Legislative Update

In its role as a clearinghouse of information on philanthropy, DVG monitors legislation at the state and federal level in order to keep our members informed about the potential impact of new laws and policies on their grantmaking and on the work of their grantees. The summaries included on this page are meant to raise awareness about major legislative activity that may affect the philanthropic sector and DVG’s members.

Note: The information about the specific legislation below does not imply endorsement or opposition by DVG. Due to the broad diversity of interests among our members, DVG does not generally take an official position on any pending legislation.

STATE of PENNSYLVANIA

(2/8/07)
LOBBYING DISCLOSURE ACT TAKES EFFECT

Pennsylvania’s new Lobbying Disclosure Act (Act 134 of 2006), which took effect on January 1, 2007, requires all entities, including charities, not otherwise excluded who spend more than $2,500 per quarter on advocacy to register as lobbyists with the Pennsylvania Department of State. Charities will be required to register as lobbyists, track their advocacy communications and disclose all costs associated with state advocacy. Failure to register within 10 days of any lobbying activity could result in fines and other sanctions.

The Pennsylvania Department of State’s Campaign Finance Web site has posted information on the lobbying act, including a Summary of Act 134, Frequently Asked Questions and information on Registration. These rules and postings will continue to be updated based on the recommendations of the Lobbying Disclosure Regulations Committee, chaired by Pennsylvania Attorney General Tom Corbett.

For additional information on how the lobbying act affects nonprofits, visit the Public Policy section the of the Pennsylvania Association of Nonprofit Organizations’ Web site or contact PANO’s Policy Officer David Ross at david@pano.org or 717-236-8584.

>>Link to information about State Legislative Activity prepared by the Pennsylvania Association of Nonprofit Organizations (PANO).

FEDERAL

(4/11/07)
IRS RELEASES NEW GUIDELINES FOR DETERMINING IF GRANTEES ARE SUPPORTING ORGANIZATIONS

The Internal Revenue Service has released clarification on its Notice 2006-109, issued in December 2006, that provides interim guidance to private foundations and to sponsoring organizations of donor-advised funds concerning how they may identify public charities that are supporting organizations. Based on comments received by the Council on Foundations and others in the field, the IRS has outlined a process whereby grantmakers can rely on information from a third-party when determining whether a grantee is a supporting organization.

Determining whether a grantee is a supporting organization is important to both private foundations and community foundations because of new requirements on distributions from private foundations and donor-advised funds to certain supporting organizations enacted in the Pension Protection Act of 2006.

The IRS has not changed the steps that grantmakers must take to determine if a supporting organization is a Type I, Type II, Type III or a “functionally-integrated” Type III supporting organization.

>> Read the Council on Foundations summary of the new IRS guidelines.

(3/27/07)
"PUBLIC GOOD ROLLOVER ACT OF 2007"

Introduced on March 8, 2007 in the Senate by Senators Byron Dorgan (D-ND) and Olympia Snowe (R-ME), and in the House by Representatives Earl Pomeroy (D-ND) and Wally Herger (R-CA), the “Public Good IRA Rollover Act of 2007” (S. 819 and H.R. 1419) would extend certain provisions that were included in the Pension Protection Act of 2006.

Currently, the IRA rollover permits individuals age 70½ and above to make charitable donations of up to $100,000 from Individual Retirement Accounts (IRAs) and Roth IRAs without having to count the distributions as taxable income. The new legislation would extend and broaden the current IRA Rollover, scheduled to expire this December, by making it permanent, removing the current $100,000 annual limit on donations, making all charities eligible to receive donations, and providing IRA owners with a planned giving option starting at age 59½.

Over the past several weeks, the bill has been gaining momentum in the House and now has 17 co-sponsors, including Representative Phil English from Pennsylvania's 3rd Congressional District, which covers the northwestern part of the state.

Both the Council on Foundations and Independent Sector argue that extending the IRA rollover will serve as an incentive for charitable giving and are encouraging their members to support the legislation.

(2/8/07)
COUNCIL ON FOUNDATIONS SUBMITS COMMENTS TO IRS ON DONOR-ADVISED FUND, SUPPORTING ORGANIZATION INTERIM GUIDANCE  

On Thursday, February 1, 2007, the Council on Foundations submitted comments to the Internal Revenue Service (IRS) on Notice 2006-109, which provides interim guidance on the donor-advised fund and supporting organization reforms included in the Pension Protection Act of 2006 (PPA or H.R. 4).   The comments urged the IRS to:

1. Allow private foundations and donor-advised funds to rely on information reported on Form 990 and, as a temporary measure, to rely on private databases such as GuideStar, in identifying public charities that are supporting organizations and in making determinations as to their type;
2. Grant sponsoring organizations of donor-advised funds (such as community foundations)  transition relief similar to that already extended to supporting organizations. The Council's proposal would allow sponsoring organizations to reimburse donor-advised funds for reasonable and necessary expenses incurred in directly carrying out charitable activities. The request is limited to expenses incurred prior to December 31, 2006, and arrangements entered into prior to August 17, 2006 (date of PPA enactment).   
3. Expand the interim guidance permitting employer-connected funds to provide assistance to employees in major disasters to also include individual emergency hardship situations.  The Council proposed some additional safeguards for such funds including defining the circumstances under which emergency hardship assistance could be granted and a percentage limitation on the number of such awards annually.

CLICK HERE to view the Council’s Comments to the IRS, or contact Janne Gallagher at gallj@cof.org or 202-467-0288 for more information.  Additional resources and analysis on the Pension Protection Act of 2006 can be found in the Charitable Reform Resources Center of the Council’s Web site.

Pension Protection Act of 2006
On August 17, 2006, President Bush signed into law the Pension Protection Act of 2006 (H.R. 4), which enacts charitable giving incentives, such as the IRA Charitable Rollover, as well as a number of reforms designed to cut down on abuses of charity tax laws by donors and nonprofit organizations.

For more information:

n Visit the Council on Foundations' Charitable Reform Resources Center

n Read our briefing paper on H.R. 4: "What the New Charities Law Means to You"

n Read an analysis of the charitable provisions contained in the Pension Protection Act of 2006 prepared by for Grantmakers of Western Pennsylvania by Carolyn Duronio, Esq. of ReedSmith LLP.

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