Friday, June 29, 2012

Read the latest updates below or with full articles online.

ACR Blog Roundup

Please note: The link to the blog posting "Legal Expert Explains the Foundation for America's Charitable Deduction" has been corrected.

Washington Roundup

The past two weeks have seen a flurry of activity in Washington ahead of the July 4th recess. As you know, the Supreme Court upheld the President’s Affordable Care Act. The House voted  255-67 to hold Attorney General Eric Holder in contempt of Congress. And finally, both the House and Senate wrapped up significant work to prevent student loan interest rates from doubling and extending transportation infrastructure funding.

Tax Reform Markers

As we have reported in our last two newsletters, Congressional leaders are “laying down markers” for individual tax reform. The latest to do so: House Ways and Means Committee Chairman Dave Camp (R-MI). In an op-ed from Tuesday, June 26th, Chairman Camp supported Speaker John Boehner’s (R-OH) call for a vote before August to extend the current tax rates, thereby avoiding the year-end “fiscal cliff.” In addition to this vote, Chairman Camp said that the House will also put forward principles for comprehensive tax reform, which would “lower taxes for families and job creators to a top rate of 25 percent, eliminate the alternative minimum tax, and… [make] the tax code simpler, flatter and fairer.” The Chairman did not mention specific deductions and credits, but to get to a top rate of 25% most, if not all, tax incentives would need to be eliminated. This could include the charitable deduction.

The Chairman also said ... (Continue reading)

Congressional Activity

With federal student loan rates set to double to 6.8 percent at the end of this week, and funding for federal transportation infrastructure projects set to run out on Saturday, the House and Senate finally reached a deal. The combined bill, which will cost approximately $120 billion, extends Federal funding for highways for two years and includes a one-year extension of lower Federal Stafford loan rates. The final agreement stripped out benefits for special state projects, the first highway bill to do so in many years. Republicans were forced to drop their insistence that the President approve the Keystone XL pipeline, and Democrats had to settle for allowing states to opt out of spending on non-road projects like bike and pedestrian paths. Senator James Inhofe (R-OK) told reporters on Wednesday that the deal comes just in time to meet a deadline to allow House lawmakers to vote on it Friday before leaving for the July 4th recess.

This compromise marks the last major piece of legislation to pass Congress before the election and provides political cover to both parties as they head into full campaign mode.

Consider This

Lost in the Shuffle – Other Key Happenings in Washington

What a difference a week can make: The Supreme Court ruling on immigration and health care, and a transportation bill that moved in Congress along with a student loan fix made for a big news week.  All of this news comes when Congress is backed up against the 4th of July when official Washington flees town.

Lost in the shuffle are some key developments that could play a big role in tax reform and how it unfolds... (Continue reading)

Making Headlines

States/Local

Pennsylvania: The Pittsburgh Council gave preliminary approval to a measure that authorizes the city to raise voluntary payments from area nonprofits to the city for 2012 and 2013. Officials plan to explore other avenues to extract more revenue from tax exempt organizations using recent state Supreme Court decisions denying tax exemptions to nonprofit groups as leverage. Also see: City Council explores legal avenues to wring more money from nonprofits, Tribune Live

Related, the Pennsylvania Association of Nonprofit Organizations (PANO) has sent an alert to state nonprofits asking them to support legislation (SB161) that would amend the Constitution to preserve the General Assembly’s role as the only determiner of what is defined as “purely public charity.”

Research (Studies & Reports)

Giving USA 2012 - The Giving USA Foundation released its annual report on charitable giving in the United States during 2011. Charitable giving overall rose 4 percent (0.9 percent when adjusted for inflation) to $298.4 billion up from $286.9 billion in 2010. Researchers attribute the slower than anticipated recovery in giving to a sluggish economic recovery.

Highlights from the report:

• Individuals accounted for 73 percent of giving. When bequests and family foundations are added, American households donated 88 percent of all charitable giving.
• Giving by foundations rose 1.8 percent to an estimated $41.7 billion, according to figures provided by the Foundation Center. However contributions to foundations declined by 6.1 percent.
• Gifts to religious organizations (representing the largest portion at 32 percent), declined by 1.7 percent to $95.9 billion.
• Gifts to human services increased 2.5 percent to $35.4 billion and gifts to education were up 4 percent to $38.9 billion.
• Gifts to environmental and animal organizations rose 4.6 percent to $7.8 billion.

For industry and local/regional impact see: Giving to Arts and Culture Rose to $13 Billion in 2011, BloombergBusinessweek; Giving to Religious Institutions Drops for Second Year in a Row. Why?, The Christian Science Monitor; and Charitable Giving Risen, Remained Steady in Area, Dayton Daily News.

In related news, a Chronicle of Philanthropy analysis finds an 8-percent drop in $1 million plus gifts since the beginning of 2012 compared with the same period last year.

This Caught Our Eye…

Tax Exemptions: Nonprofit organizations continue to face challenges to their tax exemptions and the deductibility of charitable gifts:

• A new study finds that the federal government forgoes an estimated $71 billion a year in revenue because of tax exemptions for religious institutions and has prompted some to call for tax exemptions to be limited to nonprofit organizations — religious or secular — whose services the government would have to supply if those organizations disappeared.
   
• Investigations by federal and state regulators into whether nonprofit groups have violated their tax exemptions by spending on political activity continue to emerge, this time in New York. Also see: IRS Probes Nonprofit Political Groups, Wall Street Journal

Philanthropic Degrees: The trustees of Indiana University approved a plan to create the nation’s first School of Philanthropy dedicated to the study and teaching of philanthropy. It will grant  degrees and faculty tenure. Press release: Plan to create first School of Philanthropy approved by Indiana University Trustees

Social Impact Bonds: The New York Times explores social impact bonds, a public-private philanthropic model which began in England and is being piloted in Massachusetts, and how they focus on measuring outcomes and pay only for success. 

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