Government and Politics Watch

July 01, 2009

Nonprofit World Debates New Social-Innovation Fund

The nonprofit world is applauding President Obama’s Social-Innovation Fund, which he officially announced the creation of yesterday.

But even proponents of the $50-million effort are raising questions about how it should operate.

Matthew Bishop and Michael Green, the authors of Philanthrocapitalism, write on their blog that “implementation is going to be challenging, to say the least. There is not much of a track record of scaling up nonprofits to draw on for guidance. And $50-million is a drop in the ocean compared to the scale of the problems.”

Betsy Fuchs, a philanthropy consultant, agrees. On her new blog, Modern Giving, she also wonders how the fund will pick the “best” charitable programs to support.

“With countless private foundations around the country squabbling to define the ideal due-diligence process, how does Washington know exactly how to build one? How will we be certain that those deemed the ‘best’ programs really are the best programs?” she asks.

On the issue of evaluation, in The Huffington Post, Clayton M. Christensen, a business professor at Harvard University, writes that the administration should create a national discussion among government agencies, grant makers, and others about how to measure social innovation. He also urged the president to look at businesses, and not only nonprofit organizations, when looking for innovative projects.

In all, Mr. Christensen hailed the Obama fund as a “new paradigm for solving social problems.”

Not everyone is convinced of this.

“Clay Christensen piece has left me speechless,” IssueLab, a nonprofit research group, says on its Twitter feed. Neither the argument nor the “paradigm” is new, it says.

What do you think of the social-innovation fund? What questions do you have about how it will operate? How would you run it? Click on the comment button below to share your views.

— Ian Wilhelm

June 30, 2009

White House to Spotlight Innovative Nonprofit Groups

Four nonprofit groups will discuss the way they are tackling social problems at a White House event today that will include remarks by President Obama.

The president will discuss “the importance of searching outside Washington to find and expand successful community solutions, and challenge foundations and philanthropists to join in this effort,” the White House said in a statement.

While details of the event have not been officially announced, several people who were invited said they believe it will highlight the goals of the new White House Office of Social Innovation and Civic Participation.

They said the event will include remarks by:

*Geoffrey Canada, president of the Harlem Children’s Zone, an antipoverty group that provides a comprehensive set of educational, medical, and social services in a 100-block area of Harlem. President Obama has proposed developing “promise neighborhoods” across the country modeled after the Harlem project. (Read an article from the Chronicle’s archive about Mr. Canada.)

*Robert Chambers, founder of Bonnie CLAC (Car Loans and Counseling), in New Hampshire, which provides low-interest car loans and financial-literacy training to low-income buyers. Mr. Chambers in 2006 won a $10,000 Purpose Prize, an award that honors people age 60 and above who devise innovative ways to help society. Bonnie CLAC has since expanded from one to eight locations in New Hampshire. (Read an article from the Chronicle archive about Mr. Chambers.)

*Vanessa Nunez, 19, a graduate of a training program offered by Genesys Works, in Houston and St. Paul, which prepares economically disadvantaged high school students for professional jobs.

*Two representatives of HopeLab, in Redwood City, Calif., which uses scientific research to develop technology to help children with chronic illnesses. (Read more about Pam Omidyar, who helped found HopeLab, in an article from the Chronicle’s archive.)

A variety of nonprofit and foundation leaders will attend the event. Civic Ventures, a nonprofit group in San Francisco that sponsors the Purpose Prize, announced that in addition to Mr. Chambers, five other Purpose Prize winners had been invited to attend.

— Suzanne Perry

June 29, 2009

First Lady Announces New Stimulus Spending on Community Health Centers

First Lady Michelle Obama today announced the release of $851-million in economic-stimulus money to help build, renovate, or equip more than 1,500 community health centers.

Speaking at the Upper Cardozo Health Center in Washington, Ms. Obama said the money would help “thousands of centers across the country expand and serve more Americans who simply can’t afford insurance coverage anymore.”

She said more than 650 centers will use the money to buy new equipment or health-information technology systems, and nearly 400 to adopt or expand the use of electronic health records.

The grants are part of $2-billion that the economic-stimulus law allocated to community health centers. See The Chronicle‘s coverage of previous stimulus spending to expand health-care services to the poor and an overview of how charities are seeking billions of dollars in stimulus aid.

— Suzanne Perry

Volunteering Conference Highlights Obama Push on Community Service

Last week’s National Conference on Volunteering and Service in San Francisco featured a lot of talk about the Obama administration’s efforts to promote community service.

The Chronicle‘s conference notebook brought news about the following:

Michelle Obama’s opening pitch for Americans to make community service a part of their daily lives.

Advice on how nonprofit groups can support the administration’s United We Serve campaign.

An official announcement about All for Good, the Web project to aggregate volunteer opportunities that will feed the administration’s Serve.gov.

A suggestion that the administration’s emphasis on community service as a way to help solve the country’s problems could change the way such work is evaluated.

Concerns about the strain an influx of new volunteers could put on nonprofit groups.

The prospect that budget constraints will curtail spending on the Serve America Act.

The priorities of Jackie Norris, a new senior adviser at the Corporation for National and Community Service.

— Suzanne Perry

June 24, 2009

IRS Official Stresses Agency's Role in Governance Matters

The new top charity regulator at the Internal Revenue Service has made clear she will continue the tax agency’s efforts to promote good governance by charities.

Sarah Hall Ingram, in remarks to a conference in Washington, said that the IRS has a “clear, unambiguous role to play” in governance matters.

“Some have argued that we do not need to be involved, because we can count on the states to do their job and the sector to stay on the path of self-regulation,” said Ms. Ingram.

“While both state regulation and sector self-regulation are important, and I welcome and respect them, they do not get the IRS off the hook,” she said. “Congress gave us a job to do, and we cannot delegate to others our obligation to enforce the conditions of federal tax exemption.”

She added: “The federal tax law must be applied consistently across the country, and we will use both our education and outreach programs and a meaningful enforcement presence to accomplish this.”

Ms. Ingram spoke at a meeting on “Issues in Nonprofit Governance” that was co-sponsored by the IRS, Georgetown University Law Center’s Continuing Legal Education Program, and Independent Sector, a national coalition of charities and foundations.

— Grant Williams

June 15, 2009

Federal Agency Examines How Taxpayers Report Cash Contributions

The U.S. Government Accountability Office, the investigative arm of Congress, has released a report on the “misreporting” of cash contributions to charities by individuals.

In 2001, an estimated 46 percent of taxpayers who deducted cash contributions misreported their deductions, the agency said. “About 79 percent of misreporting taxpayers overstated a total of $16-billion in contributions while about 21 percent of misreporting taxpayers understated a total of $2.2-billion in contributions,” said the report.

In 2008, the IRS examined about 175,000 taxpayers “who potentially misreported cash contributions, out of about 1.4 million individual taxpayers it examined that fiscal year, and adjusted cash-contribution amounts by $593-million in net terms,” the agency said.

The Government Accountability Office said that “one approach that tends to lead to high levels of taxpayer compliance is information reporting, through which third parties, such as employers or banks, file returns with IRS and taxpayers that provide information on a variety of taxpayer transactions. IRS tries to match information from information returns filed by third parties against taxpayers’ income tax returns to see if taxpayers have filed returns and reported all their income. Currently, information reporting is not required for cash contributions to charities.”

But the Government Accountability Office said that requiring information reporting for charitable cash contributions may not be an effective way to improve taxpayers’ compliance with the law.

“Charities could incur substantial costs and burdens if they were required to file information returns with IRS and taxpayers on the cash contributions they receive,” the agency said.

— Grant Williams

June 12, 2009

Fired National-Service Inspector General Says He Acted Properly

Gerald Walpin, who was fired from his post as inspector general of the Corporation for National and Community Service, said he acted properly and questions the timing of the decision.

“I and my office acted throughout with the highest integrity in reports and dealing with the corporation and its management in performing the IG’s responsibility to be an independent overseer of the corporation’s activities,” he said in an interview. He said he told the White House it might not appear coincidental that the president’s decision to remove him followed two reports he issued that criticized the national-service agency.

But the White House said the decision was made solely because of Mr. Walpin’s conduct, citing a decision by an acting U.S. attorney in Sacramento to file a complaint against him.

“We are aware of the circumstances leading to that referral and of Mr. Walpin’s conduct throughout his tenure and can assure you that the President’s decision was carefully considered,” Gregory B. Craig, White House counsel, said in a letter to Sen. Charles E. Grassley of Iowa, senior Republican on the Senate Finance Committee.

President Obama told Congress on Thursday he planned to remove Mr. Walpin from his post because he no longer had the “fullest confidence” in him. Mr. Craig wrote to Mr. Grassley after the senator raised questions about whether the administration had properly notified Congress of the reasons for the decision.

“Inspectors general need to know they have independence and won’t be removed for arbitrary reasons,” Sen. Grassley said in a statement.

The U.S. attorney complained about Mr. Walpin’s conduct in a case involving St. Hope Academy, a nonprofit group started by Kevin Johnson, a former basketball star who is now mayor of Sacramento. The Corporation for National and Community Service last September barred the group from receiving any federal grants or contracts for up to one year after finding that it had misused members of AmeriCorps, the national-service program.

Mr. Walpin referred the case to the U.S. attorney’s office so it could consider prosecuting Mr. Johnson and a colleague for misusing federal funds. The office reached a settlement with the academy that required the group repay some of the money it had received — an agreement that Mr. Walpin criticized in a report that he issued in May.

The acting U.S. attorney, Lawrence Brown, filed a complaint against Mr. Walpin with the integrity committee of the Council of Inspectors General on Integrity and Efficiency, a federal body. The complaint was not immediately available, but Mr. Walpin’s defense refers to charges that he overstepped his authority as an auditor and improperly communicated to the press. Mr. Walpin denies both charges.

Mr. Walpin also filed a report month criticizing spending on an AmeriCorps program at City University of New York.

He said that the White House asked him to resign on Wednesday, giving him one hour to decide. He said he declined to make such a hasty move, telling the White House in an e-mail that “it would do a disservice to the independent scheme that Congress has mandated.”

The president is required to give Congress 30 days’ notice before removing an inspector general, so Sen. Grassley questioned the propriety of the ultimatum. The White House told him it had contacted Mr. Walpin as a way to start the 30-day notification clock ticking.

Mr. Walpin, who lives in New York, was appointed to his post in 2007 by President George W. Bush. A White House spokesman noted that the decision to remove him was supported both by Democrat Alan Solomont, the corporation’s board chair, and Republican Stephen Goldsmith, the vice chair.

— Suzanne Perry

June 11, 2009

Obama to Remove National-Service Inspector General

President Obama plans to remove Gerald Walpin, the inspector general of the Corporation for National and Community Service, from his post, the corporation announced today in a statement.

Mr. Walpin recently issued a report critical of an AmeriCorps program that provides money to the Teaching Fellows project at City University of New York that was contested by the corporation, according to an article in the publication Youth Today.

But an official at the corporation, which operates AmeriCorps and other national-service programs, said the decision to fire him was not connected to that report and was made before the document was issued on June 4.

“The president has lost confidence in the inspector general and wants to appoint someone in whom he has full confidence,” the official said.

The corporation’s statement said Alan Solomont, the agency’s board chair; Stephen Goldsmith, the vice chair; and Eric Tanenblatt, chair of the board’s management, audit, and governance committee, all strongly support the president’s decision.

The corporation official said Mr. Walpin, who was nominated by President George W. Bush and has served in the position since January 2007, will be required to leave his post in 30 days.

Kenneth Bach, the agency’s assistant inspector general for support, was named acting inspector general.

Mr. Walpin, who lives in New York, could not be immediately reached for comment.

— Suzanne Perry

June 10, 2009

IRS Asked to Improve Tax Rules for International Grant Making

A committee of nonprofit experts that advises the Internal Revenue Service is recommending that the agency improve the tax rules governing international grant making.

“While the longstanding framework for cross-border philanthropy functions well, it can and should be updated to simplify compliance and clarify areas of uncertainty,” said a report by the Advisory Committee on Tax Exempt and Government Entities.

“Much of the guidance affecting cross-border philanthropy was provided long ago and fails to reflect developments of the past 15 or more years,” the report said. “As such, it does not address certain practices and structures that are common today.”

The report said that the committee believed that “a modest expenditure of IRS and Treasury administrative resources spent making updates to certain guidance will yield an exceptionally high return by reducing compliance burdens, improving charitable organizations’ ability to comply with our tax rules, and enhancing their ability to fulfill charitable missions beyond our borders.”

One committee recommendation is to simplify and enhance the application of the “expenditure responsibility” rules that private foundations follow when making grants to certain overseas organizations.

— Grant Williams

June 08, 2009

Audit Criticizes AmeriCorps Program at City University of New York

An inspector general has found that the federal government should stop an AmeriCorps program that provides money for the Teaching Fellows project at City University of New York because it does not meet the essential AmeriCorps criterion of filling an “unmet” need, the publication Youth Today reported.

Gerald Walpin, inspector general for the Corporation for National and Community Service, said in an audit that the federal government should recover the money it has spent on the program, which the university estimates could be as much as $75-million. He said the AmeriCorps money duplicated other programs and played no role in attracting people to the fellows project.

The corporation disputed the findings and said it would not halt the program.

— Suzanne Perry