'Tis the giving season, and the well-heeled couple are in the spirit. They've purchased $500-a-plate tickets to benefit one of the city's great museums. Outside the hotel, a Salvation Army bell-ringer jingles for gifts. In a hurry for the gala fund-raiser, the couple whisk by the kettle. No "clank-clank" of coins.
The scene may not be precise, but the overall story of an imbalance in charity is true, according to a recent survey. The effect on government tax revenue is the same whether the money goes to the museum or the soup kitchen. But as unprecedented wealth spins off a bounty of generosity for some public interests, human service organizations are struggling.
"When you think about the needy, you don't really think it's that bad," said Patrick Rooney, director of research at the Indiana University Center on Philanthropy. Low unemployment and a booming stock market do little to remind a giver of the pangs of the poorest, he suggests.
Indeed, the center's semiannual survey of 170 fund-raising executives released this week seems to accentuate the positive, with a 9 percent spike in confidence in the climate for giving.
But the survey reflects different attitudes depending on the charity. Those in the health and other human services groups, for example, are "significantly less optimistic than their peers" about the climate for fund-raising. With respect to health groups, Rooney and the center's executive director, Eugene Tempel, point to the conversion of hospitals and related facilities from nonprofit to for-profit as a possible explanation: Donors may balk if they believe a change is imminent.
As for the relative pessimism in other human services organizations, Tempel says good times are paradoxically to blame. But if the message of need reaches prospective donors, he said, "it's clear that people will contribute to these causes."
For the moment, that message is muddled. The Salvation Army in western Pennsylvania, for example, reported this week that its donations were down 7 percent for the year. The NASDAQ stock index is up more than 60 percent.
Helping Nonprofits to Lobby
The Alliance for Justice, a D.C.-based coalition of 40-plus activist organizations, is launching a campaign to encourage charities and foundations to lobby elected officials on public policy issues important to the groups.
The Alliance wants to clear up any misunderstandings that many charities and foundations have over how much lobbying they can do legally and whether they would be targeted for tax audits. In an excess of caution, the Alliance believes, many groups don't do much lobbying.
In general, public charities may spend up to 20 percent of their first $500,000 in "exempt purpose expenditures" on lobbying, which can include providing information and research to Congress. Above $500,000, the allowable percentage decreases.
But to be eligible under the 20 percent rule, the nonprofits must fill out a one-page IRS form. Absent that filing, they are subject to 1934 IRS language--which the Alliance calls vague--stating that "no substantial part of a charity's activities . . . be carrying on propaganda or otherwise attempting to influence legislation." It does not define "substantial."
Nan Aron, president of the Alliance, says her group is responding to foes who have conducted a "campaign to target advocacy organizations." Four years ago, Rep. Ernest J. Istook Jr. (R-Okla.) unsuccessfully pushed for legislation barring nonprofits that receive any federal assistance from lobbying.
The Alliance has published a how-to pamphlet called "Worry Free Lobbying for Nonprofits" for thousands of private foundations and public charities.
Cracking Down on Drug Deductions
Rep. Lloyd Doggett (D-Tex.) has introduced legislation that would crack down on tax deductions for companies that donate unwanted or near-useless drugs.
Depending on the market value, drugmakers generally can deduct up to twice the manufacturing cost if a product is given away, as has been the case in relief efforts for civilians in countries hampered by war or natural disasters, said Doggett's counsel, Melissa Mueller.
The bill would require that only drugs requested for the relief operation be eligible for tax deductions and that they have more than a year of shelf life when shipped.
The proposal comes on the heels of a New York Times report on the shipment to the Balkans of such inappropriate items as lip balm and hemorrhoidal ointment. Also, a recent Harvard School of Public Health study found that as much as 40 percent of drugs given away abroad were not requested and that up to a third had less than a year before expiration.
For some worthless but still dangerous drugs, the would-be beneficiary can end up paying, Mueller said. "It really is toxic junk," she explained. "You can't just give it away to get rid of it."
Doggett's bill has 61 cosponsors so far, all Democrats, Mueller said.
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