In October of 2003, the Boston Globe ran a series of articles highlighting the outrageous behavior of several private foundation officials – for example, using foundation assets to subsidize family weddings. This series of media articles prompted an investigation by the Senate Finance Committee (SFC) which led to proposals for sweeping changes to the charitable community that many agreed would have had a chilling effect on charitable giving in America.
In January of 2005, The Philanthropy Roundtable founded the Alliance for Charitable Reform (ACR). ACR was formed as an emergency advocacy initiative to respond to legislative efforts on Capitol Hill targeted at the charitable community and help bring common sense to the charitable reform debate protecting philanthropic freedom in America – particularly from the perspective of smaller, family foundations.
The Early Years
Early legislative efforts focused on proposals from both the staff of the Senate Finance Committee (led by then-Chair Senator Charles Grassley) and the Joint Committee on Taxation – Congress’s in-house tax advisors. The proposals included a number of potentially harmful policy changes for the charitable sector including: accreditation requirements on tax-exempt organizations, mandatory five-year reviews of tax-exempt status, and limits on types of organizations that foundations could support. In response, ACR worked diligently to highlight the threats to the charitable community and activate donors and charities to engage and educate their members of Congress about the potential negative consequences of these proposals. As a result, many of these proposals were never enacted into law.
The Pension Protection Act of 2006
In 2006, some of these legislative proposals resurfaced and were included in the 2006 Pension Protection Act. At that time, ACR played a key role advising Members of Congress and their staff on proposals important to our members to ensure these proposals were balanced and measured, and to avoid unintended consequences. As a result, many provisions were amended before enacted into law.
Fighting at the State Level
ACR continues to identify and respond to challenges to the charitable community in the states as well, particularly those originating from interest groups and activist organizations. For example, in 2008 the California Legislature considered AB 624, a bill that would have significantly increased onerous reporting requirements for foundations and their grantees. The legislation was promoted by Greenlining Institute, an aggressive activist organization.
We believe the impetus for comprehensive reporting was merely a veil for the true goal – influencing and ultimately directing foundations to fund causes preferred by Greenlining itself. Again, ACR activated many in the charitable community to add their voices in opposition to this legislation. While the legislation ultimately failed, Greenlining has expanded its focus to other states and has recently opened an office in Washington, D.C.
The National Center for Responsive Philanthropy (NCRP) released a report in March 2009 that presents its criteria for foundation excellence. Many of the criteria proposed could have dramatic – and, we believe, detrimental – impacts on philanthropic freedom, how foundations govern themselves, and other fundamental values we support. In response, ACR galvanized its members and others in the charitable community to aggressively oppose the criteria, which to date have not gained any traction on Capitol Hill.
Continued Threats to Charitable Giving
To date, ACR has been successful in promoting and defending philanthropic freedom, but the current economic and political climate means that it has much more work to do. With Washington poised to take on major – and costly – legislative initiatives such as health care reform while state and federal governments are facing incredible budget deficits, foundations and individual donors could be targeted as an easy source of revenue to help defray the costs and, in the process, possibly erode philanthropic freedom as well as limit charitable giving. ACR believes now more than ever is the time to encourage, rather than discourage, charitable giving. The charitable sector has had to do much more in terms of meeting local needs with far less resources due to the economic crisis. As such, ACR is fighting proposals that would limit giving, such as President Obama’s proposal to limit itemized deductions (including the charitable deduction), and educating members of Congress on reasonable proposals to encourage giving.
Visit our “Good Giving” Platform for more on our positions.