February 2009
February 27, 2009
Senate Leaders Question Charitable-Deduction Plan
The leaders of the Senate’s powerful Finance Committee aren’t offering much praise for President Obama’s plan to limit how much wealthy donors can deduct from their federal taxes for charitable gifts.
Sen. Charles Grassley of Iowa, the senior Republican member of the committee, said in a statement today that the plan would probably hurt the nonprofit world.
But Mr. Grassley, who has been an advocate for tightening tax regulations for nonprofit groups, stopped short of offering a clear prediction about what Mr. Obama’s plan might mean.
“Calculating the new deduction would be so complex that the impact on giving is difficult to determine, but given the economic crisis and the important role charities play in responding to the crisis, any proposal that might reduce charitable contributions seems counterproductive,” Mr. Grassley said.
Max Baucus, chairman of the committee, expressed concern about the president’s plans to change the rules governing itemized deductions — though a spokeswoman declined to comment on the specifics of the concerns Mr. Baucus, a Montana Democrat, has raised.
The controversy over Mr. Obama’s proposa has at least one observer hopeful that it will lead to more sweeping debate over the relationship between the federal government and charities.
Dean Zerbe, a former aide to Mr. Grassley who works as a lawyer in Washington, said the proposal amounts to a “gut-punch” for charities. But, he said, “the proposed limitation on deductions for charitable giving does provide an opportunity for Congress to bring leadership to bear and reexamine what should be the priorities for tax incentives for charitable giving.”
International Groups Pleased With Proposed Budget
Groups that advocate for greater spending on international aid say they are pleased with President Obama’s budget proposal, which would increase by 9.5 percent, to $51.7-billion, the amount the U.S. government spends on foreign assistance.
“It is reassuring to see that the president understands how our investments abroad actually protect our families, jobs, and national security,” said Samuel A. Worthington, president of InterAction, an umbrella organization of international charities, in a statement. “Failing to adequately support our international development and humanitarian programs that work with the world’s poorest people to reduce global poverty and promote economic growth undermines our own national interest.”
Writing on the Center for Global Development’s blog, Sheila Herrling called the increase a “remarkable outcome given the state of the economy and the difficult economic climate.”
That said, Ms. Herrling, Mr. Worthington, and others pointed out that the proposed spending on international aid still represented just 1.4 percent of the total budget.
The budget’s supporting documents offered additional reasons for hope, according to Ms. Herrling. The budget puts the U.S. government on a path to double foreign assistance; gives the State Department and U.S. Agency for International Development more money to hire new employees; and increases non-military assistance to Afghanistan and Pakistan, among other goals.
Nonprofit Coalition Argues Antiterrorism Efforts Hurt Charities
About a dozen advocacy groups and Muslim charities told a federal court today that the government’s seizure of a charity’s assets because of allegations it assisted terrorists hurts humanitarian work and America’s efforts to fight terrorism.
The groups raised the concern in a friend-of-the-court brief filed in support of KindHearts for Charitable Humanitarian Development, a Toledo charity. In 2006, the Treasury Department froze the group’s assets because it was under investigation for supporting terrorists in the Middle East.
The charity has denied the charges and along with the American Civil Liberties Union and others, last year sued the government, saying the seizure of the financial assets was illegal.
An executive order signed by President Bush in 2001 allows the federal government to freeze the assets of charities, businesses, and individuals if they are being investigated for terrorist activities.
In the court brief, the nonprofit organizations argue that the Bush policy and Treasury’s efforts “have created a climate of fear and intimidation among nonprofit organizations, discouraging them from doing their critical humanitarian work –- particularly in conflict-torn regions that are most in need –- for fear of being arbitrarily subjected to these actions and policies themselves.”
“In effect, the government’s actions and policies are counterproductive to its efforts to counter terrorism because they discourage and undermine the vital work” of charities, they say.
The organizations that filed the brief are Grantmakers Without Borders, OMB Watch, the American-Arab Anti-Discrimination Committee, the Appleton Foundation, the Bill of Rights Defense Committee, the Defending Dissent Foundation, the Fund for Nonviolence, Grassroots International, Kinder USA, Muslim Advocates, and the Muslim Public Affairs Council.
According to The Toledo Blade, last month, a judge ruled that KindHearts’s lawyers could have access to documents and other materials seized during a raid on the charity’s offices law-enforcement agents. The newspaper said that the decision was a victory for the Muslim group.
Read The Chronicle’s article about a push by charity leaders to get President Obama to change contentious antiterrorism policies that affect the nonprofit world.
White House Doubts Charitable-Deduction Proposal Would Dampen Giving
White House officials say they doubt President Obama’s proposal to place new limits on tax breaks for charitable deductions would dampen giving.
“What drives charitable contributions is overall economic growth, is other motivations,” Peter Orszag, director of the Office of Management and Budget, told reporters, according to a transcript on the White House Web site. “It’s not done for a tax incentive, but rather out of benevolence or some other related desire.”
Furthermore, he said, the president’s plans to revive the sagging economy will “provide a strong boost” to both charities and their donors. He noted that the recent economic-stimulus package had provided money to strengthen charities.
Robert Gibbs, the White House press secretary, agreed that giving could be affected by the economic downturn, which “the president is keenly aware of and hoping to turn around quite quickly.”
Mr. Obama proposes limiting the value of the tax break for itemized deductions, including donations to charity, at 28 percent for families making more than $250,000. That means people in tax brackets of 33 percent and 35 percent would get a smaller break than they do now.
Mr. Orszag said Bill Gates now gets a bigger tax break than a family making the same donation but falling in a lower tax brackets. If Mr. Gates donates $10,000 (the transcript says $1,000, but $10,000 is presumably what Mr. Orszag meant), “he saves $3,500 in his taxes,” he added. “All we’re saying is we think Bill Gates should get a $2,800 tax break — still a lot larger than a middle-income family — rather than the $3,500 one.”
Tax breaks for wealthy donors were limited to 28 percent when President Reagan left office in 1989, and “I would posit that charitable giving under the Reagan administration was probably pretty robust and just fine,” Mr. Gibbs told reporters, according to a transcript.
Tax experts note that the situation under the Reagan administration was somewhat different, however, because the top tax bracket was then 28 percent, rather than 35 percent. That is why wealthy people could not get a tax break of more than 28 percent.
February 26, 2009
GAO Conducts Study of Ways to Improve Accuracy in Reporting Charitable Gifts
The U.S. Government Accountability Office, the investigative arm of Congress, is looking into the “misreporting” of cash contributions to charity by individual taxpayers.
In a summary of the study’s parameters, the GAO said that data from the Internal Revenue Service show that “individual taxpayers frequently overstate deductions and make other errors when reporting cash contributions to charities.”
The agency is working to “identify pros and cons of potential options to improve compliance, including, if possible, their potential impact and costs and burdens on taxpayers, IRS, and third parties.”
The GAO was asked to review the matter by Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, and Sen. Charles E. Grassley of Iowa, the senior Republican on the finance committee.
The GAO said it was asked to:
— “Provide information on the characteristics of individual taxpayer misreporting of charitable cash contributions.”
— “Provide information on actions [the] IRS takes to address individual taxpayer misreporting of charitable cash contributions.”
— “Evaluate potential benefits and challenges associated with requiring information reporting for charitable cash contributions.”
To carry out the study, the GAO said it would interview organizations representing charities and would talk with IRS officials “to identify any challenges they face in addressing noncompliance” with tax laws.
The agency also said it would review IRS documents and research, including data from the IRS’s National Research Program, which measures taxpayer compliance with the law. The GAO said it might look at a statistical sample of taxpayer examination files from the National Research Program.
The GAO said it would review the “IRS’s compliance programs that address charitable cash contribution misreporting” by reviewing documents, enforcement data, and tax forms and publications.
Michael Brostek, director of tax issues for the GAO, said the study could be finished within the next couple of months and most likely would be made public.
Report Focuses on Federal Dollars Received by Nonprofit Organizations
The U.S. Government Accountability Office has released a report that describes the ways federal funds are provided to tax-exempt organizations and attempts to quantify the amounts nonprofit organizations receive through various programs.
“Our analysis of data presently collected suggests that significant federal funds reached nonprofit organizations in 2006,” said the GAO, the investigative arm of Congress.
But the GAO cautioned: “Due to limitations and reliability concerns with tracking systems’ data, the data presently collected provide an incomplete, unreliable picture of the federal government’s funds reaching the nonprofit sector through various mechanisms.”
With that caution in mind, the GAO said the approximate federal dollars flowing to charities and other tax-exempt organizations in 2006 through reviewed federal programs were:
- $135-billion in fee-for-service payments through Medicare;
- $10-billion in other types of fee-for-service payments;
- $25-billion in grants paid directly to nonprofit organizations;
- $10-billion paid directly to nonprofit groups through contracts;
- $55-billion paid to tax-exempt groups by states from two grant programs, including Medicaid.
In addition, the GAO said, approximately $2.5-billion in loan guarantees and $450-million in loans were issued to nonprofit organizations.
The GAO said until better data is developed, “accurately determining the extent of federal funds reaching the sector is not possible, leaving policy makers without a clear understanding of the extent of funding to, and importance of, key [nonprofit] partners in delivering federal programs and services.”
Coalitions Weigh In on Obama's Tax Plan
The top executives at Independent Sector and the Council on Foundations are the latest voices in the chorus of advocates who say President Obama’s tax plan would hamper giving to nonprofit groups and foundations.
“We are opposed to proposals which will significantly depress incentives for charitable giving,” said Steve Gunderson, president and chief executive of the Council on Foundations, an organization that represents grant makers. “In these hard economic times, we need to make sure tax and regulatory policy encourage growth in philanthropy.”
Independent Sector, a coalition of major charities and foundations, said in a statement that the plan would encourage some donors to “cap their gifts.”
“This could be a problem for many struggling nonprofits vital to our communities that are already facing a very difficult fund raising environment,” the organization said.
Jewish Group Criticizes Obama Charitable-Deduction Plan
United Jewish Communities, an umbrella group for Jewish social-service charities, criticized President Obama’s plan to cut the charitable-deduction rate, saying it would deter giving at a time when charities need it most.
“During the current economic downturn, which has forced nonprofits to do more with less, any proposal which would result in a decrease in private giving will be a disaster for America’s charities, and for those who depend upon them,” it said in a statement.
Aspen Institute Plans Meeting on White House Social Innovation Office
The White House has yet to provide details on its new Office of Social Innovation, but next week the Aspen Institute, in Washington, is holding a meeting to discuss parts of the effort, which seeks to provide federal assistance to innovative nonprofit groups that are working on the country’s most pressing problems.
According to Jane Wales, a vice president at Aspen and director of its philanthropy and social innovation program, the White House asked her to hold a series of meetings during the next two years to develop advice on how the office should operate. The first meeting will be March 4 and will include a bipartisan group of philanthropists, business leaders, and government officials.
Ms. Wales, who is also president of the Global Philanthropy Forum and worked for the National Security Council during the Clinton administration, said the gatherings will focus on a “social innovation fund,” which will provide aid to nonprofit groups, and a “social enterprise fund,” which will assist companies that seek to benefit society as well as make a profit.
Participants will also discuss immediate “issues on the presidential agenda that can be addressed in part by nongovernmental actors” like improving health care and education, and developing new sources of clean energy, she said.
Read The Chronicle’s article about ideas for the Office of Social Innovation. (A subscription or temporary pass is required to view the article.)
Tax Expert: Obama Plan Would Have "Exponentially Negative Impact"
President Barack Obama’s plan to decrease the amount of money wealthy taxpayers can deduct from their tax returns for charitable donations would be “another nail in the coffin” for nonprofit groups, according to one prominent observer.
Sheldon Steinbach, a lawyer in Washington who represents colleges and universities, said the proposal comes at a time when many nonprofit groups are already facing decreased resources. As a result, the plan could have drastic consequences for many groups.
“Any disincentive to charitable giving, especially in the current economic climate, will have an impact far beyond the black letter law,” Mr. Steinbach said. “It will have an exponentially negative impact.”
According to news reports, the president is calling for a cap on itemized tax deductions for Americans who earn more than $250,000 annually.
Such a move would reduce the value of tax deductions for people in this income bracket by about 20 percent, the Washington Post reports.
“There’s no question this will have a significant impact on charitable giving to colleges and universities in this country,” Mr. Steinbach said.
For more discussion about what this plan would mean for fund raising, visit our Forums page.
— Suzanne Perry and Peter Panepento
Nonprofit Leader Tapped For State Department Job
Secretary of State Hillary Clinton plans to name Michael Posner, president of the nonprofit group Human Rights First, as assistant secretary of state for democracy, human rights, and labor, Bloomberg News reports.
Human Rights First, in New York, works with activists in countries such as Russia, Zimbabwe, and Indonesia.
Mr. Posner declined to comment. His appointment would have to be confirmed by the Senate.
The news comes shortly after Ms. Clinton was criticized by some human-rights charities for saying that China’s human-rights record would not prevent the United States from cooperating with it on economic and security issues.
February 25, 2009
Secretary of State Supports Asian Charities During Recent Trip
During her recent trip to Asia, Secretary of State Hillary Clinton emphasized the role the United States can play in supporting foreign charities — a sign she will bring her long interest in nonprofit groups to her efforts as the country’s top diplomat.
While in China, she was criticized for not doing more to raise human-rights concerns with Chinese officials, but in response she emphasized her meetings with so-called nongovernmental organizations, or NGOs, during her trip.
“At least as important in building respect for and making progress on human rights are the efforts of civil-society institutions, NGOs, women’s groups, academic institutions, and we support those efforts,” she told reporters at a press conference February 21 in Beijing. “And I have highlighted their good work in each capital I have visited, and I will do so here.”
According to The Washington Post, Ms. Clinton met with 23 women who work at promoting legal rights, fighting poverty, and providing health care in China.
During the one-hour meeting, the charity leaders said they continue to be harassed by Chinese officials, but that charitable groups are growing quickly and are benefitting China.
Read The Chronicle’s article about the challenges facing philanthropy in China. (A paid subscription of free temporary pass is required to view the Chronicle article.)
February 24, 2009
Nonprofit Employees to Watch Obama Speech from First Lady's Box
Michelle Obama has invited two nonprofit employees to join her to watch President Obama’s address to Congress tonight.
The White House announced that Roxanna Garcia Marcus, development manager for Year Up’s Washington affiliate, and Alvaro Simmons, chief operating officer at Mary’s Center for Maternal and Child Care, in Washington, are among 25 people who will sit in the first lady’s box during the president’s remarks.
Ms. Marcus joined Year Up, an educational and technical training program for urban young adults, in July 2008. She previously worked as development director for Big Brothers Big Sisters of Mid-Florida.
Mr. Simmons, who has a long career in health care and education, joined Mary’s Center in 2006. The group earlier this month played host to Ms. Obama for her first official visit to a nonprofit group in Washington.
Nonprofit Association Offers Guide to Stimulus Money
The National Council of Nonprofits, an organization in Washington representing state nonprofit associations, has issued two reports on how the economic-stimulus package that President Obama signed into law last week will affect charities.
One summarizes the major spending and tax-cut provisions in the $787-billion
American Recovery and Reinvestment Act and identifies potential grant opportunities for charities.
The second offers tips for groups that are considering applying for stimulus money. Among them: “Get Ready Now,” “Stress the Official Purpose,” “Read the Entire Act,” and “Just Because Grant Money Exists Doesn’t Mean You Should Ask for Some.”
Catholic Charities Head Gets Hate Mail for Advising Obama
The Rev. Larry Snyder, president of Catholic Charities USA, says some abortion opponents are upset that he agreed to serve on President Obama’s Advisory Council on Faith-Based and Neighborhood Partnerships.
“I have received a fair amount of what I would term hate mail that questioned why I would associate with a contemporary Hitler and that also told me that I would probably go to hell,” he said in a speech in Washington on Monday.
President Obama, who supports keeping abortion legal, set up the 25-member advisory council of religious and secular leaders earlier this month as part of a new White House Office on Faith-Based and Neighborhood Partnerships.
“There can be no doubt that Catholic Charities is a pro-life organization,” Father Snyder said, adding that the administration was “well aware of where we stand on this issue.”
“However, there are also areas where the teachings of our Church and the policies of this administration converge, especially when it comes to the poor and marginalized.”
President Obama said he wants the new White House office to help religious and community organizations fight poverty, promote economic recovery, assist women and children, reduce the need for abortion, support responsible fatherhood, and foster an international discussion between people of different religions.
The advisory council includes “an extremely diverse group of people,” Father Snyder said. “One of our purposes is to find out what common ground might exist between such diverse opinions. Our voice needs to be at the table; our values need to be championed in these discussions.”
Speaking to the annual Catholic Social Ministry Gathering, Father Snyder also said the demand for his group’s services had reached “epic proportions” because of the economic tailspin.
February 20, 2009
National-Service Agency Discusses Plans for AmeriCorps Stimulus Money
The Corporation for National and Community Service held a conference call today to explain its plans for spending the $201-million it was allocated in the economic-stimulus plan that was signed by President Obama this week.
Most of the money ($154-million) was earmarked to expand or strengthen AmeriCorps, a program that places people in part-time or full-time positions at nonprofit groups for 10 or 12 months. The legislation provides another $40-million for the National Service Trust, an account that pays for the education grants that are awarded to people who complete their AmeriCorps service; $6-million for technology upgrades at the federal agency; and $1-million for the agency’s inspector general.
Kristin McSwain, chief of program operations at the corporation, told listeners that officials were contemplating focusing the new AmeriCorps money in areas like housing (winterizing, access to housing); health care (services and access); strengthening nonprofit groups; and youth development.
She also discussed plans to find ways to demonstrate that AmeriCorps makes a difference.
To listen to a recording of the conference call, see the corporation’s new Web page devoted to news about the stimulus money.
February 19, 2009
Bill Would Raise Rate for Car Use by Volunteers
A Wisconsin Congressman has introduced a bill aimed at helping people who use their vehicles as part of their volunteer work for charities.
Under federal law, volunteers who drive their cars for charitable purposes may be reimbursed by a charity at the rate of 14 cents a mile without the payment being subject to federal income tax.
Under the bill (HR 590) submitted by Republican Rep. Thomas E. Petri, volunteers could be reimbursed at the standard business mileage rate, which is now 55 cents per mile, without being subject to tax.
The current discrepancy between the charitable and business mileage rates “is discriminatory and unfair,” said Mr. Petri. “It discourages volunteer activity.”
A press release from the Congressman said the bill — called the Charitable Driving Tax Relief Act — would also drop a federal requirement that charities report their reimbursements to the Internal Revenue Service, “removing an administrative and paperwork burden that detracts resources from their larger purpose.”
Co-sponsors of the bill are Reps. John Campbell, a California Republican; Michael Conaway, a Republican from Texas; and Todd Russell Platts, a Pennsylvania Republican.
February 14, 2009
Hospital Fund Raisers Win Victory in Stimulus Measure
Hospital fund raisers won a major victory when Congress passed a measure Friday to provide $787-billion to stimulate the economy.
The compromise version of the measure knocked out a provision passed by the House of Representatives that would have restricted fund raisers from gaining access to the names and addresses of patients. Fund raisers often use that information to identify and solicit potential donors.
The House passed the restriction out of concern about patients’ privacy. While the final measure dropped the restriction on what fund raisers could obtain, it toughened rules that require hospitals to offer patients the option of rejecting any further communications from hospitals and medical centers. It also increased the penalties for violating patient-privacy regulations.
February 12, 2009
Compromise Stimulus Plan Restores Some Social Spending
Details of the agreement between congressional leaders on a compromise economic-stimulus measure are not yet all available, but an initial summary shows that lawmakers restored some social spending that had been cut in the Senate version of the bill.
The compromise, which must still be approved by the full House and Senate, provides $2.1-billion for Head Start and Early Head Start, the amount the House wanted. The Senate had offered $1.05-billion.
It also allocates $1-billion for Community Development Block Grants, which provide money to states for projects including housing and services for people hit by hard economic times. The Senate bill had not included any money in that area.
The new bill would also provide $53.6-billion to a “state fiscal stabilization fund,” designed to provide cash to deficit-plagued states—up from $39-billion offered by the Senate. While most of that money must be spent on public schools, $8.8-billion is set aside for states to devote to other “high-priority needs.”
The legislation also includes spending that had been agreed earlier by both houses, according to the summary, including almost $87-billion to increase the federal share of Medicaid, the health program for poor people that is operated by the states; and $2-billion for Child Care and Development Block Grants, which provide money to states for child-care services.
February 11, 2009
U.S. Government Freezes Md. Foundation's Assets in Terrorism Probe
The U.S. government has frozen the assets of a foundation in Maryland, saying the grant maker gave money that benefited the Sri Lankan separatist group Liberation Tigers of Tamil Eelam.
In a statement, the Treasury Department said it was moving against the Tamil Foundation, a private grant maker in Cumberland, Md., because the group supported the Tamils Rehabilitation Organization. In 2007, the Treasury Department shut down the Tamils Rehabilitation Organization, accusing it of being a front for the Tamil Tigers, which the United States considers a terrorist organization.
“The LTTE, like other terrorist groups, has relied on so-called charities to raise funds and advance its violent aims,” said Adam J. Szubin, director of the Treasury’s Office of Foreign Assets Control, in a statement. “We will continue to aggressively target attempts by any terrorist group to hide behind charities, front companies, or name changes to propagate terror against innocents around the world.”
The Tamil Foundation is run by N. Ranjithan, a doctor in Maryland who was a former head of the Maryland office of the Tamils Rehabilitation Organization.
Dr. Ranjithan said his personal foundation had given a grant to the Tamils Rehabilitation Organization, but he disputed that the money — or other grants made by his foundation — supported terrorism.
“We worked with them in terms of relief work, and that is all we did,” he said.
He said his foundation had also supported a number of other charities in north east Sri Lanka, all of them with the goal of providing humanitarian aid.
Dr. Ranjithan said he would seek legal assistance and contest the Treasury’s move. He declined to specify the assets of the Tamil Foundation.
Charitable Call Centers Seek Support from Congress
Supporters of 2-1-1 call centers that provide residents with information and referrals to health and human services, as well as volunteer opportunities, will visit Capitol Hill on Wednesday as part of United Way Capitol Hill Day. Their message: To urge passage of a bill that would provide $700-million over the next five years to help build and operate the 2-1-1 telephone service nationwide.
The Calling for 2-1-1 Act was introduced by Sen. Hillary Rodham Clinton in January of 2007 and, if passed, would have awarded grants to each state to provide the 2-1-1 telephone service to help residents access community, health, and disaster information. Ms. Clinton reintroduced the bill in January and supporters are optimistic that this time it will garner the support it needs to pass.
“Our president wants change, he wants us to be more efficient, and 2-1-1 brings an efficient means of delivering programs and services to constituents,” says John Ohanian, chief executive officer of 2-1-1 San Diego. “The only way for 2-1-1 to do what it’s supposed to do for all citizens is to have a national, sophisticated operation, just like 9-1-1.
“Now with this economic situation, newly poor people who have been paying taxes all along are in a situation where they need assistance but they’ve never used social services before,” says Mr. Ohanian. “That’s why you need a 2-1-1.”
February 10, 2009
Stimulus Bill Could Restrict Fund Raising By Nonprofit Hospitals
The Association for Healthcare Philanthropy, which represents nearly 50,000 fund raisers at nonprofit hospitals and medical centers, has been closely following a little-known provision of the roughly $800-billion economic stimulus legislation.
The association is concerned about the House version of the legislation, now in conference committee after passage in the Senate today. The House version of the bill contains provisions that would curtail fund raisers’ ability to gain access to patient information.
Currently, for purposes of identifying potential donors, fund raisers can obtain limited patient information such as name and address under laws that protect patients’ privacy by determining who has rights to their medical records and for what purpose. By removing fund raising from the definition of health-care operations in the law, the House bill in effect would bar fund raisers from being able to identify patients who may be interested in supporting their institutions.
The association hopes that the Senate version of the bill, which includes no such change, will prevail. It has issued an updated position paper on the legislation.
February 09, 2009
AmeriCorps Expansion Should Consider Quality, Not Number of Participants
If Congress moves to expand AmeriCorps, the national-service program, it should focus more on improving its quality than on increasing the number of people who participate, a consultant who helped draft the legislation that created the program told a forum on national service today.
“This has been the problem with AmeriCorps for many, many years,” said Shirley Sagawa, who served in President Clinton’s White House when he created AmeriCorps and the Corporation for National Service (now the Corporation for Community and National Service). Starting with Mr. Clinton, she added, presidents have “set the measure of AmeriCorps being the number of bodies in it.”
She said that’s why about half of the AmeriCorps members work part time instead of full time.
Ms. Sagawa, who served as the corporation’s first operating and policy officer, also headed a group that advised President Obama’s transition project on the future of the Corporation for National and Community Service. She spoke during a panel discussion organized by the Hudson Institute.
Both President Obama and the Serve America Act, a bill that has been introduced in the Senate, propose greatly expanding national-service programs like AmeriCorps, which places people in full-time and part-time nonprofit jobs for 10 or 12 months.
“If there’s a huge ramp up very quickly without being careful about engaging the nonprofit sector and really being thoughtful about where we can use AmeriCorps to best effects, we do risk sending people all over the place and not having outcomes,” she said. The program should also foster a kind of “core curriculum,” she said, “so the people who come for the experience actually leave with a heightened sense of civic responsibility and commitment.”
Leslie Lenkowsky, who headed the corporation in the Bush administration, said that while the time is ripe to get more Americans involved in community service, AmeriCorps is not necessarily the best way to do it. While some AmeriCorps programs, like Teach for America, can demonstrate real results, others are less effective because they operate through thousands of different nonprofit groups that each set their own requirements and do little evaluation.
See Mr. Lenkowsky’s opinion piece for The Chronicle on national service.
February 06, 2009
Senators Focus on Hospital Charity Care in Amendments to Stimulus Bill
Two members of the Senate Finance Committee are seeking to amend the economic-stimulus package moving through Congress with a pair of provisions that focus on how much hospitals do to provide services to patients at little or no cost.
One amendment would require that the federal Centers for Medicare and Medicaid Services, which oversees the nation’s largest health-insurance programs, work with the Internal Revenue Service and the Medicare Payment Advisory Commission, an independent agency that advises Congress, to develop a single, uniform definition of uncompensated care and and charity care.
“This coordination would ensure consistency in reporting of uncompensated care and charity care,” said a press release from Charles E. Grassley, an Iowa Republican who is the top-ranking Republican on the finance committee, and Jeff Bingaman, a New Mexico Democrat. “It would also eliminate a burden on hospitals that otherwise might be facing different definitions of uncompensated care and charity care when dealing with the IRS or CMS,” the press release said.
A recent report from the Government Accountability Office said that the IRS’s current “community benefit” standard—which the tax agency uses to help determine a hospital’s eligibility for tax-exempt status—“allows hospitals broad latitude to determine the services and activities that constitute community benefit.”
The IRS created the standard in a ruling 40 years ago. Nonprofit hospitals must show that they provide benefits to the people and neighborhoods in the region they serve.
The ruling said one way hospitals can show they are providing a community benefit is by having a full-time emergency room open to all people regardless of their ability to pay. Another way is to provide inpatient hospital care for all people in the community able to pay, including those covered by Medicare and Medicaid.
“I’ve been looking into nonprofit hospitals and the charity care and community benefit they provide in return for the billions of dollars in benefits they receive under the tax code,” said Mr. Grassley.
“We need to make sure the [federal] agencies are talking to each other so there’s consistency and accuracy in the way uncompensated care and charity care are defined,” Mr. Grassley said. “We need to make sure taxpayers are getting their money’s worth and that patients are getting affordable care.”
Said Mr. Bingaman: “As this economic crisis worsens and more Americans have a difficult time paying their bills and lose their health insurance, it makes sense for us to ensure nonprofit hospitals are providing free or reduced-cost care at a level that is in line with the substantial benefit they receive from not paying taxes.”
The senators’ second amendment would require the Internal Revenue Service to study the activities of for-profit hospitals and focus on the amount of uncompensated care they provide.
The press release from the senators noted that the IRS soon will release a study of nonprofit hospitals that looks at how much they do to provide charitable services to people in the neighborhoods where they are located.
“For-profit and nonprofit hospitals are subject to the same standards for purposes of federal health programs,” the statement said. “Since they are treated differently under the tax code, it makes sense that the IRS should study the activities of for-profit hospitals, especially the amount of uncompensated care they provide. This kind of study would provide valuable information on how hospitals’ activities differ as a result of their tax status.”
Obama Signals Changes In Bush's Policy on Religious Aid
While President Obama’s Office of Faith-Based and Neighborhood Partnerships is less than a week old, there are some signs of how it will operate differently than how the Bush administration approached such efforts.
The changes include:
- An effort to include nonreligious charities. Mr. Obama set up a new council to advise him on social policy and helping the poor. It includes religious groups, such as Catholic Charities USA and World Vision, but also secular organizations like Big Brothers/Big Sisters of America. A list of the council’s members is available on the White House’s Web site.
- A greater emphasis on evaluation. In the executive order Mr. Obama signed to create the office, it says the office will “promote the better use of program evaluation and research, in order to ensure that organizations deliver services as specified in grant agreements.” One of the members of the new council is Public/Private Ventures, a research group in Philadelphia that has helped foundations and charities improve their antipoverty programs.
- A move to let the U.S. Department of Justice decide contentious questions about the relationship between the government and religious charities. Mr. Obama’s executive order says that the head of the faith-based office “may seek the opinion of the attorney general on any constitutional and statutory questions involving existing or prospective programs and practices.”
Robert W. Tuttle, a professor of law and religion at George Washington Law School, told The Chronicle that the White House “punted” on some policy concerns
For example, the Bush administration allowed religious organizations that receive federal grants to discriminate in their hiring based on religion. President Obama, during his election campaign, pledged to repeal the rule.
But instead of doing so in his new executive order, Mr. Tuttle said the president seems to have made a “general policy judgment not to raise a storm with any changes right now, and let things emerge more gradually — and as technical, legal opinions — over the coming months.”
“I would expect to see changes, both in terms of hiring and substantive restrictions on direct aid to houses of worship, but the changes will be subtle,” he said.
In addition to these changes, The Washington Post reports that the Obama effort will focus on interfaith relations, helping low-income fathers, and reducing the number of abortions.
Read The Chronicle’s article about the new office and its leader.
February 05, 2009
IRS Says Research Charity Will Keep Its Tax Exemption
The Internal Revenue Service has ruled that a charity that conducts scientific research is doing nothing improper by performing studies for a for-profit company and will keep its tax exemption.
The charity, which was formed to research new methods in medical imaging, agreed to collect data for the company using a method covered by patents the company has licensed. The charity evaluates whether the imaging method is able to identify a variety of medical conditions.
Under the agreement, inventions (patentable or not) or materials that could be copyrighted resulting from the research by the charity can be made available to the company through a royalty-free license.
The charity designed the studies, but company representatives are allowed to observe them.
In its ruling, the IRS said the charity’s activities qualify as “scientific research in the public interest” under federal law and regulations.
The charity is not testing a commercial product to qualify it for sale, an act that would be improper, the IRS said.
“Any results generated by [the] charity’s research could provide the basis for commercial products but would not constitute marketable products on their own,” the ruling said. “[The] charity does not conduct any market research or evaluate the commercial practicality of the method.”
The IRS noted that federal regulations say scientific research may be carried on in the public interest even though a commercial sponsor retains the rights to intellectual property produced by the research.
Federal regulations also say that scientific research is carried on if the results are made available to the public through trade publications. The charity in the ruling “published two papers in publicly available journals discussing the results of the research for [the corporate] sponsor,” the IRS said. “There is no indication that publication was unreasonably delayed after completion of the research.”
As is its policy, the IRS did not identify the charity involved in the ruling (Technical Advice Memorandum 200905033).
February 03, 2009
Nonprofit Groups Seek to Influence Senate Spending Plan
Now that debate on the economic-stimulus bill has moved to the Senate, some charity leaders are worried that proposals to steer new money to social-service programs will become casualties as lawmakers fight to cut or redirect the spending approved last week by the House.
“We’re getting signals from some of the [Senate] offices that in fact that can happen,” said Candy Hill, senior vice president for government affairs at Catholic Charities USA. She said Catholic Charities is organizing a “massive call-in” on Wednesday, asking its members to tell their senators “we really need this on the ground.”
The House’s $819-billion stimulus package included new money for Medicaid, food and nutrition programs, unemployment benefits, community health centers, early education, block grants to states for child care and social services, and AmeriCorps, the national service program. President Barack Obama backed the bill, but not one Republican voted for it.
Many Senate Republicans are now demanding less spending and more tax cuts, and some Democrats would like to provide more money to transit and highway projects.
“Our concern is there might be a perception that helping people barely getting by may be perceived by some as not necessary funding,” Ms. Hill said.
The Senate bill already includes less money for some social services than the House version. For example, the House proposes $20-billion for the Supplemental Nutrition Assistance program (formerly food stamps), the Senate $16.5-billion; $1-billion for the Low Income Heating Assistance Program, the Senate nothing; $1-billion for the Community Service Block Grant Program, the Senate $200-million; $200-million for the Emergency Food and Shelter Program, the Senate $100-million; $100-million for the Compassion Capital Fund, which provides money to religious and other groups to provide social services, the Senate nothing.
However, the Senate offers more for the Temporary Assistance for Needy Families program ($3.3-billion compared with the House’s $2.5-billion), and $400-million for Social Services Block Grants, to help states and nonprofit groups provide services to unemployed and low-income people (the House provide nothing).
Ms. Hill says Catholic Charities members plan to urge senators to preserve the higher spending levels, and in some cases to increase them. For example, she says, both houses propose providing $150-million for the Emergency Food Assistance Program, which provides commodities to states to distribute to food banks, but her organization recommends $300-million.
Other nonprofit groups are also hoping to shape the final stimulus package. Independent Sector, a coalition of charities and foundations, said in a statement the House “took a strong first step toward alleviating some of the growing hardship faced by millions of Americans.” But it is still fighting for several additional measures, including a $15-billion bridge-loan fund to help charities that are finding it hard to get credit cover lags in payments from recession-hit state governments.
The Council on Foundations said in its weekly legislative update that it is working with senators to include measures to create a “flat” excise tax for private foundations (instead of one that varies between 1 percent and 2 percent) and allow people who qualify to transfer money from their individual retirement accounts to charity tax-free to give it to donor-advised funds. Under current law, charities can receive such gifts — but they cannot be earmarked for donor-advised funds, which allow people to put money into account and distribute it over time.
February 02, 2009
Rep. John Lewis Is New Co-Chair of Philanthropy Caucus
Rep. John Lewis, Democrat of Georgia, has agreed to serve as the new co-chair of the Congressional Philanthropy Caucus, his office confirms. Mr. Lewis succeeds Rep. Stephanie Tubbs Jones, Democrat of Ohio, who died last August of a brain hemorrhage.
The Council on Foundations, which helped to set up the caucus in 2007, says it is now working with Mr. Lewis to find a Republican co-chair to replace Robin Hayes of North Carolina, who lost a reelection bid last November.
The council proposed the body, which now has 36 members, as a way to raise awareness in Congress of issues and legislation affecting foundations.
Two U.S. senators—Charles Schumer, Democrat of New York, and Richard Burr, Republican of North Carolina—also set up a Senate Philanthropy Caucus last summer and invited colleagues by letter to join the group to “support the long tradition of good works by the philanthropic and nonprofit sectors.” That body now has five members. An aide to Senator Schumer said the co-chairs plan to send another letter seeking more members once the Senate passes the economic-stimulus package.
In addition to heading the philanthropy caucus, Mr. Lewis is chairman of the Oversight Subcommittee of the House Ways and Means Committee—the panel that oversees the tax laws that govern foundations and charities.
Before joining Congress in 1986, he was a noted civil-rights leader and voter-registration activist. Mr. Lewis headed Action, the federal volunteer agency, during the Carter administration.