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January/February 2008 Public Policy Update

IRA Rollover Provision Still Awaits Extension


Earlier this year, AFP submitted a written statement to the Senate Finance Committee, urging senators to include an extension of the Individual Retirement Account (IRA) Rollover provision in the economic stimulus package.  Unfortunately, the IRA Rollover provision was not included in that legislation. 

AFP continues to look for opportunities to pass an extension of the IRA Rollover provision.

Action Required:

If you have not done so already, please write or call your Members of Congress. 

You can find talking points, draft letters and other instructions here:


This past January, the Senate Finance Committee, chaired by Sen. Max Baucus (D-Mont.), held two hearings focused on the economic stimulus package that Congress hopes to pass in order to prevent a recession. The hearings coincided with the U.S. House of Representatives’ consideration of a similar package.

During the hearings, Chairman Baucus remarked that “fiscal stimulus must be timely. That means that once enacted, the stimulus must take effect quickly. . . . Fiscal stimulus should be well-targeted. Stimulus should be targeted on those who most need the help.”

In response to the hearings, Paulette Maehara, CFRE, CAE, AFP’s president and CEO, submitted a written statement to the committee, urging members to include an extension for the IRA Rollover provision.

The current provision expired on Dec. 31, 2007, due to Congress’ inaction. Under the provision, a donor who had reached the age of 70½ was allowed to exclude from his or her income any IRA funds up to $100,000 that were withdrawn and transferred to a charity when filing a tax return for the year of the transfer.

President Bush’s proposed 2009 budget contains a provision to make permanent the IRA Rollover provision. This version of the IRA Rollover is essentially the same as the one that expired at the end of 2007.

AFP will continue to urge Congress to extend this important provision.

AFP Continues to Weigh in on the Form 990 Redesign


As noted in the 2007 year-end Public Policy Update, the Internal Revenue Service (IRS) introduced a redesigned version of the Form 990.  In response to comments from AFP and other organizations, the IRS then released a revised edition of that form that addressed many of the concerns raised by AFP and other fundraising organizations.

Despite the changes so far, AFP still would like to see additional alterations made to the new form.

Action Required:

None at this time.


A key change made to the redesigned form was the elimination of references and disclosures related to fundraising percentages and ratios on the core form and in Schedule G (relating to fundraising and gaming). In its comments, AFP had noted that such ratios were overly simplistic and not accurate indicators of an organization’s intrinsic worth and effectiveness.

In addition, the redesigned form incorporates a two-year summary of financial information comparing the current and prior years, giving donors and others a more accurate perspective of an organization’s financial situation. The IRS also reorganized the core from, allowing for a description of an organization’s program service accomplishments on page 2 immediately after the summary.

The new Form 990, which be filed in 2009 for tax year 2008, can be found on the IRS website.

However, several concerns still remain with Schedule G, where the IRS has continued to lump fundraising and gaming activities together despite the suggestions of AFP and other organizations. AFP argued that while both activities raise funds, the purpose of fundraising is to develop a relationship and cultivate donors while gaming is for recreation and entertainment.

In addition, the fundraising community proposed that the threshold for having to complete Schedule G, which is required if an organization spends more than $10,000 on “professional fundraising activities” or raises more than $10,000 from special events, should be raised to $50,000. However, the IRS raised the threshold to only $15,000.

Another concern is a section requiring the disclosure of governance provisions. While AFP supports effective and accountable governance for nonprofit organizations, it argued in its comments that the Form 990 was not the appropriate document to address governance and that the IRS’ reasoning was flawed.

House Hearings Held on Veterans’ Charities


The House of Representatives Oversight and Government Reform Committee held a second hearing on Jan. 17 to investigate fundraising costs by veterans’ charities, with several members of Congress calling for charities to disclose their fundraising costs and how much they spend on programs and services.

The comittee also has asked the United States Postal Service (USPS) to review the cooperative mailing rule.

Action Required:

None at this time.


In December, the committee held its first hearing on the issue, using report cards by the American Institute for Philanthropy, a charity watchdog group, to criticize several veterans groups for excessive fundraising costs. However, one of the key witnesses, Roger Chapin, who has founded several veterans groups that the committee is investigating, was unable to attend the December hearing.

Chapin appeared before the committee at the hearing in January, defending the work his charities have done for veterans. He argued with several members of the committee about what percentage of his organizations’ funds went to programs and how much was spent on salaries and other perks.

Also appearing at the hearing was Geoff Peters, Esq., president of CDR Fundraising Group in Bowie, Md., who offered an authoritative and detailed discussion of fundraising costs and why percentages are a simplistic and misleading indicator of charity efficiency and effectiveness.

During the testimony, several members of the committee proposed that charities be required to disclose on all communications with the public what percentage of funds raised is used on programs and services. However, such a requirement would not pass constitutional muster because the Supreme Court has ruled several times over the past two decades that charities do not have to disclose such percentages unless asked.

Rep. Henry Waxman (D-Calif.), chair of the committee, also suggested that Congress might consider eliminating the reduced postage rates that nonprofits enjoy unless they disclose the percentage they spend on programs and services.  The USPS has been charged with reviewing the cooperative mailing rule.

With two hearings in just over a month on the issue of fundraising costs, it is quite possible that Rep. Waxman and other members of the committee may introduce legislation regarding some aspect of disclosure. AFP continues to reach out to members and staff on the committee to educate them about fundraising costs and best ways to prevent fraud and abuse.

More information about the hearing, including written testimony from participants, can be found on the committee's website.

Panel to Support National Philanthropy Day in Canada Before Senate Committee

Sen. Jerahmiel S. Grafstein (Liberal, Metro Toronto) recently reintroduced legislation that would create the first permanent government-recognized National Philanthropy Day® (NPD) in the world.

AFP has been asked by Sen. Grafstein to create a six person panel that will voice their support for a government-recognized NPD before the Senate Standing Committee on Social Affairs, Science and Technology.

Action Required:

None at this time.


The panel will address the committee on April 16, 2008.  AFP currently is working with prominent members of the charitable sector to ensure that the panel represents a strong cross-section from organizational, cultural and geographical standpoint. 

NPD acknowledges the entire spectrum of support provided by the voluntary sector and recognizes the profound impact that philanthropy has on the fabric of society. More than 50,000 people at over 125 events across North America participated in NPD events and celebrations in 2004. In Canada, NPD events are held in every province and annually involve thousands of people on November 15.

During National Philanthropy Day and throughout the month of November, Canadian AFP chapters honor exemplary local philanthropists, volunteer fundraisers, corporations, foundations, media outlets, children and young adults, and fundraisers at every level for their outstanding work in and contributions to the community. They also use this special occasion as a chance to educate the public about the importance of informed charitable giving and meaningful volunteerism.

CRTC Finalizing Telemarketing Rules, Including Potential Fees on Charities


As noted in last year’s September-October Public Policy Update, the Canadian Radio-Television and Telecommunications Commission (CRTC) is developing telemarketing rules, including regulations that would deal with public complaints.  Those rules involve fees that would fund a thirty-party organization that would help the CRTC oversee these rules.  The CRTC failed to exempt registered charities from those fees.  In response, AFP drafted comments to the CRTC urging them to exempt registered charities from the fee structure since a) the fee essentially imposes a tax on charities and b) Parliament explicitly exempted registered charities from the federal do-not-call list.

Action Required:

None at this time.


Thus far, the CRTC has refused to exempt registered charities from its proposed telemarketing rules and related fees. In regards to fees imposes to fund the CRTC’s complaints response effort, AFP is concerned that the fee would be applied on a “per complaint” basis, not just as a one-time annual registration fee.

AFP continues to look for ways to work out a compromise with the CRTC.  In addition, AFP has been approached by the Canadian Newspaper Association (CNA) to work as partners on this important issue. A joint letter from both organizations to the CRTC may be submitted in the near future.

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