May 10, 2008
Claude Rosenberg, Advocate for Increased Charitable Giving By the Wealthy, Dies at Age 80
The New York Times reported on May 8, 2008, that Claude Rosenberg, an advocate for increased charitable giving by the wealthy, recently died in his home near San Francisco. Mr. Rosenberg explained his ideas about charitable giving in his book, “Wealthy and Wise: How You and America Can Get the Most Out of Your Giving” (Little, Brown, 1994). According to his writings, "poor and middle-class people . . . give more, relative to what they can afford, than do the wealthy, especially the very wealthy." His is an excerpt from the NYT article:
“Based on extensive research on charitable giving in the U.S., Mr. Rosenberg developed a model that estimated that if people gave what they could really afford, we would increase charitable giving in the United States by $100 billion a year,” James Phills Jr., director of the Center for Social Innovation at the Stanford Graduate School of Business, said Tuesday.
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“When you take into account people’s assets, they can actually afford to give much more than they would based just on income,” Professor Phills said. That is because tax laws give a bigger break to people who donate appreciated assets, like stock that has risen in value, than it does to those who give cash. People who donate appreciated assets do not have to count the increased value of the asset as income, but they can deduct the asset’s value against their income.
Beyond informing people of how to maximize giving and tax benefits, Mr. Rosenberg “explored the psychological reasons that people don’t give as much as they can,” Professor Phills said. “For example, that people tend to do what he called ‘eyeballing’ — ‘I think I can give $50,000 this year’ — which tends to be systematically lower than what they actually are able to give.”
For the entire article, see "Claude Rosenberg, Advocate for Philanthropy, Is Dead at 80" in the May 8, 2008, issue of the New York Times.
More Nonprofits Suspend Aid for Orphans in Zimbawbe
On the heels of the trouble aid groups are having getting into Myanmar, the New York Times reported on May 10, 2008, that more than half of 55 nonprofits surveyed in Zimbawbe say they have suspended aid for orphans in that country due to violence and political strife. Here is an excerpt from the article:
Zimbabwe’s ruling party, bent on retaining control after 28 years in power, has broadened its campaign of intimidation and violence to include teachers and even aid workers, disrupting education and basic care for tens of thousands of children across the country, according to humanitarian groups, union officials and the teachers themselves.
Teachers have been upbraided by the ruling party for allegedly siding with the opposition during the nation’s disputed March elections, in which they served as poll monitors. More than 2,700 of them have fled or been evicted from classrooms, the teachers’ union says. Dozens of schools have closed, the union says, and 121 are being used as bases for the ruling party’s youth militias as they harass and beat opponents in the countryside.
Beyond that, the United National Children's Fund says that more than half the 55 nonprofit groups it recently surveyed have partly or fully suspended aid for orphans in Zimbabwe.
For the entire article, see "Violence in Zimbabwe Disrupts Schools and Aid" in the May 10, 2008, issue of the New York Times.
IRS Investigates Al Sharpton's Nonprofit, National Action Network
The New York Times reported on May 10, 2008, that the IRS is investigating Rev. Al Sharpton's nonprofit organization - National Action Network. The article reports that Rev. Al Sharpton is "brush[ing] off" reports of the investigation. Here is an excerpt from the article:
Now the U.S. attorney is investigating his nonprofit group, a probe that an undeterred Sharpton brushes off as the kind of annoyance that civil rights figures have come to expect from the government.
''Whatever retaliation they do on me, we never stop,'' he told the AP. ''I think that that is why they try to intimidate us.''
Over the past year, Sharpton's lawyers and the staff of his nonprofit group, the National Action Network, have been negotiating with the federal government over the size of his debt, which they dispute. The group has also been trying to pay off tens of thousands of dollars it owes for failing to properly maintain workers compensation and unemployment insurance.
According to National Action Network's website, Al Sharpton is the President of the 501(c)(4) organization that was founded in 1991, but formally incorporated in 1994.
For the entire article, see "Records show Sharpton owes overdue taxes, other penalties" in the May 10, 2008, issue of the New York Times.
May 9, 2008
Politics from the Pulpit
Suzanne Sataline of the Wall Street Journal online reports today that a conservative legal-advocacy group, Alliance Defense Fund, a Scottsdale, Arizona nonprofit, is enlisting ministers to use their pulpits to preach about election candidates this September, defying legal prohibitions that bar churches from engaging in politics.
According to the report, the group is hoping that at least one sermon will prompt the IRS to investigate, sparking a court battle that could get the tax provision declared unconstitutional. The action marks the latest attempt by a conservative organization to help clergy harness their congregations to sway elections. The protest is scheduled for Sunday, Sept. 28, a little more than a month before the general election, in a year when religious concerns and preachers have been a regular part of the political debate.
The report notes that the section of the tax code barring nonprofits from intervening in political campaigns has long frustrated clergy. Many ministers consider the provision an inappropriate government intrusion, blocking the duty of clergy to advise congregants.
In recent years, attempts by members of Congress to change the law have failed. Rob Boston, a spokesman for Americans United for Separation of Church and State, a nonprofit that has filed more than a dozen complaints in the past year with the IRS accusing nonprofits of tax code violations, takes the position that tax exemption is a benefit and comes with conditions. He is reported as saying that any pastor who feels gagged should forgo the tax exemption and say what he or she wants.
In 1954, Congress made it illegal for nonprofits, including churches, to endorse or publicly oppose political candidates or to intervene in candidates' elections, although they are free to take sides on issues. Only one church has challenged this, unsuccessfully. The U.S. Court of Appeals in the District of Columbia ruled in 2000that the IRS didn't violate constitutional rights when it revoked the tax-exempt status of Branch Ministries of Binghamton, N.Y., which had bought newspaper ads opposing Bill Clinton's candidacy.
Apparently, some legal scholars are hoping for a new test case. Lloyd Hitoshi Mayer, a law professor at the University of Notre Dame, is reported as saying that a church might make a successful claim that the federal government is burdening the free exercise of religion and cannot do so without a compelling state interest.
May 8, 2008
Massachusetts Legislature Considers Plan To Tax Well-Endowed Colleges
The Boston Globe reports today that the Massachusetts Legislature has asked state finance officials to study a plan that would impose a 2.5% annual assessment on colleges with endowments over $1 billion, an amount now exceeded by nine Massachusetts institutions. Not surprisingly, the plan is generating a great deal of controversy. If adopted, it would raise significant implications for the sanctity of the tax-exempt status of non-profits.
May 7, 2008
Myanmar Cyclone: Limitis on Nonprofit Access To Myanamar Prompt Aid Groups To Explore Ways To Adapt Their MO
Caroline Preston of the Chronicle of Philanthropy writes that aid groups are beginning to respond to the devastation wrought by the cyclone that hit Myanmar four days ago in which proximately 22,500 people are believed to have been killed, with another 44,000 still missing and charities indicating that they are fearful that the death toll could climb much higher.
As they prepare to mount relief operations in the country, many nonprofit groups are beginning fund-raising campaigns. Save the Children plans to announce a $10-million appeal later this week, while World Vision is asking donors for $3-million. Other groups with smaller presences in Myanmar are also soliciting donations. The American Jewish Joint Distribution Committee, a New York charity that provides financial assistance to a handful of Jews living in the country, issued an emergency appeal to provide nonsectarian assistance to the cyclone’s victims. GlobalGiving, a Web site that matches donors with projects in the developing world, set up a disaster-relief fund for the crisis.
But many aid groups say their ability to respond to the crisis has been hampered by the political context. Myanmar’s military regime limits nonprofit access to the country, and while Save the Children and World Vision have large numbers of employees in the country, most groups don’t. They operate by working with local groups on the Thai border, if they operate in the region at all.
Following the cyclone, the Myanmar government indicated a willingness to accept international aid for victims. But according to the United Nations, it has so far restricted that help to bilateral aid, meaning that assistance would be channeled through government relief groups. Many nonprofit groups are still assessing how that arrangement might affect their ability to provide aid.
Staff members with Direct Relief International have indicated that the Myanmar government’s lack of openness is complicating their ability to raise money. Many donors have called the charity’s offices over the last few days, offering money and volunteer assistance. But the group isn’t ready to send out an appeal, in large part because of the uncertainty surrounding how much aid it will be able to deliver. While the charity would usually create a fund specifically for the cyclone, instead it is considering a fund to benefit disasters across Asia. That way, it could benefit from donors’ desire to give right away in response to the news coverage of the cyclone, without risking violating donors' expressed intent on how donated funds should be used.
The challenges faced by aid groups seeking to respond to this crisis highlight, among other issues, the importance of having tangible legal modalities for public/private partnerships aimed at addressing crises of this sort and flexible pooled funding mechanisms that enable aid groups to garner the spontaneous outflows of ordinary citizens' generosity without running afoul of rigid trust law or other requirements that demand a degree of specificity as to permitted use of funds that is not suited to a massive emergency situation. The specter of aid groups being hampered in their relief efforts by such rigidity, as happened in the case of Hurricane Katrina (where funds donated to Hurricane Katrina could not be used for Hurricane Rita relief), should not be repeated. A further concern is the specter of relief groups having to return desperately needed funds due to the absence of a regime of funding vehicles which would allow holding on to funds donated for emergency relief for the long term rebuilding needs that inevitably follow a crisis of these proportions. Direct Relief International's consideration of building an Asia-wide fund in this instance seems an inspired approach. It is incumbent on the non profit, legal and international development aid and finance communities to join forces in ensuring that the necessary legal and financing mechanisms exist to support such approaches.
Proposal to Compel Foundations To Disclose Data on Diversity
P. Eisenberg of the Chronicle of Philanthropy reports that the California State Senate is considering a bill that would require all foundations with more than $250 million in assets to disclose information about the race and gender of people on their governing board and the boards of their grantees.
May 6, 2008
Foundations Urged to Drop Jitters Over Public-Policy Work
As reported by Suzanne Perry of the Chronicle of Philanthropy, speakers at this week's Council on Foundations leadership summit, took the view that foundation boards are far too timid about trying to influence lawmakers, mistakenly fearing it will jeopardize their tax-exempt status, in the words of Timothy Wirth, president of the United Nations Foundation, in Washington, and a former Democratic U.S. senator.
“The IRS encourages philanthropy to be engaged in public-policy issues,” he said. Foundations should collaborate with government bodies, both to tap into their budgets and to have a greater impact, he continued, noting that a small change in public policy often has a huge “multiplier” effect.
Jean Case, chief executive of the Case Foundation, in Washington, said her organization gives preference to projects that involve government collaboration because they are “more likely to go further faster.”
She cited her position as co-chair of the U.S.-Palestinian Partnership, a group set up by the U.S. State Department to attract private money for projects to improve the economy in the Palestinian territories.
The Case Foundation also persuaded the U.S. Agency for International Development to jointly support a project to provide “PlayPumps”—children’s merry-go-rounds that are attached to water pumps—to South Africa, she said.
John Bridgeland, president of Civic Enterprises, a public-policy consulting firm in Washington, urged foundations to gear up to influence the transition team that will be preparing policy for the next president after the November election
Council on Foundations Leadership Summit
This week, from May 4 through May 7, the Council on Foundations hosts a leadership summit, a meeting of some 3,000 nonprofit leaders described by Peter Deitz, founder of Social Actions and a guest blog writer on Tactical Philanthropy, as the "Davos of Philanthropy." The Chronicle of Philanthropy has frequent blog updates from various sessions of the event. According to one such blog, Robert Rubin, the United States Secretary of the Treasury during the Clinton administration, told grant makers at the conference today that the nation’s economy is facing “the most complex set of circumstances” in his lifetime and warned that foundations may end up earning less on their endowment investments over the next one to three years when compared with the investment growth achieved in the past 20 years. Meanwhile, he predicted that that foundations could end up facing “tremendous fiscal pressure” as the need for their services increase and government resources are reduced.
May 5, 2008
Ontario, Canada: New Legal Framework for Non-Profits
The International Journal for Civil Society Law reports in its May 2008 issue that the Government of Ontario is reviewing the Ontario Corporations Act (OCA) with a view to developing a new legal framework to govern the structure and activities of charities and not-for-profit corporations. The OCA, which was originally enacted in 1907 and which has not been substantially revised since 1953, provides the current legal framework for governing the creation, governance and dissolution of not-for-profit corporations. The not-for-profit sector has experienced tremendous change in the intervening 55 years, prompting the need for reform. The Ministry of Government and Consumer Services has released three Consultation Papers to solicit comments. Interested persons may comment on the third and final paper until May 31, 2008.
"The Third Sector and Sustainable Social Change: New Frontiers for Research," Universitat de Barcelona,Spain July 9-12, 2008
This is the 8th annual conference of the International Society for Third Sector Research (ISTR) which fosters research in the areas of philanthropy, civil society and the non-profit sector and aims to build a global scholarly community in these fields. Conference activities will include workshops on the state of philanthropy in Africa, organized civil society as a facilitator for democracy, social justice and active participation and the Gender Third Sector Research Agenda, among others. Information on registration is available on the ISTR website.
May 4, 2008
Proposed Amendment to Definition of "Charitable Purpose" in India
N. Dadrawala of the International Center for Not-for-Profit Law reports that the Finance Minister of India has proposed an amendment to Section 2(15) of the Income Tax Act which currently defines "Charitable Purpose" to include: relief of the poor; education; medical relief; and "advancement of any other object of general public utility." The proposed amendment provides that "advancement of any other object of general public utility" will not be considered a "charitable purpose" if it involves carrying on an activity in the nature of trade, commerce or business or rendering services in relation to any trade, commerce or business for consideration.
The proposed amendment is not intended to affect organizations involved in activities such as relief of the poor, medical relief and education. It is only intended to apply to entities carrying on regular trade, commerce or business, or providing services in connection with regular trade, commerce or business, and earning incomes, which have sought to claim that their purposes also advance objects of general public utility. The amendment does not target all activities falling under "advancement of any other object of general public utility"; only those activities which are commercial or support commerce are affected. Thus, organizations involved in the relief of the poor, medical relief and education may safely carry out income-generating activities without losing their exemption under Section 2(15). Trade organizations and associations supporting commerce and industry, will, however, be affected by the amendment.