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Government affairs.

Eight issues form the core of ASAE's government affairs position. Through a representative process involving our membership and the ASAE Government Affairs Committee, the ASAE Board of Directors sets society policy on issues affecting associations and associations executives. If proposed federal or state action uniquely affects our community, issues-oriented task forces or subcommittees are established to analyze such issues and make provisional recommendations to the ASAE Government Affairs Committee. The committee brings its final recommendations to the full board for approval.

1. 401(k) reinstatement

ASAE continues lobbying to restore Internal Revenue Code Section 401(k) eligibility to all exempt organizations. In 1990 we came agonizingly close to final enactment, but Congress's last-minute budget compromise prevented inclusion of 401(k) reinstatement in the final budget package.

The 401(k) issue revolves around whether employees of tax-exempt organizations will be allowed to save for retirement on an equitable tax basis with other employees in the public and private sectors. Section 401(k) provides an incentive to save in tax-deferred plans.

The Tax Reform Act of 1986 changed 401(k) plan eligibility rules so that tax-exempt employers that did not adopt a 401(k) plan by July 1, 1986, cannot now do so. Section 501(c) (6) groups are especially affected by this because they have no alternative retirement savings plan. Section 501(c)(3) groups, however, are able to offer 403(b) plans (tax deferred annuities) which provide benefits comparable to 4019k) plans.

The 401(k)s for 501(c)s Coalition, started by ASAE in the mid-1980s, now has more than 3,350 members, including approximately 3,000 chambers of commerce and 350 associations. Legislation has been introduced in the U.S. House and Senate that would give all tax-exempt oganizations access to Section 401(k) tax-deferred savings plans.

In the House, Sander M. Levin (D-Ml) and Bill Archer (R-TX) introduced H.R. 2327. In the Senate, Steve Summs (R-ID) introduced S. 448. Both bills have strong bipartisan support: co-sponsors include the chairs of both House and Senate tax writing committees.

ASAE made its voice heard clearly. Luther R. Parker, CAE, executive director of the Texas Pharmaceutical Association, Austin, testified Sept. 16, 1991, in support of 401(k) plans before the Select Revenue Measures Subcommittee of the House Ways and Means Committee. Also on behalf of ASAE, Edward H. Able, Jr., executive director of the American Association of Museums, Washington, D.C., testified Sept. 27, 1991, before the Subcommittee on Private Retirement Plans of the Senate Finance Committee.

2. Nonprofit postal rates

In 1991, after a bitter struggle by ASAE and allied societies for full funding - $649 million - of revenue forgone, the Treasury-Postal Appropriations and Conference Committee approved a $470 million allocation.

Postal rates for nonprofit mailers historically have been lower than those for commercial and other mailers. To make up the difference, the Postal Reorganization Act of 1970 created the concept of revenue forgone. This revenue estimate is made each year by the U.S. Postal Service and is subsidized by the federal government if approved by Congress.

The result of the reduction in revenue forgone is an increase in nonprofit postal rates for flats - nonletter mail like magazines, newsletters, and so forth - in two increments of 2.2 cents (first in November 1991 and again in October 1992).

ASAE also opposes further restrictions on eligibility requirements for preferred postal rates. Many associations could lose their nonprofit mail permits or face greater contraints on their use if eligibility requirements are tightened.

3. Volunteer protection

Volunteers are concerned about liability exposure. According to a Gallup survey commissioned by ASAE, nearly 20 percent of nonprofit organizations have had volunteers resign or withhold service because of the potential threat of liability lawsuits. With the National Coalition for Volunteer Production, ASAE works for legislation to protect volunteers.

Attempts to enact volunteer protection legislation began in 1987 with H.R. 911, the Volunteer Protection Act sponsored by Representative John Porter (R-IL). Opposition to the current bill, also introduced by Porter, continues to come from individuals like Representative Jack Brooks (D-TX), House Judiciary Committee chair.

President Bush now supports a volunteer protection initiative and has launched a major effort with the state attorney general to enact volunteer protection legislation at the state level. Most states have some volunteer protection laws on the books, but they need to be stronger. ASAE has joined this state-level effort as part of the Allied Partnership Program

ASAE believes volunteers are the lifeblood of any nonprofit organization. Their service is immensely valuable and ought to be encouraged, not deterred. In the current insurance climate, association officers and directors need to be protected.

4. Section 457 nonelective deferred


Statutory clarification that Internal Revenue Code Section 457 does not apply to nonelective deferred compensation plans is sought by ASAE and the Section 457 Task Force, in which ASAE plays a major role. Representatives Robert T. Matsui (D-CA) and Guy Vander Jagt (R-MI) introduced a reform and simplification act last year. The legislation would provide equitable and uniform treatment of nonelective deferred compensation under Section 457.

Currently, an employee of a tax-exempt organization who participates in such a plan must pay taxes on income he or she has yet to receive - and may never receive.

Representative Jim Moody (D-W!) has introduced H.R. 2906, which if enacted would alter Section 457 plans to the advantage of those currently enrolled in them. This bill would provide for cost-of-living adjustments to the maximum deferral amount each year. The current level of $7,500 has not changed since 1978. Another provision would allow a one-time change in the date that distribution from Section 457 deferred compensation plans will begin. Lastly, the bill permits unpenalized distributions to individuals whose deferred compensation plans hold less than $3,500 and have been inactive for at least two years.

5. Section 127 employer-provided

educational assistance programs

The issue here is whether employer-provided educational assistance programs, which constitute an important opportunity for employees, are to be accorded tax-favored status on a permanent basis under Section 127 of the Internal Revenue Code.

Proponents of legislation to permanently extend Section 127 argue that it provides the employee with an opportunity for upward mobility. Better educated and skilled employees benefit their firm and the economy as a whole. Thus, the educational tax exclusion can help increase the productivity of the work force along with the competitiveness of the U.S. economy.

The last Section 127 extension, for calendar year 1991, provided for up to $5,200 per year in education assistance benefits to cover the cost of tuition, books, and fees and reinstates the eligibility of graduate-level courses.

ASAE strongly supports the permanent reinstatement of Section 127. Through the Section 127 Coalition, ASAE actively seeks sponsors for legislation in both the House and Senate. During the 102nd Congress, senators Daniel Patrick Moynihan (D-Ny) and Bob Packwood (R-OR) introduced S. 24, the Employee Educational Assistance Act of 1991, and it now has 66 co-sponsors. In the House, representatives Frank J. Guarini (D-NJ) and Guy Vander Jagt (R-MI) introduced H.R. 127, which has 288 co-sponsors.

6. Unrelated business income tax

Once again ASAE is on the lookout for attempts to change existing standards regarding unrelated business income tax (UBIT). The threat in the 102nd Congress comes in the revenue offset opportunity UBIT could provide under the pay-as-you-go provisions of the new budget structure.

Enacted in 1950, the UBIT statutes outline which types of income-producing activities are exempt form federal income tax. Congress developed what has become known as the "relatedness test" as the key determinant of UBIT. By this standard, activities are exempt from taxation when they are "substantially related" to the organization's exempt purpose.

UBIT presently includes areas such as income advertising, proceeds from controlled subsidiaries, royalties received from meetings and conventions, and the capital holdings of the association.

Internal Revenue Service audits of tax exempts can be expected to increase. The service questions application of UBIT in such areas as tax-exempt insurance programs, publication advertising, corporate sponsorship payments, nonmember sales by social clubs, and sale and rental of membership lists.

Under previously proposed changes to UBIT, exempt organizations would not be able to adequately fund their activities and thus would have to reduce the range of valuable services they provide to business, industry, and society. Federal, state, and local governments and the American taxpayer would ultimately inherit the burden for rendering the wide range of services provided by tax-exempt associations.

According to a study by the Hudson Institute, Indianapolis, for example, nearly $49 billion in direct benefits to society result from association expenditures for education, health, standards, and testing, as well as charitable and artistic endeavors.

7. PACs and public financing of


ASAE is concerned by proposals to abolish or further restrict association-sponsored political action committees (PACs).

PACs are often accused of "buying" candidates, forcing up campaign costs, and affording special-interest groups undue influence. However, the facts tell a different story. PACs wee inspired by campaign reform legislation in the 1970s that was enacted in order to make the election process more democratic. PACs permit many individuals, who might otherwise go unheard, to speak with one voice.

PACs are a major part of campaign reform, not a campaign abuse. They allow individuals to demonstrate their collective satisfaction with a candidate's view by helping that candidate gain or remain in office.

The 1976 Federal Election Campaign Act stipulates that no U.S. citizen may contribute more than $1,000 per election to nay candidate or more than $25,000 in the aggregate to all PACs or federal candidates within one year. It also limits PAC contributions to $5,000 per election.

ASAE supports the right of associations to maintain PACs for their members. Data indicate that association PACs enjoy a broad base of support and make reasonable bipartisan donations to federal candidates. PACs give association members a valuable tool for influencing the political process.

ASAE opposes public financing of elections, which robs the federal treasury of more than $93 million per election cycle, according to the Federal Election Commission's minimum estimate of cost. Public financing of elections inhibits the right to free speech by forcing the individual to contribute money to candidates he or she may not support.

8. Proposed federal ethics rule

Proposed regulations on the ethical conduct of federal employees would prohibit government workers from conducting any business affairs related to an association while on the job. The proposed regulations, published in the Federal Register July 23, 1991, state that federal employees "may not use official time to administer the internal affairs of any such organization, or to carry out its business affairs, or to attend or to participate in meetings or events that primarily serve those purposes."

The proposed rules would also prohibit government employees form participating in association meetings and educational events unless approved through the supervisory chain of command under ambiguous guidelines.

ASAE called on the association community to comment on the proposed rule. The Office of Government Ethics subsequently received more than 900 comments from associations. After refusing to meet with members of ASAE's Special Task Force on Federal Ethics, OGE Director Steve Potts also declined to hold public hearings.

In response to the confusion over the proposed rule, the Human Resources Subcommittee of the House Post Office and Civil Service Committee held an invitation-only hearing in late October. Testifying on behalf of ASAE and the association community was Don Weinert, executive director of the National Society of Professional Engineers, Alexandria, Virginia, and task force chair.

Although the rule may nor be final until the end of the first quarter of 1992, ASAE claims a temporary victory by forcing OGE to take a serious look at revising its overbroad language and enabling associations to have their concerns heard. for his part, Steve Potts says OGE may have to "go back to the drawing board" in writing the new ethics rules.
COPYRIGHT 1992 American Society of Association Executives
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Title Annotation:American Society of Association Managers' political activities
Publication:Association Management
Date:Jan 1, 1992
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