November 2019 Public Policy Update
Each month, SECF provides members with monthly updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Matthew L. Evans, SECF's director of public policy and special projects, at email@example.com.
Private Foundation Excise Tax
The philanthropic sector has made a push this year to pass legislation simplifying the private foundation excise tax. While SECF has been working in conjunction with sector colleagues in Washington to push for a flat, 1 percent rate, the latest developments in Congress indicate a revenue-neutral 1.39 percent rate is the most likely to make it into law.
Last week SECF joined with sector leaders in sending a letter to House Ways & Means Committee Chairman Richard E. Neal (D-MA) and Ranking Member Kevin Brady (R-TX) informing them that the sector is united in its support of including the simplified 1.39 percent rate in a year-end legislative package.
Due to the efforts of sector leaders presenting a unified voice on simplification, on October 31, Rep. Danny K. Davis (D-IL), a member of the Ways & Means Committee, introduced H.R. 4953 to modify the excise tax on investment income of private foundations. This legislation is co-sponsored by Rep. George Holding (R-NC).
SECF has, for several years, supported the simplification of the excise tax on private foundations via a single rate or flat tax. This rate would replace the current two-tiered system, which varies between 1 and 2 percent based on a foundation’s giving.
Additionally, SECF’s Public Policy Agenda includes a provision calling for the simplification of the excise tax, through repeal or replacement with a single rate/flat tax. You can view our position statement on the issue at SECF.org.
SECF will continue its advocacy efforts on this issue and will work with colleagues in Washington toward a resolution.
We will continue to keep you updated as the legislative process continues. If you have any questions or comments, please contact Matthew L. Evans.
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Last month, in an attempt to overturn IRS regulations on state and local Tax (SALT) workarounds, Senate Democrats introduced a Congressional Review Act (CRA) Resolution of Disapproval. The resolution was introduced by Sen. Schumer (D-NY) and it aimed to nullify parts of the 2017 Tax Cuts and Jobs Act (TJCA) that put a $10,000 cap on the SALT deduction.
As a result of the TJCA, several states created programs to which residents could contribute, receive a credit against their state tax liability, and take a charitable deduction at the federal level, thereby avoiding the cap.
Following the creation of these programs, the IRS and Treasury Department introduced regulations that limit the deductibility of contributions to these programs and only allow individual taxpayers to claim a charitable deduction for the amount of their donation that exceeds whatever tax credit they receive. SECF submitted a comment letter regarding the proposed rule last October.
The resolution was defeated in the Senate by a vote of 52-43. This vote marks another chapter in the fallout from the TCJA, a tax bill that has had several negative implications for the sector.
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Foundations on the Hill 2020 Is Coming Soon -- Sign Up to Be A State Captain Today!
We’re less than two months from 2020, which means Foundations on the Hill (FOTH) is right around the corner.
Held in Washington, D.C., each year, FOTH is a two-day public policy event that allows members of the philanthropic sector to meet with members of Congress to inform them about the importance of philanthropy and the impact of public policy on the work we do.
Even though many forms of outreach exist, there’s still nothing more effective than meeting with policymakers in person, sharing stories of philanthropy’s community impact and making the case for laws and regulations that strengthen our ability to do even more.
That’s why Foundations on the Hill continues to be the most important advocacy opportunity all year for Southern Philanthropy – and it’s why we want you to add your voice to our delegation!
Every year, SECF consistently fields the largest delegation at FOTH. This year we had nearly 50 attendees hold more than 70 meetings on the Hill. We want 2020 to be no different. While registration for Foundations in the Hill won’t open until next month, SECF is now accepting volunteers to be state delegation captains.
As a delegation captain, you’ll lead a group committed to educating lawmakers and their staff on the public policy issues affecting foundations today. Plus, you’ll make connections with peers who understand the importance of public policy to our work – a community committed to the defense and promotion of philanthropy.
If you would like to serve as your state’s delegation captain in 2020 or need more information about Foundations on the Hill, please contact Matthew L. Evans, SECF’s Director of Public Policy.
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Public Policy in Action in Mississippi
By Jane Alexander
President and CEO, Community Foundation for Mississippi
Community foundations are in the “for good, forever” business. We offer many types of giving opportunities and serve the nonprofit community in many ways – our purpose is to make sure organizations that address community needs, and the dollars that support them, will always be there to keep our communities whole, making them vibrant places for people to live and work.
Two new initiatives the Community Foundation for Mississippi has been involved in are designed to strengthen the charitable sector, both for now and forever. They involved the public sector and the private sector, with philanthropy playing a catalytic role.
First, let’s talk about “forever.” After a nearly four-year effort, the Mississippi Community Foundations Network was thrilled that tax credits for endowment giving passed the Mississippi Legislature in the 2019 session. Legislative sponsors Sen. Joey Fillingane and Rep. Jeff Smith championed the bill designed to help donors help their favorite nonprofits forever.
Thanks to the support of Lt. Gov. Tate Reeves and House Speaker Phillip Gunn, Gov. Phil Bryant signed into law in April 2019 the Endow Mississippi Tax Credit legislation. The program provides a 25 percent credit against state income tax for donors who give gifts to eligible, endowed funds at community foundations in Mississippi. The total credit pool is authorized for 5 years and is $2 million, or $500,000 each year.
Community foundations worked together to achieve this, first commissioning a statewide transfer-of-wealth study, then using the data to create a draft bill for consideration. We took our data and our stories to the Legislature and built strong relationships with members and leaders who unanimously supported the bill. As of this writing, the 2019 pool of tax credits is nearly gone – and almost $2 million in endowment dollars have been invested in our community foundations statewide as a result. Not only has this been a “win” for endowment giving, it has been a “win” for legislators, who have made it possible for nonprofits in their districts to continue their work – forever.
Now the “for good” part. One of the overwhelming needs in the nonprofit community is for what we call capacity building. It’s a buzzword, of course, but it means helping nonprofit organizations invest in their long-term health – building strong organizations, crafting reasonable budgets and plans to fund them, educating boards, training staff, and learning to identify needs and create programs that can address them in meaningful ways. In Mississippi, that training has been hard to sustain, partly because the grantmaking community has not robustly supported this type of effort, focusing instead on funding programs – all well and good, unless the organizations doing the programs can’t sustain themselves. About three years ago, a prompt and a grant from the W.K. Kellogg Foundation (WKKF) started us down the road to transforming how grantmakers and nonprofits work – by working together.
An initial planning grant from WKKF enabled a group from the Mississippi Association of Grantmakers --a fund at the Community Foundation for Mississippi -- and the Mississippi Center for Nonprofits to explore how these “two sides of the same coin” entities might work more closely to achieve change in our state. This group, of which I was a member, soon discovered that no one had really done what we intended to do anywhere in America. Mississippi has had the experience of being innovative and first in something great – an unusual position for us.
In April, these two entities created a new, transformed organization – the Mississippi Alliance of Nonprofits and Philanthropy, or the Alliance, for short. Already it is changing the way we address capacity by forging partnerships with Candid, Network for Good, the Association of Fundraising Professionals and others to bring world-class training opportunities to its members. But perhaps more important, following the lead of WKKF, grantmakers are co-investing in this work. We are all learning to align grantmaking goals with nonprofit programs, to make sure that our scarce charitable resources in Mississippi are used for maximum benefit.
The Alliance is also working closely with the Mississippi Secretary of State’s office, our state’s charity monitor, to find ways to mitigate the deficiencies some nonprofits have and thus make the enforcement function of that office more focused and effective. Truly, when these sectors can work together, real change is possible. A public launch this winter will also give the Alliance a chance to reconnect with legislators around the impact of Endow Mississippi – the Alliance is the certifying agency for the tax credits and the home of the Community Foundations Network.
We are delighted to see how these public-private-philanthropic initiatives are reshaping the charity landscape in our state.
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Upcoming Public Policy Webinar
On Tuesday, December 10, at 11:00am (ET), SECF will host its next public policy webinar. Attendees will hear from Matthew L. Evans, SECF’s director of public policy, and Sandra Swirski of Urban Swirski & Associates in Washington, D.C. They will provide a recap of what we learned at the public policy sessions at Annual Meeting and provide a look ahead into the 2020 legislative landscape in Washington and the state levels.
Registration for this webinar is now open – click here to sign up!
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Elections Held Today in Three Southern States
Voters in three Southern states go to the polls today to cast their ballots in statewide elections. Kentucky and Mississippi are holding gubernatorial elections – in Mississippi, Tate Reeves (R) is facing off against Jim Hood (D), while in Kentucky, incumbent Republican Matt Bevin is running for re-election against the Democratic nominee, Attorney General Andy Beshear. In Virginia, voters will decide control of the state legislature.
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Public Policy at the Annual Meeting
Next week, professionals from all over the sector will converge on Atlanta to attend SECF’s 50th Anniversary Annual Meeting. At what promises to be an event to remember, Annual Meeting attendees will have the opportunity to attend several sessions dedicated to public policy!
On Thursday November 14, at 11:00am, attendees can join Ruth Madrigal (KMPG, Washington), Sandra Swirski (Urban Swirski), and Matthew L. Evans (SECF), as they discuss the current federal legislative and regulatory landscape and what it means for philanthropy. The speakers will also discuss the progress of SECF’s public policy and advocacy work at the federal and state levels in 2019.
Also on Thursday, at 2:30pm, Pete Bird of The Frist Foundation will interview Dr. Alan Abramowitz of Emory University on what to look for during the 2020 elections and what ramifications they may have on philanthropy in the South. Dr. Abramowitz is a popular expert on national politics, polling and elections. His expertise includes election forecasting models, party realignment in the United States, congressional elections and the effects of political campaigns on the electorate. His election forecast has correctly and precisely predicted the popular vote winner within two percentage points or less in every U.S. presidential election since 1988.
Finally, on Friday, November 15, attendees will be able to join Jim Hasson as he discusses compliance obligations and legal requirements, including governance, documentation of charitable contributions, grantmaking due diligence, tax reporting, succession planning and deciding between the perpetual operation or wind-down of the foundation. Jim, who as an attorney helped file the paperwork that established SECF, will also discuss new regulations and legal requirements that may apply to foundations as a result of the 2017 Tax Cut and Jobs Act.
We look forward to seeing you at next week’s Annual Meeting. If you have any questions about the public policy sessions at Annual Meeting, please feel free to reach out to Matthew L. Evans.
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