The Tax Man Cometh
The IRS will begin the “first systematic audit” of up to 150 community foundations this coming fall, according to NonProfit Times, in an effort to establish a baseline of data on normal community foundation operations. There are presently some 800 community foundations in the United States. This information will be compared against future 990s for irregularities. Once the work is completed, the IRS will over the next three years establish similar baselines for donor-advised funds and private foundations.
Charities on Terrorist Watch
New Treasury Department guidelines for charities meant to help stem the flow of funds to terrorist organizations are causing a ruckus, according to the San Jose Mercury News. The Treasury Department views the guidelines as a necessary part of post-September 11 giving. They instruct charities to “compile detailed information on board members of overseas groups” and “review financial accounts of recipient groups” in areas of concern to determine if they are using banks involved in money laundering. Some foundations worry these directives could seriously impede charitable giving in troubled regions, create added expense at a time when organizations are under pressure to reduce costs, and imperil workers who may now be viewed as spies. Barnett Baron of the Asia Foundation says, “sometimes, organizations that assist the needy must, at least indirectly, work with groups deemed terrorists.” A Treasury Department spokesman responds that the procedures are only meant to help: “A lot of charities came to us and said, ‘What can we do to make sure our organizations aren’t being abused to fund terrorists?’”
Packard Head Leaves
Richard T. Schlosberg III, head of the David and Lucile Packard Foundation, announced he will step down from his position at the end of the year. Schlosberg told the San Jose Mercury News his decision is unrelated to the foundation’s recent difficulties. When Schlosberg took the helm, the foundation’s endowment stood at $13 billion. In the aftermath of the economic downturn, the foundation’s endowment, heavily invested in Hewlett-Packard stock, fell to $4.8 billion, which led the foundation to lay off about 40 percent of its staff. Observers wonder if Schlosberg’s retirement will mean a change in funding. The Mercury News speculates a change is unlikely, because three of David Packard’s children sit on the board and are active in the foundation.
Limiting Donor Flexibility
This fall, Dairy State workers giving to the United Way of Greater Milwaukee need to pay attention to where their contributions are going. The Milwaukee Journal Sentinel reports that according to Bill Kitson of United Way, gifts of less than $50 will be routed to the charity’s general fund—Community Impact Fund—even if donors indicate they want the money given to charities outside United Way’s umbrella. Some say this is a blatant disregard for donor intent, while United Way counters it’s necessary to keep operation costs down. Groups such as Community Health Charities, “a consortium of more than 60 health groups, such as the American Diabetes Association,” stand to lose the most. “Based on last year’s donations,” the paper writes, “Community Health Charities could lose about $30,000 in small donations.”
Barnes Move in Jeopardy
Plans are “unraveling” to move the late Albert C. Barnes’s massive collection of French Impressionist paintings—which resides in a Philadelphia suburb per the donor’s emphatic instruction—well away from Philly’s Center City art scene, reports the Philadelphia Inquirer. The collection is overseen by the Barnes Foundation board, which by Barnes’s will has five members, four named from Lincoln University, a historically black college. Because the foundation was going broke maintaining the collection, it earlier petitioned the court to defy Barnes’s wish and move the collection to a more accessible and profitable location in Center City. The Pew Charitable Trusts and the Lenfest and Annenberg foundations supported the move and were negotiating with the Barnes Foundation to pay its legal fees, re-establish its endowment, and raise the funds needed to move the collection. The Barnes’s board now wants to withdraw its petition to move, however, because Pew, Lenfest, and Annenberg want the board to grow to 15 members, with Lincoln losing its majority position. Barnes Foundation attorney Arlin M. Adams says, The Barnes Foundation “will try to meet very promptly to decide if they can try to continue without the help of these three foundations. If the Barnes can’t pay its bill, the attorney general takes over.”
Funding the Security Gap
Roll Call writes that New Jersey philanthropist Ray Chambers is being credited with developing the idea that businesses can supplement government efforts in homeland security preparedness. As a member of Business Executives for National Security, or BENS, Chambers has given some $500,000 to launch New Jersey’s efforts to assist the Department of Homeland Security. In the event of a terrorist attack, the federal Centers for Disease Control and Prevention would send a “push pack” of medicines to a state, but since distributing the medicines isn’t a federal responsibility, BENS’s idea is to have corporations (say, UPS or FedEx) organize the transport. “The states, by themselves, are not going to be able to manage all the resources,” said retired Air Force General Charles Boyd, who headed the pre-September 11 commission on homeland security. “And the federal government will never be able to provide all that’s necessary.”