Framing Foundations' Future in the 110th Congress

Framing Foundations' Future in the 110th Congress

To understand the new Congress and its impact on foundations, one must begin by knowing the people who will lead us. Senator Max Baucus comes from Montana and has a passion for rebuilding rural America. Congressman Charles Rangel hails from Harlem and has a long career of advocacy on behalf of his constituents. Congressman Xavier Becerra is an articulate voice for the Hispanic community, both in his home district of Los Angeles and throughout the nation. Republican Congressman Jim McCreary has lived through the impact of Katrina on his home state of Louisiana. And Congressman John Lewis is a hero to all of us who believe in the Civil Rights movement.

Each of these members will assume a leading role on House and Senate committees with jurisdiction over the philanthropic sector. All but one is part of the new Democrat majority; Congressman McCreary will serve as the new ranking Republican on the House Ways and Means Committee. But they all have something in common. They bring to their work a deep desire to partner with philanthropy in serving the needs of their people and their communities.

If one word can define the new Congress's attitude toward our sector it is "partnership." When Congressman Becerra spoke to the Community Foundations Conference in Boston earlier this fall, he conveyed the message that legislators will help philanthropy grow "if you will help our communities." In many ways, his words define our sector's future government relations.

We in philanthropy have an opportunity to transform the political agenda from one of reform and regulation to partnership and progress, while continuing to work on the unfinished business of the last Congress. This begins with appropriate adjustments in technical language to make H.R. 4 (the Pension Protection Act) better. The work invested in reforms related to governance of the nonprofit sector is still expected to be part of the unfinished business in the 110th Congress. The future is framed not by confrontation and regulation, but also by partnerships that grow philanthropy in both size and service.

We've listened to the concerns of the field since the president signed the Pension Protection Act in August. Community foundations are struggling with several aspects of the new law, including the definition of a donor-advised fund and the law's impact on scholarship funds. We also learned that private foundations are spending hours trying to figure out whether their grantees are Type III supporting organizations and, if so, whether they are functionally integrated.

Our preference is to solve these issues by working with the Treasury Department and the Internal Revenue Service. Separately, and in partnership with Independent Sector, we have communicated with the federal agencies responsible for implementing H.R. 4 seeking relief, guidance, and transition rules for specific provisions. Specifically, our requests include the following:

  • Allow an appropriate transition period for enforcement of provisions that went into effect on or before enactment of the bill, such as the limitation on grants by private foundations to Type III supporting organizations
  • Clarify that the definition of donor-advised fund does not include:
  • Provide a transition rule for scholarships awarded by donor-advised funds prior to the date of enactment
  • Clarify that the term "distribution" does not include the purchase of goods and services at fair-market value

Congressman McCreary, on behalf of our sector, has requested that the Treasury Department clarify regulations related to disaster relief and emergency-hardship funds established by an employer through community foundations.

Each of these items responds to the unfinished agenda of our work in this Congress. Each of these items, as of this writing, remains unresolved. If they cannot be addressed by regulation and enforcement guidelines, we will begin the next Congress' legislative agenda with language making technical adjustments that address these issues.

As we prepare for the beginning of a new Congress in January, we keep in mind two important lessons from our experience with the Pension Protection Act. First, advocating without a specific legislative vehicle — a specific bill with specific language — is undesirable because the absence of language for all to review often results in the implementation issues now before us. Second, our sector must never again be put on the defensive in our legislative discussions with Congress. We cannot allow the abuses of a few to define the work of this noble sector.

For these reasons, I strongly believe we must be proactive, introducing legislation that shapes the philanthropic agenda during the 110th Congress. The council's government relations and legal teams, working with our volunteer leaders, have already begun the process to develop this positive and proactive legislation.

Quite simply, our goal is to grow philanthropy in size and service. As the nation continues the transfer of wealth and resources defined by our changing demographics, we must find ways to encourage that these resources fuel philanthropic engines. In so doing, we can engage in the collaborative process that empowers our community to increase its service to enhancing the common good.

There is much to do. There is much we want to do. I sense the new Congress would like to build on this partnership. In doing so, we can frame our future in a positive way.

Steve Gunderson, a native of Wisconsin, served three terms in the Wisconsin State Legislature and sixteen years in the U.S. Congress, where his focus was on preparing America's citizens for the twenty-first-century economy. After retiring from Congress in 1996, he served as a senior consultant and managing director of the Washington office of the Greystone Group, a Michigan-based strategic management and communications consulting firm. The Council on Foundations, which he has led since 2005, is a membership organization of more than two thousand grantmaking foundations and giving programs worldwide that provides leadership expertise, legal services and networking opportunities to its members and the general public.