President Trump has promised to repeal the Johnson Amendment, which restricts public charities from endorsing candidates for political office. Some people believe the amendment unfairly limits the free speech of church leaders who wish to advise their members regarding a specific candidate or referendum.
Does this mean that donors can get a tax deduction for making a gift to a church that advocates for a specific candidate or millage proposal before the voters?
A suggested compromise would allow a minister or other religious leader to advocate for a candidate, but would prohibit the church from spending any funds to support a candidate. Again, I wonder, does this mean that a donor could make a tax-deductible gift to a church that was supporting the donor’s favorite candidate, and perhaps withhold a gift from another that does not?
And if this is allowed for churches, would it also be allowed for other public charities? I wonder how this might be relaxed for churches but not others.
Furthermore, there are no set guidelines regarding what is a church. In practical terms, if you say you are a church, you are a church and you are automatically a public charity. You do not need to seek an exemption from the IRS. I would imagine that hundreds of new “churches” would sprout up — fed by political, deductible gifts — solely to support certain political parties, candidates or positions.
This seems like a Pandora’s box, and there is little evidence to suggest that this problem needs fixing.
March 28, 2017
Over the last few months, there has been an interesting discussion taking place about the role of Donor Advised Funds and their impact on the nonprofit sector. An article in the New York Review of Books vigorously argued that these funds have negatively impacted the charitable sector because the billions of dollars sitting unspent in DAFs would be helping people and creating change if they had gone directly to public charities. That is, the donor has received his/her tax benefit, but the public benefit that is expected from a charitable gift has yet to come — and may not, in fact, come for many years.
The Nonprofit Quarterly also jumped into the discussion, reminding us that wealthy donors often create private foundations and thereby gain tax benefits when only 5 percent of the assets are distributed each year. Aren’t DAFs just like little private foundations, and shouldn’t the rest of us have the flexibility to let our DAFs grow tax-free like the private foundations, eventually able to distribute a larger amount and thus having greater impact?
I am reminded of this issue now as we began to hear anecdotal evidence of increased or accelerated giving late in 2016. Many donors appear to have made anticipated 2017 gifts in late 2016 due to the expected changes in the income tax rates this year. In the case of our clients, many of these gifts have gone into Donor Advised Funds.
As I ponder this issue, I am reminded of one small but important byproduct of creating a DAF at your local community foundation. (The New York Review of Books article focuses solely on commercial gift funds.) I have had a DAF at my local community foundation for 25 years now, and some years I recommend distributions and some years I do not. Yet, no matter what my activity, the annual admin fee that is collected goes to support the operations of the community foundation. My local CF has played a huge role in many civic projects and has provided significant community leadership for decades. I gain a small amount of comfort knowing that no matter how active my DAF, it is in a small way supporting the work of my CF and, thus, my community.
 Lewis B. Cullman and Ray Madoff, “The Undermining of American Charity,” New York Review of Books, July 14, 2016.
 Ruth McCambridge and Gayle Nelson, “Donor-Advised Funds: Charitable Limbo or Democratizing Giving Vehicle?” nonprofitquarterly.com, July 12, 2016. See also, Howard Husock, “Donor-Advised Critics Miss the Point About the Value of These Tools,” October 27, 2016, The Chronicle of Philanthropy.
 Drew Lindsay, “A Giving Room in 2017?” The Chronicle of Philanthropy, January 4, 2017.
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In case you missed it, anyone interested in philanthropy will find Christopher Caldwell’s March 12 The Wall Street Journal essay, Donor Beware, a lucid summary of two important issues. First, he reviews the problems associated with major gifts that name a building or an institution. (The Avery Fisher Hall incident has been documented in this blog.) Caldwell’s point is that the political climate of the future may well reject a naming that today seems harmless. He cites as an example the current rejection of Cecile Rhodes by South African activists that includes the demand that a statue of Rhodes at Oxford University be removed.
In our work, we remind our clients that perpetuity turns out to be a long time and that a naming opportunity with a perpetual lifespan often turns out poorly. Most donors can achieve their goals with a 50-year naming gift.
Caldwell also dips his toe into a much more controversial pool: the taxpayer subsidy of major gifts that often benefit the elite.
This is quite a thoughtful essay and I was more than a little surprised to find it in the WSJ, especially given its length and prominent placement.
If you’re interested, call me and I’ll send you a copy, or click on this link to the essay.
Do you remember the World Book Encyclopedia? I do. I thought those days were gone, replaced by wikis, web sites and Google. Yet here comes the Almanac of American Philanthropy, a massive 1,300 page tome from the Philanthropy Roundtable’s Karl Zinsmeister.
Mr. Zinsmeister has devoted considerable space to the greatest American donors of all time (think W.K. Kellogg, Sebastian Kresge, Henry Ford, Benjamin Franklin, etc.), and he has given the bulk of the volume over to reviewing the major achievements of American philanthropy divided into nine areas, such as medicine, religion, public policy, etc.). And there is a useful review of the philanthropy literature.
All of this comes with the Roundtable’s conservative donor-focused perspective.
As an almanac, this piece is eminently readable, filled mostly with short one or two page summaries of donors, foundations, successful grants, and leading nonprofits.
In sum, this book is a marvel and anyone interested in philanthropy would derive nearly endless joy paging through this wonderful contribution to our field.