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Independent Sector
Policy Update
July 8, 2005
Fax Bill Protects Charities' Ability to Communicate
S. 714, a bill to amend the 2003 Federal Communication Commission's "do not fax" rule, will soon be signed by the President after its passage by the Senate on June 24 and the House on June 28. The bill, sponsored by Senator Gordon Smith (R-OR), restores the "established business relationship" exception that allows businesses, associations, and charities to send, without receiving prior written permission, faxed advertisements (e.g., conference promotions, publications, membership solicitations) to their members, donors, and others with whom the organization has an established relationship. Each communication, however, must include a means to opt out of receiving future documents. The FCC rule, which was scheduled to go into effect July 1, would have required prior permission from all fax recipients if the fax contained advertisements. The Commission has stayed the rule's implementation until 2006 in anticipation of the President's upcoming signing of S. 714, which will render the rule moot. More on this issue JWOD Governance Standards Withdrawn in Response to Nonprofit Concerns
On July 1, the federal Committee for Purchase From People Who Are Blind or Severely Disabled, which administers the Javits-Wagner-O'Day (JWOD) Act, withdrew the mandatory governance standards it had proposed in November 2004 for nonprofit agencies awarded contracts under the JWOD program. Those rules would have imposed stringent regulations on the nonprofits, including standards for boards of directors and limits on executive compensation. In the July 1 notice, the Committee reported that it had received 167 written comments, including those submitted by Independent Sector, consisting of 106 objections and only six submissions indicating full approval. Contrary to some of the objections expressed in comments, the committee concluded that it had authority to issue the rule, but decided to withdraw it because "the number and nature of the other issues raised in the comments justify extensive study and revision of the rule." The committee hopes to propose revised standards by the end of 2005.
Read the full notice in the Federal Register.
House Ways and Means Subcommittee Holds Hearing on Façade Easements
The House Ways and Means Committee continued its examination of the tax-exempt sector with a June 23 hearing by the Oversight Subcommittee on tax deductions for historic façade easements. Speakers addressed the importance of façade easements to historic preservation and community revitalization, the efforts of the historic preservation community to enforce easements and comply with current law, concerns about valuation abuses and over-promotion of easement donations, and potential reforms, particularly of appraiser standards, the appraisal process, and sanction enhancements for overvaluation. More on this issue.
Estate Tax Negotiations Continue
Senator Jon Kyl (R-AZ) is predicting that estate tax legislation will be brought to the Senate floor before the end of July. Because they may not have the votes to pass full repeal, Senate Republicans are focusing on a possible compromise, and Senator Kyl is working with Senator Max Baucus (D-MT) and other Democrats to try to forge a bipartisan bill. As part of its efforts to support thoughtful reform of the estate tax, IS joined a group of New York foundations to meet with Finance Committee member Senator Charles Schumer (D-NY) and encourage him to ensure that any change will not damage giving to charitable organizations. As of now, there is no consensus around a compromise, but that could change quickly. If such a compromise is reached, the measure will move to the floor as a freestanding bill; if not, Senator Kyl is expected to try to attach his version, which dramatically increases the exemption amount and cuts the tax rate to 15 percent, to other legislation
Personal Philanthropy Bill Introduced
Representative Nathan Deal (R-GA) has introduced a bill (H.R. 2534) that would allow taxpayers to take tax deductions on charitable contributions made through “personal philanthropy accounts.” The accounts would serve as trusts administered by a bank, community foundation, or other appropriate individual through which an account holder could make cash contributions to 501(c)(3)s.
Account holders would be required to have in place at all times a designated charitable organization to which remaining funds would be distributed in the case of the holder’s death, and to distribute a minimum of 5 percent per year from accounts with balances exceeding $10,000. Further provisions to prevent abuse of accounts would include limiting redistribution of payments made from one personal account to another account held by the same taxpayer; requiring that trustees allocate funds within 30 days of confirmation from a designated charity that it is a 501(c)(3) organization; and disqualifying trustees that are determined to have distributed more than 10 percent of prior payments to non-qualifying organizations in a given year.
Contributions made by an employer to an employee’s personal philanthropy account would additionally be excluded from the employee’s gross income. The bill currently does not have any co-sponsors.
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