IRF Update - July 29, 2010

July CFI Predicts 5.7 Percent Increase in Giving in 2010-11

Educational fundraisers are optimistic that philanthropic giving to U.S. schools, colleges and universities will continue to rebound in the coming academic year. That's according to the recently released CASE Fundraising Index.

The CASE Fundraising Index, or CFI, is based on a semi-annual survey that asks fundraising professionals to look at estimated results for the year that just ended and the year immediately ahead.

The July CFI predicts an increase in donations of 5.7 percent in 2010-11 over the previous academic year. Fundraisers estimate an increase of 4.3 percent from 2008-09 to 2009-10 when they close the books on the year just ended.

The encouraging projections come after significant declines in giving to educational institutions during the 2008-09 academic year, said CASE President John Lippincott.

"Giving to education is recovering from the impact of the recession," Lippincott said. "A 5.7 percent increase, slightly below the 20-year-average of 6 percent, is an encouraging sign that we may return to pre-recession giving levels in roughly two years."

Fundraisers at community colleges and independent schools are generally more optimistic about past-year results than their counterparts at four-year colleges and universities. For the year ahead, fundraisers at community colleges and four-year public colleges and universities are the most optimistic.

The National Committee, chaired by Leonard Raley, president and CEO of the University System of Maryland Foundation, provides leadership and guidance on issues of concern to institutionally related foundations and the public colleges and universities they serve. The committee also supports the development of resources, programs and services for professionals within the foundation community. View the full committee roster.

If you would like to be considered for future service on the IRF National Committee, please contact Brian Flahaven, CASE's director of government relations and institutionally related foundations, at flahaven@case.org or 202-478-5617.

In 2006, Congress passed and President George W. Bush signed a law that requires nonprofit organizations with gross receipts less than $25,000 to annually file the Form 990-N, commonly known as the e-Postcard, with the IRS. Prior to the law's passage, nonprofit organizations of this size were not required to file a return with the IRS. The law provided a three-year window, which closed on May 17, 2010, for organizations to file the Form 990-N. On July 26, the IRS announced a special one-time filing relief program that will allow organizations that failed to file a return by the deadline to file their returns by October 15, 2010, without penalty.

The Urban Institute report found that 15 percent of the nearly 300,000 nonprofit organizations that missed the May 17 filing deadline are affiliated with education or educational institutions, including fraternities and sororities, small alumni groups and regional alumni chapters. Many of these organizations are likely unaware of the new filing requirement.

CASE encourages members to take time to ensure that the small nonprofit organizations affiliated with their institutions or alumni associations have filed the Form 990-N. State-by-state lists of the organizations at-risk of losing their exempt status are available on the IRS website.

Currently, the estate tax is temporarily repealed but, without congressional action, will reappear onat its pre-2001 levels ($1 million exemption, 55 percent tax rate) on Jan. 1, 2011. In December 2009, the House passed H.R. 4154, a bill that would permanently extend the estate tax at its 2009 levels ($3.5 million exemption, 45 percent tax rate), a position that is supported by President Barack Obama and CASE. However, Senate Democratic leaders do not have the 60 votes necessary to pass H.R. 4154.

Senators Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) have introduced a proposal that would be more generous to estate owners and heirs than H.R. 4154. Under the Lincoln-Kyl proposal, the exemption level would be set at $5 million and indexed to inflation while the remainder of the estate would be taxed at a 35 percent rate. It is unclear if the Lincoln-Kyl proposal can get the necessary 60 votes in the Senate and pass the House.

Senate Finance Committee Chairman Max Baucus (D-Mont.) has indicated that he would like to combine an estate tax extension with a package of middle class tax cut extensions that the Senate will take up this fall. However, without a consensus on the estate tax rate and exemption level, it is uncertain if such a package can pass the Senate and House. Any extensions would likely be for one year, though it is unclear if lawmakers would make an estate tax extension retroactive to Jan. 1, 2010.

CASE supports a permanent extension of the estate tax at its 2009 levels and will continue urging Congress to re-instate the tax as soon as possible.

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