Effects of Tax Reform: Sector Requests IRS Delays Penalties for New Taxes, Provides Guidance
Efforts continue from the philanthropic sector to educate the IRS about the effects of the new unrelated business income tax (UBIT) for employee fringe benefits on tax-exempt organizations.
UBIT on targeted fringe benefits includes transportation and wellness for employees of any 501c(3) nonprofit, mission-related investments (MRIs) and potentially other paths of investments.
UBIT was expanded to these items through the recent tax reform and has been in effect since the beginning of the year but there are still a lot of questions surrounding the new taxes and what they mean for tax-exempt organizations.
“Because this is an entirely new way to tax nonprofits through UBIT, experts still aren’t clear exactly how the IRS will interpret the law, making it difficult to judge how it applies to specific examples,” Independent Sector shared in a recent blog.
CMF petitioned the IRS and Treasury Department to delay implementation of penalties for not filing and paying UBIT until there is sufficient guidance.
As CMF reported in March, several CMF members, including Brenda Hunt, president and CEO, Battle Creek Community Foundation (BCCF) met with the U.S. Treasury Department during Foundations on the Hill (FOTH) in D.C. to discuss the effects of the UBIT.
“It was a very useful meeting with Treasury Department representatives in order to discuss solutions for potential UBIT taxes that could inadvertently negatively affect the good work of foundations and many nonprofits,” Hunt said immediately following FOTH. “CMF played a key leadership role in defining the impact and with member input providing examples of how clarity and correction would be useful to supporting the good work being done.”
The National Council of Nonprofits is now calling on others in the sector to submit public comments to the IRS and Treasury Department to delay the effects of the UBIT on nonprofits until one year after official guidance is provided.
As the Council on Foundations (COF) shared the IRS is expected to release guidance on the two sections of UBIT that relate to nonprofit organizations as early as the end of June.
For a deeper dive on UBIT and other aspects of the tax act in relation to the nonprofit sector, join CMF and the Michigan Nonprofit Association (MNA) for a free webinar on May 22: Washington and Tax Policy.
Your foundation peers, Rob Collier, president and CEO of CMF and Donna Murray-Brown, president and CEO of MNA will lead the discussion on the opportunities and challenges facing foundations and nonprofits.
If you can’t join the live webinar, be sure to register and CMF will provide you with a recording of the webinar, resources and slides following the discussion.
The State of the Opioid Epidemic
New research is providing an inside look at the opioid epidemic and why the state says there’s noticeable progress in combatting this issue in Michigan.
Public Sector Consultants (PSC), a nonpartisan consulting firm based in Lansing, is sharing what has emerged from its research into Michigan’s opioid epidemic.
Highlights of the data:
There were 32,473 admissions for heroin and prescription opioid treatment in Michigan in 2016.
About 1,275 people died in Michigan from opioid overdoses in 2015, nearly twice as many as those who died in auto crashes.
In 2015 there were 11.4 million prescriptions written for painkillers in Michigan, compared to our state’s total population of 9.9 million.
The average cost of a hospital stay for a newborn with opiate withdrawal is $50,000, compared to $10,000 for a healthy baby.
PSC said that it began working with the Michigan Community Service Commission (MCSC) last year to track the resources and tools being used statewide and determine opportunities to further address the opioid issue.
“In collaboration with the MCSC, we will be distributing the survey and gathering feedback from the numerous organizations that have an interest in addressing opioid addiction,” Scott Dzurka, vice president, PSC told CMF. “Once the feedback is received, we are working with the MCSC to share the information using GIS [geographic information system] mapping so communities can build further collaborations.”
This work comes as the state just announced progress is being made, sharing that there has been a decrease in opioid prescriptions in Michigan.
The new data shows the number of opioid prescriptions has decreased by nearly 11 percent and the overall number of controlled substance prescriptions has dropped by 7.1 percent.
“The decrease in the number of controlled substances dispensed is a result of our partnerships and collective efforts to raise awareness among patients and health professionals,” Shelly Edgerton, director, Michigan Department of Licensing and Regulatory Affairs (LARA) said. “We, along with our partners, will continue our targeted education and outreach efforts to fight back against this devastating public health crisis.”
The state said the decrease in prescriptions is due to the effectiveness of Michigan’s strategy to combat the issue and the Michigan Automated Prescription System (MAPS) that launched last year.
As CMF reported, MAPS provides prescribers a user-friendly database to view whether controlled substances have previously been prescribed to a patient.
The state said there are currently more than 30,000 registered users of MAPS and that number will grow once legislation takes effect on June 1 requiring all prescribers of controlled substances to use the system.
During the Health Funders Affinity Group spring meeting last month, CMF members participated in small group discussions with their peers around topics that will be guiding their work over the next year, including substance abuse and the opioid epidemic.
Members shared work underway, challenges in their service areas they would like to address and brainstormed ideas for future collaboration to support change throughout the state.
“Last year, five Michigan funders collaborated to fund nine community coalitions in the fight against opioids,” Nora Maloy, co-chair CMF Health Funders Affinity Group and director of programs, Blue Cross Blue Shield of Michigan Foundation (BCBSM Foundation) said. “In 2018, additional foundations expressed interest in joining us for a new initiative aimed at treatment.”
BCBSM, the BCBSM Foundation, Michigan Health Endowment Fund and Community Foundation for Southeast Michigan, all CMF members, and the Superior Health Foundation are the five funders leading this collaborative work.
President Donald Trump’s administration has been focused on the issue nationwide, slating $625 million in the proposed federal budget for states to respond to the crisis.
“It is an important issue for Michigan and other parts of the country, yet we don't want to minimize other substance abuses that have been long-standing and not getting similar attention and resources,” Phyllis Meadows, Health Funders Affinity Group co-chair and senior fellow of health, The Kresge Foundation said.
Connect with CMF’s Health Funders Affinity Group.
New Video Highlights Success of Public-Private Partnerships in Transforming Public Spaces
The Michigan Department of Environmental Quality (MDEQ) has featured Detroit’s riverfront in a new video released as part of their series featuring flips of “brownfield” areas - “vacant or abandoned properties with known or suspected environmental contamination.” The video highlights the success of recent improvements completed along the river’s shoreline to improve its public use.
MDEQ, which aims to safeguard our state’s environment while supporting economic growth and development, has helped to support the riverfront clean-up and enhancement efforts. A $6.2 million Clean Michigan Initiative grant from MDEQ was awarded to Detroit to demolish crumbling infrastructure, address storm water contamination and help build the river walk.
This work, together with Michigan philanthropy’s participation has created public-private partnerships that are changing Detroit’s landscape.
“Without the partnerships, this could not have happened. Without people’s love for the city of Detroit, this could not have happened,” Raymond Scott, deputy director, Detroit Department of Buildings, Safety, Engineering & Environment, said.
As reported by the Detroit Free Press, a number of philanthropic partners have contributed to Detroit’s riverfront improvements over the last 30 years and created more inclusive spaces along the shoreline. General Motors, a CMF member, was one such partner, having purchased Detroit’s Renaissance Center in the mid 1990s, at which time they “began to mull how to transform the concrete no-man's-land between the RenCen and the water.” In 2003, GM partnered with the city of Detroit and The Kresge Foundation in launching the Detroit Riverfront Conservancy, a nonprofit entity that has played a critical role in developing the riverfront district and facilitating community access to the waterfront.
In reflecting on work that has been completed in the area, Detroit Riverfront Conservancy president and CEO Mark Wallace remarks in the video: “Going from that industrial heritage to this public space was really one of those projects that taught our community how to work together and how to come back together again.”
Several CMF members, including the McGregor Fund, Community Foundation for Southeast Michigan and many more in the Detroit area have supported work to transform blighted areas, increase public access and spur economic development.
For the conservancy, with the east riverfront transformation roughly 85 percent complete, the next phase of work focuses on West Riverfront Park, a 22-acre area that had been privately owned for nearly 100 years before the conservancy bought it in 2014 and reopened it to the public for concerts and other gatherings. The designer of this $50 million transformation project will be landscape architect Michael Van Valkenburgh Associates (MVVA), selected from among top international firms that participated in a design competition. The Ralph C. Wilson, Jr. Foundation provided a $345,000 grant supporting the competition through the foundation’s "Livable Communities" focus area. The conservancy notes in its press release that riverfront planning is made possible in part through several other CMF members, as well, including Fifth Third Bank, the Fred A. and Barbara M. Erb Family Foundation, Hudson-Webber Foundation, John S. and James L. Knight Foundation and The Kresge Foundation.
"This park will have a profound impact on the lives of Detroiters and will be a regional draw for recreation," Wallace said. "The work that has brought us to this moment has been one of the most inclusive and transparent processes that has been undertaken in public space design anywhere." The planning to date has included significant community involvement. Next steps include a series of public engagement opportunities to help refine the design.
It is anticipated that MVAA will begin work on the park in the spring of 2020. In the meantime, the Detroit Riverfront Conservancy will lead a campaign to raise funds for the project and the final 15 percent of work remaining on the east riverfront project will be completed.
Watch the MDEQ video series on brownfield flips.
Explore the West Riverfront Park plans created by MVVA.
Learn more about the Detroit Riverfront Conservancy.
Cook Family Foundation announces $1.1 million commitment to Owosso Public Schools
Content excerpted from a foundation press release. Read the full release here.
The Cook Family Foundation recently announced it has awarded a $1.1 million grant to the Owosso Public Schools for the completion of its auditorium in the new high school and middle school building.
“We believe we are at our best as a community when we come together to accomplish big tasks,” Tom Cook, executive director, Cook Family Foundation said. “When I think back over the last 25 years, I can think of no greater collaboration and no more important achievement than the passage of the Owosso Public Schools bond proposal on November 7, 2017.”
That bond measure provides funding for a multi-purpose performance space. The foundation’s grant will fund enhancements to create an auditorium for theatrical performances as well as band and choral concerts.
“The arts develop well-rounded individuals who are creative thinkers, communicators and problem solvers,” Andrea Tuttle, superintendent of the Owosso Public Schools said. “With a true auditorium, Owosso students will have daily accessibility to a space that will foster cross-curricular learning to develop communication, technology, and public speaking skills.”
The foundation said the $1.1 million grant is “extraordinary funding above and beyond the foundation’s usual grant-making, which last year totaled $719,000.”
“We are committed to the Shiawassee County community,” Cook said. “We have no plans to scale back our support for early childhood and other educational endeavors, our Nonprofit Capacity Building Program or environmental efforts centered around the Shiawassee River and the Saginaw Bay Watershed.”