The Philanthropy Roundtable will continue our Alliance for Charitable Reform (ACR) in 2006.
The Roundtable established ACR in January 2005 as an emergency initiative to respond to legislative proposals on Capitol Hill that would affect private foundations and public charities. Its mission is to offer common-sense solutions for abuses in the charitable sector while protecting the freedom of donors and foundations to use their best judgment in carrying out their charitable objectives.
I am happy to report that we acheived our objectives this year: ACR leadership played a crucial role in preventing the enactment in 2005 of legislation that would harm philanthropic freedom and threaten the very existence of family foundations. However, the emergency is not over, and therefore ACR will maintain a very active presence on Capitol Hill.
Dan Peters and Heather Higgins, the chairman and vice chairman of the Roundtable, will continue to run the ACR steering committee. Sandra Swirski, a principal of Venn Strategies (firstname.lastname@example.org), will continue to serve as ACR executive director. And Dan has graciously agreed to continue taking the lead on fundraising for this emergency ACR effort. Since ACR is not funded by general membership contributions to The Philanthropy Roundtable, ACR has to raise money over and beyond the normal budget for Roundtable conferences, publications, and services to donors.
In 2005, under the leadership of Dan, Heather, Sandra, and the steering committee, ACR quickly captured national philanthropic attention—with a March conference in Washington for 100 leading donors from across the country, an April op-ed by Heather Higgins in the Wall Street Journal offering a devastating critique of legislative proposals made by Senate Finance Committee staff, and a May letter to Senate Finance Committee Chairman Charles Grassley articulating ACR concerns that was signed by Senator Rick Santorum and 21 other senators. Senator Santorum emerged as a legislative champion for ACR’s common-sense approach to charitable reform.
ACR had a powerful, positive influence on the June recommendations of Independent Sector’s Nonprofit Sector Panel. Thanks in part to ACR’s clear articulation of the principles of philanthropic freedom, the panel rejected such Grassley proposals as a five-year review of tax-exempt status and arbitrary limits on staff and trustee compensation. The panel did, however, recommend more new regulations than ACR believes are needed to counteract charitable abuses.
ACR dramatically stepped up its self-defense lobbying activity in the summer. On July 27, ACR organized and co-hosted with several other groups a self-defense Lobby Day on Capitol Hill. Sixty foundation and charity leaders visited 40 Senate offices to express their concerns about legislative proposals that could harm the philanthropic sector. During August, in four states with Finance Committee members, ACR initiated a grassroots campaign to mobilize charity and foundation leaders to express their concerns about the damage that would be done to charity if family foundations are regulated out of existence.
On November 8, ACR organized another self-defense Lobby Day to support Senator Santorum’s CARE legislation; 19 other organizations, including the Association of Small Foundations and Independent Sector, joined with ACR, and altogether 75 individuals visited 50 Senate offices. This work helped to ensure the inclusion of a number of common-sense charity incentives in the Tax Relief Act of 2005, which passed the Senate on November 18. The Senate legislation also included some troublesome provisions, including one that would increase foundation excise taxes for certain kinds of real estate investment income.
This Senate legislation was also notable for what was missing. It did not include a requirement for foundation accreditation, five-year reviews of tax-exempt status, arbitrary limits on trustee and staff compensation, federal micromanagement of the boards of private organizations, limits on compensation of family members on family foundations, or a requirement that gifts of certain kinds of appreciated property be valued at their original cost. Such measures had all been proposed in the last two years by Senate Finance Committee and/or Joint Tax Committee staff.
Meanwhile the House did not include any provisions affecting philanthropy in its own tax legislation. The House and Senate bills will now have to go to conference for a final tax relief and budget reconciliation package, probably in early 2006. Therefore Congress is likely to revisit charity and foundation legislation during the next few months. Beyond that, it is worrisome that Finance Committee Chairman Grassley is still talking about regulation of trustee and staff compensation, and governance changes that could possibly harm family foundations.
The Roundtable has concluded that we cannot withdraw our forces in the middle of this battle. We are deeply grateful to those who have joined us in the ACR fight in 2005. Together we will do what it takes to protect philanthropic freedom in 2006.
For more information about the Alliance for Charitable Reform, including information about how to join our coalition, see www.ACReform.com.
Adam Meyerson is president of The Philanthropy Roundtable.