Strategic Source Online

February 2004

Alert:   Eliot Spitzer Proposes Legislation

The Attorney General for New York, Eliot Spitzer, is proposing legislation to impose provisions of the Sarbanes-Oxley Act on non-profits. This would require corporate officers to sign public reports, an audit committee, and public disclosure of transactions between board directors, officers, and staff. Spitzer has also recommended the elimination of foundations with assets less than $20 million, on the premise that such foundations are inefficient. Neither of these proposals has gathered significant legislative support, but bears watching.

Nonprofit Coordinating Committee of New York (NPCCNY): Sarbanes-Oxley for Nonprofits

The NonProfit Times: NY's Attorney General Seeking to Apply Sarbanes-Oxley Act

Update:   Charitable Giving Act (H.R. 7) Passed Fall 2003

H.R. 7 (Charitable Giving Act) was passed by the House in the Fall 2003.  The Senate passed the Care Act in April 2003.  H.R. 7 will reduce the foundation excise tax to 1%, raise self-dealing penalties from a minimum of 5% to 25%, and reduce eligible expenses that would satisfy the 5% distribution requirements (including excluding compensation in excess of $100,000 to any disqualified person).  Both H.R. 7 and the Care Act would permit IRA rollovers to a foundation or charitable remainder trust, although the age thresholds are different in each bill.  The conference committee action is stalled, in part due to budget concerns and in part due to politics as usual.

Foundations on the Hill: Vote Results

The Council on Foundations: Charitable Giving Legislation

Planning Idea:  Start a 100 Year Strategic Plan

Succession planning is one of the most challenging issues confronting every family foundation.  It is more than engaging the interest of the children, but involves preparing successor generations in leadership, grant making, financial literacy, and administration.  It also involves developing a process that will work through many generations and which focuses on such organizational issues as eligibility, selection criteria, tenure, and compensation, and more qualitative issues, such as consensual decision-making, balance amongst the family groups, harmony, communication, problem resolution, and team building.  This is where the regularly scheduled and organized family meetings become so valuable.  Think of this as the start of the 100 year strategic plan. Is your foundation ready?

IFF Advisors: Ensuring Your Legacy for Future Generations

IFF Advisors: Institute for Family Foundations

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