ACR Blog

Serving Our Veterans

On the eve of the celebration of Independence Day, we wanted to share an interview we conducted with Thomas Meyer who is the program manager of veterans services at The Philanthropy Roundtable. Meyer is also the author of Serving Those Who Served: A Wise Giver’s Guide to Assisting Veterans and Military Families. In this interview, Meyer explains how veterans are a source of great human capital for our country and discusses the approach philanthropy should take in supporting our nation’s veterans.

In addition to the interview, below is an excerpt from Meyer’s guidebook:

There is much alarmism about veterans today. “Judging from media accounts, I’m the rare American veteran who isn’t homeless, homicidal, or suicidal. . . .” started a recent essay in the Atlantic by former soldier James Joyner. Much of this gloomy commentary is inaccurate or misleading.

For instance, a definitive government study released in 2013 found that while suicides among veterans rose 10 percent from 1999 to 2010, the suicide rate among the overall population rose much faster during that same period—up 31 percent. And two-thirds of veteran suicides are among those 50 years and older, suggesting the biggest problem is not among men and women deployed since 9/11.

As a group, it is much more accurate to think of veterans as a national asset than as a national problem, or set of victims. Nearly 6 million Americans have served in the military since the 9/11 attacks: 2.8 million of them are still serving; 3.2 million are civilians as of early 2013. Some of those civilian veterans are in college, at home raising children, or retired; of those who are in the labor force, more than 90 percent are employed.

The annual earnings of all U.S. veterans are 12–15 percent higher than the earnings of non-veterans. Their poverty rate is only a little more than half the overall rate.

None of this is surprising when you notice that veterans rank higher than the general population in levels of intelligence, physical fitness, avoiding a criminal record, finishing high school, and attending college. To help you separate realities from the many myths about veterans in circulation today, we have included at the end of this book a set of vital statistics. You’ll find clear data on the topics above, as well as others like physical health, mental health, family status, and so forth.

While those who have served in the military are—on the whole—in better shape than comparable non-veterans, there are many individuals who need and deserve help. Foremost among these are the men and women who were injured during their service. In this book, we lay out six areas where there are opportunities for public-spirited donors to aid veterans. In all of these areas, donors and charitable groups are already making progress, though both the successes and the remaining gaps vary a lot by region.

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ACR To Meet With Lawmakers About Camp Draft, Part II

This is the second of a two-part series about the issues ACR members will discuss in meetings with congressional offices on July 8.

Members of the Alliance for Charitable Reform (ACR) leadership team are set to meet with members and staff of the House Ways and Means Committee and the Senate Finance Committee on Tuesday, July 8. The group will discuss some of the charity-related proposals in the tax reform discussion draft released earlier this year by House Ways and Means Chairman Dave Camp (R-MI). ACR thoroughly examined the Camp draft and engaged its members and colleagues in the field for feedback in evaluating these provisions. ACR ultimately identified four that raise serious concerns.

Our last post outlined the troubling provisions from the Camp draft that relate to the charitable deduction.  In this post we will explain ACR’s concerns with the proposal related to donor-advised funds (DAFs) and identify the provisions in the Camp draft which ACR applauds.

Donor-Advised Funds
According to the National Philanthropic Trust, 2012 saw a large increase in the number of DAFs to more than 201,000 accounts nationwide. Contributions to these DAFs also reached an all-time high in 2012, totaling over $13 billion and bringing the average account size to over $224,000. Because DAFs are controlled and administered by sponsoring public charities, their management costs are much less expensive than those needed to establish private foundations, which also have stringent reporting and operating requirements. Additionally, because funds from DAFs can quickly be disbursed, they are ideal for funding emergency situations and disaster relief.

The Camp draft would require all contributions to a DAF to be distributed to public charities within five years of receipt. If this requirement is not met, organizations that oversee these funds would face an excise tax equaling 20% of the contributions not distributed from the specific account within the five-year window.

Payout rates from DAFs from 2007 through 2012 annually exceeded 16%, according to the National Philanthropic Trust. When contrasted with the payout rate of a private foundation—which usually hovers around the statutory minimum of 5%—the requirement in the Camp draft appears misguided and unnecessary.

You can access additional information in ACR’s May 28 webinar that examined DAFs and the possible ramifications of the proposed requirement in the Camp draft.



What ACR Supports
While there are proposals in the Camp draft that are troubling, there are also proposals that ACR wholeheartedly supports. In addition to the fact that Chairman camp retained a charitable giving incentive for all three tax brackets, albeit a modified incentive, ACR also thanks the Chairman for:

  • Extending the deadline to April 15 to make charitable contributions and receive a deduction for the prior year.
  • Streamlining the private foundation (PF) excise tax on net investment income to a flat 1%. ACR has supported this measure for several years because the current two-rate structure has the practical effect of deterring foundations from increasing their grants during times of great need.

These two provisions were also recently passed in stand-alone bills by the House Ways and Means Committee. ACR will be expressing gratitude to lawmakers and their staffs in the July 8 congressional meetings for the inclusion of these policies.

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Nonprofit Issues

ACR To Meet With Lawmakers About Camp Draft

This is the first of a two-part series about the issues ACR members will discuss in meetings with congressional offices on July 8.

Members of the Alliance for Charitable Reform (ACR) leadership team are set to meet with members and staff of the House Ways and Means Committee and the Senate Finance Committee on Tuesday, July 8.  The group will discuss some of the charity-related proposals in the tax reform discussion draft released earlier this year by House Ways and Means Chairman Dave Camp (R-MI). ACR thoroughly examined the Camp draft and engaged its members and colleagues in the field for feedback in evaluating these provisions. ACR ultimately identified four that raise serious concerns: three related to the charitable deduction and one related to donor-advised funds. This post will highlight the three provisions related to the charitable deduction.

While the Camp draft ultimately preserves the charitable deduction— a decision that ACR wholeheartedly applauds—it does alter the deduction in ways which would ultimately cause a significant reduction in charitable giving. The proposed changes to the charitable deduction are as follows:

The 2% Floor
This proposal eliminates the charitable deduction for all gifts that fall below 2% of a donor’s Adjusted Gross Income (AGI). When combined with other changes in the deduction, the floor effectively eliminates the charitable deduction for 95% of taxpayers. The charitable deduction was fashioned as a proxy for backing out all gifts to charity from a donor’s income, to insure that those gifts are not taxed. To limit the charitable deduction for most taxpayers means that those gifts will be taxed for the first time in history.

AGI Limit for Cash Donations
Under current law, donors receive a deduction for cash gifts up to 50% of their AGI. For capital assets, donors can take a deduction for gifts up to 30% of their AGI. The provision included in the Camp proposal streamlines those limits to 40%, effectively discouraging gifts of cash and encouraging gifts of capital assets.
Charities typically prefer cash gifts, which can be more quickly absorbed and put to work, especially by human service charities.

Limiting Donor’s Assets to Basis
But while the Camp draft significantly favors capital assets over cash in one area, it includes another proposal that actually claws back the deduction for certain types of assets. For closely held stock and real estate, two of the most common capital assets donated to charity, the proposal generally limits a donor’s charitable deduction to the donor’s basis in the asset, while current law allows a deduction for fair market value. These new limits will radically affect major gift programs, seriously reduce the amount of large noncash gifts, and hinder foundation formation.

Taken together, these proposed changes would hurt charitable giving at both ends of the spectrum, discouraging donors of all income types from traditional forms of giving.

Tomorrow, we will explain how the Camp draft sets its sights on donor-advised funds. We will also identify the proposals in the Camp draft that we support.

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Ways and Means Markup Tax Extenders Bill

House Ways and Means Chairman Dave Camp (R-MI) held a markup (which is a formal amendment process) on May 29 on another group of tax extenders – annually expiring tax incentives – and related bills that the Chairman hopes to make permanent. The Committee considered three charity-related bills: a permanent extension of the IRA charitable rollover (introduced by Rep. Aaron Schock (R-IL) and Rep. Earl Blumenauer (D-OR); a permanent extension of the deduction for qualified conservation easements; and a permanent extension of the enhanced deduction for food donations.

The Committee also considered two other bills, both of which have long been ACR priorities. The first, HR 3134, was introduced by Rep. Mike Kelly (R-PA) and Rep. Bill Enyart (D-IL). It would give people until April 15 to make charitable contributions eligible for the charitable deduction, instead of requiring those gifts to be made by the end of the calendar year. The other, HR 4691, was introduced by Rep. Erik Paulsen (R-MN) and Rep. Danny Davis (D-IL). It would permanently streamline the excise tax on a private foundation’s investment income to a flat 1 percent instead of the current two-tier structure.

For a comprehensive review of the comments, amendments, and votes taken at the markup, please click here. We also partially documented the progress of the hearing via social media, which can be seen below. The Committee ultimately approved all of the measures, including the Paulsen-Davis and Kelly-Enyart bills, with Republican-only support. 

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Maine Partially Removes Cap on Charitable Contributions

Philanthropists, foundations, and other charitable organizations continue to fight against harmful legislation that curtails private charitable giving. Hawaii, North Carolina, Missouri, Montana, and Kansas are just a handful of states who have acted within the last year to pass legislation that would positively impact charitable giving. For example, Hawaii Governor Neil Abercrombie signed a bill last July that eliminated a cap on charitable deductions that had been in place for two years. Maine is the most recent state to take action.

In 2013, the Maine legislature enacted a $27,500 cap on all itemized deductions, including the charitable deduction. According to the Maine Association of Nonprofits (MANP), the Maine charitable sector stood to lose $20 million a year in charitable giving due to the cap.  Maine nonprofits, led by MANP, jumped into action to support legislation—LD 1664: An Act To Encourage Charitable Contributions to Nonprofit Organizations—which would carve the charitable giving deduction out of the overall cap. After a lengthy legislative process, a compromise was eventually reached to ensure passage of LD 1664.

The revised version of the bill would:

  • Keep the cap through tax year 2015;
  • Allow taxpayers to deduct an additional $18,000 in charitable donations for tax year 2016;
  • Remove the cap on charitable giving entirely in 2017.

The bill passed both houses of the Maine legislature on April 17 and became law without the governor’s signature on April 30 (when the legislature is in session, passed legislation must receive a signature or veto by the governor within six days of passage or the bill becomes law). MANP expressed gratitude on its website to “all the nonprofit leaders and philanthropists who made phone calls, testified, sent e-mails, and lobbied in the State House.  Without these efforts, the bill would not have cleared even the first of many hurdles it passed to become law.”

Despite the steps in the right direction, MANP has stated it will continue the fight to preserve the full charitable deduction in Maine.

“Next year, we will be working to for an even better solution and we look forward to working with all of you again,” MANP wrote on its website.

The full journey of LD 1664, starting in January, is chronicled here.

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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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