Monday, May 7, 2018

Hauser Institute, Global Philanthropy Report

Hauser InstituteThe Hauser Institute for Civil Society (Harvard) has published The Global Philanthropy Report: Perspectives on the Global Foundation Sector. From the introduction:

Global philanthropy holds immense promise in the 21st century. Global giving is growing, gaining visibility, and creating much-needed change around the world.

Over time and across geographies the world has witnessed a near-universal charitable instinct to help others. Recent years, however, have seen a marked and promising change in charitable giving - wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments. A growing number of philanthropists are establishing foundations and other giving structures to focus, practice, and amplify their social investments. There appears to be a growing belief that institutional philanthropy can encourage more strategic investment approaches; facilitate collaboration; serve as a role model for others; and, in sum, have greater impact on the economic and social challenges being addressed.

Despite the growing significance and scale of institutionally-based philanthropy, remarkably little is known about the related resources and their deployment at the national, regional, and global levels. In much of the world, publicly available philanthropic data and knowledge are scarce. In most countries, neither governments nor private organizations collect and/or make available important data on social investing. Cultural traditions understandably inhibit the sharing of information about giving, often a very personal act. What information does exist is often anecdotal, incomplete, and sometimes inconsistent. In addition, given the varied definitions and research frameworks employed in existing studies, data are generally not comparable within or across countries; information has not been aggregated or analyzed through a global lens. Until the launch of this effort there has been no ongoing and globally coordinated undertaking to quantify the volume of global giving, classify its purposes, or seek to understand its current and potential impact.

Researchers at the Harvard Kennedy School, in collaboration with colleagues around the world, are beginning to address this knowledge gap. The Global Philanthropy Report: Perspectives on the global foundation sector seeks to develop a knowledge base to address the size, scope, and practice of institutional philanthropy across the globe. This inaugural report represents a first step in an attempt to understand worldwide philanthropic practices and trends; provide comparative analysis across countries and regions; begin to develop a picture of the magnitude of global philanthropic investment; and help create an evidence-based discussion on global philanthropy. We hope to publish the report biennially, adding additional countries and reporting increasingly comprehensive data within countries in future editions. Importantly, national collaborators are publishing more in-depth reports on philanthropy in their individual countries.

Lloyd Mayer

May 7, 2018 in Studies and Reports | Permalink | Comments (0)

CIVICUS: 2018 State of Civil Society Report 2018

CivicusCIVICUS has published its annual State of Civil Society Report for 2018. Here is a brief description:

Each year the CIVICUS State of Civil Society Report examines the major events that involve and affect civil society around the world. Our report is of, from and for civil society, drawing from a wide range of interviews with people close to the major stories of the day, CIVICUS’ ongoing programme of research and analysis, and findings from the CIVICUS Monitor online platform tracking the space for civil society around the world. We will follow the report with a series of dialogues and conversations on the theme of 'reimagining democracy’ in the coming months.

And here are 10 key trends discussed in the report:

“What is perhaps unusual about this year’s report is the focus on the resistance and the fact that the fightback is on, ” is one of the key findings of the State of Civil Society Report 2018. The report identifies 10 key trends that impacted on civil society in 2017 and are continuing in 2018, including:

  • Globalised neoliberalism is failing people all around the world;
  • Polarising politics are dividing our societies;
  • Personal rule by political leaders is undermining democratic institutions;
  • Attacks are increasing on journalists reporting on corruption and public protests;
  • Growing surveillance and manipulation of opinion is betraying the promise of social media;
  • Uncivil society is claiming civil society space;
  • Multilateralism is in the firing line;
  • The private sector's growing role in governance demands more scrutiny;
  • Patriarchy is now firmly under the spotlight;
  • Civil society is fighting back and building resolute resistance.

Lloyd Mayer

May 7, 2018 in Studies and Reports | Permalink | Comments (0)

Giving USA & IU Lilly Family School of Philanthropy: The Data on Donor-Advised Funds

Giving USA Lilly SchoolGiving USA and the Indiana University Lilly Family School of Philanthropy have published a The Data on Donor-Advised Funds: New Insights You Need to Know. Here is a description:

Donor-advised funds are frequently identified as one of the fastest-growing vehicles for charitable giving, but the question of where those donor-advised fund grant dollars go has remained largely unanswered until now. A new report is the first to uncover these answers. Among other findings, it identifies education, religion and public-society benefit organizations as the types of nonprofits that attracted the most donor-advised fund grant dollars, based on a sample of donor-advised fund sponsoring organizations from 2012 to 2015.

And here is a critique by Alex Cantor, published in The Chronicle of Philanthropy.

Lloyd Mayer

May 7, 2018 in Studies and Reports | Permalink | Comments (0)

Lott et al.: Bifurcation of State Regulation of Charities

Urban InstituteCindy M. Lott (Columbia University School of Professional Studies), Mary L. Shelly, Nathan Dietz (Urban Institute), and Marcus Gaddy (Urban institute) have published Bifurcation of State Regulation of Charities: Divided Regulatory Authority Over Charities and Its Impact on Charitable Solicitation Laws (Urban Institute). Here is the abstract:

In 27 United States jurisdictions, the attorney general is the sole state-level regulator of charitable organizations and charitable solicitation. In the other 24 jurisdictions, state-level charity regulation is split between two entities: the state attorney general and another state agency, most commonly the secretary of state. This division of regulatory authority is called “bifurcation.” This paper provides background information and data on bifurcated structures for state charities regulation and illustrates the potential utility of considering bifurcation in research on other state-level areas of charitable regulation. We explore several areas of state-level regulation of charitable solicitation (fundraising) through the lens of bifurcation and identify how bifurcation may affect regulatory patterns using our Index of Charitable Solicitation Regulatory Breadth. These approaches to understanding the regulatory context at the state level may have broad applications for research on charities and for jurisdictions considering different models of oversight.

Lloyd Mayer

May 7, 2018 in Studies and Reports | Permalink | Comments (0)

Thursday, September 14, 2017

2017 Guidestar Compensation Report

The 2017 Guidestar Compensation report is now available for purchase, although Guidestar does provide a sample of the report here.   Summaries highlight two issues:

    -    Nonprofit compensation has gone up over the last year, returning to pre-recession levels; and

    -    A gender gap persists in nonprofit compensation (not that that is particularly shocking to anyone in the sector, but it is nice to have some evidence to that effect)

 

EWW

September 14, 2017 in Current Affairs, In the News, Studies and Reports | Permalink | Comments (0)

Friday, June 23, 2017

Blumberg, Canadian Registered Charities Revoked as a Result of Audit 1992-2017

Blumbergs-0928_crop_small_175_175_c1_c_cMark Blumberg (Blumberg Segal LLP) has put together a list, with relevant links, of all 447 Canadian registered charities that have had their charity status revoked by the Charities Directorate of the Canada Revenue Service over the past 25 years. For anyone interested in seeing what types of activities get Canadian charities into trouble with the federal tax authorities, this list could be invaluable. I am not aware of a similar compilation with respect to the IRS in the United States, although Terri Lynn Helge (Texas A&M) has an article in the Pittsburgh Tax Review (Rejecting Charity: Why the IRS Denies Tax Exemption to 501(c)93) Applicants) that looks at IRS denials of applications for recognition of exemption as a charity under section 501(c)(3).

Hat tip: globalphilanthropy.ca.

Lloyd Mayer

June 23, 2017 in International, Publications – Articles, Studies and Reports | Permalink | Comments (0)

Thursday, June 22, 2017

Crystal Ball Gazing: Tax Reform and Nonprofits

CongressNo one knows what is going to happen with tax reform, which means now is the perfect time to speculate wildly about how Congress may help or hurt tax-exempt nonprofits if and when it actually does something.

Tax Simplification: If Congress follows the President's lead and simplifies in part by sharply increasing the standard deduction, it will make the charitable contribution deduction irrelevant to an even greater proportion of U.S. households as the number of itemizers shrinks significantly. According to an Indiana University Lilly Family School of Philanthropy report, this change alone could reduce charitable giving by an estimated $11 million annually, and if combined with a lower top tax rate of 35% they could together reduce charitable giving by $13.1 billion. To put these figures in perspective, the most recent Giving USA report reported $282 billion in donations from individuals for 2016.

Non-Itemizer Deduction: One proposal to counter this effect is a charitable contribution deduction for non-itemizers, as long advocated for by Independent Sector among others. The Lilly Family School of Philanthropy report estimates that allowing non-itemizers to deduct their charitable contributions would more than offset the negative effect on contributions from the standard deduction increase and rate reduction proposals. That said, it is hard to see how this proposal could have much chance of success given both its revenue cost and the administrative and enforcement complexity it introduces, particularly in an era of reduced IRS examinations. For an analysis of some of these issues, see this October 2016 Urban Institute report.

The Ghost of Rep. Camp: While Dave Camp is not dead he is no longer in Congress, which you would think would limit his influence over current tax legislation. But he did something brilliant when he was driving the tax reform bus as Chair of the House Ways & Means Committee several year ago: he went through the laborious process of actually drafting legislative language and having the result analyzed and scored by the Joint Committee on Taxation. This means that both the specific language and revenue effects of each provision of the Tax Reform Act of 2014 is available to be pulled off the shelf and deployed immediately as part of any current tax reform legislation. As detailed on pages 535-598 of the JCT report, this includes numerous provisions relating to tax-exempt organizations, including a number of limitations on the existing charitable contribution deduction. Especially if some revenue raisers are needed to pay for other aspects of tax reform, I expect to see some of Rep. Camp's proposals reappear in current legislation.

The Charities Helping Americans Regularly Throughout the Year Act of 2017: Given the uncertainty about the content, timing, and even liklihood of major tax reform legislation, it is a good idea to have a backup plan. The CHARITY Act (I do not know where they got the "I" from) is a modest, bipartisan attempt to tweak the existing tax laws for tax-exempt charities. Its provisions include simplifying the private foundation investment tax under section 4940, making donor advised funds eligible for IRA rollover contributions, increasing the mileage rate applicable to personal vehicle use for volunteer charitable activities, creating an exception to the private foundation excess business holdings rules under section 4943 (can you say Newman's Own Foundation?), and an electronic return filing requirement for all tax-exempt nonprofits.

I look forward to months if not years of further crystal ball gazing on these topics.

Lloyd Mayer

 

June 22, 2017 in Federal – Executive, Federal – Legislative, In the News, Studies and Reports | Permalink | Comments (0)

Wednesday, June 21, 2017

Feds In Action: Data, a Report, and the Occasional Indictment or Raid

IRSWhile the IRS is underfunded and Congress is deadlocked, this does not mean there is no action by the federal government with respect to tax-exempt nonprofit organizations. For starters, the IRS' continues to report data like clockwork, including the always informative Data Book. Highlights from the FY 2016 Data Book include the miniscule examination rate (only 2,956 annual returns examined, including Forms 990, 990-EZ, 990-N, 990-PF, 1041-A, 1120-POL, and 5227), continued strong closures of exemption applications (92,129 for the year, of which the IRS approved 86,406, disapproved 54, and had another 5,669 closed for other reasons, including withdrawals), and now almost 1.6 million organizations recognized as exempt under section 501(c).

The IRS Advisory Committee on Tax Exempt and Government Entities has also had its charter renewed for two more years, and released its sixteenth Report of Recommendations earlier this month. The Committee has been restructured in a way that many of its current members feel is not helpful, as they shared at length in the report. More specifically, the Committee is now divided into subgroups not based on functional areas but instead on subject areas, specifically FICA Replacement Plans, Online Accounts, and, ironically, Future of the ACT.

Finally, the IRS and other federal authorities continue to pursue the most egregious wrongdoing by actors at tax-exempt nonprofits, including criminally. Recent news reports include two major stories along these lines. One involves a federal indictment against a bank officer and her husband who are alleged to have transferred embezzled funds from Bank of America totalling $1.2 million to a variety of charities, possibly in exchange for return payments or other benefits from those charities, according to reports in the Atlanta Journal-Constitution and the Boston Globe. The other, separate situation involves a search by IRS and U.S. Postal Service investigators at the headquarters of televangelist Benny Hinn, as reported by the Dallas Morning News. No further public information is currently available regarding this investigation.

Lloyd Mayer

 

June 21, 2017 in Federal – Executive, In the News, Studies and Reports | Permalink | Comments (0)

Tuesday, May 10, 2016

Report: U.S. High School Graduation Rate Hits 82.3 Percent

Today's Philanthropy Digest is reporting that while the U.S. high school graduation rate rose to a record high 82.3 percent in 2014, the nation is not on track to reach the goal of achieving a 90 percent rate by 2020. That's according to an annual study from Civic Enterprises and the Everyone Graduates Center at John Hopkins University's School of Education.

Conducted in partnership with America's Promise Alliance and the Alliance for Excellent Education, the report from GradNation, 2016 Building a GradNation: Progress and Challenge in Raising High School Graduation Rates, found that while Iowa has achieved a 90 percent graduation rate and twenty other states are on track to do so by 2020, for the first time in four years the nation as a whole is not on track to meet the goal. According to the study, 2, 397 low-graduation-rate high schools -- defined under the Every Student Succeeds Act as those with at least a hundred students enrolled and an Adjusted Cohort Graduation Rate of 67 percent or lower -- enrolled a total of 1.2 million students nationwide, even as the number of large low-graduation-rate schools with at least three hundred students was halved from 2,000 to 1,000 between 2002 and 2014. In forty-one states, low-income students accounted for more than 40 percent of those enrolled in low-performing schools -- including twelve states where they made up more than 75 percent of the student body. African Americans and Latinos made up more than 40 percent of enrollment in low-graduation rate schools in fifteen and nine states, respectively.

The Digest continues:

The study also found that low-graduation-rate schools account for 7 percent of all district schools (and 41 percent of all low-graduation-rate schools), 30 percent of charter schools (26 percent), 57 percent of alternative schools (28 percent), and 87 percent of virtual schools (7 percent). The report recommends that policy makers set clear definitions and give graduation rates the weight they deserve in ESSA; require all states to report extended-year graduation rates in addition to four-year grad rates; create evidence-based plans to improve low-graduation-rate high schools; and ensure that alternative and virtual schools are included in state accountability and improvement systems.

"As the report points out, raising the graduation rate to 90 percent would require graduating an additional 285,000 students," said America's Promise Alliance president and CEO John Gomperts. "Putting it that way makes the goal appear that much more attainable. But to graduate this additional number of students equitably, the nation will have to focus on getting significantly more low-income students, students of color, students with disabilities, English-language learners, and homeless youth on track to earning a diploma. Persistence is key."

Needless to say, the government -- federal, state and local -- will have to allocate more tax dollars to education, to ensuring that the facilities and personnel are available to guide these students towards earning their graduation diplomas. 

VEJ

 

May 10, 2016 in Current Affairs, In the News, Studies and Reports | Permalink | Comments (0)

Wednesday, June 3, 2015

The Effect of Medicaid Expansion on Charity Care Costs

Let me just be honest about my biases.  I think it is absolutely shameful that 19 states, including Florida, have refused to participate in Medicaid expansion.  It's free money, for Christ's sake, you idiots! But I digress and I am supposed to be a scholar and speak in cold unemotional logic.  So let me restate my opinion in the language of a scholar:  Ahem . . . .  It's free money, for Christ's sake, you idiots!  Anyway, we have previously blogged about the early impact of the affordable care act on hospital charity care costs.  A more recent report by the Kaiser Family Foundation confirms the early trend:

Looking at particular cost items, charity care costs decreased 40.1 percent among hospitals in Medicaid expansion states compared to 6.2 percent in non-expansion states. However, another component of cost of care to the poor, Medicaid shortfalls – the difference between what Medicaid pays and the costs of treating Medicaid patients – increased 31.9 percent between 2013 and 2014. Shortfalls increased for hospitals in expansion states but were more than offset by increases in Medicaid revenue. Shortfalls increased more among hospitals in non-expansion states than expansion states and were not offset by increases in Medicaid revenue, possibly due to state cuts in provider reimbursement. Combining the decrease in charity care costs with the increase in Medicaid shortfalls, the net cost of caring for low income patients decreased among hospitals in expansion states, while these costs increased among hospitals in non-expansion states.

So let me get this straight.  The feds, using our tax dollars, will pay 90% of the costs of Medicaid expansion -- 100% until 2020.  Charitable costs will likely increase without medicaid expansion anyway, meaning we will pay for indigent care one way or the other.  But the nefarious nineteen (as I will call them from now on) don't want any of "Obama's stinking money."  Yeah, that'll teach us, alright!  We should remind the knuckleheads that Obamacare was based entirely on Romneycare!

dkj

 

June 3, 2015 in Studies and Reports | Permalink | Comments (2)

Tuesday, June 2, 2015

Bright Lines Project Issue Political Activity Draft Regulations

We previously blogged on the efforts of the Bright Lines Project to come up with draft political activity regulations here and here.  Bright Lines continues the work with these draft regulations.  The latest draft, by the way is dated November 11, 2014.  Recent reports suggest the real draft regulations may issue sometime this month.   

dkj

June 2, 2015 in Studies and Reports | Permalink | Comments (0)

Friday, May 29, 2015

The Economic Value of College Education by Major

If I were King of the world, I would allow for only a few majors at the undergraduate level.  Literature, Languages, History, Mathematics, Science, Art and Philosophy.  I would forbid students from majoring in jobs or careers.  On the other hand, I have a daughter going into her junior year in college and three more in line and they all need to get jobs to support me and my old bones one day.  Georgetown University's Center on College and the Workforce has an informative study out this month quantifying the economic value of a college education by major.   I intend to send this to all four of my daughters phones because they won't hear me unless they get it by text or snapchat or whatever other social media is out these days.   

 

 

Exec-Sum-Fig-1

May 29, 2015 in Studies and Reports | Permalink | Comments (0)

Friday, January 30, 2015

2014 Charitable Donations to Colleges = Record Year

The Wall Street Journal reported that Harvard, Stanford Lead Record Year for College Gifts; $37.5 Billion Is 10.8% Jump; Top 10 Schools Bring in 18% of Donations:

Colleges and universities received a record $37.5 billion in donations last year, led by massive gifts to Harvard University, Stanford University and other already-wealthy schools.

The new high, a 10.8% jump from the prior year, was due in part to stock-market increases that boosted capital gifts, as well as a jump in donations of art, according to an annual survey being released Wednesday by the nonprofit Council for Aid to Education. ...

The top 10 recipients brought in nearly 18% of all gifts last year, up from 15% a decade earlier, according to Ann E. Kaplan, who directs the survey.

(Hat tip:  TaxProf Blog)

Nicholas Mirkay

 

 

January 30, 2015 in In the News, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Saturday, January 24, 2015

Cooney et al.: Benefit Corporation and L3C Adoption: A Survey

Kate Cooney (School of Management, Yale), Justin Koushyar (Business School, Emory), Matthew Lee (INSEAD (Singapore)), and Haskell Murray (Belmont) have posted the results of their research titled Benefit Corporation and L3C Adoption: A Survey at the Stanford Social Innovcation Review blog.  Here is the introduction:

A major challenge for social enterprises pursuing both a social mission and financial profit has been the absence of clear legal guidance about their responsibilities to investors and other stakeholders. In the United States, a number of new legal forms specific to social enterprise have emerged over the last decade to fill this gap. The two most common, the low-profit limited liability company (L3C) and the benefit corporation, modify traditional business legal structures to clearly enable and mandate the pursuit of social and environmental as a for-profit business enterprise. This is no small matter—the last major legal form to be created in the United States was the LLP in 1991.

The success of a new regulatory infrastructure for social enterprise depends heavily on the extent to which state legislators, then companies, adopt these forms. To date, a lack of good data has made it difficult to evaluate progress. To address this, we worked over the last year with Secretary of State offices and Intersector Partners to develop systematic, nation-wide data on adoption of these forms.

Lloyd Mayer

January 24, 2015 in Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Monday, September 29, 2014

What happens if charity care becomes obsolete?

An article last week in the Washington Post (h/t Chronicle of Philanthropy) discussed a report by the Department of Health and Human Services that indicated that hospitals are experiencing significant declines in charity care and bad debt, thanks to expansions in Medicaid and a drop in the number of otherwise uninsured individuals due to the Affordable Care Act.  The report projects $5.7 billion (that’s billion, with a “b”) in savings in uncompensated care costs in 2014.

The first thing that I thought was, “Wow, that’s a big number!  Great news!”   The second thing I thought was, “Gee, I wonder if that will change how we evaluate nonprofit hospitals.”    What that might say about my mental state aside, it will be interesting to see how this structural change to the way we pay for health care works its way through the standards for tax exemption.

I note that the HHS report tracks “uncompensated care,” which it treats as the sum of bad debt and charity care.  While the HHS report does indicate that there is a difference between “self-pay” patients and “charity care”, the report is quick to note that not all hospitals break down their reporting this way.   (See HHS Report, FN 6).  Of course, part of the raging debate is whether bad debt is charity care – the Catholic Hospital Association says it isn’t but not all hospitals agree.

Either way, under traditional formulations of the community benefit standard, charity care is not the be-all and end-all of for exempt status – it might not even be necessary.   The recent trend, first evident in the Revised 990 Form’s Schedule H and then in the community assessment report requirements of the ACA, appears to lean toward wanting more discussion and disclosure of charity care as component of tax-exemption, even if that doesn’t appear anywhere formally quite yet.  It will be interesting to see if a structural reduction in the need for charity care (however defined) changes that conversation.

Then, of course, there are the states.   Having practiced in Illinois at the time of the Provena decision (good summary here), I’m particularly curious to see how that might play out.   For those of you who weren’t following Provena, Illinois revoked the property tax exemption for a number of nonprofit hospitals, stating that the Illinois property tax charitable exemption provisions (some of which are in the state constitution) require actual charitable use (as in relieving- poverty-charitable-use) of the property.   While denying that charitable use is a numbers game (that is, you need to show that there are enough charitable dollars spent to offset the property tax uncollected) – the court then engages in exactly that mathematical exercise.  

I’ve moved from Illinois since Provena came down, but I understand there was a legislative fix (SB 2194 and SB 3261, passed in 2012), that partially codifies this math-based analysis.  What happens if a hospital doesn’t meet its charity care dollars spent requirement because they are simply not necessary anymore due to ACA?

I might be going out on a limb here, but I’m guessing that Prof. Colombo might have a thought or two on this…

EWW

September 29, 2014 in Current Affairs, Federal – Executive, State – Legislative, Studies and Reports | Permalink | Comments (1) | TrackBack (0)

Friday, August 22, 2014

Study Finds Increase in Charitable Donations by Puerto Rican Taxpayers after Charitable Contribution Deduction Limitations Were Removed

As reported by the Philanthropy News Digest, a recent analysis discloses that charitable gifts reported by taxpayers in Puerto Rico increased by about $5 million in the year following a change in the law that expanded the deductibility of charitable contributions.  The change in giving patterns varied among income groups (predictably in part, but perhaps surprisingly in some respects). A summary follows:

              

The report … analyzed tax data from the Puerto Rico Treasury Department for 2011 — the first year that individual taxpayers in Puerto Rico were allowed to deduct 100 percent of their donations to nonprofits, up to a maximum of 50 percent of their adjusted gross income — and found that the number of people who claimed a charitable deduction jumped from 27,644 in 2010 to 47,004, or 4.6 percent of all tax filers, in 2011. Previously, Puerto Rican taxpayers were only allowed to claim a deduction of 33 percent on their charitable donations, or 100 percent of their donations in excess of 3 percent of their adjusted gross income.

 

The report also found that while the number of taxpayers claiming a charitable deduction increased across all income groups, the average amount claimed fell some 39 percent, with the total increasing 7 percent and 27 percent among individuals with an adjusted gross income of between $25,000 and $50,000 and more than $150,000, respectively, and falling among those with an adjusted gross income of between $100,000 and $150,000 (-8 percent), $75,000 and $100,000 (-2 percent), $50,000 and $75,000 (-1 percent), and less than $25,000 (-9 percent).

 

A copy of the full report is available here.

 

JRB

August 22, 2014 in Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 20, 2014

New Report on Governance by College Trustees

The Chronicle of Higher Education is running a story on a recent report exhorting college boards of trustees to engage more actively in governance.  The key details follow:

The report, “Governance for a New Era: A Blueprint for Higher Education Trustees,” was released on Tuesday by the American Council of Trustees and Alumni. It stemmed from a project led by Benno Schmidt, chairman of the City University of New York’s Board of Trustees and a former president of Yale University.

 

The document calls on trustees to rethink their leadership roles in light of colleges’ current challenges. Broadly, it asserts that trustees should take a strong role in areas such as defining an institution’s goals, protecting academic freedom, ensuring educational quality, and holding colleges accountable for their performance.

Interested readers may access the full report here.

 

JRB

August 20, 2014 in Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 13, 2014

DAF Millennials Get Charitable

        Earlier this week, I wrote about the need for donors to view their charitable giving as a form of investment. According to the results from a Vanguard Charitable study released earlier this month, Millennials are doing just that. See The NonProfit Times article "Millennials More Generous with Donor-Advised Funds."  Millennials want to track the results of their giving and be involved in implementation associated with their donations. They are frequently turning to donor-advised funds ("DAFs") in this endeavor, including Mark Zuckerberg and his wife. (If you are interested in the overall DAF debate, see the Forbes article from earlier this year).

        In “An Inside Look,” Vanguard Charitable looked at 15,330 donors over a 10-year period. These donors used Vanguard’s DAF to make their donations. Although Millennials comprised the smallest percentage of donors when compared to Baby Boomers and Traditionalists (those born before 1946), as a whole, they contributed more money on average. According to Vanguard Charitable, Millennials gave $9,065 compared to an average of $6,979 and $7,877 for Traditionalists and Baby Boomers, respectively.

        At the same time, Millennials report that they are unsure of how to give outside of using DAFs. Clearly, Millennials want their charitable dollars to end up with those charities that will put them to their most productive use. Although the chief philanthropic officer at Vanguard Charitable has recommended that they hold board positions as a way to achieve this result, I would argue that charities themselves should assume responsibility for communicating to donors what their “return” or “social impact” is for a given investment. Donors should not want to give a substantial amount to a charity or to charities without understanding what the resulting social impact is. Millennials are creating a culture in their giving that will demand more transparency and accountability and that has the ability to re-shape the future of the nonprofit sector.

Khrista Johnson

August 13, 2014 in In the News, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 12, 2014

Stanford Study: Nonprofits Need More of a Say in Measuring Social Impact

        Nonprofit evaluation is a key component of establishing an efficient charitable market. Without a way to measure social impact, both nonprofits and donors remain unaware of whether investment is being put to its most productive use. (Social impact may be thought of as what the charity has accomplished with a donation). As Stephen Goldberg has noted in his book Billions of Drops in Millions of Buckets, one of the reasons inefficiency exists in the charitable market is because funders currently cannot differentiate between effective and ineffective charities. The Stanford Social Innovation Review recently examined the need for a shift in nonprofit evaluation and the discourse surrounding it in “Measuring Social Impact: Lost in Translation,” and the ideas expressed hold valuable insights for the sector.

        Most importantly, the authors contend that nonprofits need to set the agenda in terms of evaluation and should use a qualitative approach in addition to a quantitative one. They point out that if nonprofits do not shape the evaluation conversation, funders will do it for them. They note five specific items that nonprofits should “talk more about” in terms of evaluation. First, nonprofits should focus more on their purpose and their strategy for achieving it. As the authors advise, “[A]ll nonprofits should have a clearly defined theory for how they will create change that connects their strategies and programs to the results that they anticipate.” Second, nonprofits should spend more time discussing people. Funders often want nonprofit assessment to include quantitative assessments, e.g., the number of people indirectly affected. However, too much emphasis on quantitative analysis reduces a nonprofit’s impact to a series of numbers. The authors promote a more balanced approach that includes qualitative assessments as well: “Qualitative assessments that draw on conversations with people are often more consistent with how nonprofits operate, and they are also a methodologically valid form of evaluation.” Third, nonprofits would benefit from drawing attention to the big picture. In other words, evaluation should consider how a given nonprofit’s work fits within the collective transformation of an area. Fourth, nonprofits should not shy away from discussing their challenges. Their failures and lessons learned are beneficial in terms of collective learning. Accordingly, the authors urge nonprofits to highlight not only monitoring but also transparency as a goal in evaluation. Finally, nonprofits should encourage more learning. Currently, funders (who focus more on monitoring than learning) have a much louder voice in evaluation than beneficiaries and nonprofit workers who are directly involved and who may facilitate learning.

        In terms of the discourse surrounding nonprofit evaluation, the authors caution that business, managerial, and scientific language is drowning out the nonprofit voice. This underscores the need for nonprofits to take charge of shaping evaluation. Too often terms such as “investment,” “returns,” “output,” and “outcomes” are used to discuss social impact, without regard to the five other areas identified. The Stanford team’s study of 400 individuals and organizations in the nonprofit sector revealed that the vocabulary of nonprofit evaluation typically falls within 3 cultural domains: (1) managerial, (2) scientific, and (3) associational, with managerial terms dominating the discourse. All of these domains hold valuable insights for the nonprofit sector; however, nonprofits themselves should be the ones to shape their evaluation and the discourse surrounding it.  

Khrista Johnson

August 12, 2014 in In the News, Publications – Articles, Studies and Reports | Permalink | Comments (1) | TrackBack (0)

Wednesday, July 16, 2014

Notes on the CPI Report on the IRS Targeting Scandal

The Center for Public Integrity has released an investigative report about the IRS Tea Party targeting scandal, in which the CPI reviewed thousands of pages of documents and interviewed dozens of insiders. The report provides a good high-level overview of the scandal, and makes a few useful findings about the Exempt Organization function within the IRS. To many, the findings may come as no surprise, but bear repeating: over time the IRS has fewer employees to regulate a rapidly growing sector, the already low rate at which the IRS investigates exempt organizations is shrinking, the social welfare category (i.e., the one at the heart of the targeting scandal) is growing, and the IRS is increasingly timid – backing down to political pressure. Unfortunately, none of this makes for an effective overseer of a vital part of civil society.

Although the report is useful, some peripheral statements should be more closely considered if only because a number of misconceptions about the IRS targeting scandal continue inadvertently to be spread. One statement in the report is that “It wasnʼt until the Supreme Courtʼs Citizens United v. Federal Election Commission decision in 2010, however, that politically active nonprofits — social welfare groups as well as 501(c)(5) labor unions and 501(c)(6) trade groups — became a major force in political elections, all while receiving a de facto tax subsidy.” The implication from the “de facto tax subsidy” language is that political activity, when conducted after Citizens United by a noncharitable tax-exempt like a 501(c)(4), (5), or (6), gets an unwarranted subsidy and is abusive. But this is not really right. Political activity by a noncharitable exempt generally is not tax-advantaged relative to the same activity by a political organization (aka a “527”). Rather, political activity by a noncharitable exempt actually triggers a tax that is intended to make the tax treatment of political activity consistent across sections of the tax code. There is no abusive subsidy for political activity here.

Later, the report notes that “Social welfare and other nonprofit groups galloped into the post-Citizens United era with an inherent advantage over overtly political groups: They could hide the source of their funding, regardless of whether those sources were corporations, individuals or other special interests. And they're only required tell the FEC the names of donors who give money to help produce specific ads — something that rarely happens.” This point bears more than passing emphasis. The anonymity offered to donors by noncharitable exempt status, and not a tax subsidy, is the underlying legal issue at the heart of the targeting scandal post-Citizens United. In other words, the targeting scandal is not really about taxes at all, it is about donor disclosure or the lack thereof.

The report says that: “The tea party affair has directed attention away from what many IRS workers say is the much larger problem — regulating the activities of politically charged nonprofits.” and also that the IRS is “supposed to ensure 501(c) nonprofit organizations don't become more political than the law allows.” The broad meaning here is right: the targeting scandal has diverted attention from some real problems with the legal architecture. Also, the IRS does have a legitimate role to play when it comes to political activity and tax exemption. But these statements unintentionally play into another misconception about the IRS’s role when it comes to the political activity of noncharitable exempts and political organizations. In this context, the IRS does not really “regulate” political activity in the sense of deciding whether or not the activity is permitted. Rather, the IRS’s function is to classify organizations based on their purpose as measured by the quantum of their activities. This is an important distinction. The IRS does not regulate speech or activity as such; rather, the IRS, as charged by Congress, assesses organization purposes and activities and applies a tax label ((c)(4), 527, etc.). So political activity is relevant to tax classification, but it is not a question of permitting or prohibiting political activity.

The report also states that “Political ‘527 groups’ are tax exempt like 501(c)(4) groups, but unlike them, they must disclose their donors.” It should be noted that the point about disclosure is correct, but not the point about tax-exemption. Broadly, 527 groups are taxed on their investment income whereas 501(c)(4)s and other noncharitable exempts are not. So the tax treatment is not equivalent. But as noted earlier, if a noncharitable exempt engages in political activity, then a tax is triggered, which is intended to make the organizational tax treatment of political activity broadly uniform across exemption categories.

But none of this undermines the key thrust of the report's message -- that the regulatory environment of the IRS exempt organization function is in crisis and in need of constructive solutions.

Roger Colinvaux

July 16, 2014 in Current Affairs, Federal – Executive, Federal – Legislative, Studies and Reports | Permalink | Comments (0) | TrackBack (0)