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Information for Policymakers Information for Nonprofits Policy Issues About MNA Public Policy
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Policy PortalIssue#106 STATE NEWS
FEDERAL NEWS
MNA Action Network
The place where you can speak directly to elected officials about the issues affecting the nonprofit sector STATE NEWS Revenue Estimating Conference Reports Economy Moving Laterally On May 19, Michigan Treasurer Jay Rising, Senate Fiscal Agency Director Gary Olson, and House Fiscal Agency Director Mitch Bean released an estimate of the state’s revenues for the remainder of Fiscal Year 2005, which anticipates revenues for FY05 being slightly higher than expected and FY06 revenues lower than previously expected. The state is expected to finish FY05 with $18.765 billion in total revenue, $16.5 million more than the January revenue estimate. The surplus is somewhat of a surprise as previous forecasts expected general fund deficits up to $76 million; the budget surplus will be the result of unanticipated growth in Single Business Tax and annual income tax payments. The outlook for FY06 is not as rosy – tax revenues are projected to total $19.379 billion, $58.6 million less than the January estimate. Report: Michigan’s Structural Deficit Due to Outdated Tax Systems The Center on Budget and Policy Priorities, of Washington, D.C., released a report May 17 th stated Michigan is at considerable risk for ongoing structural deficits because of problems with the state’s tax structure: the sales tax is focused on goods instead of services; the income tax is flat; the Headlee Tax Limitation Amendment; and recent income and business tax cuts. If unchanged, these problems could lead to $400 million annual budget deficits. Michigan is not alone – more than half of all states are at risk. Take the Michigan Mentoring Policy Agenda Survey The Michigan Mentoring Advocacy Network, a coalition of organizations and individuals interested in closing the mentoring gap by supporting and strengthening mentoring in Michigan, have created a questionnaire to gather information from organizations active in mentoring to develop recommendations for Michigan policymakers. The survey is available at Survey Monkey. Please complete the survey by June 17, 2005. Michigan Nonprofit SuperConference 2005: Sustaining Mission The first annual Michigan Nonprofit SuperConference – Sustaining Mission – will be held June 14 and 15, 2005 at the Hyatt Regency Dearborn and will focus on providing a forum for learning about techniques, strategies, resources, and partners that can help Michigan’s nonprofits accomplish their missions to serve our communities. The Michigan Nonprofit SuperConference combines the elements that have made the Grantmakers-Grantseekers Conference and the Volunteerism SuperConference important resources to nonprofit leaders for many years. Learn more about the conference on MNA's Web site, review the event schedule, and resister online now. Keynote speakers will include:
Workshops will fall in the following categories:
MSU-EDA Hosts Institute on Cultural Economic Development The Michigan State University Community and Economic Developers Program is hosting its 18 th Annual Summer Institute on Wednesday, June 15, 2005, from 8:00 to 4:00 at the Kellogg Center, to assist local communities in responding to opportunities for cultural economic development. At the conference, titled Ideas and Dollars: How Cultural Economic Development Makes Cents for Michigan, presenters and participants will examine relationships among arts, culture, innovation, job creation, and wealth generation. Participants will also discuss the effects of entrepreneurship, cultural creativity, and education on economic development and community prosperity. Registration is limited and is due June 6, 2005. Details are available on the Smart Michigan website. Governor Granholm’s Appointments Since May 5 th, Governor Granholm has made the following appointments: Barrier Free Design Board
Manufactured Housing Commission
Certificate of Need Commission
For further information on these appointments, visit the Appointment News Web site. Michigan ’s House and Senate are in session. The House meets Tuesdays and Wednesdays at 1:00 p.m. and on Thursdays at 10:30 a.m. The Senate meets Tuesdays, Wednesdays, and Thursdays at 10:00 a.m. The Senate session schedule and the House session schedule are available through December 2005. For information on committee meetings, visit the Michigan Legislature Web site. FEDERAL NEWS Sign On - AmeriCorps Letter to President Bush The House Appropriations Subcommittee on Labor, HHS, Education, and Related Agencies will meet in early June to make their funding recommendations for AmeriCorps. In advance of that Subcommittee hearing, Voices for National Service will send the following letter to the President. Your organization's CEO or Executive Director is invited to sign on. To register your organization's support, please email info@voicesforservice.org. The deadline for doing so is COB, Wednesday, May 25, 2005. For more information on the appropriations process for FY 2006, and for more ways to get involved, including scheduling site-visit from your Member of Congress, please visit www.VoicesForService.org. May 23, 2005 President George W. Bush Dear Mr. President: We are writing to thank you for your commitment to providing Americans of all backgrounds with opportunities to serve their community and the nation. Under your leadership AmeriCorps expanded by 50% in 2004, and this year 75,000 Americans have stepped forward to tackle critical problems facing our nations communities. Your support has been vital to this success. Over the past decade, AmeriCorps programs have helped build a stronger, more engaged citizenry while taking on some of our country’s most pressing problems. More than 400,000 Americans have served, helping to recruit, train, and supervise traditional volunteers, tutor and mentor youth, build affordable housing, teach in low-income schools, restore parks and streams, run after-school programs, and help communities respond to disasters. AmeriCorps members are the foot soldiers in your army of compassion, providing tangible benefits to over 10 million people each year. AmeriCorps has become a model of a public-private partnership that works, and a true example of a government program that operates through devolution principles. When Congress created AmeriCorps, it required that private dollars be used to match federal funds. The private sector has risen to the challenge generating nearly $1.5 billion, helping to build more than 1,000 effective AmeriCorps programs, and inspiring untold volunteer hours. Over the past three years, AmeriCorps programs have experienced both highs and lows. We are deeply grateful for your leadership during this period. We also applaud the efforts the Corporation for National and Community Service has taken to improve management and accountability within the agency, and we actively participated in the rigorous rulemaking process to make the AmeriCorps program stronger, increase its stability and predictability, and position it for continued growth. At a recent hearing of the House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies several members expressed concern about whether the nation needs AmeriCorps. Like you, we believe that the nation needs AmeriCorps as much as it did in the aftermath of September 11, when you asked all Americans to serve. We are counting on your administration to sustain its steadfast support for service and volunteering, and urge Congressional leadership to fully fund your budget request for AmeriCorps. In just ten years, AmeriCorps has become a vital service resource, and a training ground for our future civic leaders. We are profoundly grateful for your dedication to the national service movement and your commitment to preserving and growing the AmeriCorps program. We look forward to working with you and the Corporation for National and Community Service to expand opportunities for all Americans to serve. Thank you again for your continued leadership at this pivotal time. Sincerely, Kyle Caldwell, President & CEO, ConnectMichigan Alliance Senate Finance Committee Plans June 8 th Hearing The Senate Finance Committee has scheduled a hearing on June 8, 2005, to address issues related to charitable donations of real property, including changing the rules related to the donation of land, conservation easements, and historic façade easements. These provisions would raise revenues to cover the losses generated from charitable giving incentives in the CARE Act. The Committee is also considering modifying regulations of Type III Supporting Organizations, Donor-Advised Funds, and Charity Owned Life Insurance, but will likely delay introducing charity reform legislation until the Panel on the Nonprofit Sector releases its report in June. Regarding the nonprofit sector, the Committee is reportedly concerned about the following issues: boards’ management of their organizations; excessive compensation and travel expenses for executive staff and board members; remedies to the property donations problem that aren’t as draconian as the Joint Committee on Taxation’s recommendations; and charitable donations being siphoned away from their intended purpose. Source: INDEPENDENT SECTOR Grassley and Baucus Introduce Charity Life Insurance Bill Senators Charles Grassley (R-IA) and Max Baucus (D-MT) have introduced legislation to place a 100 percent excise tax on the acquisition costs of certain life insurance contracts purchased by charities that primarily benefit unrelated private investors. The Grassley-Baucus bill (S. 993) would also impose reporting requirements on both the charity and the investors, with penalties for failure to file. If passed, the legislation would have an effective date of May 3, 2005. It expands on a proposal in the President’s budget that would impose a 25 percent excise tax on the proceeds of certain life insurance arrangements in which charities purchase policies on their donors. In brief, the transactions which are the focus of the legislation work as follows: An investment bank sells fixed income securities interests to investors, usually institutional (such as life insurance companies, hedge funds, and private banking clients). The capital raised goes into a trust (established by the participating charity), and is used to purchase “life only” annuities and life insurance policies on the charity’s participating donors. The income from the annuities is then used to pay the premiums on the life insurance policies and to provide a guaranteed fixed return to investors. At the death of the insured donor, the trust first uses the proceeds from the life insurance policy to repay the investors and then any remaining death benefit, perhaps a substantial sum but a small percentage (e.g. 5-7%) of the overall policy proceeds, go to the charity. In essence, the charity sells its “right” to purchase such insurable interests in donors to investors, who otherwise are mostly barred by state law from purchasing such life insurance contracts, in exchange for a small percentage of the overall scheme. Although these schemes are relatively new making it difficult to assess their real return to the participating charities, a secondary market has already developed, permitting investors to sell their interests. The Grassley-Baucus bill seeks to stop these transactions through the imposition of an excise tax, equal to 100 percent of the acquisition costs, on the transaction at the time the contract is made. In contrast, the Administration’s proposal, contained in the President’s FY 2006 Budget, would have imposed a 25 percent excise tax on the proceeds from such life insurance contracts. Source: INDEPENDENT SECTOR Rule Clarified on Personal Information in Nonprofit Mail The Alliance of Nonprofit Mailers and other nonprofit representatives were successful in negotiating clarifications (PDF) to a rule on the use of personal information in Nonprofit Standard Mail. These clarifications include descriptive examples of solicitations containing personal information that can be sent at the Nonprofit Standard postage rate rather than the First Class rate. The rule with the clarifications will go into effect on June 1, 2005. For further information, visit the INDEPENDENT SECTOR Public Affairs website. Source: INDEPENDENT SECTOR Federal Oversight Reform of the Nonprofit Sector The process of federal oversight reform of the nonprofit sector began as a response to high-profile scandals involving charities. In September 2004, Senate Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) wrote a letter (.pdf, 825 kb) to INDEPENDENT SECTOR President Diana Aviv encouraging IS to convene an independent national panel to make recommendations to strengthen governance, ethical practice and accountability within the nonprofit sector. The national Panel on the Nonprofit Sector was formed on October 12, 2004, and included regional nonprofit leaders: Sam Singh, President and CEO of Michigan Nonprofit Association; William C. Richardson, President and CEO of the W.K. Kellogg Foundation; William S. White, President of the Charles Stewart Mott Foundation; Dorothy Johnson, President Emeritus of the Council of Michigan Foundations; and Jon Pratt, Executive Director of Minnesota Council of Nonprofits. On November 1, 2004, the Internal Revenue Service released the revised Form 1023, Application for Exemption Under Section 501(c)(3), the application for charitable organizations seeking tax-exempt status to streamline the application process and help the IRS spot potential fraud. On November 4, 2004, the IRS Tax Exempt and Government Entities (EO) Division released a statement that listed their accomplishments in FY2004 and set their priorities for FY2005, particularly the enforcement of regulations on tax exempt organizations. The Panel first convened on November 7, 2004, and immediately formed five Work Groups to focus on areas of central importance to the nonprofit community:
One month later, on December 9, 2004, the Panel announced the creation of a Citizen Advisory Group. The nine members of the group, leaders of America’s business, educational, media, political, and religious institutions, were to advise the Panel as it developed its recommendations. On January 24, 2005, the Work Groups released a set of preliminary recommendations for consideration by the Panel. After seeking public comment on the Work Groups’ recommendations, the Panel released on March 1, 2005, its Interim Report. The five Work Groups and the Expert Advisory Group then held a series of meetings and email exchanges on issues addressed in the report. The Panel also convened 15 field hearings around the country to gather input from the sector, and it encouraged organizations and individuals to send in comments throughout the process. The Joint Committee on Taxation released, on January 27, 2005, a report requested by the Senate Finance Committee recommending, among other tax law changes, revenue-raising reforms for tax-exempt organizations. The report is part of the Finance Committee’s effort to reform the nonprofit sector. On April 5, 2005, the Senate Finance Committee held a hearing on Charities and Charitable Giving: Proposals for Reform. Much of the hearing focused on the operation of charities, particularly looking at how individuals may claim federal tax deductions for various types of donations. Key leaders from the nonprofit community provided testimony during the hearing, including: Diana Aviv from INDEPENDENT SECTOR; Brian Gallagher from United Way of America; and Leon Panetta from the Panetta Institute for Public Policy. All written testimony from the hearing is available on the Senate Finance Committee's Web site. The House Ways and Means Committee held a hearing on April 20, 2005, to examine the tax-exempt sector, including its legal history, size, scope, and impact on the economy. The hearing also addressed the need for congressional and IRS oversight of the sector and the steps the IRS is taking to improve nonprofits’ compliance with the law. Testimony from the hearing is available on the House Ways and Means Committee’s Web site. Between May 10 th and 19 th, the Panel invited input on new draft recommendations based on the deliberations of the Work Groups and the Expert Advisory Group. These recommendations, and the reactions to them, will help shape the Panel’s deliberations as it prepares the report it will present to the leaders of the U.S. Senate Finance Committee in June. Sources: Panel on the Nonprofit Sector; MNA Public Policy Issues Update Invite Your Congressman to Visit Your Service Site The Labor- HHS Appropriations Subcommittee (Senate, House) is a new home for two national service programs – AmeriCorps and Learn and Serve America. Congress recently elected to disband the Veterans Affairs, Housing and Urban Development Appropriations Subcommittee, transferring responsibility for all Corporation-funded programs to the Labor- HHS Subcommittee. While the Senior Corps and VISTA have been a part of the Labor- HHS portfolio for some time, AmeriCorps and Learn and Serve are recent additions. The House and Senate will not be in session the week of May 30 th thru June 3 rd in observance of Memorial Day. Both will reconvene the following week. Normally, the Senate meets Tuesdays, Wednesdays, and Thursdays at 9:30 a.m. The House meets Tuesdays, Wednesdays, and Thursdays at 10:00 a.m. For the complete schedules, visit the Senate’s Tentative 2005 Legislative Schedule and the House Schedule. For information on committee meetings, visit the House Committee Offices Web site or the Senate Committees Web site. |
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