Legislation We’re Tracking: Accelerating Charitable Efforts Bill Includes Mandates for DAFs and Private Foundations
CMF’s Government Relations Public Policy (GRPP) team is closely monitoring proposed federal legislation that would impose mandates on donor advised funds (DAFs) and private foundations. The Accelerating Charitable Efforts (ACE) Act (Senate Bill 1981) was introduced last week by Senator Angus King of Maine and Senator Chuck Grassley of Iowa.
The GRPP team has outlined key takeaways from the ACE Act. If passed as currently outlined, the bill would:
Replace existing DAFs with two new time-limited types of DAFs:
• 15-year DAFs: Those under which a donor would get immediate tax benefits (as under current law) but only if DAF funds are distributed (or advisory privileges are released) within 15 years of the donation.
• 50-year DAFs: As an alternative, donors who want more than 15 years to distribute their DAF funds would be allowed to elect an “aligned benefit rule” under which the donor would continue to receive capital gains and estate tax benefits upon donation but would not receive the income tax deduction until the donated funds are distributed to the charitable recipient. All funds would be required to be distributed outright to charitable organizations no later than 50 years after their donation.
Provide special rules for community foundations:
• The ACE Act would allow donors to hold up to $1 million in DAF funds at any community foundation without being subject to the proposed payout rules.
• For amounts over $1 million, a donor could still receive up-front tax benefits if the DAF requires a 5% annual payout or if donations must be distributed within 15 years of contribution.
Restrict private foundation spending practices by preventing them from meeting their 5% payout obligations through salaries or travel expenses to a donor’s family members or through distributions to DAFs.
The ACE Act would eliminate the 1.39% tax on net investment income for private foundations if:
• The private foundation makes annual Qualifying Distributions of at least 7%; or
• The private foundation’s governance documents include a 25-year sunset (spend-down).
Additional 990-PF disclosure is required for contributions by private foundations to DAFs.
The GRPP team is working with our national partners to strategize on our advocacy efforts. The Council on Foundations, for example, is engaging their members in an action alert. The ACE Act will be a key discussion item for CMF members serving on the Government Relations Public Policy Committee at their upcoming meeting on June 22.
In April, CMF’s Government Relations Public Policy Committee and Community Foundation Committee jointly hosted a lunch and learn conversation on payout and DAFs – first with Philanthropy Roundtable’s Vice President of Policy and Government Affairs Christie Herrera and Executive Senior Fellow Howard Husock, and then with Ray Madoff, a professor at Boston College Law School and co-author of the Initiative to Accelerate Charitable Giving policy proposal. While CMF hosted this dialogue to welcome diverse perspectives to the policy conversation, CMF’s government relations goals continue to hold that our members each have different engagement and investment strategies that include the value of endowed philanthropy.
CMF members with questions on the proposed legislation are invited to connect with our GRPP team.
Newest Payout Rate Research Study Features DAF Data
In the coming weeks CMF will be releasing the final installment in our payout rate research series – a comprehensive study of DAFs housed at Michigan community foundations. CMF once again commissioned the Dorothy A. Johnson Center for Philanthropy, this time to explore the question – what does the data tell us about DAF payout rates within our network of community foundations? The Johnson Center also researched DAF distribution rates particularly during 2020 to explore how DAFs responded to the pandemic and national reckoning for racial justice. We look forward to sharing those findings with our CMF community and all in our philanthropic ecosystem soon as we seek to advance deeper understanding and data-driven dialogue in our field.
The Council on Foundations has released a statement and is encouraging its members to reach out to Congress in opposing the ACE Act. The Philanthropy Roundtable has also issued a statement. The Community Foundation Public Awareness Initiative statement can be found here.
Learn more about the Initiative to Accelerate Charitable Giving which supports the legislation.
Connect with recent news coverage from The New York Times: “How Long Should It Take to Give Away Millions?” and “A new bill would force some philanthropies to spend money faster.”
Connect with recent news coverage from The Chronicle of Philanthropy: “Sens. Grassley and King Push Measure to Accelerate DAF and Foundation Giving” and “Coalitions of Foundations and Donors Line Up to Oppose New Senate Measure to Speed Up Giving.”
Supporting the LGBTQ+ Community: An Inside Look at The HOPE Fund
In honor of Pride Month, we’re highlighting the work of the Community Foundation for Southeast Michigan (CFSEM) in supporting the LGBTQ+ community in Southeast Michigan.
CFSEM has been keenly focused on supporting the LGBTQ+ community for over two decades through its HOPE (Helping Others through Partnership and Education) Fund which was created to strengthen organizations and projects that support LGBTQ+ individuals and families through targeted grantmaking, projects and technical assistance.
According to CFSEM, in 1994, concerned civic leaders collaborated with the community foundation to confront a challenge affecting the LGBTQ+ community. The LGBTQ+ community — from youth to seniors — lacked essential human and social services. At that time CFSEM shared that few nonprofit agencies offered LGBTQ+-friendly programs, while LGBTQ+-led organizations were underfunded and understaffed.
The HOPE Fund was created at CFSEM in response to these challenges as a grantmaking and technical assistance program to focus on strengthening organizations and projects that serve the LGBTQ+ community.
In 1995, a pivotal $43,000 challenge grant was received from the national Funders for LGBTQ Issues that helped to launch the initiative.
In the over two decades since its inception, contributions of more than $3 million have been made to support The HOPE Endowment Fund, its grantmaking program and related efforts such as the Racial Equality Initiative.
CFSEM created and implemented the Racial Equality Initiative from 2007-2012, through the support of the Ford Foundation, Arcus Foundation and Funders for LGBTQ Issues.
According to CFSEM, the project’s focus was to intentionally support leadership capacity building of LGBTQ+ people of color-serving organizations in Southeast Michigan.
“The project helped to strengthen the leadership skills of individual LGBTQ+ leaders of color in addition to building the capacity of organizations in areas such as board development, volunteer management and fundraising,” Surabhi Pandit, director of Human Services Initiatives at CFSEM said.
As a part of this initiative, the LGBT Racial Equity Endowment was created and continues to support LGBTQ+ leaders of color and people of color-serving organizations and projects.
Through the process of administering the fund, CFSEM shared that they have learned more about the diversity of the LGBTQ+ community and have strived to ensure that their grantmaking efforts reflect the varying needs of all LGBTQ+ people in their region.
Over the last 25 years, more than 163 grants totaling over $2.2 million have been distributed through the HOPE Fund, resulting in a more responsive, creative array of services, programs and organizations for Southeast Michigan’s LGBTQ+ community.
“What is amazing to see is that we continue to engage donors today who were initial donors to The HOPE Fund over 25 years ago – they understand the ‘why’ and have continued to support our work over the years. We are continually working on innovative ways to raise awareness about the work of The HOPE Fund and engage new donors,” Pandit said.
CFSEM continues to work closely with their nonprofit partners who are on the ground to understand their needs and inform the design of flexible and responsive grantmaking programs.
“In the early months of the pandemic, The HOPE Fund proactively responded to needs in the LGBTQ+ community in Southeast Michigan through grants totaling $200,000 to five leading organizations. This pandemic has highlighted disparities throughout our country and we know the LGBTQ+ community has been and continues to be disproportionately impacted by COVID-19,” Pandit said.
The fund includes a diverse committee of community leaders and advocates that assist in the fund’s development efforts and recommendations for annual grantmaking.
CFSEM shared that supporting the LBGTQ+ community has provided more opportunities for the community foundation to expand its reach and support of equity-focused organizations and initiatives.
“The relationships built with LGBTQ+-serving organizations has given the community foundation the ability to open doors to other grants from non-LGBTQ+- focused funds or initiatives of CFSEM,” Pandit shared.
CFSEM is proud of the support that has flowed from its HOPE Fund but says they recognize a deep commitment to equity and inclusion must continue as there is “still so much work to be done towards creating a culture where all people feel valued, loved and have the essential resources they need to live a healthy and long-lasting life.”
Learn more about The HOPE Fund
Advancing Diversity, Equity and Inclusion: Together on the Journey
The Grand Traverse Regional Community Foundation (GTRCF) has announced the launch of a new Diversity, Equity and Inclusion (DEI) fund.
GTRCF’s DEI Fund will be used to support a variety of organizations and initiatives, including Black, Indigenous, People of Color (BIPOC) and LGBTQ+ led organizations; DEI training and learning; and other partners, programs and opportunities promoting equity and inclusion.
“While the DEI Fund is new to the community foundation, it is a manifestation of our long-held mission—to enhance the quality of life in our region for all people,” David Mengebier, president and CEO of GTRCF and CMF trustee said. “To achieve healthy, resilient, thriving communities in the region, all people must have equitable and inviolable access to the resources they need to reach their full potential. That’s why we are committed to using our leadership, resources, and voice to build toward a better future for the diverse people and places of our region.”
The fund will be dedicated towards DEI efforts in Antrim, Benzie, Grand Traverse, Kalkaska and Leelanau Counties.
The community foundation has previously supported DEI efforts in the community, awarding grants to nonprofit partners such as the Native Justice Coalition, Justice for our Neighbors and Arts for All of Northern Michigan as well as the city of Traverse City for anti-racism training for law enforcement, among others.
Earlier this year, GTRCF shared insights from its evolving DEI learning journey with CMF.
Staff had formed a DEI working group early on dedicated to exploring how to embed DEI into all aspects of the organization’s work. Since then GTRCF has engaged staff and board in anti-racism training and adopted new DEI-related policies and practices.
“We cannot fully accomplish our mission unless we’ve integrated diversity, equity and inclusion into every aspect of our work,” Mengebier shared with CMF. “The first steps have been around listening and learning from the BIPOC leadership in our community.”
Grant decisions for GTRCF’s new fund will be made by a review committee with a diversity of representation from BIPOC and LGBTQ+ communities, allies and equity leaders and advocates.
The new DEI fund is another result of GTRCF’s commitment to its ongoing DEI journey.
Learn more about GTRCF’s DEI Fund.
Read more about GTRCF’s DEI learning journey.
Is your organization on a DEI learning journey? Share your story with the CMF team as we lift up opportunities for peer engagement and share emerging practices with our entire CMF community.
Efforts to Increase Vaccination Rates
Content excerpted and adapted from an article.
The Michigan Health Endowment Fund is supporting a door-to-door initiative to increase vaccination rates in Southwest Michigan.
The Berrien County Health Department and United Way of Southwest Michigan partnered on the project to combat the lower vaccination rates in the area.
According to the Berrien Health Department, less than 50% of residents are fully vaccinated.
The health department and United Way are working to recruit volunteers to knock on people’s doors and attend community events to talk to people who are hesitant about getting the COVID-19 vaccine.
“We know there are some in our community who may be hesitant or just need more information about the vaccine before they are willing to say yes. This is why our partnership with United Way and using volunteers to help have some of those one-on-one conversations we believe will be really helpful in providing that information and getting people to say yes to the vaccine,” Gillian Conrad with the Berrien County Health Department said in the article.
Read the full article.