Wednesday, October 30, 2019

Think Tank Alert: American Idea Foundation

On Monday, former House Speaker Paul Ryan launched the American Idea Foundation. The American Idea Foundation is a nonprofit, exempt under section 501(c)(3), and plans to focus on Ryan's legislative interests from his years in Congress, including poverty, economic opportunity, and "evidence-based approach[es]" to solving other problems.

At this point, of course, there's not much to say about the American Idea Foundation. It just launched, and hasn't filed any 990s or actually done anything. And, in fact, it's not completely clear to me what the Foundation plans on doing. It doesn't look like it plans on doing its own research; rather, it plans to identify successful organizations, and maybe education policymakers about what they're doing?

That's probably just fine as a charitable mission. Because it chose exemption under section 501(c)(3), however, it's going to face some constraints on how much it can lobby (as opposed, I suppose, to merely educate) policymakers, limitations that it wouldn't face if it chose exemption under section 501(c)(4). The advantage to 501(c)(3)? Donations are deductible by donors. 

But if it chose its form solely for the deductibility of donations, that makes an odd juxtaposition between its focus on bottom-up, grassroots solutions and the donor base it's pursuing. Because, as we all know, the TCJA, by increasing the standard deduction, radically reduced the number of people who could deduct their charitable contributions. 

Anyway, at this point we don't know much about the American Idea Foundation, but it will be interesting to watch in the coming years.

Samuel D. Brunson

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The 501(c)(3) recognition will liklely be helpful because: 1) it excludes the group from political campaign expenditures or activities; 2) it excludes the group from spending more than 20% of revenues or expenditures (the typical "no substantial part" calculation) on lobbying while allowing for an unlimited amount to be spent on "public education," including issue advocacy; 3) many of the group's donors will likely be major donors who can take advantage of the charitable deduction up to the (more generous than before TCJA) 60% of AGI; and 4) 501(c)(3) recognition is assumed by some in the public to be somehow purer than 501(c)(4) recognition and a "Good Housekeeping seal of approval" from the IRS.

Posted by: Michael L. Wyland | Oct 31, 2019 2:44:40 PM

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