Public
Policy News & Resources Archive
 LEGISLATIVE
WATCH
HR 4 Signed into Law – Some provisions take effect immediately (updated August 18, 2006)
On August 17, 2006, President Bush signed the Pension
Protection Act of 2006, which contained several key provisions
that will affect grant makers. Some provisions take effect immediately
and at least one has a retroactive effective date. Among the ones
that require immediate attention by grantmakers are:
• The provision which requires expenditure responsibility
for grants by private foundations to Type III supporting organizations,
other than those that are “functionally integrated,”
and which bars such grants from counting toward a private foundation's
payout requirement. Somewhat simplified, a functionally integrated
Type III supporting organization is one that provides its support
by carrying on activities that its supported organizations would
otherwise have to do themselves rather than by providing grants
to the supported organizations. This provision, enacted upon signature,
also requires expenditure responsibility for grants to any type
of supporting organization if someone, who is a disqualified person
with respect to the private foundation, controls the supporting
organization or the organization it supports. These grants also
do not count toward payout. Note that this provision only limits
grants to the supporting organization. It does not affect grants
made directly to the supported organization even if control is
present.
• A provision, enacted upon signature, that prohibits the
payment of grants, loans, compensation or similar payments from
a donor-advised fund to the donor, the advisor, members of their
families, or businesses they control. Because expense reimbursements
are considered to be “similar” payments, community
foundations that permit donors to raise money for advised funds
will be prohibited from using the advised fund’s assets
to reimburse donors’ expenses effective on the date of enactment.
• Similarly, the new legislation prohibits all three types
of supporting organizations from the payment of grants, loans,
compensation or similar payments to the supporting organization’s
substantial contributor, members of his or her family, and businesses
they control. This prohibition is retroactive, applying to any
transaction occurring after July 25, 2006.
• The IRA charitable rollover incentive is effective upon
signature for contributions made during 2006 and 2007. It permits
individuals who have reached 70 ½ to exclude from income
of up to $100,000 a year in retirement plan assets of contributing
to a qualifying charity. Split-interest gifts and gifts to donor-advised
funds, supporting organizations, and private foundations do not
qualify for the incentive.
Further
analysis and information available at the Council on Foundations
web site.
House and Senate Pass Bill that includes Charitable Reform
Legislation (updated August 7,
2006)
On August 3, the Senate passed the pension reform legislation
(HR 4) that contained a number of charitable incentives and safeguards.
The legislation had previously passed the House. President Bush
is expected to sign it into law soon.
Reaction from major nonprofit and foundation sector organizations
has been mixed. Independent Sector, while expressing disappointment
that the non-itemizer deduction was not included, characterized
the bill as a “substantial step forward.” Read
Independent Sector's reaction.
The Council on Foundations, by contrast, expressed dismay over
the “secretive and closed” nature of the bill’s
development and issued
a statement calling the bill part of “recent congressional
attacks on community foundations.”
Key items in the legislation include an IRA Charitable Rollover
provision, increases in penalty excise taxes for foundation misconduct,
direction to the IRS to undertake a study of donor advised funds,
new reporting rules for donor advised funds, several provisions
restricting grants/gifts to Type III Supporting organizations,
and the application of the Excess Business Holding Rule to Donor
Advised Funds. Read
the COF analysis of the bill.
Senator Grassley Urges Enforcement on Series
of Problems in the Tax-exempt Arena
(June 12, 2006) Senator Chuck Grassley (R-IA), Chair of
the Senate Finance Committee continues to urge oversight, reform
and enforcement of the Tax-exempt arena. In a June 1, 2006 press
release, Senator Grassley called for IRS comments and thoughts
on several areas of the tax-exempt sector, including tax-exempt
entities being used for political purposes, officer and director
compensation and trustee fees, and non-profit hospitals.
Movement Expected Soon on Estate Tax Repeal/Restructuring (Updated May 9, 2006)
A number of sources including OMB
Watch and Bloomberg.com are reporting that there appears to be increased movement by Senate
Republicans to hold a vote on the repeal or possibly radical restructuring
of the estate tax. (A full repeal passed the House in April 2005.)
One proposal would raise the estate exemption level to $5 million
per person/$10 million per couple (current exemptions are $2 million
and $4 million respectively), and set the tax rate at 15% (currently,
the rates can go up to 40+%). The Joint Committee on Taxation,
a bipartisan Congressional panel, estimates that repealing the
estate tax could cost the government as much as $78.8 billion
per year by 2016. For more information, see the above reports.
H.R. 4297 Expected to Pass by Week’s End
(Updated May 9, 2006)
[Via the Council on Foundations updates] Today, Senate Finance
Committee Chairman Charles Grassley (R-IA) and House Ways and
Means Committee Chairman Bill Thomas (R-CA) will announce that
conferees have reached a deal on the tax reconciliation bill (H.R.
4297). Though charitable provisions were removed from the final
version of H.R. 4297, it does appear that Grassley and Thomas
have agreed in principle to include charitable reform and incentive
provisions in the contents of a second "extenders" package.
It is unclear if, when or how the extenders package will be considered
by the House and Senate. H.R. 4297 is expected to be approved
by week's end.
Massachusetts Budgets and Analyses (updated
April 25, 2006)
The Massachusetts state budget process is underway. Governor Romney’s
proposed budget may be found here: budget.mass.gov/,
and the Massachusetts Budget and Policy Center’s (MBPC)
analysis of the Governor’s budget is available here: www.massbudget.org/article.php?id=397.
Click for a report from the Massachusetts Budget and Policy Center on
the House Floor Action on the FY 2007 Massachusetts Budget.
The FY 2007 House Ways and Means Committee’s budget proposal
is available at: www.mass.gov/legis/07budget/house/ and MBPC’s analysis of the budget may be found here: www.massbudget.org/article.php?id=409
Both budget proposals appear to be taking a cautious route in
estimating available revenues for the coming fiscal year; in both
cases, the revenue projections are approximately $200 million
less than what is projected in collections if current trends continue.
There are significant differences however, including differences
in proposed tax cuts and services budgets.
Congress Leaves for Recess without Taking
Action on Tax Reconciliation Bill (Updated
April 10, 2006)
[Via the Council on Foundations Legislative network] Late last
week, a frantic push by congressional leaders to secure an agreement
on the tax reconciliation bill (HR 4297) before the beginning
of the Spring District Work Period failed. Conferees are expected
to continue work on the tax reconciliation bill when they return
to Washington on Monday, April 24. And despite some reports to
the contrary, Senate Finance Committee Chairman Charles Grassley
(R-IA) remains committed to including charitable reform and incentive
provisions in the final tax bill.
Congressional leaders are considering a number of strategies
to overcome procedural obstacles on two issues unrelated to the
charitable provisions in the bill – the capital gains and
dividends tax cut extension and a one year provision protecting
taxpayers from the alternative minimum tax (AMT). One strategy
under consideration would involve removing a number of business
tax extenders from H.R. 4297 and moving them in a separate bill.
If this strategy is adopted, it is unclear whether the charitable
provisions would remain in the tax bill or be moved to the business
extenders bill. Conferees will consider this and other strategies
when they return to Washington.
View
the Council on Foundations summary and analysis of critical issues
in NR 4297.
Senator Grassley continues scrutiny of nonprofit hospitals.
(updated March 21, 2006)
Senator Charles Grassley (R-IA) continued his scrutiny of nonprofit
hospitals’ charitable activities. In a letter to the American
Hospital Association dated March 8, Sen. Grassley said he had
"serious concern" about their billing and debt collection
practices, as well as the high salaries of some hospital executives,
their joint ventures with commercial profit-making organizations,
and their use of profit-making subsidiaries. The letter also urged
the AHA to engage on issues of charity care and providing discounts
to the uninsured. Read
the entire text of Sen. Grassley’s letter.
Related article "Nonprofit
Hospitals Face Scrutiny Over Practices", The New York
Times, March 19, 2006
Houses Passes Tax Reconciliation without Charitable Reforms. (updated December 12, 2005)
On December 8, the US House of Representatives
passed HR
4297
the Tax Cut Extension Reconciliation Act of 2005, but unlike its
companion bill passed by the Senate, S
2020 *, the House version does not contain charitable reform
provisions. A House-Senate conference on S.2020-HR 4297 could
begin as early as next week, although it is unclear that there
will be enough for conferees to come to agreement before Congress
adjourns for the year.
*Warning – S2020 loads as a 418-page PDF
file
Senate passes S. 2020, Tax Relief Act of 2005, Includes
Key Charitable Provisions. (Updated
November 22, 2005)
At 12:30 am, November 18, the Senate passed S.
2020 The Tax Relief Act of 2005, which includes a number of
key charitable reform provisions, including IRA charitable rollovers,
non-itemizer deductions, definitions of Donor Advised Funds, rules
for Donor Advised Fund payouts, and minimum activity levels for
Donor Advised Funds. The Council on Foundations has completed
an initial
analysis of S2020. The Independent Sector has also put together
information
on the bill.
AGM Testifies on Behalf of
MA Charities Bill (Updated November
3, 2005)
Three staff and members of AGM testified on behalf of
Massachusetts House Bill 4347 “An Act to Promote the Financial
Integrity of Public Charities” in front of the Joint Committee
on Consumer Protection and Professional Licensure on November
3. Ron Ancrum (President), Elizabeth
Smith (Executive Director, Hyams Foundation and Chair
of the Board, AGM) and Mary Jo Meisner (Vice
President for Communications, Community Relations and Public Affairs,
The Boston Foundation, and AGM Member) presented supporting testimony
about the efforts by the Attorney General’s office to strengthen
the governance, accountability and transparency of charities in
Massachusetts.
As approved by the AGM Board, Ron and Elizabeth expressed the
organization’s support for the bill and applauded the efforts
of the AG to strengthen our sector’s accountability. In
their remarks, they also stressed the need for ongoing education
of nonprofits on these issues, as well as appropriate resources
for the Division of Public Charities for education and enforcement.
Several other groups testified in favor of the bill, and one
group expressed general dissent. The Committee asked the AG’s
office to continue to work with groups that expressed specific
reservations to the bill and to report back to the Committee in
a couple of weeks.
AGM will continue to track this bill and post updates to the
public policy pages.
Read AGM’s testimony.
Read the AG’s original
press release on this legislation.
If you would like to see a red-lined version of the proposed
bill (i.e., the existing laws with the new language inserted)
please contact Miki Akimoto.
House Bill 1461 – Possible Threat to Nonprofit
Advocacy Activities (October 28,
2005)
The US House of Representatives pass HR 1461 on October 26, 2005,
which primarily focuses on the reform of certain Government Supported
Entities (GSEs) including Fannie Mae and Freddie Mac, and would
create an Affordable Housing Fund. However, HR 1461 includes an
amendment that would disqualify nonprofits that use private monies
to engage in lobbying or nonpartisan election activities (such
as voter registration) from applying for grants from this fund.
More information on this may be found at: http://www.independentsector.org/programs/gr/housingadvocacy.aspx
Senator Grassley’s Remarks at IS Conference
(October 28, 2005)
Senator Charles Grassley (R-IA) addressed the CEOs attending the
October Independent Sector Conference. His remarks provide insight
into the likely direction that charitable reform legislation will
take in the coming session – including a clear sense that
there are abuses in the charitable sector that need to be addressed
through new laws. Full text of his remarks is at: http://finance.senate.gov/press/Gpress/2005/prg102405b.pdf
Senate Finance Committee:"The Future of the Gulf
Coast"
(October 18, 2005)
On October 6, the Senate Finance Committee held a hearing
on “The Future of the Gulf Coast: Using Tax Policy to Help
Rebuild Businesses and Communities and Support Families after
Disasters.” Click
here for witness statements
Senate Finance Committee:"Charities on the Frontline"
(October 11, 2005)
On September 13, the Senate Finance Committee held a
hearing titled “Charities on the Frontline: How the Nonprofit
Sector Meets the Needs of America’s Communities”.
Witnesses included Dr. Eugene Steuerle of the Urban Institute,
Major George Hood of the Salvation Army, and Mr. Luke Hingson
of the Brother’s Brother Foundation. Click
here for witness statements.
The CARE Act (Charitable Giving Act) of 2005 has been reintroduced
in the House and Senate. It is listed as House Resolution 3908
(H.R. 3908) and the Senate version is S.1780. Key provisions in
both bills include allowing charitable deductions for individuals
who do not itemize tax returns; tax-free distributions from IRAs
to charities (under specific circumstances); and simplification
of lobbying expenditure limitations. The House version also includes
restrictions on certain types of administrative expenditures (by
private foundations) that will count as qualified distributions.
Full text of the proposed bills is available from AGM –
please email Miki Akimoto.
Senate Committee on Homeland Security Opens Katrina Hearings
(September 14, 2005)
The Senate Committee on Homeland Security and Governmental
Affairs has opened hearings on “Recovering from Hurricane
Katrina: the Next Phase.”
Click here for Witness lists and statements.
Proposed Changes to USA Patriot Act and Implications
for Grantmakers. (July 13, 2005)
Since the September 11th terrorist attacks, foundations and corporations,
particularly those funding internationally, have had to engage
in additional due diligence with regard to their grantmaking.
In accordance with Executive Order 13224, the USA Patriot Act
and other related laws, including voluntary guidelines issued
by the Treasury Department, grantmakers regularly check the names
of their prospective grantees against various watch lists produced
by the government, and document their compliance to protect themselves
from possible criminal and civil prosecution. More>
Congressional Focus on Hospitals (June
13, 2005)
On May 26, during a House Committee on Ways and Means
hearing, Chairman Bill Thomas (R-CA) said that Congress should
review the work of nonprofit hospitals to determine whether they
provide enough community benefit to justify tax subsidies. In
addition, on May 25, Senate Finance Committee Chairman Charles
Grassley (R-IA) sent a letter to 10 nonprofit hospitals and hospital
systems asking them to account for their charitable activities.
Full text of the letter may be found here: http://finance.senate.gov/press/Gpress/2005/prg052505.pdf
Senate
Finance Committee Hearing on Land Conservation, and Report on
Nature Conservancy now available (June
13, 2005)
On June 8, the Senate Finance Committee held a hearing titled
“The Tax Code and Land Conservation: Report on Investigations
and Proposals for Reform.” Witnesses included Steven J.
McCormack, President and CEO, Nature Conservancy; Jonathan Selib,
Tax Counsel, U.S. Senate Committee on Finance; Timothy Lindstrom,
Director of Protection and Staff Attorney, Jackson Hole Land Trust;
and, Burnet R. Maybank, III, Director, South Carolina Department
of Revenue. Witness statements and video files of the hearing
are available at: http://finance.senate.gov/sitepages/hearings.aspx
Information
and analysis on Massachusetts and New Hampshire State Budget Proposals
(updated May 18, 2005) It’s
Budget Season, and as a service to our members, we are providing
a consolidated set of links to state Budget Proposals and reactions
to those proposals. More>
MA AG Press Release on New Charities Legislation. (May
9, 2005)
On May 5, Attorney General Tom Reilly introduced legislation aimed
at enhancing the financial strength and integrity of Massachusetts
charities through increased standards that promote more financial
discipline, accountability and transparency.
The legislation, sponsored by Senator Mark Montigny, D-New Bedford,
and Representative Daniel Bosley, D-North Adams, sets stronger
and clearer standards for public charities to protect against
mismanagement and overcompensation of executives and to improve
their financial strength.
The AG’s office full press release can be found here: http://www.ago.state.ma.us/sp.cfm?pageid=986&id=1414
The Boston Globe article on this legislation may be found here.
Council on Foundations Supports Grassley/Baucus Bill
on Charitable Interest in Life Insurance (May
6, 2005) On May 6, the Council on Foundations
announced its support of a bill proposed by Senators Charles Grassley
(R-IA) and Max Baucus (D-MT) which would end arrangements in which
private investors join with a charity to purchase life insurance
on the lives of the charity’s donors. The private investors
have no relationship to the insured individuals except by reason
of the arrangement. For more information on the bill, please see:
http://finance.senate.gov/press/Gpress/2005/prg050305.pdf
For the full Council on Foundations Press release, please
see:
http://www.cof.org/Content/PressRelease/Display.cfm?pressReleaseID=2596
Senate Finance Committee
Hearing on Land Donations Expected in Early June (May
6, 2005)The Senate Finance Committee is expected to hold
another hearing on charities in early June. The hearing will focus
on land donations, including the committee’s review of the
operations of The Nature Conservancy and limitations on gifts
of appreciated property. More information as it is available.
Charity Coalition Urges Frist to Stop Finance Committee’s
Initiatives (May 6, 2005)
In an April 27 letter to Senate Majority Leader William H. Frist
(R-TN), the Alliance for Charitable Reform urged against allowing
Senate Finance Committee proposal that might increase regulatory
burdens on charities to come to the Senate floor. For more information
see: http://www.pgdc.com/usa/item/?itemID=274433
AG to propose strict rules for charities: Reilly targets
financial abuses (May
5, 2005)
Senator Santorum Requests Philanthropy Roundtable Involvement
in Debate on Charitable Sector Reforms (April
26, 2005)
April 20th Hearing by the House Ways and Means Committee on the
Tax-Exempt Sector (April
21, 2005)
IRA Charitable Rollover Bill Introduced (April
21, 2005)
House
of Representatives Passes Permanent Estate Tax Repeal
(April 15, 2005)
House Ways and Means Committee to Hold
April 20 Hearing on the Tax-Exempt Sector (April
14, 2005)
Senate Finance Committee Hearing on Nonprofits:
Commentary and Statements (April
6, 2005)
Senate Finance Committee To Hold Hearing On Charities
On Tuesday, April 5, 2005 (March
30, 2005)
CARE Act reintroduced in Senate as part of S.6
(February 15,
2004)
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