IRF Update - December 2, 2011

CASE Updates State Charitable Solicitation White Paper

To help members navigate the complex landscape of U.S. charitable solicitation laws, CASE has updated the white paper Application of Charitable Solicitation Registration Statutes to Tax-Exempt Educational Institutions and Related Organizations.

Currently, 39 states and the District of Columbia require nonprofit organizations, including educational institutions, to register before they can solicit donations within the state. The white paper, prepared by the Washington, D.C.-based law firm of Webster, Chamberlain and Bean in February 2010, has been updated to reflect the latest additions and changes to registration requirements by state, including new laws in Oklahoma and Hawaii that exempt institutionally related foundations from registration requirements. It is available to CASE members with premier-level benefits.

Register Today and Save on the 2012 CASE IRF Conference

Registration is now open for the 20th Annual CASE Conference for Institutionally Related Foundations, April 18–20, 2012, in Chicago. CASE members are eligible for a special early bird registration rate.

The theme for this landmark conference is "The Basics, The Best, The Next" as CASE and our foundation members reflect on two decades of helping to strengthen the IRF field and look ahead to what foundations and foundation leaders can expect in the future. The conference is designed primarily for executives at foundations affiliated with four-year institutions and community colleges.

CASE will offer CPE credit for selected sessions, and the conference will again include special programs and sessions for community college foundation staff.

To register and view the agenda, visit the CASE website. Additional session information will be posted in the next few weeks.

Charitable Deduction Still in Discussion Despite Super Committee's Inability to Reach Agreement

On Nov. 21, the co-chairs of the Joint Select Committee on Deficit Reduction, also known as the "super committee," announced that the committee was unable to reach agreement on a plan to reduce the deficit by $1.2 trillion over the next decade. The committee's failure to reach an agreement means that automatic spending cuts allocated evenly between defense and nondefense spending will begin in January 2013. To avoid the cuts, lawmakers could look to limiting the value of itemized deductions, including the charitable deduction, as a way to raise revenue.

While the super committee was unable to reach an agreement, proposals offered by super committee Democrats and Republicans contained provisions that could have limited the charitable deduction. A Republican proposal offered by Senator Pat Toomey (R-Penn.) would have limited itemized deductions for high-income taxpayers in exchange for permanently extending the Bush tax cuts and lowering the top marginal tax rate to 28 percent. A Democratic proposal would have subjected high-income taxpayers to a limit of 2 percent of adjusted gross income on all itemized deductions. Since both of these proposals failed to gain support in the committee, it is unclear if the itemized deduction limits would have included the charitable deduction.

CASE will continue to encourage lawmakers to preserve the charitable deduction and will continue to alert members about the latest developments from Capitol Hill.

NACUBO, Commonfund Find Endowments Returned 19.8 Percent in FY 2011

U.S. college and university endowments saw an average return of 19.8 percent in fiscal year 2011, according to preliminary data from the 2011 National Association of College and University Business Officers and Commonfund Institute's Endowment Study. The data reflected returns at 284 colleges and universities.

"What stands out in these preliminary figures is the fact that, despite the positive returns of this year and last, endowments still have not completely recovered from the damage inflicted by the market declines that accompanied the 2008–2009 credit crisis," said John Walda, president and chief executive officer of NACUBO, and John Griswold, executive director of the Commonfund Institute. The two organizations found that the average endowment stands at 86 percent of its value in FY2007.

Other preliminary findings include:

• Average returns were similar across endowment size groups,
• The effective spending rate for the preliminary group averaged 4.3 percent, though institutions with very large endowments tended to have spending rates around 5.0 percent, and
• Institutions with smaller endowments (less than $25 million) reported average allocations to domestic equities of 41 percent, compared with an average domestic equity allocation of 12 percent for very large endowments (more than $1 billion).

The final study, which will report endowment data on 850 institutions, will be released in January 2012. Additional information is available on the Commonfund website.

Headlines

State Student Loan Programs Look to Fill Financial Aid Gap
Stateline, 11/16/11
Six states have recently introduced new student loan programs to help students fill the gap between available financial aid and ability to pay. A number of these programs have been created in response to state cuts in financial aid. State student loan agencies are trying to reinvent themselves since they no longer issue or service federal loans.
Full article

State Aid to Universities Soon Could Hinge on Performance Goals
Detroit Free Press, 11/20/11
Michigan plans to tie a portion of state funding to its public universities to performance goals such as graduation rates and the number of specialized degrees awarded. The goal of the program is to produce more graduates, though institutions view it as a threat to their autonomy and argue that it could lead to less diverse offerings. Seventeen states are either studying or implementing some form of performance-based funding.
Full article

What Now?
Inside Higher Ed, 11/22/11
The failure of the congressional "super committee" to reach an agreement on how to achieve $1.2 trillion in deficit reduction will now trigger automatic, across-the-board spending cuts that could affect student loans and research grants. Congress has until 2013 to determine how to apply the cuts, which must be split evenly between defense and nondefense spending. To avoid making cuts, lawmakers could look to raise revenue by limiting the value of deductions, including the charitable deduction.
Full article

Americans Say Giving to Charity Is a Holiday Priority
Chronicle of Philanthropy, 11/18/11
A poll conducted by the American Red Cross found that 7 in 10 Americans say it is important to give to charity during the holiday season, though only 57 percent plan to do so. The poll also found that charitable donations are the last thing that many people plan to cut when having to reduce holiday expenses.
Full article (subscription required)

Letting Numbers Tell the Story
Inside Higher Ed, 11/15/11
Liquidity—the ability to turn assets into cash—has become a prominent financial concern for institutions and is tracked closely by rating agencies. Since 2005, insufficient liquidity has been one of the factors cited most often in credit downgrades of colleges and universities. Institutions are also working to improve how they communicate about their financial situation with key stakeholders.
Full article

New Jersey's Public Colleges Enter Race for Donations
Press of Atlantic City, 11/12/11
As state aid continues to decrease, smaller public colleges and universities are turning to their foundations to help provide new revenue for their operations. Small college foundations are beginning to transition from events-only fundraising to direct donations from individuals. Growing private support can take time for institutions trying to build their fundraising capacity and should be viewed as a long-term investment.
Full article 

How can I receive the CASE IRF Update in my inbox?

Contact Brian Flahaven, director of legislative, foundation and recognition programs, at flahaven@case.org.