Monday, March 9, 2009

Continuing Debate about Limiting Charitable Contribution Deduction for High-Income Donors

We previously blogged about the Obama Administration's proposal to limit the availability of itemized deductions for taxpayers with over $250,000 of income, reactions to that proposal from Harvey Dale and Nonprofit Law Prof Blog contributing editor John Colombo, and a study on the likely effects of this proposal.  The debate over the proposal continues, as illustrated by a recent Associated Press report carried on MSNBC.  Besides citing expressions of concern by both donors and nonprofit executives, the article also notes that a recently released Indiana University Center on Philanthropy study indicates that the combination of this proposal and other Obama Administration tax proposals would result in 4.8 percent less giving by high-income households, totaling almost $4 billion.  While a relatively small amount when compared to total charitable giving, and smaller decline that the decline expected because of current economic conditions, it still suggests a measurable effect for those charities who rely significantly on gifts from such households.

LHM

March 9, 2009 in In the News, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

CQ Politics on Nonprofits and Campaign Cash

We previously blogged about the Campaign Finance Institute's study on the more than $400 million in campaign spending by non-charitable nonprofits that are tax-exempt under sections 501(c)(4), 501(c)(5), 501(c)(6) and 527 of the Internal Revenue Code.  Following up on this study, a CQ Politics' article focuses on the nearly $200 million spent during the 2008 election cycle by the 501(c)s alone, which was greater than the amount spent by the Democratic Congressional Committee and triple the amount such groups spent in the 2004 election cycle.  The article notes that reactions to this level of spending vary, with a spokesperson for the Campaign Legal Center quoted as stating that data from the 2008 election still needs to be evaluated before any legal changes are considered, other groups calling for investigations of specific 501(c)s for alleged violations of federal election or tax laws, and at least one candidate targeted by a 501(c) raising concerns about the lack of donor disclosure for such organizations under existing law.

LHM

March 9, 2009 in In the News, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Nonprofit Journalism and Mother Jones

The New York Times reports that the financial situation of Mother Jones is putting the idea of preserving print journalism through using the nonprofit form to the test.  According to the article, Mother Jones, which publishes bimonthly, has seen its finances strained by both a a 23% drop in advertising revenue during 2008 and a decline in major donations.  At the same time, the magazine has been able to avoid layoffs by belt-tightening in other areas.  The article notes that other publications with nonprofit ties have also had to adjust their operations because of financial troubles, including the nonprofit Christian Science Monitor that announced last fall its poor finances were forcing it to switch to a mostly digital format in 2009 and the for-profit Congressional Quarterly, which is indirectly owned by the nonprofit Poynter Institute and which has been put up for sale.

LHM

March 9, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Kansas Governor Sebelius and Questions Regarding a Nonprofit's Funding

The Kansas City Star reports that some Kansas lawmakers are raising questions regarding whether a nonprofit that works with the developmentally disabled may have used its ties to Kansas Governor and HHS Secretary nominee Kathleen Sebelius to receive government funding outside of normal procedures.  The article reports that Community Living Opportunities received over $700,000 in extra Medicaid funds without having to go through a regional gatekeeper, as is was apparently required for other providers of such services.  CLO's board includes two individuals with strong ties to the Governor, Kansas Democratic Party Chairman Larry Gates and recent nominee to the state Supreme Court Dan Biles.  Both the party Chairman and Governor Sebelius made public statements denying any influence peddling, and Governor Sebelius denies any role in the funding decision beyond receiving a briefing about it.  One lawmaker, Rep. Peggy Mast (R-Emporia) is cited as calling for joint House-Senate hearings on the matter.  The articles notes that CLO used the funds to reimburse staffers who work with the developmentally disabled.

LHM

March 9, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Angel Food Ministries Settles Governance Dispute

We previously blogged about the multiple troubles of Angel Food Ministries, including concerns regarding apparently high compensation, campaign contributions by the organization's leaders that presumably were made possible in part by that high compensation, a sexual harassment lawsuit against the ministry and the son of the ministry's founders, and a lawsuit seeking to remove the founders - Pastors Joe and Linda Wingo - from leadership.  The ministry's headquarters had also been the subject of an FBI raid last month, according to the Atlanta Journal-Constitution.  For additional coverage of these matters and more details regarding the ministry, see the recent Chicago Tribune article.

At least one of these issues has now been resolved, as the Houston Chronicle reports that the lawsuit seeking to remove the founders has been settled.  According to the article, to resolve that lawsuit Pastors Joe and Linda Wingo agreed to allow an audit of the ministry, to stop using corporate credit cards for personal expenses, and to transfer ownership to the ministry of a private jet used by the ministry, which had been owned by a for-profit company associated with the Wingos.  The two board members who filed the suit also plan to resign from the ministry's board.

LHM

March 9, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Sunday, March 8, 2009

Nonprofit "soft money" campaign spending tripled in 2008 over 2004; overall campaign nonprofit spending decreased

A new study by the nonprofit Campaign Finance Institute finds that 501(c)(4), (5) and (6) organizations and 527 organizations spent more than $400 million in soft money contributions during the 2008 presidential election campaign. (More background on soft money).  Here is a brief excerpt from the report:

Fueled by unlimited “soft money” donations, Section 501(c) nonprofit groups and Section 527 political organizations spent more than $400 million in the 2008 federal elections. This figure is largely based on CFI’s analysis of Federal Election Commission (FEC) and Internal Revenue Service (IRS) reports. Since public disclosure of 501(c)s’ partisan activities is incomplete, we also analyzed group public statements, press reports, and past spending patterns, and interviewed a number of group representatives.

Our $400 million estimate represents a modest drop from 2004 when federal 527s alone disbursed $426 million and 501(c)s probably spent less than $60 million according to previous CFI research. In an unusual election where the Democratic presidential candidate raised astounding amounts of money, both major candidates discouraged soft money support, and the gathering recession discouraged some prospective wealthy individual donors, outside soft money still made a big impression -- particularly in close Senate and House races.

What has changed dramatically since 2004 has been the balance between the two main categories of outside group soft money. Influenced by regulatory changes as well as political circumstances, federal 527s spent $200 million, only half of what they did in 2004, but 501 (c) (4) social welfare groups, (c) (5) labor unions and (c) (6) business leagues disbursed at least three times as much as in 2004 or 2006. (501 (c) educational, religious and charitable groups are prohibited from engaging in partisan campaign intervention)

Nothing illustrates this development more clearly than the advent of Freedom’s Watch, the $30 million 501(c) (4) group that was the second largest pro-Republican soft money group. Its finances fell midway between those of the two top 527s supporting George W. Bush in the previous election, Progress for America Voters Fund and Swift Boats Vets and POWs for Truth. Some groups that had utilized 527s in recent elections -- such as Pharmaceutical Research and Manufacturers of America (PHARMA, the prescription drug industry association,) which financed America’s Agenda: Health Care for Kids, and the U.S. Chamber of Commerce -- now carried out similar programs through their 501(c)s. Others, including League of Conservation Voters, Planned Parenthood and Sierra Club, continued to utilize both major vehicles but rebalanced their efforts towards their 501(c)s.

This is a well-done, well footnoted report, complete with links to empirical data and supporting research.  It should be required reading for anyone interested in the influence of nonprofit spending in political campaigns. 

dkj

March 8, 2009 in Studies and Reports | Permalink | Comments (0) | TrackBack (0)