Vol. 6, Issue 15
   April 11, 2000

Treasury Department Publishes New Regulations on Charitable Tax Shelters

Issued as part of an ongoing effort to end a range of abusive tax shelters, the proposed regulations target a practice involving the use of a seriously ill person to reduce estate taxes. The practice takes advantage of rules governing charitable lead trusts, in which a taxpayer places a sum of money into a trust and directs that a charity receive payments from it for a period of years. The taxpayer's heirs are designated to receive any funds remaining in the truSaint Under the tax code, some of these trusts can be linked to the length of a specified individual's life, with the trust's value for tax purposes rated accordingly. If the specified individual is a younger person who dies prematurely, the income tax deduction will be large and the estate tax small.

Noting that the individual specified to be a "measuring stick" in some of these arrangements does not have to be that of the taxpayer, some estate planners have begun to offe deals complete with the names of young, seriously ill people, who often receive a small payment for their participation.

Officials from the Treasury Department called the practice "ghoulish and grotesque."

The new regulations would require that the "measuring life" for charitable lead trusts be that of the taxpayer, his spouse, or a direct ancestor of any beneficiaries. If approved, the rules would apply to any arrangements made on or after April 4, 2000.

Andersen, Curt. "Rules on Charitable Tax Shelters Tightened." Associated Press 4/5/2000.

Crenshaw, Albert B. "Treasury Seeks Ban on Tactic for Cutting Estate Taxes." Washington Post 4/5/2000.

Federal Register: April 5, 2000 (Volume 65, Number 66) Page 17835-17839.

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House Passes Bill Containing Charitable Choice Provision

Charitable choice allows religious organizations to compete on the same level as other nonprofit groups for federal funds. Since a charitable-choice provision became law as part of the Welfare Reform Act of 1996, however, opponents have expressed opposition to the concept as a violation of the First Amendment principle of separation of church and state.

Rep. Mark Souder (R-IN), who introduced the charitable-choice amendment, argued that the Department of Housing and Urban Development already allowed religious institutions to use federal funds to provide social services and that his amendment would merely codify the practice. Souder also pointed out that both presidential candidates, Texas Gov. George W. Bush and Vice President Al Gore, have said they support charitable-choice initiatives.

Some representatives and several national civil rights organizations contend that such measures allow religious institutions to ignore civil rights and other laws when using federal funds to provide services. Some religious groups have also expressed concerns that taking federal funds to operate social services could jeopardize their independence.

Leaming, Jeremy. "House Passes Bill With Charitable-Choice Provision." First Amendment Center/Freedom Forum 4/10/2000.

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Cable Entrepreneur Gives $35 Million to Pennsylvania Boarding School

"The teachers there not only taught education, they taught what you should be as a person . . . that if you develop the right qualities and get an education, you could do something of value in life," said Gerry Lenfest, who graduated from Mercersburg in 1949.

According to Lenfest, the gift represents the first disbursement of approximately $110 million that he and his wife plan to give away this year. Some of the money will stay in Philadelphia, he said, although he declined to provide details. The Lenfests also are putting $100 million into a family foundation that will make additional grants in the future. Last year, the couple donated their collection of Pennsylvania impressionist paintings and $3 million to the James A. Michener Art Museum in Doylestown.

Mercersburg's headmaster, Douglas Hale, said the Lenfest gift will go toward scholarships meant to diversify the student body, increase teacher pay, and renovate dormitories and other buildings on campus.

Although there is no public ranking of gifts to private schools, a confidential survey conducted by the National Association of Independent Schools found that in recent years four member schools have reported individual gifts of $20 million to $30 million; three member schools have received gifts of $50 million to $60 million; and one has received $100 million.

Lenfest paid $2.3 million for Suburban Cable in 1974 and proceeded to buuild it into the largest cable system in the Philadelphia area. In January, it was bought by Philadelphia-based Comcast Corp. for $7.2 billion.

Horn, Patricia. "Alumnus Donates $35 Million; H.F. "Gerry" Lenfest Is Giving Mercersburg Academy a Piece of His Fortune From Cable TV." Philadelphia Inquirer 4/7/2000.

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Tech Investor Offers Capital In Return for Pledge to Nonprofits

Recalling how much he hated having to raise funds as chairman of an East Palo Alto community center, Miller has come up with a new way to attract money for charity. He invests his own money in start-up companies and invites other wealthy individuals into the deals, but on one condition: the investors must agree to donate a percentage of their profits to nonprofit organizations.

Miller used his investing-for-charity approach last winter to secure a portion of the $12 million first-round financing for New York-based Oncology.com, a cancer Web site he is helping develop with Michael Milken. The two are using the same approach for a nutrition-oriented Web company that has raised $7.5 million to date. Miller estimates that almost three-quarters of the profits generated by the latter are committed to nonprofits in the medical research field, and both he and Milken are donating 100 percent of their own profits from the two companies to charity.

Neidorf, Shawn. "Ex-Intel Executive: Let's Make a Deal to Donate." San Jose Mercury News 4/5/2000.

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Z. Smith Reynolds Foundation to Fund Race Relations Projects in North Carolina

The $1 million initiative, "Race Will Not Divide Us," has four goals: to stimulate new activity and innovation, particularly among groups or in geographic areas where little has been done to improve existing tensions among people of different races; to support and sustain pioneering race relations models; to identify and spread the lessons of successful models of race relations work; and to create a network of leaders in improving race relations.

The foundation has established a $750,000 discretionary fund to support worthy programs and projects. An additional $250,000 will be used to evaluate the effectiveness of the funded programs as well as other models, provide technical assistance to local programs, disseminate findings, and convene practitioners so that they can continue to share their ideas.

"For much of the Z. Smith Reynolds Foundation's history, we have been concerned about race relations in North Carolina, and we believe this new initiative will make a difference in how people of different races interact with one another," said foundation president Lloyd P. (Jock) Tate.

In 1993, the Reynolds Foundation conducted a statewide survey on race relations which confirmed that racial discrimination and prejudice were serious problems in the state.

Organizations and projects interested in applying for a grant should contact the Z. Smith Reynolds Foundation and ask for information about its Race Will Not Divide Us initiative. Applications are available by calling the foundation at (800) 443-8319, or by request via e-mail: info@zsr.org The deadline for submitting proposals is May 8.

"Z. Smith Reynolds Foundation Announces Race Relations Initiative." PR Newswire 4/7/2000.

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Saint Paul Foundation Seeks New Donors for Diversity Funds

The Saint Paul Foundation launched its Diversity Endowment Funds program eight years ago with a $1 million grant from the Katherine B. Andersen Fund. The program works to "remove institutional barriers" that prevent people of color from participating in charitable giving. The initiative conprises a common fund plus four community-specific funds: the Asian-Pacific Endowment for Community Development; the Pan African Community Endowment; El Fondo de Neustra Comunidad; and the Two Feathers Fund.

Last year, the combined endowment of the four funds rose 13 percent, from $5.5 million to $6.2 million, and generated 84 grants totaling some $275,000, bringing the funds' total giving to nearly $1 million.The grants awarded by the funds are relatively small, ranging between $500 and $10,000, but are targeted to meet critical needs that might otherwise go unmet.

Norman Harrington, director of development for the diversity funds, notes that each of the communities benefiting from a fund has contrasting cultures, with different traditions and belief systems.

Ricardo A. Millett, director of the philanthropic and volunteerism program at the Kellogg Foundation, says the Saint Paul Foundation got the Kellogg grant because it organized a common fund and four semi-autonomous funds to work together. Separate committees oversee fundraising and grantmaking at each of the four funds.

"Saint Paul's approach is unique among all of our grantees," says Millett. "It's the only grantee in our mix that has attempted to develop a fund embracing all four communities."

Beal, Dave. "Foundation Goal: More Giving From People of Color." St. Paul Pioneer Press 4/9/2000.

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MacArthur Foundation Awards Grants to Media Centers for Community-Based Projects

"We are pleased to continue our support for media centers, which provide access to film and video production for individuals and groups otherwise unlikely to be able to take advantage of these media for public interest purposes," said Woodward A. Wickham, vice president for the General Program at the MacArthur Foundation.

The awards were made to centers in 10 states and the District of Columbia for film and video projects in three categories: those that foster community engagement; those that serve and involve children and youth; and those that stimulate community discussion about issues related to welfare, workforce development, and economic inequality.

The projects supported include the Minnesota-based Center for Arts Criticism’s media arts program for rural and urban youth; the production and screening of documentaries about sweatshops and human rights issues by New York’s Educational Video Center in collaboration with National Mobilization Against Sweatshops and Human Rights Watch; and "Youth Metro," a weekly bilingual discussion series on Chicago's WRTE, an eight-watt radio station managed by teenagers.

Media centers supported by the MacArthur program provide community-based and independent film and video producers with access to training and other resources needed to produce, exhibit, and distribute film and video. National media organizations supported by the foundation provide support for independent producers, services to the field, and exhibition and distribution of independent media to the public.

"MacArthur Foundation Makes Grants to Twenty-Three Media Centers." MacArthur Foundation Press Release 4/10/2000.

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Benton Foundation Report Finds Commercial Broadcasters Failing to Meet Community Needs

According to the report, "Market Conditions and Public Affairs Programming" during a typical fortnight, only 0.3 percent of the total commercial broadcast time is devoted to local public affairs programming. Arguing that the market is not meeting the needs of local communities, Benton is urging the Federal Communications Commission to begin a formal, public rulemaking to define the public interest obligations of digital television broadcasters as part of its comments filed at the Commission.

"Broadcasters' abysmal performance providing coverage of issues of local concern exemplifies the need for a rulemaking to clearly define their obligations," said Charles Benton, chairman of the Benton Foundation, who served on the President's Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters. "The commission should begin that proceeding now and base the next generation of public interest obligations on a collection of principles that recognize the rights of viewers in American broadcasting."

Benton suggests that the FCC should adopt a set of principles — the Viewers' Bill of Rights — on which to base the proceeding. The Viewers' Bill of Rights recognizes that, per a 1969 Supreme Court ruling, the rights of viewers are paramount in American broadcast regulation and that a commitment to localism must be respected. Programming must be accessible to all Americans and should serve the needs of children, education, democracy, and diversity.

"Benton Study Finds That Commercial Broadcasters Fail to Provide Communities With Local Public Affairs Programming Benton Calls on FCC to Adopt Viewers Bill of Rights." Benton Foundation Press Release 3/27/2000.

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Freedom Forum Study Finds Newsrooms Lacking in Diversity

The Freedom Forum's analysis of data gathered by the American Society of Newspaper Editors over the last 22 years found that journalists of color continue to be disproportionately underrepresented in newsrooms and that almost as many journalists of color leave the newspaper industry each year as are hired. Despite diversity hiring efforts in the newspaper industry, the overall percentage of journalists of color in newsrooms increased by just 1.2 percentage points between 1994 and 1999.

According to the report, "Newsroom Diversity," the diversity in U.S. newsrooms lags more than 16 percent behind the trend in the general population. In 1999, the Census Bureau estimated the percentage of people of color in the U.S. population at 28 percent; the number of journalists of color was estimated by ASNE at 11.6 percent.

"What is clear from this analysis is that the existing 'pipeline' that contributes new journalists of color to the newspaper industry is too small," said Charles L. Overby, chairman and chief executive officer of the Freedom Forum. "We have to create new pathways to lead people of color into newspaper journalism."

"U.S. Newspapers Must Hire Journalists of Color in Record Numbers to Make Newsrooms Reflect the Nation's Growing Diversity." Freedom Forum Press Release 4/10/2000.

See also: Arvidson, Cheryl. "2nd ASNE, APME 'Time Out' to Push News Diversity." Freedom Forum Online 4/11/2000.

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Knight Foundation Announces New Round of Journalism Grants

Published since 1961 by the Columbia University Graduate School of Journalism, CJR is dedicated to assessing "the performance of journalism in all its forms, to call attention to its shortcomings and its strengths, and to help define — or redefine — standards of honest, responsible service." Like many similar publications, including the American Journalism Review, CJR has struggled financially. In 1999, the Knight Foundation made a similar $1 million grant in support of AJR.

Knight also announced a cross-disciplinary grant of $825,000 to help two Harvard graduate school programs — the Graduate School of Education’s Programs in Professional Education and the Kennedy School of Government’s Joan Shorenstein Center on the Press, Politics and Public Policy — to work together to expand and extend the reach of a professional development institute on "The Media and American Democracy." (For the complete list of grants made by Knight in this round of funding, follow the link to the foundation press release, below.)

The foundation also announced that it will join with the American Society of Newspapers Editors, the Associated Press Managing Editors, and the Freedom Forum in announcing new national newspaper diversity initiatives, including a project to reenergize and support high-school journalism in U.S. communiites.

"Columbia Journalism Review to Receive $1 Million Grant From Knight Foundation." Knight Foundation Press Release 3/23/2000.

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National Film Preservation Foundation Awards Grants to Film Archives

Among the films slated for preservation are home movies of Ernest Hemingway, footage of Lakota Sioux life in the 1940s, and filmed portraits of Appalachian craftsmen at work.

"Where the foundation really makes a difference is in helping smaller archives preserve their films," said Arthur Hiller, the Directors Guild of America representative to the National Film Preservation Board, who served on the review panel. "These regionally produced films capture the truth, flavor, and folklore of our paSaint"

This year marks the third year that NFPF has awarded preservation grants, and the new federal cash awards of $1,000 to $10,000 match private donations already raised by the organization. With its latest round of grants, NFPF has extended its activities to 20 states and the District of Columbia. Other grant opportunities are available at the organization's Web site.

"National Film Preservation Foundation Awards First Federally Funded Grants to 23 Archives for Immediate Release." National Film Preservation Foundation Press Release 4/22/2000.

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National Endowment for the Humanities Announces $30.5 Million in New Grants

"The National Endowment for the Humanities is committed to reaching every American — students and adults alike — with learning opportunities about American history and culture," said Ferris.

The spring round of funding also includes NEH's annual "preservation and access" grants. The 67 projects totaling $18.8 million will advance the agency's preservation mission in several critical ways, including support for the microfilming of historic U.S. newspapers and books; the stabilization and documentation of fragile collections of rare objects; the digitization of archived materials so they can be posted to the Internet; the creation of research tools and reference works; the field testing of high-tech programs to control environmental conditions in storage space; and the creation of training programs for conservators.

"U.S. Humanities Endowment Announces $30.5 Million in New Grants." NEH Press Release 4/5/2000.

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Pacific Life Insurance Company Awards Grants for Nonprofit Staff Positions

The goal of the program, entitled the "Nonprofit Capacity-Building" program, is to support nonprofit agencies with targeted grants that help them build capacity in order to better serve the community. The grants will be used to fund a volunteer coordinator or director of development position for a two-year period, but are reduced by half in the second year in order to encourage the recipient nonprofits to secure other sources of funding for the new positions.

"Pacific Life Foundation Gives $1 Million to Charities for New Grant Program; Total Donations in 2000 Will be Over $3 Million." Business Wire 4/10/2000.

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ExxonMobil Foundation Supports Expansion of Science Teaching Initiative

The additional funding will help bring the initiative to more than 36 million students in in 23 states and the District of Columbia, and will make it possible for ten new states — Arizona, California, Connecticut, Florida, Illinois, Massachusetts, Michigan, New York, Pennsylvania, and Wisconsin — to participate in Phase II of the program.

Begun in 1996, Building a Presence for Science has been transforming the way K-12 teachers and students teach and learn science. A primary objective of the program is to help K-12 science teachers implement state and national science education standards in their schools. Secondary goals include the creation of a network through which science teachers can share the latest ideas about effective science teaching.

"Building a Presence for Science has proven to be a major vehicle for integrating national science standards into the K-12 curriculum," said NSTA executive director Gerry Wheeler. "Within each state, the program can be tailored to meet specific needs and priorities. Teachers are enthusiastic about the program's professional development opportunities. They are eager to communicate with one another to update their knowledge in science, a field that is constantly changing. Providing science teachers with support is key to raising science achievement of our nation's students."

Since its inception in 1955, the ExxonMobil Foundation (formerly the Exxon Education Foundation) has provided more than $500 million in financial support to education organizations. In addition, the foundation was recently named the 2000 Outstanding Foundation by the National Society of Fundraising Executives, the largest association of charitable fundraising executives in the world.

"National Science Teachers Association; ExxonMobi Foundation Expands Major Science Teacher Initiative to Ten New States." ExxonMobil Foundation Press Release 4/7/2000.

"ExxonMobil Foundation Named 2000 Outstanding Foundation." ExxonMobil Foundation Press Release 3/27/2000.

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The Foundation Center