July 2009
July 31, 2009
Senate Appropriations Committee Votes to Restore Obama's National-Service Budget
Under a bill passed Thursday by the Senate Appropriations Committee, the Corporation for National and Community Service would receive about $1.15-billion, approximately the amount that President Obama requested for the agency in his proposed budget for 2010.
The House of Representatives earlier voted to cut $90-million from Mr. Obama’s budget request for the agency, which operates AmeriCorps and other service programs.
In a statement, the Senate Appropriations Committee said its budget recommendation “puts AmeriCorps on the path” to having 250,000 participants in 2017, a goal approved by Congress earlier this year in the Serve America Act. AmeriCorps has about 75,000 participants this year.
The appropriations committee allocated $50-million for a new Social Innovation Fund that would provide money for “social entrepreneurs” and nonprofit groups that are developing creative solutions to national and local problems.
Mr. Obama had requested $50-million for the fund; the House voted to spend $35-million.
The Senate Appropriations Committee also recommended spending $8-million for a new Volunteer Generation Fund and $2-million for a new Nonprofit Capacity Building Program. The House did not include money for the programs.
July 29, 2009
IRS Ends Audit of Minnesota Church in Case About Sermons
The Internal Revenue Service has told a Minnesota church under examination for the content of the pastor’s sermons that the government is no longer pursuing the audit because of a “procedural issue” involving the tax agency’s initial inquiry into the church.
But in a letter to the Warroad Community Church, in Warroad, Minn., the IRS said that it “may commence a future inquiry” into the church after the agency resolves the procedural matter, which the government did not explain in detail.
Gus Booth, pastor of the church, was one of many ministers who last year preached sermons intended to deliberately challenge the 1954 federal law prohibiting charitable organizations and churches from engaging in partisan political activity.
The Alliance Defense Fund, a Scottsdale, Ariz., nonprofit group that argues cases on behalf of Christian causes, promised free legal support under its “Pulpit Initiative” to churches, including Warroad Community Church, that agreed to challenge the federal ban on political speech during sermons about the moral qualifications of candidates seeking political office that were given on Sunday, September 28, of last year.
The fund has said that its initiative is not about “whether pastors should or should not ‘endorse’ candidates” but about restoring “the right of pastors to speak freely from the pulpit without fear of punishment by the government for doing what churches do: speak on any number of cultural and societal issues from a Biblical perspective.”
According to a statement from the Alliance Defense Fund, Mr. Booth sent the IRS a copy of a sermon he preached in May 2008 about primary elections and a copy of his September 28 sermon about the general election. The fund said that the IRS began an inquiry in August 2008.
In a short, July 7, 2009, letter to the church, the IRS said that it was closing the examination because of “a pending issue regarding the procedure used to initiate the inquiry.”
IRS officials could not immediately be reached for comment.
Lawyers for the Alliance Defense Fund said they were disappointed the IRS has dropped the examination. “ADF would likely have waived any complaint about procedural concerns involved in the investigation stage of the audit in order to reach the merits of the case and clarify the law,” said Erik Stanley, the fund’s senior legal counsel, in a statement.
The IRS suffered a setback earlier this year when a federal court ruled that a different church did not have to comply with an IRS summons for information because the summons was authorized by a government official of insufficient rank.
Some tax-law experts have said that the IRS’s defeat in the case could force the agency to write new rules to determine who has the authority to order an investigation into a church.
July 27, 2009
Congress Urged to Support National Service and 'Social Innovation'
A New York Times editorial is urging lawmakers to allocate more money to the Corporation for National and Community Service, the federal organization that oversees national-service programs.
In particular, the editorial argues that members of Congress should not “shortchange” the Social Innovation Fund, a program designed to help innovative charities. President Obama requested $50-million for the fund, but the House of Representatives allocated $35-million for it.
“That seems particularly unwise, given the need for fresh approaches and the willingness of foundations and philanthropists to match the federal investment,” says the editorial.
In all, the House budget for the corporation is $90-million less than what Mr. Obama had sought. The focus now turns to the Senate, which is set to deliberate over the federal budget.
July 24, 2009
IRS Releases Training Materials on Governance Matters
The Internal Revenue Service has publicly released educational materials on governance matters that it has been using recently to train its agents and employees.
The materials are of interest to charities because of controversy over the IRS’s role on the topic of governance. The federal tax code does not explicitly set out governance standards for the IRS to enforce, but the tax agency has shown increasing interest in keeping an eye on charity governance practices.
For example, the IRS’s newly revised Form 990 informational tax return, the primary document that charities file each year, includes a series of questions about nonprofit organizations’ governance policies and practices.
In a speech last year, Steven T. Miller, who was then the IRS’s top charity regulator, said, “the effects of good or bad nonprofit governance cut across virtually everything we see and do in our work. It impacts whether the organization is operated to further exempt purposes and public, rather than private, interests. It dictates whether the organization’s executives are compensated fairly or excessively. It influences whether the organization makes informed and fair decisions regarding its investments or its fund-raising practices, or allows others to take unfair advantage.”
However, a committee of nonprofit experts that advises the IRS urged the tax agency last year to be cautious in its stepped-up efforts to promote good governance by charities, saying such efforts are “fraught with complexity.”
On an opening page of the tax agency’s training materials, the IRS says, “It is not our job to determine the organization’s governance structure, policies, or practices, or to make decisions for them.”
In a speech last month, Sarah Hall Ingram, the current top charity regulator at the IRS, said that once the tax agency had posted the training materials on its Web site, “I invite all who are interested or concerned about what we are up to to review them.”
She added: “We are not finished with the topic. We intend to provide our employees with additional training on governance. So please let us know whether and how you think we should improve or supplement the materials and our training program. We welcome your input and ideas.”
July 23, 2009
New Study Challenges Thinking Behind Charitable-Giving Tax Incentives
Studies have projected that President Obama’s proposal to limit the tax break wealthy people get for charitable deductions would dampen giving by various amounts. But would all charities feel the pain, or just those in certain fields?
Two professors at the University of California at Davis have just published a paper that explores that question. Using data from the IRS Statistics of Income, they developed an economic model to examine how state and federal income-tax rates affected giving to different types of charities from 1985 to 2005.
The result: Tax incentives had little or no effect on donations to charities in the fields of health, human services, or public and social benefit. But they did influence giving to organizations devoted to animals, arts and culture, education, and the environment, as well as to private foundations.
The authors — Michelle H. Yetman and Robert J. Yetman, both associate professors of management — say theirs is the first attempt to measure the impact of tax incentives on charitable contributions by using data provided by charities, rather than by taxpayers. While cautioning that the approach merits further research, they say the results raise an “intriguing” policy question.
If charitable deductions don’t influence how much people donate to soup kitchens or women’s shelters, should they be revoked for such groups since they cost the government money without expanding giving? “Likewise,” they write, “our results suggest that if the supply of charities such as private foundations and lyric operas is highly valued, one might plausibly suggest that the charitable deduction to these types of charities be expanded and enriched.”
President Obama proposed limiting tax breaks for itemized deductions, including donations to charity, to help pay for overhauling the health-care system.
IRS Releases Final Regulations for Returns of Small Groups
The Internal Revenue Service has issued final regulations that explain how organizations must file tax returns if their annual gross receipts are usually $25,000 or less.
Last year, the IRS released its Form 990-N, also known as an electronic notice or “e-Postcard,” a new tax document required of groups with annual gross receipts of $25,000 or less.
In the past, only groups that earned more than $25,000 yearly had to file returns with the IRS, but the Pension Protection Act of 2006 requires all groups to file.
July 22, 2009
Fired Inspector General Sues National-Service Agency
The former inspector general for the Corporation for National and Community Service who was fired last month is suing the organization in U.S. District Court for the District of Columbia.
In the lawsuit, Gerald Walpin seeks to be reinstated and says that his firing was illegal, reports ABC News. In a statement, Mr. Walpin says he is suing the corporation, which oversees AmeriCorps and other national-service efforts, to protect the system of federal inspectors general.
A White House spokesman told ABC that the Obama administration stands by its decision and that it followed the official rules required to dismiss an inspector general.
In an opinion article in the latest edition of The Chronicle, Pablo Eisenberg writes that the firing of Mr. Walpin and other moves raise questions about the governance of the national-service agency.
(A paid subscription or temporary pass is required to view Mr. Eisenberg’s article.)
Administration Provides 'Fact Sheet' on Social Innovation Fund
The Corporation for National and Community Service has posted a fact sheet about the new Social Innovation Fund, which will provide grants to help nonprofit groups expand successful social projects.
The fund was created by the Edward M. Kennedy Serve America Act last spring, although Congress has not yet approved its budget. President Obama and the Serve America Act proposed $50-million for fiscal year 2010, but the House Appropriations Committee last week trimmed that to $35-million. The Senate has not weighed in yet.
July 20, 2009
House Committee Votes to Cut Obama's National-Service Budget
A key House committee has voted to cut $90-million from President Obama’s proposed 2010 budget for the Corporation for National and Community Service — including trimming the Social Innovation Fund from $50-million to $35-million.
The House Appropriations Committee, which met on Friday, proposed reducing the president’s budget for the agency, which operates AmeriCorps and other volunteer programs, from $1.15-billion to $1.06 billion. It noted in a press release that plan would still represent a $169-million increase over the agency’s 2009 budget.
The full committee approved the cut that was proposed earlier by an Appropriations subcommittee.
The proposal — part of a bill covering 2010 spending on labor, health, human services, and education — now goes to the full House. A Senate Appropriations subcommittee is scheduled to meet on July 28 to consider a companion bill.
July 16, 2009
Obama Nominates Nonprofit Lawyer to Head Employment Commission
President Barack Obama said today he intends to nominate Jacqueline A. Berrien, a longtime nonprofit and foundation worker, as chair of the Equal Employment Opportunity Commission.
Ms. Berrien has served as associate director-counsel at the NAACP Legal Defense and Educational Fund since September 2004. She served from 2001 to 2004 as a program officer at the Ford Foundation’s Peace and Social Justice Program, administering grants to promote civic engagement and greater political participation by underrepresented groups.
Earlier positions included assistant counsel at the Legal Defense and Educational Fund and staff lawyer at the Lawyers’ Committee for Civil Rights and the American Civil Liberties Union.
House Health-Care Surtax Plan Would Affect Charitable Deductions
When House Democrats issued a plan for overhauling the health-care system this week, they proposed a new surtax on wealthy people as a way to pay for expanded insurance coverage.
While that tax takes a different form than President Obama’s proposal to limit the value of itemized deductions, including those for charitable donations, its impact would be somewhat similar, according to an analysis by CQ Politics.
The reason: The surtax would apply to adjusted gross income, not taxable income — which means itemized deductions could not be used to bring down the tax bill. (In theory, that could dampen the incentive for donating to charity.)
The Democrats have proposed that the surtax start at 1 percent on income above $280,000 for individuals and $350,000 for married couples; rise to 1.5 percent for income above $400,000 (couples $500,000); and to 5.4 percent for income above $800,000 (couples $1-million).
President Obama has not yet commented on the surtax proposal. He has never wavered publicly from his own proposal to limit the tax breaks for itemized deductions to 28 cents for every dollar spent for couples earning more than $250,000 (individuals $200,000) — down from the current high of 35 cents.
That proposal has been controversial because of its potential to depress charitable giving, although many charities support it because they believe they will benefit from lower health-care costs.
Senate Democrats are cool to the surtax idea, CQ reports.
July 15, 2009
New Blog Highlights Obama's "United We Serve" Campaign
The administration has started a blog about President Obama’s “United We Serve” campaign to get Americans to do volunteer work during the summer.
The Stories of Service Blog debuted this week with several items about volunteer projects at nonprofit groups.
The lead post highlights efforts by Major League Baseball to support the campaign through a benefit concert, a video, a community-service project with AmeriCorps members, and a public announcement during this week’s All-Star Game.
The blog is featured on Serve.gov, a Web site operated by the Corporation for National and Community Service.
July 13, 2009
British Politicians Propose Online Contest for Foreign Aid
In a sign of the growing popularity of contest-like grant making, the Tory political party in Britain is proposing that everyday citizens be allowed to vote on how part of the government’s foreign aid budget is spent.
Under the proposal, Britain’s Department for International Development would set aside about $65-million that the public would control by voting online between 10 aid projects in Africa and elsewhere, reports The Independent, a newspaper in London.
Several international aid charities are objecting to the idea, saying that people would probably vote for projects involving well-know nonprofit organizations. What’s more, they said projects that benefit needy children, for example, would likely be chosen over complex ones, like projects that seek to build democracy and good governance.
One political observer called the idea “popular gimmickry.” A Tory official said it is “morally right to give people greater control” over how their tax dollars are spent.
Several foundations and corporations have explored integrating online voting into their programs to mixed results. Read The Chronicle’s article about such efforts. (A paid subscription or free temporary pass is required to view the Chronicle article.)
What do you think of the Tory proposal? Should America adopt a similar strategy?
Job Vacancies Persist at Government Aid Agency
Six months into his administration, President Obama has yet to name people to senior positions at the U.S. Agency for International Development.
In The Washington Post, Al Kamen, a columnist, wonders why the vacancies persist despite Mr. Obama’s pledge to make foreign aid a priority.
“There was much talk by the Obama team during the campaign about how international development was so important to national security and how it needed to be a priority,” he writes. “But six months into the Obama administration, the Agency for International Development, though deeply troubled and adrift, now finds itself without a single top job filled by an Obama appointee.”
He writes that even if the White House were to name someone immediately, he or she would not take office until the fall.
The names of several prominent charity leaders, like Paul Farmer of Partners in Health, have been floated for the agency’s top spot.
While the Agency for International Development awaits new leadership, the U.S. State Department, which oversees the aid agency, has picked a nonprofit executive for a high-level job. In May María Otero, chief executive of Accion International, a microfinance group, was appointed to be an under secretary of global affairs.
What do you think? Do the vacancies have an effect on international aid groups that work with the government?
July 10, 2009
House Panel Proposes Cutting President's Budget for National Service and Social Innovation
A House subcommittee today proposed cutting President Obama’s 2010 budget for the Corporation for National and Community Service by $90-million — including trimming the new Social Innovation Fund from $50-million to $35-million.
The House Appropriations Labor, Health and Human Services, and Education Subcommittee proposed increasing the agency’s budget from almost $890-million in fiscal year 2009 to $1.06-billion in fiscal year 2010.
But President Obama had proposed $1.15-billion, partly to expand the AmeriCorps program and create the Social Innovation Fund, which will award grants to help nonprofit groups expand innovative social projects, or start promising new ones. Both were authorized by the Edward M. Kennedy Serve America Act that was signed into law last April.
“The subcommittee will consider further expansion of service and volunteer programs once the Corporation for National and Community Service has demonstrated that is has made improvement in its internal operations,” Rep. David R. Obey, the Wisconsin Democrat who chairs the Appropriations Committee, said in a statement.
President Obama’s budget did not cover everything included in the Serve America Act, which created an array of new volunteer programs, due to budget constraints. (See The Chronicle’s interview with Nicola Goren, acting chief executive of the corporation, on that topic.)
But the president did include the $50-million the bill authorized for the Social Innovation Fund — and he touted the new fund at an event at the White House last week.
The spending bill now goes to the full House Appropriations Committee. The Senate will adopt its own version.
Voices for National Service, a coalition of national service programs and state service commissions, asked supporters to urge Congress to fully finance the president’s request, saying service programs can help people hit by the economic crisis.
It said in an e-mail message that the Corporation for National and Community Service had focused on improving its management practices over the past six years and that the Serve America Act would introduce new internal controls and policies to strengthen its accountability.
White House Gives Some Details on Social Innovation Fund
The White House has offered some details about the timing for awarding grants from the $50-million Social Innovation Fund that was discussed by President Obama at a White House event last week.
If Congress approves the money, the Corporation for National and Community Service — the federal agency that is managing the fund — will issue a “notice of funding opportunity” next fall, according to a fact sheet the administration plans to post online.
Applications will be due during the winter, with funds awarded next spring, it says.
A senior White House official also clarified the purpose of the travels President Obama said his aides would make to identify promising nonprofit groups. “This tour will not be connected to the Social Innovation Fund’s decision or funding process,” she said.
“Instead, it is designed to inform and shape the social-innovation policy agenda,” she said.
The Social Innovation Fund, created by the Edward M. Kennedy Serve America Act, which was signed in April, will provide money to help nonprofit groups expand innovative social projects or start promising new ones, with a strong emphasis on results. Matching funds must be provided by private sources or state or local governments.
The White House fact sheet notes that spending is contingent on Congressional approval of the budget for the Corporation for National and Community Service for fiscal year 2010 (which begins October 1).
The president said last week that the Social Innovation Fund would provide money to “the most promising nonprofits in America” and that Melody Barnes, his domestic-policy adviser, and members of the White House Office of Social Innovation and Civic Participation would be traveling around the country to “discover and evaluate the very best programs in our communities.”
While that suggested he was seeking candidates for Social Innovation Fund grants, the White House official gave a different goal. The president, she said, wants his aides to “go out into communities across the country to identify and highlight innovative community solutions and to talk with community leaders and social entrepreneurs about the best ways for the government to promote greater innovation and impact in the nonprofit sector.”
President Obama has said he wants to create “a new kind of partnership between government and nonprofits” — with help from foundations, corporations, and philanthropists — to address the nation’s pressing problems.
Under the Serve America Act’s description of the Social Innovation Fund, the Corporation for National and Community Service will award five-year grants of $1-million to $10-million to established grant makers, or partnerships between a grant maker and a state or local agency.
They will in turn provide grants of at least $100,000 a year for three to five years to nonprofit groups, following consultations with “a diverse cross section of community representatives.” Those groups must provide data on the “measurable outcomes” their work has had.
The corporation may award up to 10 percent of the money directly to nonprofit groups.
Grant recipients must:
- Propose to use the money in one of the following areas: elementary or secondary education for low-income students, child and youth development, poverty reduction, health, resource conservation, energy efficiency, civic engagement, or crime reduction.
- Have a decision-making strategy that involves “rigorous evaluation of program effectiveness and offer a plan to expand projects that have been proven by research to have sizable, sustained benefits to participants or society; support new projects with a substantial likelihood of significant impact; or partner with a research organization to evaluate the effectiveness of such projects.
- Match every federal dollar with a dollar from private, state, or local sources.
For more details, see the Serve America Act.
July 09, 2009
Nonprofit Groups Urge Taxing the Wealthy to Help Finance Health Plan
More than 600 nonprofit, advocacy, religious, and labor groups have united to urge Congress to raise taxes on wealthy people to help pay for reshaping the health-care system and other national priorities — including possibly limiting the tax breaks for charitable deductions as proposed by President Obama.
“Today taxes are at a historic low relative to the size of the economy,” says a statement the groups sent this week to lawmakers. Tax cuts in the early part of the decade “disproportionately benefited the most affluent and powerful members of our society,” widened income inequality, added to national debt, and left the country ill-prepared to face its challenges, it says.
The groups call for measures like taxing wealthy households, assessing a “significant” tax on large estates, and closing corporate tax loopholes. They say they support the kind of measures outlined in documents prepared by Citizens for Tax Justice, an advocacy group for low- and middle-income taxpayers. (Those documents include one on revenue proposals and health-care financing.)
Among the items the tax group backs: President Obama’s plan to limit the tax savings for itemized deductions to 28 cents for each dollar spent by couples making $250,000 (individuals, $200,000) to help pay for health-care changes. The wealthiest taxpayers now get up to 35 cents, while people in lower income brackets get less.
The president’s proposal, the tax group says, “would mainly impact those who have benefited the most from the tax policies of former President Bush — the richest one percent of taxpayers.”
While the itemized-deduction proposal has met with a cool reception in Congress, partly because of fears it would dampen charitable giving, lawmakers are still struggling to find the money for a health-care plan and the president’s idea remains in the mix of possible revenue producers.
Citizens for Tax Justice also proposes raising money for health care by extending the Medicare payroll tax, which now applies to salaries and wages, to investment income above certain levels and applying a higher rate to the wealthiest taxpayers. It issued reports this week showing how the Medicare-tax and itemized-deduction proposals would affect taxpayers in each state.
Deborah Weinstein, executive director of the Coalition on Human Needs, a network of antipoverty groups that helped draft the statement sent to Congress, said while health care is now in the spotlight, the groups plan to wage their fight more broadly. “There are a lot of issues that are going to need revenues, especially in a bad economy,” she said.
More than 70 national groups —including the Children’s Defense Fund, Families USA, National Coalition for the Homeless, and YWCA USA — and more than 500 state and local groups signed the statement.
July 07, 2009
Audio: Why Charities Should Care About State Budget Crises
As California, New York, and other states grapple with massive deficits, many nonprofit organizations are facing the prospect of significant cuts in government support.
Nonprofit groups stand to be among the most affected by these budget shortfalls because they have done a poor job of standing together to argue their cases to lawmakers, says Robert Egger, president of D.C. Central Kitchen, in Washington, and founder of the V3 Campaign, an effort to get nonprofit views considered in elections at the city, state, and federal levels.
Mr. Egger discusses the issue in more detail in the latest episode of Philanthropy This Week, the Chronicle‘s new podcast about the nonprofit world.
July 05, 2009
California Charities Worry About Budget Crisis
California charities that depend on state money to survive are facing a mixture of confusion and fear after Gov. Arnold Schwarzenegger declared a fiscal emergency and the state said it would start paying many of its bills with IOU’s.
You can read more in an article from The Chronicle of Philanthropy.
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.