Legislation updating prudence standards that govern the management and investment of funds held by institutions exclusively for charitable purposes is scheduled to be signed into law by Governor Jim Doyle this Monday, July 20. The bill (SB 31), which passed the Wisconsin State Senate in May and the Assembly in June, implements changes to the Uniform Management of Institutional Funds Act (UMIFA) recommended by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in 2006. UMIFA guides charities on the management and investment of funds, provides rules on spending from endowment funds, and permits the release of restrictions on the use and management of charitable funds. Members of NCCUSL spent four years developing and drafting language to replace UMIFA, which was incorporated into Wisconsin law in 1976, with the Uniform Prudent Management of Institutional Funds Act (UPMIFA) for enactment by state legislatures. It applies to funds held by institutions exclusively for charitable purposes.

 

Read full article from DFW member Attorney Adam J. Wiensch, Foley & Lardner LLP for more information on this legislation

 

Click here for materials from DFW's webinar "Demystifying UPMIFA" hosted on 5/7/09

 

** DFW is in the process of putting together a program in August to address what the passage of this bill will mean.  Watch your email for more details on this event.

The enrolled budget bill was presented to the Governor and signed into law on June 29, marking the first time since 1977 that the biennial budget was enacted before July 1, the date on which the new biennium begins. The signed budget bill became 2009 Wisconsin Act 28 [pdf].

 

The text of the Governor's budget address is available here, and the Governor's veto message can be found here [pdf].

 

With the signing of the biennial budget on June 29, the most recent legislative floorperiod has concluded. The next floor period will commence on September 15. The schedule of floorperiods for the 2009-2010 Legislative Session was established by 2009 Senate Joint Resolution 1.

Healthcare reform is the hot topic on Capitol Hill these days. The Senate had originally hoped to have legislation to the Senate floor by the end of June, but has now moved their deadline to before the August recess due to an unexpectedly high cost estimate of the legislation - $1.6 trillion. As a result, most of the legislative schedule for the month of July for the House and Senate will be consumed by this healthcare reform package, with most of the committees of jurisdiction holding hearings and markups before floor action.

 

As you may recall, when President Obama first announced his proposal to limit the itemized deduction, including the charitable deduction, a number of members of Congress spoke out against the proposal. Additionally, the Senate voted several times to preserve the current structure of the charitable deduction. Since then, however, it appears as though a "compromise" measure is now being considered in the Senate. The basic idea is that when individual tax rates increase in 2011 to 36% and 39.6%, the itemized deduction levels will freeze at the current law levels of  33% and 35% instead of increasing with the individual tax rates. 

 

A major step in transparency is unfolding in the nonprofit world. The vehicle delivering this change is the newly revised IRS Form 990, "Return of Organization Exempt from Income Tax," which nonprofit organizations have begun filing for the 2008 tax year. The impact that the increased transparency will have on nonprofit organizations has been severely underestimated. Read the summary of IRS's Strategic Plan 2009-2013 and New Form 990 Creates Strategic Opportunities and Risks for Nonprofit Organizations.

• DFW recently launched a webpage on the American Recovery and Reinvestment Act (ARRA)
• The Philanthropy Roundtable's monograph,  "How Public is Private Philanthropy? Separating Myth from Reality" provides a legal review of the limited relationship between philanthropy and government, refuting the claim that private foundation assets are "public money." The monograph's authors demonstrate that as with tax credits and preferences that individuals and businesses receive to encourage particular activities - such as the research and development tax credit - "recipients are not treated as public entities, and their assets are not deemed public." 
• The Philanthropic Collaborative (TPC) released a new study that looks at the broad benefits to communities from grantmaking in the health sector. BROAD BENEFITS: Health-related Giving by Private and Community Foundations [pdf] finds that two of three grant dollars in health go toward benefiting underserved populations and expands knowledge of how grants in the health field impact all communities, including low-income and minority populations.
• Bridgespan has conducted the second phase of a longitudinal study that show nonprofits are turning to much tougher measures than foreseen six months ago to cope with the economic downturn. Managing in Tough Times: May 2009 Nonprofit Leaders Survey Update results include: the percentage of nonprofits that have resorted to layoffs has increased, as has the percentage that has made broad-based programmatic reductions; more organizations have drawn down their reserves; nonprofit leaders appear to be optimistic about the future, though: Almost half of the respondents reported that they believe their organization will be on stronger financial footing in a year's time; and two thirds have employed contingency planning, a key step for weathering the storm, as outlined in our original November 2008 report "Managing in Tough Times: 7 Steps."