Advocating for Associations in a Challenging Time

1. Advocating for Associations in a Challenging Time John H. Graham IV, CAE President & CEO ASAE & The Center September 19, 2008 Annual Association Law Symposium – Washington, DC Connecting Great Ideas and Great People

2. ASAE Advocacy Priority Survey • Earlier in 2008, over 600 ASAE-member CEOs rated the issues they believe should be priorities in ASAE’s advocacy agenda. • Health care reform was the highest rated issue for CEOs both in Washington, and outside of DC. • There was no more than a 3.6% difference on any issues between DC-area CEOs and those located outside DC.

3. Advocacy Survey Results

4. Sample Survey Comments • “We need to fight anything that would seek to restrict our ability to advocate on behalf of our respective members.” • “There needs to be a major education of members of Congress on the role and needs of not-for-profit associations.” • “Health care reform is critical to all Americans and should be a primary effort for associations to advance America.”

5. Health Care Reform • About 46 million Americans lack health insurance. • Health care spending growing at about 7% per year. • Presidential candidates have competing health care reform proposals. • Congress vows substantive health care reform in 2009, though there are differences of opinion on key reform elements.

6. Health Care Reform • Policy debate has shifted away from traditional association health plans (AHPs). • ASAE supports pooling arrangements that allow small businesses to purchase group-rate health coverage for their employees under the umbrella of their trade or professional association. • Small Business CHOICE Act (introduced in July) would incorporate idea of AHPs into the reinsurance market.

7. Tax Reform • Most lawmakers agree we need to make the tax code simpler, fairer and better able to promote economic growth. • The tax code includes many provisions that affect health care – FSAs, HSAs, etc. • Tax subsidy for employer-sponsored health benefits likely to be scrutinized. JCT estimates that excluding employer spending on health care benefits from income taxes cost the govt. $246 billion in 2007.

8. Tax Reform • Sen. Chuck Grassley (R-IA) will make a “hard push” for review of all charitable provisions in the tax code if Congress gets serious about tax reform. (Source: BNA – 9-15-08) • Excess benefit transactions and tax treatment of tax-exempt hospitals and universities among the most heavily scrutinized issues by Grassley.

9. Nonprofit Governance • Grassley and Senate Finance continues to investigate governance of nonprofits – particularly executive compensation and obligation of nonprofits to provide public benefit in exchange for tax-exempt status. • IRS has just completed a study of exempt hospitals, with final report due soon. Next up: colleges and universities, with focus on compensation, UBIT, and endowments.

10. New Form 990 • IRS has asserted that scrutiny of nonprofit governance practices is warranted because good governance leads to improved compliance. • Redesigned Form 990 includes new section on governance, focusing on board structure, and presence of policies such as conflict of interest, whistleblower, and document retention and destruction.

11. New Form 990 • IRS officials have said that answering “no” to questions about policies would not automatically trigger an audit, but that the Service would look at all information to form a complete picture. (Source: BNA, 6-20-08) • IRS ACT report said the IRS “merely asking about specific governance practices is a powerful force that can drive behavior.” (Source: ACT Report, 6-11-08)

12. Lobbying Reform • First LD-203 filing for lobbyists and associations that lobby was due July 30. Initial guidance sparked considerable confusion about what needed to be disclosed. • NAM is appealing lower court decision upholding HLOGA provision requiring disclosure of members that contribute $5,000 in a quarter and “actively participate” in planning, supervision or control of lobbying activities.

13. Additional Oversight Concerns • The FTC has proposed extending its jurisdiction to 501(c)(3) organizations. • The FTC Reauthorization Act of 2008 (S. 2831) would give the FTC authority to regulate the business practices of nonprofit organizations – authority already held by the IRS. • ASAE is concerned about duplicative oversight from an agency inexperienced in nonprofit issues and management.

14. Looking Ahead • Current Congress is unlikely to enact major health care reform or tax reform in an election year. • That said, health care reform, tax reform and scrutiny of nonprofits are all converging as issues for next Congress. • In 2009, associations and other nonprofits face challenge of educating new Hill and Administration staff about our overall industry, as well as our own individual issues.

15. Value of Research • As part of its mission to promote the value of associations, ASAE conducts periodic research on the size and scope of the association sector to share with Capitol Hill and other audiences. • Associations Matter (2007) is most recent study of associations, with key metrics focusing primarily on employment, wages, revenue and assets. • Based on third-party government statistics.

16. Associations Matter • Associations Matter also compares the association sector with other major industries and examines association employment and wage trends over a 10-year period. Data is shown at the national level and by state. • In 2006, tax-exempt organizations as a whole accounted for more than 1 million jobs; generated a payroll of over $30 billion; and received an estimated $1.9 trillion in revenue.

17. Questions?

18. Speaker Contact Info: John H. Graham IV, CAE President & CEO ASAE & The Center for Association Leadership Phone: 202-626-2741 E-mail: jgraham@asaecenter.org Connecting Great Ideas and Great People