Last week I had the opportunity to lobby on the Hill with a coalition of social service agencies on a bill that would have devastating effects on many of our non-profits. I thought that many of you would also be concerned about this legislation.
Raise concerns about Nonprofit "Reform"
The Senate Finance Committee has launched an initiative to reform laws governing 501(c)(3) tax-exempt organizations - a category that includes many social service agencies, and many national organizations. The House Ways and Means Committee seems to be following suit in also investigating the non-profit sector.
There are serious concerns with a number of the proposals under consideration by the Finance Committee, such as:
Limiting the value of non-cash gifts to charities, including real property and stocks that are not listed on a stock exchange, to the lower of the donor's basis in the property or the fair market value. While this change does not narrowly respond to a specific problem in which certain donors have deducted an excessive amount for their gifts, it would diminish charitable giving. An estimated 20% of gifts to endowments are in a form other than cash or marketable securities;
*Having the IRS accredit charities that meet "best practices" and allowing government grant makers to favor such charities. The IRS has no expertise in the substantive work of nonprofits. Finding and certifying best practices is an area best left to self-regulation. Independent accrediting organizations are well-suited to develop such guidelines;
*Limiting the size of Boards of Directors of nonprofit organizations to no more than 15 individuals. Nonprofit boards thrive on volunteerism. Size limitations on boards for an organization focused on fundraising and community building could be devastating to nonprofits; and
at the federal level there are already adequate laws that provide the necessary oversight to exempt organizations. These laws are buttressed by ample regulation at the state level, enforcement of those state laws, self-regulation, and adoption of best practices by the charitable sector. Federal law should be amended to create a new body of governance of charities unrelated to establishing and maintaining federal tax-exempt status and determining tax liability.
Whatever legislation emerges from the Senate Finance Committee and House Ways and Means Committee, should be based on a compelling need for specific and measured reforms. Legislation that would profoundly impact the capacity of our nation's nonprofits to serve our citizens should not be rushed through Congress, whether or not it is used to raise revenue as some have proposed.
Please ask Members of Congress to take a leadership role in raising concerns with nonprofit "reform proposals" that do not narrowly target specific abuses perpetrated by nonprofits or perceived inadequacies in the laws regulating charitable organizations;
Let me know what you hear.
Susan Turnbull, DNC Vice Chair