The National Committee for Responsive Philanthropy (NCRP) is the
nation's only nonprofit philanthropic watchdog organization working to
promote increased philanthropic giving and philanthropic access for
people with the least wealth and least opportunity in our nation. We are
writing to seek your help on HR 7, The Charitable Giving Act of 2003,
which is currently under consideration in the U.S. House of
Representatives.
For some years, NCRP has been promoting higher levels of foundation
spending or "payout," particularly in the form of grants to this
nation's hard-pressed nonprofits. Section 105 of HR 7 would take a
small but important step toward that end. We need you to write or call
your member of Congress and any and all members of the House Ways and
Means Committee to prod Congress to support higher levels of grantmaking
from private foundations.
In particular, Sec. 105 of this bill would prevent private foundations
from including administrative and operating costs in their annual payout
calculations, currently set at a minimum of 5% of their assets. If this
bill passes with Sec. 105 intact, it could mean up to an additional $4.3
billion for America's charities each year, while not having a
significant financial impact on the nation's foundations.
Most private foundations have turned the 5% minimum payout floor into a
spending ceiling, and for some, a good part of their payout is in
administrative and operating costs, including fees paid to their trustee
board members, and office construction and rental expenses. You
probably know several nonprofits that have had to cut back programs and
services due to decreased charitable donations and foundation grant
cutbacks, at a time when the federal government is skewering the social
safety net and state governments are laboring under record budget
deficits. Increasing the grants payout of private foundations by what
would amount annually to .4% of their total assets won't drive
foundations out of business by any stretch of the imagination, but will
add billions to needed grantmaking.
USA Today endorsed this legislation in its lead editorial on May 28,
2003, but that won't move Congress to support increased levels of
foundation payout the way that calls and letters from nonprofits - from
the grassroots up to the national level - will.
Attached is NCRP's analysis of Section 105; the press release announcing
our findings; and some talking points that you can use if you decide to
contact your representative in the House and encourage him or her to
support HR 7. Feel free, of course, to tailor these talking points so
that they reflect the current needs and interests of your organization.
Contacting the members of the House Ways and Means Committee - which
will "mark up" the bill by mid-June - to voice your support would also
be incredibly helpful. Visit www.congress.org <http://www.congress.org>
to obtain your representative's contact information. We have attached a
list of the members of the House Ways and Means Committee, including
their contact information.
It is particularly important for you to make contact with House
Democrats on the Committee and elsewhere in Congress. In the past,
NCRP's call for increased foundation grantmaking was typically
"left-baited," with the charge that increased payout was simply an
attempt to defund mainstream charities in the interest of left-wing
social justice causes. Now, because HR 7 has Republican as well as
Democratic co-sponsorship, opponents are practicing "right-baiting,"
charging that this is simply a scheme of the right wing to "defund the
left," with foundations representing the left. To NCRP then and now, the
call for increased payout is neither left nor right-it's simple
economics that foundations do not need to sit on as much of their assets
as they currently do. They can afford to spend more on nonprofits, and
we know America's nonprofits can use the new grantmaking now. And even
if Sec. 105 of HR 7 is enacted, foundations can still spend freely on
administrative costs; they would, however, have to make sure that their
minimum payout level consists almost entirely of grants to nonprofits.
If you need any help contacting your representative, please let us know.
You can reach Jeff Krehely, NCRP's research director, at jeffncrp.org or 202-387-9177, and he will be glad to assist
you.
We understand that you may have some apprehension speaking out in
support of this provision, since many - but certainly not all -
foundations oppose it. However, you can always ask your representative
to keep your communications with him or her confidential. The important
thing is to express your views on this issue, which has the potential to
greatly benefit the nonprofit sector at a time when it needs as much
support as it can get.
Finally, if you are the executive director of an umbrella organization,
association, or network, we encourage you to pass this message and its
attachments on to your members, or any other colleagues who you think
may be interested in getting this bill passed into law.
Based on our analysis of existing data and research, NCRP believes that
this provision has the potential to pump billions of dollars into
America's charities, without placing a large or unreasonable burden on
the nation's foundations. Indeed, the provision under consideration has
significant potential to help make the foundation community much more
efficient and accountable.
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