Hurricane Katrina Part Deux

When Hurricanes Katrina and Rita hit the New Orleans and Texas areas, breaking down the levees and flooding the lower lying homes, many of the foundations under the authority of the National Heritage Foundation (NHF) took immediate action. Both money and people advanced on the tragedy and did what they could to help. And many wonderful new chapters in the NHF story were written – headlined by The KATRINA HOUSING FOUNDATION, EVERY CHURCH A SCHOOL FOUNDATION, AND MUTTSHACK.

Foundations at NHF tackled the basic tasks of getting displaced persons a place to live, ECAS helped mobilize the churches in the area to rescue and rehabilitation eff orts, and MuttShack helped take care of animals left to wander on their own having been separated from their owners.

NHF staff focused on analyzing requests for reasonable compensation and expense reimbursement, worked overtime to backstop these efforts and speed up the rescue and rehabilitation work. In our offices it was very like what happened when the September 11th terrorist attacks on the country. We had nearly $2 million out the door and helping those victims in New York before the smoke settled.

I listened to John Grisham and his wife being interviewed on CNN, at the time just after Katrina hit. He had put $5 million, I believe, into a Private Foundation at great expense, and the interviewer asked: “Why did you feel you had to go to the expense of setting up a Private Foundation. Why didn’t you just send the money to the Red Cross or some other agency in the New Orleans area?”

His answer was exactly why, in 1968, Dr. Wil Rose, in San Francisco, Ron Philgreen, in Kansas City, and I set up the National Heritage Foundation in the first place. He said… in effect:

“My wife and I wanted to roll up our sleeves – we wanted to get our hands dirty – we wanted to personally help the victims. And setting up a Private Foundation was recommended to us by our Financial Planner, since we would need some reimbursement of expenses.”

AND THAT’S WHAT WE AT NHF WERE CREATED TO DO.

NHF was created in 1968 to encourage philanthropy all over the world, and in our short lifespan, we have nearly 10,000 foundations under our authority, and have impacted lives in 26 countries. These foundations, under NHF authority, are taking care of Buddhist old folks in Golok, Tibet, we are helping Sufi Moslem Orphans in Cairo, Egypt, we are building a Golden City (Hindu) in southern Andra Pradesh in India which will provide services to 27 villages. In the United States, we have a homeless shelter in slumtown Phillie, we have a battered women’s shelter in Minneapolis, and we run a park in California. We were created to help encourage Philanthropy, worldwide. Some call it…

“CHARITABLE ENTREPRENEURSHIP”

The founders of NHF have always realized that the idea of “people helping their fellow man” was indeed a Golden Thread that could well bind the world’s peoples together on this Shrinking Blue Marble called “Earth.” AND DON’T WE NEED SOME BINDING-TOGETHER?!!!

NHF provides the back office administration for anyone who feels like helping others. In a sense we are, first, an incubator – then after some progress, a greenhouse, - and perhaps later on, when the project is big enough, strong enough, to stand on its own two feet – a launching pad for charitable independence. When the new charitable endeavor is big enough for independence, we have GRADUATION DAY, where our NHF foundation – with our help – becomes an Independent Public Charity.

NOW COMES THE DARNED PENSION REFORM ACT

And now it is Verboten for a Donor Advised Fund like NHF to help individuals respond to community needs – when those needs require the payment of Reasonable Compensation for Bona Fide Charitable Activities, or the payment of Reasonable Expenses for those projects. THIS IS NOW AGAINST THE LAW FOR A DONOR-ADVISED FUND TO DO.

Yes, of course we can set up a Field of Interest Charity, as we do with the Congressional District Programs, but the donor or initiator AND HIS FAMILY OR ANY CORPORATION OF WHICH HE MAY BE A SIGNIFICANT OWNER ARE PROHIBITED FROM MAKING A CONTRIBUTION. Yet he or she may do these things if only they set up an expensive PRIVATE independent foundation.

Consider how thoughtless the new law is: An individual wants to set up a foundation at NHF to, for example, “Tutor Inner City Gifted Children After School.” As any Entrepreneur would do, he fund this idea initially with his OWN donations. Under the new restrictions, he cannot be reimbursed, even if he purchases notebooks for them to study with. The law would make that a Donor Advised Fund. Yet, if he only creates his own non-profit corporation and files (for $750) Form 1023 with the IRS and begins his own dangerous and expensive journey through the administrative minefield of charity administration, he may be reimbursed for the notebooks and materials he has purchased for this after-school program. It makes you wonder whether the Congressmen even read the entire text of The Pension Reform Act.

HERE’S THE DANGER TO AMERICA

Charitable Entrepreneurship is indispensible to our future. CE will give employment to people, especially young people, and CE will give deep job satisfaction to those who are working on aspects of “Making the World a Better Place to Live.”

We are ENCOURAGING Charitable Entrepreneurship by asking Congress to remove from the category of Donor Advised Fund all “Foundation Accounts” at Community Foundations like NHF, funds which have at least 1/3 Public Support! Call me at (561) 301-3891 and we’ll go see your favorite Congressman together.