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The Donors Forum is tracking the following
government issues and legislation that affect the philanthropic
and nonprofit sector.
Panel on the Nonprofit
Sector Releases National Principles and Best Practices
In October, the Panel on the Nonprofit Sector released
its Principles for Good Governance and Ethical Practice:
A Guide for Charities and Foundations. It is available
on the Nonprofit Panel website. The Guide outlines 33
practices designed to support board members and staff
leaders of every charitable organization as they work
to improve their own operations.
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Compliance Guides
Published by IRS
The Internal Revenue Service has issued three guides
to assist tax exempt organizations and contributors
to nonprofits in complying with the law. One of the
publications is a compliance guide for private foundations,
another is for public charities. The guides identify
activities that may jeopardize exempt status, forms
that must be filed, record keeping responsibilities
and resources. The third guide explains tax law for
organizations that receive tax-deductible charitable
contributions and for taxpayers who make contributions.
Source: Independent Sector.
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IRS Compensation
Checklist
The IRS has published a 16-point checklist to help nonprofits
and foundations establish appropriate compensation for
executives and board members who are considered "disqualified
persons" under the tax code. The document, called
a Rebuttable Presumption Checklist, was published to
help (mostly larger) organizations avoid penalties for
excessive payments. The checklist allows nonprofit officials
to compare pay and benefits provided to leaders with
levels at similar organizations.
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House Subcommittee
Holds Hearing on Tax-Exempt Organizations
On Tuesday, July 24, 2007, the House Ways and Means Oversight
Subcommittee held an overview hearing on tax-exempt organizations.
The hearing focused on a number of recent legislative
developments that affect the philanthropic and nonprofit
community, most notably the Pension Protection Act of
2006 (PPA) and the draft re-designed Form 990.
Click
here to see the hearing achieves, including
witness testimony from a panel of national leaders in
the nonprofit community.
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Bill Introduced
to Make IRA Rollover Permanent
On March 8, Senators Byron Dorgan
(D-ND) and Olympia Snowe (R-ME) and Representatives Early
Pomeroy (D-ND) and Wally Herger (R-CA) introduced legislation
(S 819 and HR 1419) to make permanent the IRA Rollover,
a charitable incentive that allows taxpayers age 70 ½
and over to make tax-free distributions to charitable
organizations from their individual retirement accounts
(IRAs). The bill extends the current IRA rollover incentive,
which was included in the Pension Protection Act of 2006
and expires at the end of 2007, by removing the current
$100,000 limitation on donations per year, making all
charitable organizations eligible to receive donations
and providing a planned giving option at age 59 ½.
More than 600 nonprofit organizations from across the
country, including the Donors Forum, signed onto a letter
in support of the 2007 Public Good IRA Rollover Act.
Illinois Representatives Melissa Bean
(D) and Jerry Weller (R) were original co-sponsors of
this important legislation. The Donors Forum thanks
Representatives Bean and Weller for their commitment
to this valuable giving incentive and their support
for the nonprofit community throughout Illinois. The
Donors Forum also thanks Congressman Rahm Emanuel for
his co-sponsorship of this legislation.
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IRS Releases Report on Compensation Study
The Internal Revenue Service (IRS) recently released
the first two parts of its Report
on Exempt Organizations Executive Compensation.
In the report, the IRS finds "significant reporting
issues". Although the examinations did not evidence
widespread concern other than reporting, the report
stated that where problems were found "significant
dollars are being assessed." Senate Finance Committee
Chairman Max Baucus (D-MT) responded
to the report by stating that he is deeply concerned
by the report of serious errors in executive compensation
reporting. Senate Finance Committee Ranking Member Charles
Grassley (R-IA), also commented
on the report.
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President's FY08 Budget Includes Charitable Rollover
and Change to Private Foundation Excise Tax
President Bush's FY08 budget proposal,
issued earlier this month, includes a permanent extension
of the IRA charitable rollover and the simplification
of the private foundation excise tax. The IRA rollover
provision would permanently allow taxpayers age 70 ½
and older to make tax free distributions of up to $100,000
from their individual retirement accounts (IRAs) to
charitable organizations. Gifts to donor-advised funds,
supporting organizations and private foundations would
not qualify for the incentive. The excise tax proposal
would simplify the current two-tier structure of the
tax on private foundation investment earnings by changing
it to a single rate of one percent. For more information,
see pages 28-40 of the Treasury
Department's Blue Book.
The Donors Forum supports
legislation that would allow
individuals to make contributions of IRA assets to charitable
organizations without tax penalty and legislation to
lower or eliminate the excise tax on private foundation
investment income.
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What the New Charities Law Means
for You
On August 17, President
Bush signed into law a bill that will impact grantmakers
and donors. The new charitable provisions, part of the
Pension Protection Act of 2006 (HR 4), include the first
comprehensive regulation of donor-advised funds, as well
as reforms or incentives that will affect private foundations,
supporting organizations and individual donors. The provisions
are many and complex, but here's a brief
overview (pdf) of what the new law could mean for
you.
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Policy Update - Private Foundations
and the Pension Protection Act
The Pension Protection Act of 2006 contains a number of
provisions that have an impact on private foundations
and other nonprofits. In particular, the new Act requires
private foundations to exercise expenditure responsibility
when making grants to certain types of supporting organizations.
These grants cannot count toward a private foundation's
minimum distribution requirements.
It's important for private foundations
to understand which organizations are affected by these
new regulations. For more information on private foundation
impact,
click here. For information
on provisions relating to supporting organizations,
visit Council
on Foundations.
To join the Policy Update email list,
click here.
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President Signs Law with Charitable
Sector Provisions
For a comprehensive overview
of the legislation prepared by Quarles and Brady’s
Tax-Exempt Organizations Practice Group, click
here.
On August 17, President
Bush signed the Pension Protection Act of 2006 (HR 4)
into law. The bill contains a number of charitable giving
incentives and reform provisions. Click here
to learn more.
The incentives include an IRA rollover
provision that allows individuals 70 ½ and older
to make contributions of IRA assets to charitable organizations
without tax penalty up to $100,000. The provision is
in effect for two years. The rollover provision does
not include donations made to donor-advised funds, supporting
organizations and private foundations. The non-itemizer
deduction was not included in the bill.
Reforms contained in the bill include
new reporting requirement for small charities (annual
gross receipts of $25,000 or less), enhanced appraisal
rules and new recording requirements for cash donations—regardless
of amount—to charity. Under the law, the IRS will
be allowed to share more information with state regulators.
Many of the bill's provisions take
effect immediately, such as the IRA charitable rollover
incentive and a number of provisions related to grantmakers.
For information on the provisions that require immediate
attention by grantmakers, click here.
The Council on Foundations has
requested immediate guidance from the Department of
the Treasury on a number of confusing issues contained
in the bill. The request
focuses on new rules for donor-advised funds and supporting
organizations and a provision addressing private foundation
grants to supporting organizations.
A summary of the charity provisions
has been prepared by the Joint
Committee on Taxation (pdf) and Independent
Sector.
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IRS Announces Draft Form 990 for Public Comment
The IRS recently released a draft of the first major
re-design of the Form 990 since 1979. The re-designed
version of the Form 990, Return of Organizations Exempt
from Income Tax, proposes significant changes to the
ways in which public charities and other exempt organizations
will report information on finances, fundraising activities,
governance, executive and board compensation, and program
services. The IRS has stated that it anticipates using
the new form for the 2008 tax year (returns filed in
2009).
The IRS will accept public comment
on the draft form until September 14, 2007. It is critical
that organizations provide thoughtful feedback on the
draft to ensure that the new form is useful for our
own organizations, government officials responsible
for oversight, and the donating public.
You can see the full draft of
Form 990, summary materials, and more information on
how to submit comments on the IRS
website.
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IRS Announces Form 990 Changes
Additional changes are expected to be made to the format
and requirements for the Form 990. These changes, recently
announced by the Internal Revenue Service (IRS) in reference
to its plans to release a draft of a new Form 990 open
for public comment, are expected to include a "core
form" for all tax-exempt organizations and detailed
schedules that apply only to nonprofits with specific
types of activities.
Of note, smaller nonprofits that
were not previously required to file returns may be
required to file a new Form 990-N electronically starting
in 2008. This change will primarily effect small tax-exempt
organizations, whose gross receipts are normally $25,000
or less, and have not previously been required to file
Form 990. The IRS has provided guidance on the new Form
990-N Electronic Notice.
This change is in response to the mandate outlined
in the Pension Protection Act of 2006 which requires
the IRS to establish the new information form and revoke
the tax exempt status of any organization that does
not file either the new 990-N or the Form 990 for three
consecutive years. See the
IRS website for
frequently asked questions about the new electronic
form.
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Advocates Guide to the State Budget
Illinois spends billions in taxpayer dollars each year.
Read the Advocates Guide to the Illinois State Budget,
a new resource from the Donors Forum of Chicago, to learn
how your organization can have a voice in the budget debate
and get its fair share in Springfield. The guide includes
a fold-out poster of the state budget process, a description
of the budget and advocacy tips on how to effectively
influence the process.
To obtain a paper copy, visit our Library.
Contact us at (312) 578-0175 or info@donorsforum.org
to have a copy mailed to you.
Download a PDF copy here (please
note that file sizes are large and may take some time
to download).
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Resource for Lobbying Questions
In addition to the resources provided by Donors Forum
on Lobbying
Guidelines and Engaging
in Advocacy and Lobbying, there is now another
helpful resource available. The Alliance for Justice
provides one-on-one technical questions to nonprofits
via phone (866-NP-LOBBY) and email.
Experts can answer a wide range of lobbying questions
from "What IRS form do I need to elect 501(h)?"
to "How can a 501(c)(3) produce and distribute
a voters guide that describes the candidates?"
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