Nonprofits Advocate For Charitable Deduction

The Charitable Giving Coalition -- a group of nonprofit advocates from 40 states -- traveled to Washington, D.C., yesterday. Their mission? To make sure the charitable deduction isn't eliminated during on-going discussions on how to avoid the so-called "fiscal cliff."

According to an article in The Worcester Telegram, the group is part of an effort called "Protect Giving," which involves an estimated 280 people from more than 50 nonprofits. They met with members of Congress to plead with them to leave the charitable deduction off of the chopping block.

While both Democrats and Republicans agree the cliff needs to be avoided, they remain at an impasse because President Barack Obama is insisting tax rates go up on the wealthiest 2 percent. Republicans say they are ready to accept increased revenue as part of a deal, but that it can't come from tax hikes, which they say will destroy jobs. They say any revenue should come from closing loopholes and eliminating deductions.

Yet many economists claim that it is impossible to raise the revenue Republicans claim they can get ($800 billion) without eliminating virtually all deductions, including the charitable deduction. Nonprofit officials say that if it were to be eliminated, giving to organizations would be severely damaged.

The sector appears to have an ally in this fight with President Obama, who said in an interview with Bloomberg TV on Tuesday that  if the deduction were eliminated, "Every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse. So that's not a realistic option." Nonprofits the past have fought hard against the Obama administration's efforts to reduce the charitable deduction.

Tim Garvin, president of United Way of Central Massachusetts and a member of the Coalition, told The Telegram that the group met with nearly 240 legislative offices, including staffers from the offices of Sens. John Kerry (D-MA), Patrick Leahy (D-VT), and Rep. Peter Welch (D-VT). Sen. Scott Brown (R-MA) also came to listen to the group's advocacy.

You can read the full story in The Worcester Telegram.

Ariz. Group Ordered To Release Donation Records (UPDATED)

Gov. Jerry Brown (D-Calif.)

UPDATE: The Los Angeles Times has reported that Americans for Responsible Leadership has released the names of its contributors. The release identified the nonprofit Americans for Job Security as the organization behind the $11-million donation. That money was then passed to Center to Protect Patients Rights to ARL.

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The California Supreme Court ruled Sunday that a Phoenix, Ariz.-based Political Action Committee (PAC) had to release its donation records to state records.

The state's highest court made the 7-0 ruling on a rare Sunday conference call, ordering Americans for Responsible Leadership (ARL) turn over records relating to an $11-million donation to a business campaign that opposed two propositions by Gov. Jerry Brown. The court ruled that ARL had to submit the records to the Fair Political Practices Commission (FPPC) an hour after their ruling, according to The Sacramento Bee.

As of this writing, however, ARL has yet to submit the records, having already unsuccessfully attempted to get the court to extend the deadline to 9 a.m. local time today. Matt Ross, a spokesman for ARL's legal time, said in a written statement to The Sacramento Bee that "While we are working to deliver the records, we still believe that the FPPC does not have the authority to take such action and have filed a request for immediate stay with the United States Supreme Court."

That letter was sent to Justice Anthony Kennedy, who wrote the majority opinion in the controversial Citizens United case, which focused on campaign spending by corporations and nonprofits. In the letter, attorney Thad A. Davis wrote that the FPPC was unfairly targeting ARL because it was targeting Brown's initiatives.

For its part, the FPPC wants to review the donations records to determine whether ARL violated state rules that require nonprofits to disclose the names of its donors if their money was earmarked for a specific initiative. Depending on when they receive the records from the group, it remains to be seen whether the FPPC has enough time to make ARL disclose the names of its donors if a violation is found.

The NonProfit Times blog first reported on this story last week when a judge from the Sacramento Superior Court ruled that the FPPC could investigate ARL's donation records. That decision was eventually appealed to the California Supreme Court.

IRS Considering Changing 501(c)(4) Governing Rules

The Internal Revenue Service (IRS) is considering changing a rule that allows social welfare nonprofits to run attack ads while not disclosing their donors.

According to a recently published letter from Lois Lerner, the director of the IRS's exempt organizations division, the agency is "aware of the current public interest in this issue," and that they will consider changes to the rules. The letter was sent on July 17 to two campaign finance reform groups, Democracy 21 and Campaign Legal Center, according to The Huffington Post.

The two advocacy groups had long pressed the IRS to not only review the regulations governing 501(c)(4)s, but also to investigate specific groups, including the Republican-leaning Crossroads GPS and the pro-Obama group Priorities USA. Both of these organizations have received increased scrutiny this election cycle, as critics claim that they should not be tax-exempt because their primary purpose is to advocate for a specific candidate.

Democracy 21 President Fred Wertheimer told The Huffington Post that the response from Lerner was significant, since it was the first time the IRS has publicly stated that they will consider changes to the regulations. He also pointed out that by mentioning the date the regulations were first put in place -- 1959 -- Lerner acknowledged they do not reflect current circumstances, such as the United States Supreme Court's Citizens United decision.

Both Wertheimer and Campaign Legal Center Executive Director J. Gerald Herbert responded to the IRS today with a letter pressing the agency to move quickly to investigate social welfare groups spending large amounts of money on the 2012 elections while hiding their donors from the public.

You can read the full story in The Huffington Post.

Nonprofits, Not Super PACs, Spent More In 2010 Election

So-called Super PACs (Political Action Committees) have received a lot of attention in today's politics. The 2010 Supreme Court decision, Citizens United v. Federal Election Commission, opened the door for these groups to splurge on political campaigns. But according to a new study, nonprofit groups actually spent more than Super PACs, at least during the 2010 elections.

An investigation released yesterday by the Center for Public Integrity and the Center for Responsive Politics showed that nonprofit groups spent $3 for every $2 spent by Super PACs, according to CBS News. These groups actually have a bit of an advantage over the PACs, as they are not required to release the names of their donors as outlined by section 501(c)(4) of the U.S. tax code.

In total, nonprofit "social welfare" organizations spent a total of $95 million during the 2010 midterm elections, compared to $65 million by Super PACs. Much of the spending by nonprofits came from conservative groups, outspending their liberal counterparts $78 million to $16 million. Given the results of that election, those numbers aren't too surprising.

Things are a little different so far in the 2012 election season. The report states that Super PACs are currently outspending nonprofits, though it noted there is a possibility that could change now that there are clearly defined candidates for both the presidency and Congress.

You can read the full story on CBS News' website.