Posts tagged ‘AFP Political Action Committee’

July 6, 2013

WARNING: Do Not Stick Your Head in the Sand!

I’ve warned the nonprofit sector.

Over the years, I’ve warned the nonprofit sector many times.

Most recently, I provided a warning last month in my post “Special Report: America’s 50 Worst Charities Named”:

As a profession, we must do more to self-regulate. If we do not, we can expect others to fill the vacuum. The [“50 Worst Charities”] investigative report is one example of how those outside the nonprofit arena are filling that vacuum. It’s only a matter of time before government regulators become even more engaged.”

Well, sticking one’s head in the sand did not work. Declaring that most community benefit organizations efficiently do good did not work. Instead, just as Head in Sand by tropical.pete via FlickrI predicted, government has stepped into the void. Due to the nonprofit sector’s failure to self-regulate or to lead the way with government officials, politicians are taking action to further regulate charities.

Oregon has become the first state in the nation to “eliminate state and local tax subsidies for charities that spend more than 70 percent of donations on management and fundraising, rather than programs and services, over a three-year period,” according to a report in The Statesman Journal. This might be a model law that other states soon consider.

Recently, the good leaders at GuideStar, Charity Navigator, and the BBB Wise Giving Alliance penned a Letter to the Donors of America. In the open letter, the authors stated:

We write to correct a misconception about what matters when deciding which charity to support.

The percent of charity expenses that go to administrative and fundraising costs—commonly referred to as ‘overhead’—is a poor measure of a charity’s performance.”

Reading the opening paragraphs of the letter, one might be led to believe that overhead costs should not factor into our giving decisions. However, the authors are quick to point out:

That is not to say that overhead has no role in ensuring charity accountability. At the extremes the overhead ratio can offer insight: it can be a valid data point for rooting out fraud and poor financial management.”

In Oregon, state legislators were clearly motivated to act by the behavior of charities at the extreme.

The Statesman Journal reports:

The Oregon Department of Justice has already identified the top 20 ‘worst of the worst.’

They include charities such as Michigan-based Law Enforcement Education Program, which spent just 2.7 percent of its funds on programs over the past three years; California-based Shiloh International Ministries, which spent 3.2 percent on programs; and Florida-based American Medical Research Organization, which spent just 4.2 percent on programs.”

As a result of the Oregon law, donors to the disqualified charities will no longer be able to take a state tax deduction for their contributions. Also, the disqualified charities will no longer be exempt from property taxes.

January 4, 2013

Fiscal Cliff Disaster Averted, but Trouble Looms

We ended 2012 by surviving the so-called Mayan Doomsday. We began 2013 by driving off the so-called Fiscal Cliff before averting possible economic disaster. Congress passed the American Taxpayer Relief Act of 2012 which put the nation back on safe ground, for the moment.

Previously, I looked at the Act and provided information about what key elements mean for the nonprofit sector. Now, let’s look at:

What’s next?Road Sign by Madjag via Flickr

The Charitable Giving Coalition, chaired by the Association of Fundraising Professionals, as well as the AFP Political Action Committee, won a great victory when Congress preserved the charitable giving tax deduction and reinstated the IRA Charitable Rollover for 2012 and 2013. Everyone who was involved in visiting members of Congress, writing them, or calling them to advocate for the nonprofit sector certainly has a right to take pride in what the sector has accomplished.

However, before we get too carried away congratulating ourselves, let’s remember that the nonprofit sector continues to face danger.

The return of Pease Amendment provisions will make charitable giving a bit more expensive for wealthy donors. Higher taxes will also mean that donors will have less money with which to give. As a result, organizations may face some challenges. But, these are challenges that we have faced before. We’ll just have to work a bit more creatively.

Unfortunately, there are other looming dangers.

Thelma & LouiseThe Fiscal Cliff legislation, which was originally supposed to decrease the deficit, will actually increase the deficit by $4 trillion over the next decade, according to the nonpartisan Congressional Budget Office. In other words, we’re still headed full-speed ahead to economic collapse which would be a disaster for the nonprofit sector and society in general.

Charitable giving has historically correlated to about two percent of Gross Domestic Product. If GDP growth continues at a slow pace, philanthropy is also likely to grow only modestly. If runaway deficit spending leads to another recession, we can expect a likely decline in overall philanthropy.

All Congress has done is buy a bit of time.

Republicans have signaled that they will address the issue of spending cuts within the next two months. In two months, Congress will have to vote on whether to increase the nation’s debt ceiling. President Obama has already said that any spending cuts will require an increase in tax revenue in order to garner Democrat support.

Having achieved a tax rate increase, The White House now seeks to raise additional revenue in other ways. For example, the Administration may want to apply the top tax rates to those earning less than the current threshold of $400,000 for individuals and $450,000 for married couples. Also, the Administration is likely to seek limitations on deductions, particularly for the “wealthy.” The Administration has previously expressed support for both revenue generating options. Now, it’s likely those proposals will resurface during spending-cut negotiations.

So, while the charitable deduction appears to be safe for the moment, that safety may only last for two months.

Think I’m being alarmist? Let me provide some perspective from the US Debt Clock:

In 2000 the deficit was $5.8 trillion, which was $56,150 per taxpayer.

In 2008 the deficit was $9.2 trillion, which was $85,893 per taxpayer.

In 2012 the deficit was $16.4 trillion, which was $145,620 for every taxpayer.

Now, the Fiscal Cliff deal will add another $4 trillion to the deficit over 10 years!

At some point, the American economy will either collapse, going the way of Greece, or the government will get its act together and control spending. I’ve heard a lot of talk during the debate over the Fiscal Cliff about the need to return to Clinton Era tax rates. Sadly, there was little talk of returning to Clinton Era spending levels, even as a percentage of GDP which would still allow for spending increases.

The situation must be dealt with for the good of the nation. Unfortunately, this may require some pain for the nonprofit sector in the form of a reduced charitable giving tax deduction and reduced direct grants to and contracts with nonprofit organizations.

On the floor of the House of Representatives, during debate over the Fiscal Cliff legislation, Democrats have already begun to argue for additional revenues, echoing statements this week from The White House. In other words, the nonprofit sector has made it out of the first round of debates. But, the second round is quickly approaching.

Challenging times remain immediately ahead.

November 9, 2012

Obama Plan Could Cost Nonprofit Sector $5.6 Billion a Year

The outcome of the most recent Election Day contests for President and Congress means many things to many people. For the nonprofit sector, it means it’s time to get back to work on Capitol Hill as Congress considers a proposal by President Barack Obama that could cost the nonprofit sector billions of dollars in philanthropy.

Michael J. Rosen, CFRE meets with Sen. Max Baucus (D-MT)

On December 4 and 5, 2012, hundreds of nonprofit professionals from around the country will gather in Washington, DC for “Protect Giving-DC Days.” Participants will gather for a working dinner and, the next day, will meet with members of Congress and their staffs to encourage them to preserve the charitable giving tax deduction by helping them understand the potential impact that a decline in private giving would have on local programs and the people they serve.

Protect Giving-DC Days is being organized by The Charitable Giving Coalition, an alliance of over 40 charitable organizations, nonprofits, and associations pushing for common-sense tax policies that recognize the critical role philanthropy and the nonprofit sector play in restoring America’s economic and civic health. Coalition members include the Association of Fundraising Professionals, United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Council on Education, the American Institute for Cancer Research, Independent Sector, The Philanthropy Roundtable, and others.

The advocacy effort is critically important as Congress attempts to identify ways of increasing revenues by limiting or eliminating tax deductions, including those for charitable giving. For example, Obama has proposed limiting the federal-tax charitable-deduction to 28 percent for individuals earning more than $200,000 and couples earning more than $250,000. Currently, taxpayers may claim up to a 35 percent charitable deduction.

June 15, 2012

The Nonprofit Sector Has Lost a Good Friend

The nonprofit sector lost an ardent supporter, and my wife and I lost a very close friend on June 6, 2012.

Lisa Halterman (1954-2012)

Lisa Maxine Reisman Halterman touched countless lives. We are all better off for the time she was with us, which was far too brief. Even if you never knew Lisa, she has improved your world in immeasurable ways. Think of a pebble tossed into a still pond causing ripples to expand outward. The impact of Lisa’s philanthropy rippled outward as well.

Lisa was involved with and supported a variety of organizations including the Please Touch Museum, the Rittenhouse Square Flower Market, the Curtis Institute of Music, the Rosenbach Museum, the Philadelphia Film Festival, the Philadelphia Children’s Alliance, and the Philadelphia Area Repertory Theatre. She even hosted a special reception to benefit the Association of Fundraising Professionals Political Action Committee.

Though very different from each other, these organizations all enhance the quality of the lives of those they serve and, as a result, enable or inspire those individuals to improve the lives of others. The ripple effect.

Lisa’s philanthropy was generous. Parenthetically, and sadly, not a single nonprofit organization seriously approached her for a planned gift.

Only 22 percent of Americans over the age of 30 say they have been asked to consider a planned gift, according to a report from The Stelter Company. So, I’m not exactly surprised that Lisa was never asked. I just wonder how many other lost opportunities there are every single day? How many people are in your database that should be asked for a planned gift that you just haven’t gotten around to asking?

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