Vol. 6, Issue 7
   February 15, 2000

Joint Committee on Taxation Issues Recommendations on Tax-Exempt Organizations

The report generally proposes expanding the information subject to disclosure, with specific recommendations providing for the disclosure of nonprofit documents including (but not limited to) all written determinations and background file documents involving tax-exempt organizations; the results of audits of tax-exempt organizations; applications for exempt status (and supporting documents), including those pending IRS approval; audit and examination information provided to attorneys general and other nontax state officials or agencies; Forms 990-T (the unrelated business income tax return); and any returns filed by affiliated organizations of tax-exempt organizations.

The committee also recommended that private foundations be required to file a summary of capital gains and losses reported on their 990-PFs. The report also recommends that the IRS require that foundations provide a full listing of their capital transactions to the agency and the public, upon request.

Let America Speak, a coalition of organizations committed to defending nonprofit advocacy rights, criticized several provisions in the report related to nonprofit lobbying. Among them were proposals that required 501(c)(3) organizations to provide information about their lobbying activities on their annual tax returns; disclose the amount of money they spent on activities under the "self-defense" exception to the lobbying rules; and disclose expenditures for nonpartisan research and analysis if the research or analysis includes a "limited 'call to action.' "

The Treasury Department, which also was directed by the Internal Revenue Service Restructuring and Reform Act to study the matter, has not yet issued its report. Congress will consider both reports and then decide whether to act on any of the recommendations.

To download the Joint Committee report in PDF format, visit: http://www.house.gov/jct/pubs00.html

"Joint Committee on Taxation Report Contains Nonprofit Advocacy Provisions; Proposals Would Create Burdensome New Recordkeeping Requirements for Nonprofits." Let America Speak News Release 1/28/2000.

McGovern, James J. "Exempt Organizations Update: What's Hot In Washington." February 2000. KPMG Washington National Tax. (Available through Independent Sector.)

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Kathleen Price Bryan Family Fund Dissolves

The recommendation to dissolve was made by the fund's board of trustees after it failed to hire a new executive director to replace William Massey, who resigned in 1998 to become president of the National Charities Information Bureau. The fund made no grants in 1999.

"The members reviewed the operation of the trust, " said acting executive director J.M. Bryan Taylor, "and reached a recommendation that was made as being the only action that could be taken to continue the good work that the members knew Mr. and Mrs. Bryan intended for this trust to achieve."

FCnote: The Kathleen Price Bryan Fund (NC) had assets of $70,012,817 and made grants totaling $2,818,205 in the year ending 12/31/98.

Cohen, Todd. "Kathleen Price Bryan Fund Is Splitting Up." The Raleigh-Durham Business Journal 2/14/2000.

Kathleen Price Bryan Family Fund Press Release 2/11/2000.

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Carnegie Corporation and Century Foundation Announce Digital Broadcasting Initiative

Digital Promise will build upon the Twentieth Century Fund's 1993 Report of the Task Force on the Future of Public Television, which was chaired by Vartan Gregorian, now president of the Carnegie Corporation.

"The Internet and new digital telecommunications technologies are challenging every aspect of radio and television," said Gregorian. "We believe the new technology should serve the public interest. This work will help inform future public policy decisions."

To develop its recommendations, the project will engage and consult with civic and political leaders and representatives from educational institutions, libraries and museums, the arts and public health communities, minority groups, and the public broadcasting community.

"The Carnegie Corporation and the Century Foundation Announce New Project on Fulfilling the Promise of Public Service Telecommunications in the Digital and Internet Age." Century Foundation Press Release 2/7/2000.

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USA Networks Gives $6 Million to Increase Diversity in Cable TV Industry

"With this tremendous gift from USA Networks, Inc., the Walter Kaitz Foundation will significantly expand its efforts in diversifying the workforce of the new communications marketplace," said Spencer Kaitz, founding director of the foundation and president of the California Cable Television Association. "We welcome the opportunity and applaud USA's commitment to put forth concrete efforts and zero in on this critical need — a diverse media workforce. The creation of the innovative New Media Fellowship and Broadcast Television Diversity programs will allow us to meet this goal," added Kaitz.

The Broadcast Television Diversity Program is designed to support the efforts of colleges and organizations to promote career opportunities within the cable industry among minority students, and will award $5,000 scholarships to 100 women and minority students. The New Media Program will provide participants with a four-month training program and a one-month on-site apprenticeship with participating industry companies.

The Walter Kaitz Foundation is a national membership organization whose core mission is to diversify the workforce of the cable/broadband industry.

FCnote: The USA Networks Foundation, Inc. (NY) had assets of $7,085,504 and made grants totaling $447,330 in the year ending 12/31/98.

"USA Networks, Inc. and the Walter Kaitz Foundation Announce Creation of New Minority Employment Programs." Business Wire 2/14/2000.

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Carnegie Endowment for International Peace Launches Global Issues Database

Designed to enlarge the international community of scholars and practitioners interested in the comparative analysis of global issues management, the new Managing Global Issues Information Network organizes information according to one of 20 global issues (e.g., labor rights, environment, etc.) and/or one of 16 global themes (e.g., NGOs, compliance, enforcement, etc.). In addition to helping participating members disseminate information internationally about their own work, the network is designed to encourage collaboration by allowing users to identify potential research partners, event speakers, bibliographic sources, and upcoming meetings of interest.

"It's a very difficult thing to get people to talk outside their own issue area and share lessons," commented project director P.J. Simmons. Another goal of the project, said Simmons, is "to encourage more dialogue across nations."

Individuals with experience in global issues management and an interest in sharing best practices and lessons learned are invited to fill out the online form and be considered for inclusion in the database.

FCnote: The Carnegie Endowment for International Peace (DC) is a non-grantmaking operating foundation that had assets of $250,609,473 in the fiscal year ending 6/30/98.

Morin, Richard and Claudia Deane. "The Ideas Industry." Washington Post 2/15/2000, p. A21.

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World Bank Awards $5 Million in Grants to Fight Poverty

In announcing the winners, Wolfensohn said it was "remarkable to see so many people joined together to reach one objective: to do development better and reduce poverty."

"In the next 25 years, another two billion people will share the world. Most of them will live in poverty if we do not take action now," said Wolfensohn. "We need ever more effective, innovative solutions to meet this challenge. The Development Marketplace can help bring our collective experience, knowledge, and passion to bear in the search for solutions."

The event attracted nearly 1,200 proposals from around the globe. Of those, 339 finalists were chosen to display their ideas at the marketplace, which was held February 8 and 9 at World Bank headquarters in Washington, D.C. Forty-six jurors representing the development community and private sector judged the proposals on their originality, efficacy in fostering partnerships, cost-effectiveness, and potential for ownership by those standing to benefit the most.

The next step for the winners is to put together a program, budget, and action plan that takes their ideas from concept to prototype over the next year and a half. Unfunded proposals have been posted to the World Bank's Web site, and bank officials are encouraging foundation staff and other potential funders to review them.

To review the full list of award winners, visit: http://www.developmentmarketplace.org/html/results.html

"World Bank Announces Development Marketplace Winners; Awards $5 Million for Innovative Ways to Fight Poverty." World Bank News Release 2/1/2000.

See also: Burgess, John. "A World Bank Marketplace of Ideas." Washington Post 2/15/2000.

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Rose Family Creates Architectural Fellowship Program at Enterprise Foundation

The Frederick P. Rose Architectural Fellowship will promote architectural and community design and encourages young architects to become leaders in public service. The fellowship is endowed by the Frederick P. and Sandra R. Rose Foundation.

"The marvelous legacy of Mr. Rose shines brighter today with the announcement of this generous gift from his family," said Enterprise Foundation CEO Bart Harvey. "His was a life that blended remarkable talent with compassion. His ability to see — and create — things of beauty will always be remembered."

The fellowships will match 30 architects over the next nine years with 30 nonprofit organizations or community development corporations, with each fellow receiving $40,000 a year for three years.

Applications for the program are being accepted now, and the first 10 fellows will be announced in May.

"The Enterprise Foundation Receives $5.5 Million Gift; Rose Family Donation Funds Architectural Fellowships for Low-Income Communities." Enterprise Foundation Press Release 2/9/2000.

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Conservation International Donates $35 Million for Research Center

The project is funded in part by a $35 million donation from Intel Corporation co-founder Gordon Moore and his wife Betty. The gift, made in the fall of 1998, was the largest private gift ever given to support international biodiversity.

"Conservation Group to Donate $35 Million to Study Guatemalan Rain Forest." San Francisco Chronicle 2/13/2000.

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Conference on Museum Fundraising Reveals Questionable Practices

Two of the figures at the center of the "Sensation" debate declined invitations to attend the conference: New York City Mayor Rudolph Giuliani, who had threatened to withdraw city fundng for the exhibit, and Arnold Lehman, the director of the Brooklyn Museum, who objected to the conference's title, "Taking Funds, Giving Offense, Making Money."

Among the speakers at the conference was Gilbert S. Edelson, administrative vice president of the Art Dealers Association of America, who stated that some museums take a commission on sales of new art exhibited on their walls, just as private dealers do. And while no conclusions were reached at the day-long conference, concern about censorship and infringement of first amendment rights was a common theme.

"The message of the controversy to government officials is to be careful about getting into this business of arts funding, because once you get in you may not be able to get out. The more often there are First Amendment decisions in court, the more powerfully the message goes out to legislators to be careful," said David Strauss, a University of Chicago law professor. "This is not a battle that can be won in court. People who think that there is an important role for the government to play in funding the arts have to win in the court of public opinion."

Dobrzynski, Judith H. "'Sensation,' Gone But Still Provocative." New York Times 2/14/2000.

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Pew Trusts Fund Catholic Research Project

"A strong public expression of religious faith and an open, pluralistic public square don't have to be mutually exclusive," said Pew president Rebecca W. Rimel in announcing Religious Communities and the American Public Square, an initiative that has awarded grants of more than $1 million to researchers studying the civic contributions of mainline Protestant, Catholic, evangelical Christian, Muslim, Latino, African-American, and Jewish religious groups in the U.S.

High among the project's goals is to clarify how Catholics may work more effectively with those of other faiths to revitalize both the religious environment and civic participation in the American republic.

The project will feature several national conferences organized jointly by the Commonweal Foundation and the Faith & Reason Institute, as well as numerous colloquia and case studies pursued independently by the two groups.

"Pew Embarking on Major Study of Roman Catholicism in American Public Life." Pew Charitable Trusts Press Release 2/7/2000.

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Donations of Stock to Religious Congregations on the Rise

No one group tracks gifts of stock to charities nationwide, but for many congregations such contributions are outpacing the increase in overall donations. In fact, it is not unusual for officials of large congregrations to have relationships with money managers or brokers who handle pledges of stock. In such cases, donors generally call their brokers, who transfer the shares to whatever investment firm is handling the congregation's investments. Religious organizations say that upon receiving donations of stock, they almost always sell the shares immediately, opting not to play the market.

Donating stock has positive tax implications for the donor: no capital gains taxes in addition to a tax deduction. And congregations on the receiving end don't pay capital gains either.

Some theologians see the move toward donating stock instead of cash as a fundamental break with religious tradition in America. The practice, they say, is closer to what occurred in medieval Europe among wealthy landholders.

"When land was the equivalent of stock, you gave monks land — and the revenues from it — instead of cash," said Andrew Brown, author of "The Darwin Wars'' and an expert in religious trends. "It's a pattern most common during periods when you have seriously rich people."

Huffstutter, P.J. "More Stocks Are Ending Up on Collection Plate." Los Angeles Times 2/15/2000.

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A New Generation of Philanthropists

Typical of this new generation is Nicholas Lovejoy, who left e-tailer Amazon.com , where he was manager for financial systems in information technology for three years, to form the Gordon-Lovejoy Foundation with his wife, Barbara Gordon. The foundation supports environmental causes and the sustainable use of the planet's resources. Says Lovejoy, "It's a harder problem. To figure out how to sell books on the Internet may be a hard problem. But to figure out what you want to change about the world and how to change that in an effective way that makes people better off, it's just a far vaster problem."

Rob Glaser, founder of Seattle-based RealNetworks , is another Internet philanthropist with an ambitious long-term agenda. Glaser established the Glaser Family Foundation to address a wide array of social, political, and environmental concerns. "I am focused on making the greatest and deepest long-term impact, and not necessarily doing something that has an immediate impact but only scratches the surface," notes Glaser.

Young philanthropists with a background in technology tend to share a sense of idealism fostered by their having accomplished prodigious feats in a relatively short period of time. Says Lovejoy: "I'm absolutely convinced I can do anything that other people think is impossible, because we did it regularly at Amazon...and that's simply the attitude I want to apply to what we're trying to do now."

And although younger philanthropists may be tackling enormous societal issues, many are uncomfortable with the traditional view of their charitable activities. "The word philanthropy can be very off putting in a way to people," said Paul Shoemaker, director of Seattle-based Social Venture Partners, a "venture philanthropy" fund. "It has sort of this blueblooded connotation to it."

Vervohek, Sam Howe. "Internet's Rich are Giving It Away." New York Times 02/11/2000.

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GreaterGood.com Acquires Hunger Site

Only six months old, the Hunger Site was a success from the start — attracting nearly 34 million visitors with its promise of a one-pound food donation for every click of a button on its home page. But the site, which was supported by corporate donors through the United Nations’ World Food Programme, became increasingly difficult to maintain. Executives of the merged entity hope that the consolidation of the two sites will allow the Hunger Site to continue it's work while helping to distinguish GreaterGood.com from the many other cause-related e-commerce sites that are vying for donors' time and money.

“The Hunger Site Joins Forces with GreaterGood.com.” Business Wire 2/10/2000.

Tice, Carol. "Charity Portals’ Deal May Signal Consolidation." Puget Sound Business Journal 2/14/2000.

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Charitableway.com to Offer Workplace Giving Stations

The portal site will use the funding to provide businesses with customizable online Workplace Giving Centers as a way for their employees to donate to charity and connect with their communities.

"This second round of funding will help us meet the market demand to make charitable and workplace giving an easier and more engaging experience," said Pete Mountanos, founder and CEO of Charitableway.com. "By making it a simpler, more informative and more interactive experience for companies and their employees to get involved, we are finding new ways to help increase charitable contributions in America."

Michael Linnert of TCV and an executive to be named from PaineWebber will be joining the Charitableway.com board of directors. Current board members include former Hewlett Foundation president David Gardner, AOL senior vice president Mike Homer, Benchmark Capital partner Andy Rachelff, Softbank Technology Ventures executive managing director Gary E. Rieschel, and Charitableway.com CEO Pete Mountanos.

Charitableway.com has also joined with Social Ecology, an application service provider for the nonprofit sector, to offer DonorLink IT, Web-based email relationship management software designed to make it easier for nonprofit organizations to keep track of and communicate with their supporters. When DonorLink debuts in the spring, Social Ecology will allow nonprofits that are part of the Charitableway.com network to use the program for free for an introductory period.

"Charitableway.com Receives $35 Million in Series B Funding to Become the Premier Application Service Provider Linking Businesses and the Nonprofit Sector." Business Wire 2/8/2000.

"Social Ecology and Charitableway.com Connect Nonprofits With New Ways To Manage Donor Relationships." Business Wire 2/15/2000.

See also: Wolverton, Troy. "Charities Gear Up to Tap Online Donations." CNET News.com 2/10/2000.

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University of Pennsylvania Negotiates $10 Million Gift Via E-mail

"To my knowledge, this is the largest e-gift [ever made to a higher education institution]," Jean-Marie Kneeley, vice dean for external affairs at Penn, told the Chronicle.

The gift was made by Christopher H. Browne, managing director of New York-based investment-management firm Tweedy, Browne Company. In an initial meeting with school officials, Browne suggested that his gift be negotiated online. Four days later, after several e-mail exchanges, he sent an e-mail confirmation of the gift's amount and related details. Browne and Penn officials both agreed that the process could have taken weeks if conducted via phone and fax.

Kneeley pointed out that e-mail was not the school's usual channel for attracting major gifts. "This is not something that we would do with someone we don't know," she said. Browne is a trustee of the university and also serves as president of the Penn Club in New York. She added that school officials would be thanking Browne in person.

Carlson, Scott. "Penn Officials Use E-Mail to Negotiate a $10-Million Gift." Chronicle of Higher Education 2/9/2000.

See also: "Christopher H. Browne Makes $10 Million Gift to the University of Pennsylvania." University of Pennsylvania Press Release 1/28/2000.

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Charities Have Range of Choices in Online Giving Sites

"I doubt they'll all survive, and who knows which of these is going to turn out to be good or bad?" said Ann Medlock, president of the Giraffe Project, a small charity in Langley, Washington, that has signed up with a number of charity portal sites. "The nice thing is [that on any] of these sites, you can look as good as any of the big organizations. We're hoping people we don't know will find us online and donate."

For many smaller nonprofits and community organizations, signing up with a charity portal is a way to raise money without incurring any costs — an attractive proposition to groups with small staffs and budgets. But there remain legal, competitive, and ethical issues surrounding online fundraising that in turn raise questions about the viability of many portal sites.

Competition from large, well-funded sites probably means some of the smaller fee-based ones will not survive. Charitableway.com, a San Francisco-based donation-solicitation site, for example, recently announced that it will donate 101 percent of the money pledged on the site for an indefinite period. Corporate sponsors are covering Charitableway's operating costs and donating the extra 1 percent to charity. The organization's announcement followed one from AOL-sponsored "Charities Explore Online Giving Sites." Puget Sound Business Journal 1/31/2000.

See also: "Charity Watchdogs Warn of Potential for Online Fraud." Associated Press in New York Times 2/8/2000.

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The Foundation Center