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home > legislative update > 05.15.08
The California Senate Business, Professions and Economic Development Committee (BP&ED ) held a hearing on AB 624 on Monday, May 12th.
At the hearing, there was a good showing by foundations and at least equal, if not more, opposition than support. This is a great improvement over the first hearing. The foundations that testified gave credence to the idea of the importance of diversity in their own grantmaking, while at the same time admitting that more could be done. Main points that were addressed by the opposition were: (1) Legislation based on faulty report/data; (2) the bill may be unconstitutional; (3) it might discourage individual donors; (4) bill doesn’t address core issues; (5) slippery slope argument, where does it end (6) philanthropy is not the place to address the shortcomings of government.
John Gamboa, Executive Director of the Greenlining Institute, testified that AB 624 would help study diversity in the foundation community and that this legislation was simply a little "sunshine" for the community. Further, Gamboa noted that foundations need to be held accountable to the public because they are subsidized by taxpayers. Main arguments put forth supporting the legislation are that: (1) taxpayers need to know how their money is spent; (2) small organizations don’t benefit from foundation funding; (3) grantees are already required to report this information to government/foundations; (4) we need the money.
Other witnesses that also testified in opposition included Hewlett Foundation, The Philanthropy Roundtable and the Nonprofit and Unincorporated Division of the California State Bar. The Philanthropy Roundtable's testimony focused on the cost of this legislation to California -- that it has the potential to drive $23 billion in charitable giving out of the state - a fact that the Ranking Member of the Committee pointed to later in the hearing.
In the end, Chairman Ridley-Thomas did not ask for a vote on AB 624. Instead, the Chairman asked the foundations to work with the authors of the legislation and others to come up with amendments to the bill to make it better. Given the time constraints that the Committee faces, it appears the Chairman is hoping for a compromise version of the legislation that the BP&ED Committee can vote on by the middle of June.
The Alliance for Charitable Reform remains steadfast in its principled opposition to AB 624 and any other similar legislative efforts that would interfere with the sovereignty of private foundations and the charitable causes they support.
As always, we will continue to monitor AB 624 and keep you posted of any developments.
Update from Congress: As you know may remember, at the end of 2007, Congress adjourned without extending several expiring tax items - including the IRA charitable rollover. Now, Congress is seeking to enact a retroactive fix to these tax provisions. To this point, we understand that Senate Finance Committee Chairman Max Baucus (D-MT) expects a mark-up of the Senate tax extenders package to occur the first week in June. The legislation, as currently written, would extend the IRA Charitable Rollover provision through 2009. Click here for a summary of the legislation.
In the House of Representatives, Democratic leaders have agreed to a tax increase of one-half of one percent on the incomes of couples who annually make more than $1 million. This increase has been attached to an emergency Iraq War funding bill. We believe that this legislation is a clear indicator of the direction of the 111th Congress which will, no doubt, be searching for additional revenue for an ambitious agenda and the wealthiest of Americans will be targets for additional revenue. Given the discussion over the past few years about endowment and foundation wealth, and public vs. private money, it is very possible that foundations may be seen as an "untapped resource" for this new agenda.
Update from the Community: Earlier this month, the Council on Foundations held a Leadership Summit to discuss a myriad of topics relating to the charitable sector. Part of the summit included a plenary session titled "Philanthropic Impact: Achieving Diversity through Leadership or Legislation?" President of the Philanthropy Roundtable, Adam Meyerson, was a speaker at this session, along with Congressman Xavier Becerra, Robert Ross of the California Endowment, I King Jordan of the Theodore R. & Vivian M. Johnson Scholarship Foundation, Ann Wiener of the Jessie Smith Noyes Foundation, Inc. and Angela Glover Blackwell from Policy Link.
In one of the most striking comments from the session, Congressman Becerra (D-CA; member House Ways and Means Committee) told the audience that foundations might expect increased Congressional scrutiny if they do not increase their giving to projects that benefit minorities. Claiming that foundations receive a tax subsidy from the federal government, Congressman Becerra warned that foundations currently receive a "$32 billion earmark" and, "Right now earmarks are under a big microscope, and $32-billion is a lot of money, so do well."
Adam Meyerson spoke against the underlying notion that a white-dominated board wouldn't care about helping low-income or minority populations. He also noted that more individuals are stepping in and wanting to improve the lives of low-income people. "Let’s not drive away the new philanthropic capital by taking away from donors the freedom to decide how and where to give away their money."
For more information about this session and others at the Council of Foundations summit, please visit their website at www.cof.org.
As always, please feel free to call Sandra Swirski or Chris Fox should you have further questions, 202-466-8700. |
