January 2008
January 29, 2008
Minister Pledges to Fight Senator's Request
In rousing style, the televangelist Kenneth Copeland has pledged to fight efforts by Sen. Charles E. Grassley, an Iowa Republican, to make his Christian ministry’s finances public, reports Roll Call, a Washington political newspaper.
In November, Mr. Grassley, who is the senior Republican on the Senate Finance Committee, sent letters to Kenneth Copeland Ministries, in Newark, Texas, and five other television ministries to obtain their financial information.
During a closed-circuit broadcast last week to about 1,000 ministers and other guests, Roll Call reports that Mr. Copeland said he would vigorously resist the request.
“You render unto the government what belongs to the government. And you render unto God what belongs to God,” he said, according to the newspaper. “You can go get a subpoena, and I won’t give it to you,” Mr. Copeland continues. “It’s not yours, it’s God’s and you’re not going to get it and that’s something I’ll go to prison over. So, just get over it.”
Mr. Grassley’s aides told the newspaper that Mr. Copeland had supplied some information, but that it fell short of what the Senator wanted. They said he plans to send another request to get more information.
A subscription is required to view the Roll Call article.
— Ian Wilhelm
January 25, 2008
Direct-Mail Executive Proposes Voluntary Fund-Raising Disclosure System
Following Congressional criticism of the fund-raising practices of some veterans charities, an executive at a prominent direct-mail company that became embroiled in the controversy has proposed a new system for providing information to donors.
The U.S. Supreme Court has restricted the ability of regulators to control the way charities raise money on grounds that such activities are tied to advocacy and education and thereby merit free-speech protection under the First Amendment.
But Mark Fitzgibbons, president of corporate and legal affairs at American Target Advertising, in Manassas, Va., says his system would pass muster because it would be voluntary. He has proposed that charities be asked to post online one standardized form giving details about their fund-raising activities—instead of requiring them to register in multiple states where they raise money.
That, he writes in his proposal, would replace a cumbersome process under which “hundreds of millions of donor dollars are diverted annually” by charities to fill out paperwork to comply with state disclosure laws.
Mr. Fitzgibbons has submitted the proposal to Rep. Christopher Shays, a Connecticut Republican who sits on the House Oversight and Government Reform Committee. That committee has held two hearings on veterans charities since December, with lawmakers blasting certain groups for spending large percentages of their donations on fund-raising activities, or in some cases on high salaries and perks.
Some lawmakers said legislation may be needed to rein in such practices.
Richard Viguerie, chairman of American Target Advertising—a pioneer in the use of direct mail to promote political causes—was asked to testify at the second hearing because his company raises money for one of the charities the committee scrutinized, Help Hospitalized Veterans, in Winchester, Calif.
Under Mr. Fitzgibbon’s “opt-in” proposal, charities and other nonprofit groups that raise money would complete a form to provide the kind of information that state regulators now demand — such as address, names of board members, executive salaries, source of revenue, as well as the amount spent on fund raising and the names of outside fund raisers.
The organizations would also post their contracts with fund-raising firms and any other information they wanted to add about their programs or other activities. They would include the Web address on all solicitation materials.
The voluntary nature of Mr. Fitzgibbons’s proposal will probably dismay people concerned about charity fund-raising abuses. But he argues that more nonprofit groups would make information available than they do now because his system is so much simpler and cheaper than the state-registration system, which he says many charities evade.
Furthermore, he says, since the data will be available online, “more donors across the country will have access to the information.”
At the Congressional hearing, Mr. Viguerie criticized lawmakers for failing to open their own fund-raising activities to the same kind of scrutiny that charities do. Mr. Fitzgibbons offers a remedy for that: His proposal would also apply to committees that raise money for state and national politicians.
January 24, 2008
Nonprofit Coalition Tells Congress Charitable Tax Incentives Help Economy
Independent Sector, the coalition of major charities and foundations, today urged Congress to extend two tax incentives that help charities—one to encourage donations from individual retirement accounts and the other to promote food donations—as a way to stimulate the economy.
“I state emphatically that the experience of many in the charitable community indicates that people are indeed struggling in this economy and that stimulus is truly warranted,” said Diana Aviv, the group’s president, in a statement that was submitted to the Senate Finance Committee.
“As institutions, charitable organizations are also experiencing higher costs, particularly for fuel, that reduce the resources available to support their programs,” she added.
Ms. Aviv asked Congress to extend a measure, which expired at the end of 2007, that allowed people at age 70-1/2 to transfer up to $100,000 a year from their IRAs to charity without paying income taxes on it.
The House agreed to continue the incentive for one more year as part of a larger tax-relief bill in November, but the Senate dropped the provision. Independent Sector is now pushing to include it in legislation Congress is expected to consider early this year to extend expired tax provisions.
Ms. Aviv told the Finance Committee, which held a hearing today on the economic slowdown, that IRA contributions can act as a stimulus by “taking money from passive investment accounts and injecting it into the economy.” She cited several examples where donors had directed hospitals to use their IRA money to buy specific goods, such as bassinets, or to pay for renovations or building projects.
Ms. Aviv also urged Congress to extend a provision, which also expired at the end of last year, that allows grocery stores, farmers, ranchers, small businesses, and restaurants to get the same tax break—known as an “enhanced tax deduction”—as corporations do for donating excess food to charity.
This “would have an immediate impact on the lives of persons struggling to get by in a slowing economy, and give essential assistance to the charities that are dedicated to serving their needs,” Ms. Aviv said.
January 23, 2008
IRS to Release Some 990 Instructions Early
The Internal Revenue Service will release the new informational tax return, known as Form 990 tax, on a staggered schedule, the agency announced last week at a meeting of tax lawyers.
The final draft of the revised 990 will be unveiled in the middle of the year, but the agency will release instructions for certain parts of it and a glossary of terms within the next few months.
The composition of the redesigned form has been pretty clear since a version was released in December, but tax agency officials continue to revise it. The overhaul of the tax form is the first significant change the IRS has made in a quarter of a century.
Instructions for Schedule H, which nonprofit hospitals must fill out, will probably be released first, and the agency will also clarify what qualifies as a hospital. The schedule for tax-exempt bonds, Schedule K, is also likely to come out soon. In addition, instructions for some parts of the standard 990 that all groups fill out, such as a section listing executive compensation, will be released early.
“We’ll release parts of the instructions that can be separated, easily stripped off the from rest,” said Steven J. Pyrek, a spokesman for the agency’s exempt- organizations division. “We want to put it out there and have people react to it.”
The agency will also soon release a glossary of terms to assist groups that cannot afford specialized help when filling out their own 990s.
—Sam Kean
January 22, 2008
International Groups Press for Changes to President's AIDS Program
As Congress prepares this year to extend President Bush’s multibillion-dollar global HIV/AIDS program, international aid groups are asking lawmakers to scrap several provisions of the program that they say hinder their work.
The five-year, $15-billion program — known as the President’s Emergency Plan for AIDS Relief, or Pepfar — has been praised for significantly increasing U.S. government spending on the HIV epidemic overseas. But two requirements of the program have sparked particular criticism from some AIDS practitioners.
A stipulation that one-third of money for prevention programs be spent on teaching abstinence, even in areas where the disease is spread primarily by drug users or by people who have multiple sexual partners, has drawn fire.
Charities say there should be more flexibility on how money can be spent. “We think the evidence points to getting rid of the earmark and allowing folks on the ground to determine how to allocate funds,” said Jennie Quick, governmental affairs manager with Population Services International.
Abstinence may be an appropriate message for youth, she said, but people who are already having sex might benefit more from learning about condom use or fidelity.
Aid groups are also seeking to eliminate a pledge disavowing prostitution that they must sign to receive government grants. The pledge, charities say, has had a chilling effect on HIV/AIDS work.
“It has led to groups censoring themselves,” said Jodi Jacobson, director of advocacy with American Jewish World Service. “They aren’t doing the kinds of work they might otherwise be doing because they’re afraid they’ll be de-funded.”
Ms. Jacobson cited a case in Bangladesh where 20 “drop-in centers” that provide job training, child care, and other services to sex workers were closed when a grant maker — an intermediary agency that regranted money to these drop-in centers — withdrew support out of fear that it would lose U.S. government funds.
The anti-prostitution pledge has been challenged in court by charities on at least two occasions since it was introduced in 2003.
Last year, DKT International, in Washington, lost a bid to eliminate the provision after a federal appeals court decided that compelling charities to sign the pledge did not violate First Amendment rights. A second case, involving Open Society Institute, is still pending in a New York court.
Legislation to reauthorize Pepfar is expected to be introduced in the House of Representatives next month. In addition to pushing for specific changes in the legislation, charities are hopeful that they’ll see an overall increase in spending.
Congress is expected to commit at least $30-billion over the next five years to the program. But many nonprofit groups say that $50-billion is needed to effectively fight the disease.
They are also hopeful that areas such as prevention and family planning will receive additional support.
But perhaps most important, they say, is that legislators use data, rather than ideology, to shape the program.
“If we’re going to be spending $50-billion in trying to fight an epidemic, we ought to be doing so in ways that are evidence-based and are shown to be highly effective,” said Ms. Jacobson.
— Caroline Preston
January 17, 2008
Watchdog Group Asks IRS to Investigate Pulpit Endorsement
Americans United for Separation of Church and State, a watchdog group, has sent a letter to the Internal Revenue Service asking the agency to investigate a preacher’s apparent endorsement of a presidential candidate. Under federal law, nonprofit organizations are not allowed to engage in partisan political activity and could lose tax-exempt status for violations.
Sen. Barack Obama, a Democrat from Illinois, made an appearance at the Pentecostal Temple Church of God in Christ, in Las Vegas, on Sunday, six days before Nevada’s political caucus on the 19th. According to The Las Vegas Review-Journal reports that the church’s pastor, Leon Smith, then made a number of political comments, including, “I want to see this man in office.”
The Review-Journal also quotes Mr. Smith as saying, “The more he [Obama] speaks, the more he wins my confidence, and … if the polls were open today, I would cast my vote for this senator.” The church could not be reached for comment in the article.
The IRS has sternly reminded nonprofit groups that it will monitor political campaigning by charities in 2008.
However, one church has recently decided to fight against what it feels are unnecessary and mistaken constraints on pastors. The Calvary Assembly of God Church, in Algoma, Wis., ran an advertisement in The Wall Street Journal earlier this week. The ad, written in the form of a letter to the IRS, opened with the pronouncement, “we’re writing today to call your bluff.”
The church’s pastor, Kenneth D. Taylor, then challenges the IRS to investigate sermons he delivered around Election Day in 2006. The Cavalry church was supported in its effort by the Beckett Fund, a nonprofit group that advocates for religious free expression.
In framing his challenge, Mr. Taylor invoked the example of All Saints Episcopal Church, in California, which the IRS investigated for political activity from 2004. The agency ruled in 2007 that All Saints had violated federal law but did not punish the church. All Saints has sought an explanation and an apology.
That lack of punishment emboldened Mr. Taylor, who writes, “You’ve all but admitted that you can’t enforce these rules. But we’re unhappy to see that you’re still saying you have a right to censor sermons.” He adds later, “I challenge you — if you still think it’s the law — to investigate what I preached.”
January 10, 2008
IRS Needs to Help Small Charities Comply With Tax Laws
The Internal Revenue Service is not doing enough to help small nonprofit groups understand its rules, the national taxpayer advocate told Congress this week.
Nina E. Olson, the taxpayer advocate, said in her annual report to Congress said the IRS needs to develop a plan to step up its outreach to small charities.
By doing so, Ms. Olson said the agency would help more groups comply with an increasingly complex tax code.
“The IRS has increased enforcement actions against [tax-exempt organizations] and the resources dedicated thereto,” Ms. Olson said in the report. “However, resources devoted to EO [exempt organization] education and outreach, which were never adequate, have continued to decline.”
Ms. Olson, who operates independently of other IRS offices and reports to Congress, also called on the IRS to relax the reporting requirements for small organizations — particularly for small public and operating foundations. Such foundations that have less than $25,000 in gross receipts should be allowed to file a shorter version of the Form 990 rather than the long form, she said.
She had previously made a similar recommendation for nonprofit groups with less than $50,000 in annual revenue.
The IRS now plans to raise the threshold for filing the Form 990, beginning with the 2010 tax year.
January 08, 2008
Senator Wants Evangelical Groups To Reconsider Stance on Records
Four evangelical groups have yet to turn over financial information to Sen. Charles E. Grassley as part of the Iowa Republican’s informal investigation into the groups’ spending and compensation practices.
But Mr. Grassley said today that he is holding out hope that the four groups will reconsider their stance.
“It’s a new year and the ministries that have chosen not to cooperate have a chance to see the inquiry in a new light,” Senator Grassley said today in a written statement. “This has nothing to do with church doctrine. It’s only about tax-exempt policy. The ministries are no different from any other tax-exempt group in terms of an obligation to cooperate with a Congressional oversight inquiry exploring tax policy.”
It has been more than a month since Mr. Grassley’s original deadline for six evangelical organizations to provide financial records as part of the inquiry.
Two of the groups — Kenneth Copeland Ministries, in Newark, Tex., and Joyce Meyer Ministries, in Fenton, Mo. — have complied with the request and turned over records to Mr. Grassley’s office in December.
Officials of a third group, World Healing Center Church, met with Mr. Grassley’s staff on December 7 and had said they would decide by December 12 whether the organization would comply. But Mr. Grassley’s office said today that it remains unclear whether the Grapevine, Tex., organization is planning to turn over documents as part of the inquiry.
Another organization, Without Walls International Church, has asked for more time to respond.
The two remaining groups included in the inquiry — World Changers Church International, in College Park, Ga., and New Birth Missionary Baptist Church, in Lithonia, Ga. — have said they do not plan to cooperate.
Marc Owens, a Washington lawyer who represents World Changers Church, said in a recent interview that he believes it is the Internal Revenue Service, not Mr. Grassley, that should be making the request.
“He’s doing so apparently because he doesn’t like the way the six churches have organized themselves, their compensation practices, the way their members support the institution,” Mr. Owens said of Senator Grassley. “It’s dangerous ground. If there’s a real tax question, the IRS can investigate as it does in other situations.”
Charities Win Federal Aid to Help Homeowners Facing Housing Crises
NeighborWorks America, a Washington charity that works to strengthen neighborhoods and boost homeownership, has been awarded a $180-million federal grant to help nonprofit groups and government agencies provide counseling services to homeowners facing foreclosure.
The money, part of an appropriations bill the President signed into law last month, will be available to organizations approved by the U.S. Department of Housing and Urban Development to serve as “housing counseling intermediaries.”
Those organizations—which include Catholic Charities USA and the National Urban League—can then channel the money to local organizations and affiliates to help them expand or develop counseling programs designed to keep homeowners from losing their homes to foreclosure.
Such programs educate mortgage holders about their options when they fall behind in their payments and, in some instances, can help homeowners negotiate a new payment plans with lenders.
The appropriation also allows NeighborWorks to spend as much as $5-million on its own efforts to train additional housing counselors nationwide. The charity is required to make regular reports to report to the House and Senate Committees on Appropriations as well as to the Senate Banking Committee on the status of their efforts to reduce mortgage foreclosures.
NeighborWorks has 60 days to distribute the first $50-million of the total and is currently determining what parts of the country face the highest need for assistance.
Many social-service groups say they have been struggling to provide such assistance, according to an article in The Chronicle of Philanthropy.
— Brennen Jensen
January 07, 2008
Yale U. Plans Big Increase in Annual Endowment Payouts
Yale University has announced it will spend significantly more of its endowment each year, a decision prompted by “exceptionally strong investment returns.” The change comes amid questions from Congress about the large size and relatively small payouts of university endowments.
In the current fiscal year, the university plans to spend $843-million of its endowment, which had a market value of $22.5-billion on June 30. The following year, Yale will spend 37 percent more than that, approximately $1.15-billion.
The university also announced that from now on it will spend at least 4.5 percent of its endowment annually, with a cap on spending of 6 percent.
The increased payments will support financial aid for low- and middle-income students and scientific research, especially biomedical research. The university is also considering expanding its undergraduate body from 5,300 students to 6,000.
Sen. Charles E. Grassley, a Republican from Iowa, praised Yale’s decision, adding that he was eager to see more details. Mr. Grassley, the senior Republican on the Senate committee that oversees tax-exempt groups, has held Congressional hearings in the past year exploring whether universities are holding on to too much of their endowment money at a time when tuition costs continue to rise.
Mr. Grassley has noted that private foundations must spend 5 percent of their assets each year, and he wants a similar standard enacted for all university endowments, which he says are collectively worth more than $340-billion nationwide. Several major higher-education associations, however, have opposed the idea.
— Sam Kean
January 02, 2008
U.S. Senator Seeks to Regulate Corporate-Charity Promotions
A U.S. Senator is attempting to regulate charitable promotions by companies that promise to give part of the proceeds from a purchase to a particular charity.
But some observers say a bill he proposed to oversee these promotions has been poorly researched and steps on the toes of state regulators.
Sen. Robert Menendez, a New Jersey Democrat, last month proposed a bill that would require companies to reach agreements with charities on how their names will be used and how much money they will receive before using it in promotions, and to inform consumers how much money will go to charity.
The Federal Trade Commission would be told to enforce the agreements.
“Charity should never be used solely as a sales pitch,” Mr. Menendez said in announcing the bill. “When consumers open their wallets, they should have the comfort of knowing that their good intentions will be protected and that their donations will benefit the intended cause.”
The bill has earned praise from some charity leaders, who say that poorly constructed marketing arrangements hurt the credibility of other, more legitimate efforts.
But Jack Siegel, a Chicago lawyer and the author of the blog Charity Governance, questions whether such a law is needed.
“If Senator Menendez thought federal regulation was in order, he should have first undertaken a comprehensive survey of state requirements,” Mr. Siegel writes. “We see no evidence that he undertook such a study. From such efforts, he should have drafted a comprehensive regulatory solution, and then eliminated what is essentially duplicative state compliance burden.”
Others, however, say such regulation is needed as corporate-charity marketing deals becomes more commonplace.
Kandy Ferree, president of the National AIDS Fund, which has engaged in several marketing promotions with companies, says it’s a good idea to require companies and charities to inform customers how much money will go to charity, and to make sure charities have agreed to let their names be used in a promotion.
“It’s very important for anyone who participates in a campaign to understand what part of the money goes to charity,” Ms. Ferree says. “It’s absolutely critical that any company that wants to work with a charity inform the charity about their intent and develop a formal agreement. Our name is as important to us as any corporation’s name is to their business.”
What do you think? Should the federal government oversee marketing agreements between charities and businesses? Or can state regulators effectively govern these arrangements? Click on the comments link below this post to share your thoughts.
— Peter Panepento and Elizabeth Schwinn