At a time of great media and regulatory scrutiny of the philanthropic sector, 300 foundation representatives from 35 states and the District of Columbia took the time to gather in Washington, DC earlier this month for the 14th annual Foundations on the Hill (FOTH). Organized by the Council on Foundations and the Forum of Regional Associations of Grantmakers, the event brings foundation trustees and staff to Capitol Hill to discuss pending and future legislation and tell the story of philanthropy.

“Philanthropy exists, in part, because of the tax laws of this country,” said Robert Collier, President of the Council of Michigan Foundations, who brought 35 philanthropists to FOTH. “Today, there are some members of Congress who think philanthropy is just a big tax dodge. Members of Congress need to hear the stories of what family foundations are doing with their grantmaking. They need to hear about the value that [philanthropy is] bringing to their communities.”

Family Giving News was there, accompanying the Michigan delegation, as giving families did just that. This month’s issue chronicles the issues, the meetings, and the lessons learned at this year’s Foundations on the Hill.

The Issues

Foundation representatives attending FOTH are treated to comprehensive orientations by Council on Foundations and regional association staffers who outline the major issues and offer tips on talking to legislators before ascending the Hill and meeting with members.

FOTH attendees heard that this year’s event was going to be a little different. Delegations from California, for instance, had opted to go to Sacramento instead of Washington because of the controversy surrounding A.B. 624. Recently passed by the California State Assembly, A.B. 624 would require California foundations with assets over $250 million to collect certain ethnic, gender, and sexual orientation data pertaining to governance, staff, and grantmaking.

Steve Gunderson, President of the Council on Foundations, which opposes the bill, urged foundations to be prepared for questions about this bill that has garnered national attention.

“Be ready to answer the question, ‘What is philanthropy doing about diversity?’” the former Wisconsin congressman said. “But the real question is: how do we achieve diversity—through leadership or legislation?”

This theme emerged in the talking points provided to FOTH attendees: where there is a choice between leadership and legislation, it’s better to support philanthropic initiative and leadership. Where legislation is necessary, it’s better to have legislation that encourages and develops that initiative.

Among the issues to be discussed were the IRA charitable rollover, the excise tax, conservation easements, and the so-called “Low-profit, Limited Liability Company” or L3C.

At the top of the list of desired legislation was an extension of the IRA Charitable Rollover. Introduced in the Pension Protection Act of 2006, this provision allowed taxpayers ages 70-and-a-half or older to make tax-free distributions of up to $100,000 from their IRAs to charitable organizations. According to the National Committee on Planned Giving, this new giving tool resulted in more than $138 million for charities across the country. Legislation to extend the provision, which expired at the end of 2007, is currently pending, and many foundation leaders would also like to see the provision expanded to include gifts to private foundations, donor-advised funds, and supporting organizations.

Frank Wideman, III, President of the Self Family Foundation and member of the National Center’s Friends of the Family Advisory Committee, and others also voiced concerns about the excise tax, the tax levied on the net investment income of most domestic private foundations.

“It’s very complicated to figure whether you pay 1% or 2%,” Wideman said. “We believe it would be best to have a flat excise tax somewhere between 1 and 2%, and we’d like to see the revenue dedicated to support IRS enforcement.”

Many Michigan foundations were interested in an extension of the deductions for qualified conservation easements. William Hanson, Director of Communications for the Detroit-based Skillman Foundation, noted that Michigan’s Grand Traverse Regional Land Conservancy was able to double its area in 2007 largely due to these incentives, now tied up in the pending Farm Bill.

Still other foundations were looking for support of a new form of Limited Liability Company, the so-called “Low-profit, Limited Liability Company” or L3C. State legislation has been introduced in Michigan, North Carolina, Vermont, and Montana that would allow for foundations to invest in these new companies that generate a modest profit while carrying on a business that supports a charitable purpose. It is hoped that, with the legislation’s passage and a regulatory ruling from the IRS, L3Cs will provide a streamlined, effective way to invest in economic development initiatives without the attendant administrative hurdles that program-related investment can impose.

(Visit the FOTH website for more on these proposals and others.)

Finally, and perhaps most importantly, foundations were encouraged to share their personal stories of their work in their home communities.

“With the downturn in the economy, members of Congress want to know what we’re really doing in our communities,” Gunderson continued. “Share that story.”

The Meetings

The Council of Michigan Foundations has been coming to the Hill for 30 years. They meet with every member of Michigan’s Congressional delegation—15 House members and both Senators—inside a day and a half. FOTH matches the hectic speed of Congress, sandwiching sessions with Senators and Representatives between committee hearings, House votes, and countless meetings with other constituents.

Since time is of the essence, location doesn’t much matter. Foundation representatives caught up with Rep. Carolyn Cheeks Kilpatrick (D – MI) in the hallway between committee meetings.

“We’ll do meetings every place except the Men’s or the Ladies’ Room,” said Collier. “They look forward to our visits. The time they give us is quite remarkable. They’ll go out of their way to meet with us.”

The Michiganders were split up into teams of five or more to meet with their representatives. The members may be there for the meetings; they may not be. In the latter case, the team meets with a Congressional staffer, usually the legislative assistant who handles the relevant issue area. Foundation representatives begin by introducing themselves and their affiliations. A team leader reviews the important issues and the team’s stance on them. Finally, some in the group, especially the foundation leaders from the member’s district, will talk about their recent philanthropic achievements before leaving a packet of information with the staffer. The process takes a maximum of 20 minutes.

Michiganders who gathered to talk with Sen. Carl Levin (D – MI) met first with his legislative assistant for financial services, Julie Davis, in a conference room adjacent to his office. Levin, sleeves rolled up and tie loosened, joined the meeting as another wrapped up to find the only empty seat at the table’s head.

“I see you saved the hot seat for me,” he said.

Michiganders outlined their stance on the issues, including their support of the IRA charitable rollover, conservation easements, and L3Cs.

When it came to the easements, Levin referred the team to his colleague, Sen. Debbie Stabenow (D – MI), the first woman from Michigan elected to the Senate and a member of the conference committee currently wrangling over the Farm Bill that controls the deduction’s fate.

Levin was intrigued by the prospects of the L3C, calling it an interesting “hybrid” approach to social investment. Team members explained that, once pending legislation passed in Michigan, they were hoping to get the IRS to “ratify” that legislation nationally with a regulatory ruling. Levin wondered aloud about how long that might take.

“If it’s going to be a year, you might as well get on with the business of [Congressional] legislation,” he advised.

From there, the team discussed members’ work around the extraordinary number of foreclosures in Levin’s hometown of Detroit. Wayne County led the nation in foreclosures in 2007. Foundation leaders talked about their work, and pointed to how L3Cs might provide additional assistance to philanthropic efforts.

Inside of 20 minutes, the meeting wrapped up. In the next day and a half, Michigan’s foundation leaders, racing between the Rayburn, Cannon, Dirksen, and Hart offices around the Capitol, would do this another 16 times.

The Lessons

Giving families have a crucial role to play in these important conversations. If you’re considering attending next year’s FOTH or setting up meetings with regulators in your community or state, keep the following lessons in mind as you plan.

Do the homework. There’s really no substitute for the support that infrastructure groups like the Council, the Forum, and its regional association members provide in terms of logistics, legislative briefings, and general tips. Regardless of how much support you’re getting, though, it helps to do your homework. Know who your local, state, and federal representatives are. Learn a little about their background and current work. Know the issues that affect your philanthropy, and learn about pending legislation that relates to it.

Find common ground. With just a few minutes to make their case, foundation leaders have to connect quickly with their busy representatives. In some cases, this is easier as members of Congress are family philanthropists themselves.

Rep. Fred Upton (R – MI), for instance, recently joined the board of the Frederick S. Upton Foundation, a family foundation in St. Joseph, Michigan.

“I’m one of you now,” Upton said, introducing himself as the grandson of Frederick S. Upton, cofounder of Whirlpool.

Rep. Vernon Ehlers (R – MI) and his wife Johanna Meulink are philanthropic through their church back home in Grand Rapids, which they chose specifically because, in Ehlers’ words, “it allowed us to be more hands-on and not simply write checks.”

Look to the subjects your legislators care about as well. Ehlers taught physics for a number of years at the University of California at Berkeley and at Calvin College in Grand Rapids and is the first research physicist to serve in Congress. He cares very much about education and was eager to talk about it.

Finally, don’t forget about the opportunity to connect with fellow giving families.

“This is great trip that we make annually to Washington. It’s an opportunity to meet other family foundations that are doing great work all over the country,” Wideman said. “It’s particularly meaningful for us because we have a very tight-knit group of family foundations in South Carolina.”

Wear your passion on your sleeve. Giving families tend to be extraordinarily modest.

“I hear this a lot – ‘Gosh, I don’t know why a member of Congress would want to know what we’re doing with our foundation,’” Collier said.

The problem is that Congress very much wants to know what philanthropists are doing with philanthropic assets. Giving families, with their wealth, influence, good works, and passion for the public good, are uniquely positioned to tell this story.

“You have to have passion,” said Rep. Robin Hayes (R – NC) in a morning address to FOTH attendees. Hayes is co-chair of the newly formed “Philanthropy Caucus,” and board member of the Concord, North Carolina-based Cannon Foundation.

“How many of you in here care about what you do?” Hayes asked. “How many of you love what you do and think it’s critical? Wear that on your sleeve. Let people know who you are, how much you care, why you do it, and what it does. That’s where you need to be.”

Just be yourself. Tell your story, and let your passion for the work you do shine through.

Involve family. Consider making your advocacy a family affair. At this year’s FOTH, Gloria Royal, vice president of marketing communications at the Kalamazoo Community Foundation, was accompanied by her daughter, eighth-grader Colette Royal.

“This is the third year that I’ve come to Foundations on the Hill, and I just thought that this would be a good opportunity for my daughter to experience our government and find out about what it is that we do,” Gloria said.

“I knew that all eyes would be on her because she’s a young person, but I also knew that she would handle that well,” she added.

Each year, Michigan presents a Washington-themed gift to a member of the delegation. This year’s gift went to Colette when her Congressman, Rep. Upton, presented her with a pair of “Commander-in-Chief” socks.

“I hear about them on the news all the time,” said Colette, who’s considering a career in politics. “To actually meet them was interesting.”

“I think it’s a great thing to experience this together,” Gloria said. “It gives you something to talk about that’s outside your normal daily routine, and it’s not too early for her to start thinking about her career.”

Families on the Hill

With every grant, giving families are making the case for philanthropy around the world and in their own backyards. This past week, family foundations and their philanthropic colleagues from around the country made that case to Congress.

“This is a great day,” Rep. Hayes said. “You have a wonderful opportunity, a challenge to meet, and constituents to serve.”

“As Steve Gunderson put it, it’s ‘leadership or legislation,’” Collier said. “And educating others about what we do—is what leadership is all about.”

Thanks to Robert Collier, President of Council of Michigan Foundations, and to the entire Michigan delegation, who allowed me to accompany them during this year’s Foundations On The Hill, most especially Carol Paine-McGovern, President of the Paine Family Foundation.