in the 1980s.”

As details about Camp’s draft become available, the nonprofit sector should continue to engage with its elected representatives about the charitable deduction or any other tax policy issue that will affect charitable giving. The release of the President’s budget is also expected on March 5, and once again we expect that budget to propose a 28 percent cap on the charitable deduction. Any proposed reduction or elimination of the charitable deduction in these two documents remains a significant concern to the charitable sector as tax reform legislation moves ahead in the future.

We encourage you to join us at the 2014 Alliance for Charitable Reform Summit for Leaders on March 5. The Summit offers a half-day of programming to provide an insiders’ look at the political issues impacting philanthropy and nonprofits, as well as guidance on how to effectively advance your cause in Washington. Camp’s draft and the President’s budget are sure to be among the topics discussed.

ACR will continue to educate lawmakers about the critical importance of preserving the full value and scope of the charitable deduction. We will also keep you updated about other legislative proposals that will affect the work of charities and foundations in our communities.

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Nonprofit Issues

ACR BLOG: With Malice Toward None

LincolnToday marks the 205th birthday of Abraham Lincoln, our country’s 16th president. On this occasion, we take a moment to highlight one of Lincoln’s most well-known passages from his second inaugural address. With the Civil War winding down, Lincoln offered this plea to the nation to mend the divisiveness that had resulted from the war:

“With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”

Lincoln knew it would take an extraordinary effort from every citizen to heal the nation and it was clear that philanthropy would play a crucial role in that effort. It is the same role philanthropy plays today—to create solutions for our most pressing challenges and to cultivate a robust civil society that supports those in need. Lincoln’s words are as applicable today as they were in those desperate times in the final months of the Civil War.

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Nonprofit Issues

Philanthropy and the State of the Union Address

2014 SOTU
Courtesy of Whitehouse.gov

President Barack Obama gave the annual State of the Union address last night and touched upon several issues facing our nation, such as immigration and health care to name a few. The core of his speech and the impetus behind the proposals he offered, however, revolved around the concept of addressing income inequality and economic mobility.

“Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead,” President Obama said during his address.

The President laid out several plans for action to help overcome this inequality and offer more opportunity to those who face barriers or lack access to education and good jobs. He explained that he is “reaching out to some of America’s leading foundations and corporations on a new initiative to help more young men of color facing tough odds stay on track and reach their full potential.” He also said he is looking to enhance the quality of early education by pulling together “a coalition of elected officials, business leaders, and philanthropists willing to help more kids access the high-quality pre-K they need.” These are just a couple of examples of how philanthropy can serve in resolving this crisis. However, the President’s comments failed to fully address the ongoing critical role of charitable giving in developing and implementing solutions to our economic and social challenges.

For the last 50 years, Americans have voluntarily given two percent of gross domestic product (GDP) for charitable causes. In 2012, Americans gave an astonishing $316 billion to charity. That’s $6 billion a week!

Charitable giving has been the lifeblood of our churches, synagogues and other religious institutions. It has helped to make our colleges and universities the best in the world. It is critical for the flourishing of the arts, science and medicine, and the protection of our natural habitats. It provides food for the hungry, care for the sick, and shelter for the homeless.

And yet, private charitable giving has the potential to do even more. Instead of two percent of GDP, imagine if Americans voluntarily gave three percent – currently valued at an additional $160 billion. Such an increase in charitable giving would be especially helpful in expanding opportunity for low-income families and addressing the crisis in economic mobility through job-training programs, early education initiatives, and scholarships for secondary education. 

While federal safety net programs have reduced hunger, homelessness, and other forms of material poverty, millions of Americans now feel trapped at the bottom of the economic ladder. There is not much government can do to repair this social fabric, put families back together, or restore optimism that the American Dream is still open for those who work hard. That is primarily, and appropriately, the work of cultural institutions and civil society: religious congregations, mentoring programs, microfinance lenders, and character-teaching programs such as youth sports and Scouting. A new infusion of philanthropy could make a huge difference in expanding opportunity and addressing the crisis in economic mobility.

We encourage our lawmakers to take steps to protect and encourage charitable giving. This is why we are grateful to Senators Ron Wyden (D-OR) and John Thune (R-SD) for their bipartisan letter calling for protection of the charitable deduction. Now is not the time to limit or abandon the charitable deduction which has been so important for communities across this land and can serve as a significant catalyst for solving the problems the President highlighted last night.

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