CAM Legislative Alerts are notifications for members and supporters of the California Association of Museums regarding state or federal issues affecting museums. If you have any questions or would like to be taken off our distribution list, please email CAM at cam@calmuseums.org.

The California Association of Museums (CAM) encourages you to take a few minutes of your time today or tomorrow to review the call to action below from the American Association of Museums (AAM). AAM is inviting signatories for a joint letter on noncash gifts to the Senate Finance Committee Chair and Ranking Member. This letter endorses recommendations from a report from the Panel of the Nonprofit Sector and attempts to preempt the possible harmful reform of noncash donations.

Thank you for supporting the California and federal museum field. Please feel free to contact Celeste DeWald, Executive Director, at the CAM office at (831) 471-9970 or cam@calmuseums.org with any questions or comments you may have.

AAM CALL TO ACTION

AAM Museum Advocacy Team Action Alert - July 13, 2005

INSTRUCTIONS

If your museum would like to join as a signatory, please e-mail Jason Hall at AAM at jhall@aam-us.org no later than Noon on Friday, July 15, 2005.

THE LETTER

Joint Letter on Noncash Gifts to Senate Finance Committee Chair and Ranking Member

The Honorable Charles E. Grassley
Chairman
Committee on Finance
United States Senate
SD-219 Dirksen Senate Office Building
Washington, DC 20510-6200

The Honorable Max Baucus
Ranking Minority Member
Committee on Finance
United States Senate
SD-219 Dirksen Senate Office Building
Washington, DC 20510-6200

Dear Mr. Chairman and Senator Baucus:

We understand that this summer you expect to introduce legislation to correct abuses of charities by those seeking personal benefits, and to encourage additional donations for charitable purposes As you are considering reforms relating to the donation of noncash gifts, we urge you to move with caution, given the importance of such donations to many kinds of charities, but also to give strong consideration to adopting the reforms in this area that have been proposed in the recent final report of the Panel on the Nonprofit Sector.

With respect to the need for caution and deliberation, a number of our organizations have already contacted you about some of the most damaging proposals that have been put forward in recent months, including those that would replace the current fair market value deduction with a deduction for the lesser of the donor's cost basis or fair market value. As you know, a similar proposal enacted in 1986 for gifts of appreciated property was temporarily repealed several times and then fully repealed in 1993 after the evidence of the dramatic reduction in giving was documented. For example, for museums alone, a national survey demonstrated a 60% drop in giving to museums generally from 1985 to 1987, and a second national survey, of art museums only, showed a drop of 63% from 1986-88. And initial evidence of the impact of changes to the car donation deduction which became effective on January 1, 2005 suggests that donations to charities in this area have been reduced by as much as fifty percent.

At the same time, however, we share your concern that if the American taxpayer is to continue to subsidize giving to charities via the tax deduction system, that system should be fair and transparent. If Americans lose confidence in giving to charity, the public service missions of all of our organizations will suffer. In addition, where we have good evidence, as with the effective Art Advisory Panel mechanism at the Internal Revenue Service, we can see that there is a need for reforms to tighten up the valuation process in noncash gifts.

In this context of the need for reform but also the need to proceed thoughtfully, balancing a proposal's potential benefit in increasing the accuracy of valuation against its potential costs in discouraging donors to charitable purposes, we strongly encourage you to review and adopt the recommendations on noncash gifts of the Panel on the Nonprofit Sector, as expressed in its June 2005 Final Report (pp. 53-60.)

As you know, the Panel, convened with your encouragement by Independent Sector, represents a wide variety of charities, and the process by which its conclusions were drawn incorporated a great deal of additional advice from many of us and other kinds of charities. We strongly believe that continuing to base noncash gift deductions on fair market value is the right way to maintain and encourage Americans' historical pattern of generous giving for charitable purposes, but we are fully aware that, as the Panel's Report points out, "problems have arisen due to the lack of clear, objective standards for establishing clear market value of the donated property." We know that unless we take effective steps to address those problems, we cannot maintain confidence in the fair market value deduction mechanism that has been so successful in encouraging giving for charitable purposes.

The Panel's recommendations on noncash gifts are those effective steps. Strengthening the definition of a qualified appraisal and a qualified appraiser for these purposes, expanding penalties on taxpayers for grossly inflated valuations for deduction purposes, imposing new penalties on appraisers for such valuations, and mandating electronic filing of Forms 8282 and 8283 will collectively go a long way toward restoring justified confidence in the accuracy of fair market value deductions, but do so in ways that will not unduly discourage giving. These recommendations, which would apply to all forms of appreciated property, along with the additional specific recommendations on conservation and historic façade easements and on clothing and household items, would be practical, substantial, and effective ways to increase valuation accuracy.

Thus we strongly encourage you to enact these provisions where so recommended by the Panel, and to direct the IRS to take action to incorporate them into regulations or policies where so recommended, as part of your forthcoming legislation in this area.

Finally, many of us previously have been in productive contact with you and your staff members on these issues, and we would be happy to continue to work collaboratively with you and them on this issue as the legislative process unfolds. We share your goal of strengthening the nonprofit sector by assuring that it continues to merit high levels of public confidence.

Sincerely,

Cc: Dean Zerbe, Tax Counsel
Jon Selib, Tax Counsel

National Organizations
American Arts Alliance
American Association of Museums
American Association for State and Local History
Americans for the Arts
American Heart Association
American Symphony Orchestra League
American Zoo and Aquarium Association
Associated Writing Programs
Association of Performing Arts Presenters
Association of College and University Museums and Galleries
Association of Fundraising Professionals
Association of Jewish Aging Services
Association of Jewish Family and Children's Agencies
College Art Association
Council for Advancement and Support of Education
Council of American Jewish Museums
Dance/USA
Hebrew Immigrant Aid Society
Independent Sector
International Association of Jewish Vocational Services
Jewish Council for Public Affairs
Literary Network
Museum Store Association
National Association of Independent Schools
National Cancer Coalition, Inc.
National Catholic Development Conference
National Committee on Planned Giving
National Council of Jewish Women
1-880-Save-A-Pet.com
The Arc of the United States
The Center for Social and Economic Leadership
The Nature Conservancy
The Points of Light Foundation
United Cerebral Palsy
United Jewish Communities

Regional, State, and Local Organizations
Allied Jewish Federation of Colorado
Association of Midwest Museums
Bland County Historical Society
California Association of Museums
Christian Appalachian Project
Colon & Associates, LLC
David Posnack Hebrew Day School of Broward County
David Posnack Jewish Community Center of Broward County
Fort Wayne (IN) Jewish Federation
Hecksher Museum of Art, Huntington, NY
Jewish Board of Family and Children's Services of New York City
Jewish Community Foundation of Colorado
Jewish Community Relations Council of Greater Washington
Jewish Family Service of Broward County
Jewish Family Service of New Orleans
Jewish Family Service of Wilkes-Barre, PA
Jewish Federation of Central New Jersey
Jewish Federation of Greater Los Angeles
Jewish Federation of Greater New Haven
Jewish Federation of Greater New Orleans
Jewish Federation of Greater Philadelphia
Jewish Federation of New Hampshire
Jewish Federation of Palm Beach County
Jewish Federation of South Palm Beach County
Lower Hudson Conference of Historical Agencies & Museums
Michigan Nonprofit Association
Mid-Atlantic Association of Museums
New England Museum Association
New Jersey State Association of Jewish Federations
New Orleans Hillel Foundation
North Carolina Center for Nonprofits
Mount Vernon Ladies Association
Museum Association of Arizona
Museum Association of New York
Museum of disABILITY History
Oklahoma Museums Association
Southeastern Museums Conference
The Frick Collection
This Century Art Gallery, Williamsburg, VA
UJA Federation of New York
United Jewish Communities of Metrowest, NJ
United Jewish Community of Broward County
United Jewish Federation of San Diego County
Virginia Association of Museums
Ward W. O'Hara Agricultural Museum, Auburn, NY
Wolf Creek Indian Village and Museum
Youngstown Area Jewish Federation