Legislature(2011 - 2012)BARNES 124

01/26/2012 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 184 REFUND OF FISH BUSINESS TAX TO MUNIS TELECONFERENCED
Heard & Held
*+ HB 290 ESTABLISH ENDOW ALASKA GRANT PROGRAM TELECONFERENCED
Heard & Held
          HB 290-ESTABLISH ENDOW ALASKA GRANT PROGRAM                                                                       
                                                                                                                                
8:03:57 AM                                                                                                                    
                                                                                                                                
CHAIR MUNOZ announced  that the first order of  business would be                                                               
HOUSE  BILL NO.  290, "An  Act  creating the  endow Alaska  grant                                                               
program in  the Department of  Commerce, Community,  and Economic                                                               
Development to encourage community development."                                                                                
                                                                                                                                
8:04:23 AM                                                                                                                    
                                                                                                                                
ERIN  HARRINGTON, Staff,  Representative  Alan Austerman,  Alaska                                                               
State Legislature,  presented HB  290 on  behalf of  the sponsor,                                                               
Representative Austerman,  by paraphrasing the  following written                                                               
remarks [original punctuation provided]:                                                                                        
                                                                                                                                
     Endow  Alaska sets  up a  challenge  grant or  matching                                                                    
     fund mechanism that  allows local community foundations                                                                    
     throughout  Alaska to  leverage private  donations from                                                                    
     within   their   communities    by   matching   donors'                                                                    
     contributions dollar-for-dollar with state funds.                                                                          
                                                                                                                                
     By providing a  powerful tool to help  grow the endowed                                                                    
     assets  of  community  foundations,  the  Endow  Alaska                                                                    
     program addresses several objectives:                                                                                      
                                                                                                                                
          · It supports community self-sufficiency                                                                              
                                                                                                                                
          · It recognizes the ability of community members                                                                      
             to identify and respond to local needs                                                                             
                                                                                                                                
          · It creates additional catalyst for community                                                                        
             conversations about philanthropy and the power                                                                     
             of Alaskans to invest in meaningful local                                                                          
             projects and visions                                                                                               
                                                                                                                                
          · It creates an opportunity to take today's state                                                                     
             dollars--which result from the development of a                                                                    
             finite, non-renewable  resource--and turn  them                                                                    
             into a    financial   tool   that   can   yield                                                                    
             perpetual returns, potentially supporting local                                                                    
             projects and investments for centuries to come.                                                                    
                                                                                                                                
     Endow  Alaska  is  inspired  by   a  program  that  was                                                                    
     originally put in place  in Iowa--Endow Iowa--and which                                                                    
     has since  been established  in Kentucky, as  well. The                                                                    
     legislation envisions a  relationship between the state                                                                    
     and   a   "lead  philanthropic   entity"--a   statewide                                                                    
     organization  that receives  an annual  lump-sum grant,                                                                    
     and then turns around  and provides numerous "challenge                                                                    
     grants"  to local  community  foundations or  community                                                                    
     affiliate funds.                                                                                                           
                                                                                                                                
        ·   Presently in Alaska, the organization most                                                                          
          likely  to  qualify  as  the  "lead  philanthropic                                                                    
          entity" would be  the Alaska Community Foundation-                                                                    
          -a statewide  community foundation with  more than                                                                    
          250 funds  in management, and assets  of more than                                                                    
          $47 million.                                                                                                          
                                                                                                                                
        ·   A nonprofit public charity promoting personal                                                                       
          philanthropy  and providing  financial management,                                                                    
          strategic   development    and   donor-development                                                                    
          services to communities,  organizations and donors                                                                    
          across Alaska.                                                                                                        
                                                                                                                                
MS. HARRINGTON then posed a  hypothetical example in which Kodiak                                                               
has a  community foundation.  The  State of Alaska would  make an                                                               
annual lump sum grant to  perhaps the Alaska Community Foundation                                                               
(ACF), which  would be able to  provide a challenge grant  to the                                                               
Kodiak  Community Foundation.   The  Kodiak Community  Foundation                                                               
would apply  to lead  a local campaign  and have  its fundraising                                                               
matched.   If the Kodiak  Community Foundation was able  to raise                                                               
$10,000 in  its first year,  it might be  able to obtain  a state                                                               
match  via  ACF.   She  then  continued  to paraphrase  from  her                                                               
written remarks [original punctuation provided]:                                                                                
                                                                                                                                
     The  program  is  quite simple,  but  the  impacts  are                                                                    
     potentially profound.                                                                                                      
                                                                                                                                
     The bill does not  currently recommend a funding level,                                                                    
     though  it does  provide  some  funding limitations  to                                                                    
     ensure that  community investments are made  in diverse                                                                    
     regions of the state.                                                                                                      
                                                                                                                                
        ·   However, because this is a matching or challenge                                                                    
          grant   program,  the   scope  of   the  fund   is                                                                    
          necessarily limited  by the capacity of  donors in                                                                    
          Alaska's communities.                                                                                                 
                                                                                                                                
8:08:58 AM                                                                                                                    
                                                                                                                                
MS. HARRINGTON then  reviewed the legislation, which  is only one                                                               
section.   The language  on page 1,  lines 6-12,  establishes the                                                               
Endow Alaska program  in the Department of  Commerce, Community &                                                               
Economic Development  (DCCED).   The program  is being  placed in                                                               
DCCED  due  to  the department's  experience  with  administering                                                               
grant funds through the Division  of Community & Regional Affairs                                                               
(DCRA).   Page 1, line 13,  through page 2, line  9, outlines the                                                               
requirements of a  community foundation for the  purposes of this                                                               
program as well as what  would be considered a lead philanthropic                                                               
entity.   The  language  references the  Internal Revenue  System                                                               
(IRS)  code because  some of  these organizations  are explicitly                                                               
defined in  the IRS  code and  have to meet  certain tests.   The                                                               
language started  on page  2, line  10, through  page 3,  line 5,                                                               
describes  some  of the  factors  the  lead philanthropic  entity                                                               
should consider  when choosing to  offer a community  a challenge                                                               
grant.  She characterized this  portion of the legislation as the                                                               
policy portion in  which the legislature describes  what it wants                                                               
to  achieve.   The language  on page  3, line  6, sets  forth the                                                               
limits  such  that  the  grants   cannot  exceed  $25,000  for  a                                                               
community foundation  unless it  benefits multiple boroughs  or a                                                               
large region.   Furthermore, a single borough  can't receive more                                                               
than five Endow  Alaska grants per year.  She  did note that work                                                               
needs  to be  done  in the  aforementioned  provision since  some                                                               
areas  in  the state  aren't  an  organized  borough.   The  last                                                               
limitation  stipulates that  only 5  percent of  the grant  funds                                                               
received  by  the  lead  philanthropic entity  can  be  used  for                                                               
administrative purposes.  Currently,  ACF administers about [280]                                                               
affiliate funds  and about $47  million in holding.   She related                                                               
her understanding  that ACF's administrative fees  are much lower                                                               
than 5  percent of the grant  funds received.  The  final portion                                                               
of the legislation consists of  definitions.  Ms. Harrington then                                                               
paraphrased   from  the   following  written   remarks  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Our  office  has  been  work-grouping  this  bill  with                                                                    
     individuals from  around the state who  are involved in                                                                    
     community  foundations  and  their work.  Through  this                                                                    
     process,  we have  identified  several  aspects of  the                                                                    
     bill that can be improved to:                                                                                              
        · Ensure the legislation recognizes the unique                                                                          
          characteristics and opportunities of Alaska                                                                           
        · Enable   communities    with   limited   financial                                                                    
          resources    to    avail   themselves    of    the                                                                    
          opportunities presented by Endow Alaska.                                                                              
        · Clarify that the program is intended to grow                                                                          
          endowed funds                                                                                                         
        · Underscore the importance of local donors and                                                                         
          local control of funds.                                                                                               
                                                                                                                                
     After  your  committee  hears public  testimony  today,                                                                    
     we'd like to  return at a future  meeting with proposed                                                                    
     revisions to HB  290 that helps achieve  the goals I've                                                                    
     just outlined.                                                                                                             
                                                                                                                                
8:14:40 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  inquired as  to the  policy if  more than                                                               
one philanthropic entity existed in  a community or if there came                                                               
to be more than one philanthropic entity in the future.                                                                         
                                                                                                                                
MS.  HARRINGTON   said  that  currently   she  wasn't   aware  of                                                               
communities  that  have  more   than  one  community  foundation.                                                               
However,  she  deferred  to those  in  the  community  foundation                                                               
realm.   She related  her understanding  that typically  there is                                                               
only  one  community  foundation  in  communities  with  such  an                                                               
organization.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARDNER acknowledged  that may  be the  case now,                                                               
but  suggested  that once  state  money  is available  more  such                                                               
organizations  may be  created.   For  instance,  if an  existing                                                               
community  foundation doesn't  support  a  particular issue,  she                                                               
could envision  another organization  being created.   Therefore,                                                               
there  should be  a manner  in  which to  select which  community                                                               
foundation [to  fund] unless  the intention  is to  fund multiple                                                               
community foundations.                                                                                                          
                                                                                                                                
8:16:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  then directed attention to  page 2, lines                                                               
5-6, of  HB 290 and  inquired as to  whether the intention  is to                                                               
support  only  community  organizations  or  also  corporate  and                                                               
private organizations.                                                                                                          
                                                                                                                                
MS. HARRINGTON  acknowledged that  the aforementioned  portion of                                                               
the legislation is  one in which the sponsor would  want to amend                                                               
in order  to provide clarity  regarding [the  member organization                                                               
being the Alaska Community Foundation].                                                                                         
                                                                                                                                
8:17:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA  inquired  as  to  how  the  work  of  the                                                               
Rasmuson Foundation would compare with what HB 290 proposes.                                                                    
                                                                                                                                
MS.  HARRINGTON   recommended  that  the  committee   invite  the                                                               
Rasmuson Foundation to  speak regarding its work and  view on the                                                               
proposal in  HB 290.   She did  note, however, that  she believes                                                               
the  Rasmuson  Foundation  would  need  a  formal  invitation  to                                                               
testify due to the nature of  the organization.  To the question,                                                               
Ms. Harrington  specified that the  Rasmuson Foundation  has been                                                               
investing in  community foundations  through challenge  grants as                                                               
well as  through the community foundation  mechanism, albeit with                                                               
a different  focus.   The focus of  the Rasmuson  Foundation with                                                               
the community foundation mechanism has  been to provide funds and                                                               
assist  communities  that  don't have  community  foundations  to                                                               
create  one and  thus involves  more technical  assistance.   Ms.                                                               
Harrington emphasized that  HB 290 doesn't compete  with the work                                                               
of the Rasmuson Foundation, rather it enhances it.                                                                              
                                                                                                                                
8:19:04 AM                                                                                                                    
                                                                                                                                
CHAIR  MUNOZ announced  that the  committee certainly  can invite                                                               
the Rasmuson Foundation to speak at the next hearing of HB 290.                                                                 
                                                                                                                                
8:19:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK inquired as to the inception of this idea.                                                                  
                                                                                                                                
MS.   HARRINGTON   explained   that   staff   in   Representative                                                               
Austerman's office  subscribe to  various newsletters  and follow                                                               
some nonprofits.   Originally,  staff became  aware of  the Endow                                                               
Iowa program and some of  its benefits, particularly in the rural                                                               
communities of Iowa.  She opined  that the Endow Iowa program has                                                               
experienced  an astonishing  level  of success,  success in  ways                                                               
that she suggested would be analogous  in Alaska.  The Endow Iowa                                                               
program  was inspiring  and  resulted in  discussions  of how  it                                                               
would work in Alaska.                                                                                                           
                                                                                                                                
8:20:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked if the $25,000  limit [specified on                                                               
page 3, lines 8-9] is per year.                                                                                                 
                                                                                                                                
MS. HARRINGTON answered that the  $25,000 limit is intended to be                                                               
per year,  although she acknowledged  that it's not clear  in the                                                               
legislation.  In further response  to Representative Saddler, Ms.                                                               
Harrington confirmed that the $25,000  limit is for each sub unit                                                               
not the lead  organization and the borough is not  intended to be                                                               
the recipient  of the funds.   This language could  be clarified,                                                               
she acknowledged.                                                                                                               
                                                                                                                                
REPRESENTATIVE  SADDLER  opined  that  with  a  1:1  match,  much                                                               
philanthropy would flow to this  proposed fund and perhaps starve                                                               
other  philanthropic  organizations.    He  inquired  as  to  the                                                               
experience in Iowa.                                                                                                             
                                                                                                                                
MS. HARRINGTON related that in  conversations with nonprofits she                                                               
found   that  annual   campaigns   are   fairly  different   than                                                               
endowments.   In  fact, the  Chilkat Valley  Community Foundation                                                               
related that they were explicit  with nonprofits that they didn't                                                               
intend to  perform annual fundraising or  compete with nonprofits                                                               
to provide  ongoing annual  services.   Rather, they  are dealing                                                               
with bequests  and planned giving  and other ways in  which funds                                                               
can  flow into  the  fund  during major  life  transitions.   The                                                               
aforementioned  resulted  in some  of  the  nonprofits being  the                                                               
original investors in the community fund.                                                                                       
                                                                                                                                
REPRESENTATIVE SADDLER surmised  then that the goal of  HB 290 is                                                               
to create an  endowment from which the proceeds  go toward direct                                                               
grants to the community foundations.                                                                                            
                                                                                                                                
MS. HARRINGTON replied yes.                                                                                                     
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether this  would be  a one-time                                                               
appropriation to the lead philanthropic  organization or would it                                                               
take a couple of years.                                                                                                         
                                                                                                                                
MS HARRINGTON deferred to the sponsor.                                                                                          
                                                                                                                                
8:24:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE AUSTERMAN related that he  has reviewed it both as                                                               
an  annual  appropriation or  a  larger  sum  to create  its  own                                                               
endowment  from  which  the  interest earnings  are  spent.    He                                                               
expected the  discussion of  the aforementioned  to occur  in the                                                               
Finance committees.                                                                                                             
                                                                                                                                
8:25:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked if the Alaska  Community Foundation                                                               
is the lead philanthropic organization.                                                                                         
                                                                                                                                
REPRESENTATIVE  AUSTERMAN  replied  that  currently  ACF  is  the                                                               
organization  which  he   knows  has  a  track   record  and  the                                                               
capability to do this, although  there may be other organizations                                                               
that will come forward.                                                                                                         
                                                                                                                                
8:25:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA   asked  if   the  sponsor  has   had  any                                                               
discussions with the Kenai and Soldotna [foundations].                                                                          
                                                                                                                                
MS.  HARRINGTON  confirmed  that   there  is  a  Kenai  Peninsula                                                               
Foundation.    The  sponsor statement  in  the  committee  packet                                                               
includes  a list  of community  foundations  that already  exist.                                                               
She  noted that  there are  also community  funds that  have been                                                               
established  with   the  assistance  of  Arctic   Slope  Regional                                                               
Corporation (ASRC)  in order  to benefit all  of the  North Slope                                                               
communities.   Furthermore, there are communities  throughout the                                                               
state  that are  actively  exploring the  establishment of  local                                                               
community foundations.                                                                                                          
                                                                                                                                
8:27:08 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE AUSTERMAN,  returning to  Representative Gardner's                                                               
earlier question, clarified that  the legislation doesn't specify                                                               
there  is  only  one  community   foundation  or  affiliate,  and                                                               
therefore there is  the potential for more than  one as reflected                                                               
in the language on  page 1, line 11.  He  then suggested that the                                                               
benefit  of having  more than  one foundation  could result  in a                                                               
better  organization  or  philanthropic   community  due  to  the                                                               
competition.                                                                                                                    
                                                                                                                                
8:28:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  pointed  out  that  under  the  language                                                               
capping the grant  amount on page 3, lines  8-9, communities with                                                               
multiple organizations  would receive  a greater  benefit because                                                               
each  organization   would  receive  $25,000.     Therefore,  she                                                               
questioned whether  the limit  would be  one per  organization or                                                               
per  community,  in which  case  knowing  the selection  criteria                                                               
would be necessary.                                                                                                             
                                                                                                                                
REPRESENTATIVE AUSTERMAN responded that he was not sure.                                                                        
                                                                                                                                
8:29:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER  inquired as to the  feedback regarding the                                                               
5  percent administrative  cap, particularly  from those  smaller                                                               
communities  that  don't  have the  administrative  economies  of                                                               
scale.                                                                                                                          
                                                                                                                                
MS.  HARRINGTON said  that she  hasn't received  any feedback  on                                                               
that  matter.    However,  she   clarified  that  the  5  percent                                                               
limitation  is  for  administrative   purposes  within  the  lead                                                               
philanthropic  entity.    When  the   dollars  go  to  the  local                                                               
community foundation, they are intended  to flow into the endowed                                                               
fund to  build it.   Therefore, there would be  no administrative                                                               
fees at  the local level, which  is based on the  assumption that                                                               
these foundations are already functioning  or will be shortly and                                                               
the  purpose  is  to build  endowments  with  existing  resources                                                               
running the administrative functions.                                                                                           
                                                                                                                                
8:30:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  if  there  is  any  standard  for                                                               
management of the lead philanthropic organization.                                                                              
                                                                                                                                
MS.  HARRINGTON  said   that  she  is  learning   about  the  IRS                                                               
restrictions  that provide  high levels  of assurance  that these                                                               
organizations  are  operating in  a  manner  consistent with  the                                                               
public  good.    Additionally,   Uniform  Prudent  Management  of                                                               
Institutional  Funds Act  (UPMIFA) ensures  that donors  have the                                                               
ability to  be ensured that  organizations holding  endowed funds                                                               
on  their behalf  are  doing  so in  a  fiscally prudent  manner.                                                               
Essentially, when there is a  fund with many donors, [the donors]                                                               
can become the  safeguard in that the donors have  the ability to                                                               
be sure the foundation is being managed prudently.                                                                              
                                                                                                                                
8:32:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER   recalled  the  legislation's   goal  of                                                               
leveraging  donations.   Referring  to the  language  on page  2,                                                               
lines 16-17  and 29-30,  she asked  if the  community foundations                                                               
and  community  affiliate  organizations are  required  to  match                                                               
dollar-to-dollar or can they do more.                                                                                           
                                                                                                                                
MS. HARRINGTON  confirmed that the language  allows for community                                                               
foundations to [provide a  match that exceeds dollar-for-dollar].                                                               
However, she wasn't  sure that is useful and  characterized it as                                                               
a policy call.                                                                                                                  
                                                                                                                                
8:34:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  related her understanding that  this is a                                                               
matching  grant fund  and thus  the community  foundation has  to                                                               
raise whatever amount the state is asked to provide.                                                                            
                                                                                                                                
REPRESENTATIVE AUSTERMAN replied yes.                                                                                           
                                                                                                                                
8:34:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ inquired  as to  the details  of the  Endow                                                               
Iowa and Kentucky programs.                                                                                                     
                                                                                                                                
MS.  HARRINGTON said  she  would  have to  research  the type  of                                                               
philanthropy  those  two  programs  have generated.    Since  the                                                               
Kentucky program was enacted relatively  recent, it's likely just                                                               
beginning  to have  impacts.   However, in  Iowa the  dollar-for-                                                               
dollar match  component has  been in existence  for six  to seven                                                               
years during  which donors  could receive a  tax write-off.   The                                                               
Iowa program  was so successful that  it had to do  away with the                                                               
dollar-for-dollar  match  and only  have  the  tax write-off  for                                                               
donations.                                                                                                                      
                                                                                                                                
8:36:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER surmised that in  terms of money flow, the                                                               
state would  appropriate a  certain amount of  money to  the lead                                                               
philanthropic  organization  that  would  take  applications  for                                                               
grants.  Local community foundations  would apply for grants, the                                                               
applications  would be  scored, and  a matching  amount of  funds                                                               
would  be provided.    He  then asked  whether  there is  another                                                               
effort to  obtain matching state  funds or do the  state matching                                                               
funds come through the lead philanthropic organization.                                                                         
                                                                                                                                
MS.  HARRINGTON clarified  that  it's intended  to  refer to  the                                                               
funds   that  are   received  through   the  lead   philanthropic                                                               
organization.                                                                                                                   
                                                                                                                                
8:38:04 AM                                                                                                                    
                                                                                                                                
KEN  CASTNER,  Member,  Board   of  Trustees,  Homer  Foundation,                                                               
informed  the committee  that the  Homer Foundation  has been  in                                                               
existence for over 20 years.   He noted that he submitted written                                                               
testimony  to the  sponsor  and  thus he  would  like to  provide                                                               
answers to  some of the questions  posed today.  He  informed the                                                               
committee that UPMIFA, AS 13.70.020,  is state law that addresses                                                               
the concerns  expressed by  Representative Saddler  regarding the                                                               
prudent  management   rule.     With  regard   to  Representative                                                               
Gardner's concern  over the  possibility of  rapid growth  of new                                                               
community foundations,  he reminded the committee  that community                                                               
foundations  don't  fund  projects.     Therefore,  there  is  no                                                               
competition.   [Community foundations] fund other  501(c)(3)s and                                                               
other  general   charitable  organizations  and   publish  annual                                                               
reports.   He characterized community foundations  as apex boards                                                               
that are difficult  to populate.  Most of the  work for community                                                               
foundations is in regard to  the management and administration of                                                               
the funds as  well as reporting; the distribution  of grant funds                                                               
isn't the  largest portion of  what a community  foundation does.                                                               
Although he said  he wouldn't expect a rapid  growth of community                                                               
foundations, he would expect ACF  would grow more affiliates.  He                                                               
said  he would  also  expect the  smaller  communities to  create                                                               
simple  funds,  which he  referred  to  as community  endowments.                                                               
Because  of the  nature of  the various  sizes of  communities in                                                               
Alaska, he expressed hope that  the community funds would qualify                                                               
for matching  grants for  their endowments.   Mr.  Castner opined                                                               
that  as  a  public  charity,  [community  foundations]  have  to                                                               
annually meet  a public support  test such that one-third  of the                                                               
community foundation's  income has  to come from  public sources.                                                               
Although the  support from individuals  is capped, it's  not from                                                               
governmental  sources.   Therefore, any  funds from  governmental                                                               
sources  are very  helpful in  meeting the  aforementioned public                                                               
support  test.   In closing,  Mr. Castner  offered to  help craft                                                               
this legislation for Alaska.                                                                                                    
                                                                                                                                
8:42:01 AM                                                                                                                    
                                                                                                                                
CANDACE  WINKLER,  President/CEO,   Alaska  Community  Foundation                                                               
(ACF), provided the following testimony:                                                                                        
                                                                                                                                
     [The  Alaska  Community   Foundation  is]  a  statewide                                                                    
     community   foundation    that   works    to   increase                                                                    
     philanthropy and build  community throughout the state.                                                                    
     I am testifying in support of  HB 290, which I think is                                                                    
     a  pragmatic way  to  incentivize  and grow  individual                                                                    
     philanthropy and to invest in  Alaska's future. I think                                                                    
     Alaskans  understand the  value of  endowments; ...  we                                                                    
     all live with the Permanent Fund  as a part of our life                                                                    
     and I  also think Alaskans recognize  the importance of                                                                    
     local control and  guidance and I think  that this bill                                                                    
     enables that  to happen.   Many of us in  the nonprofit                                                                    
     and development  world know that Alaska  has low levels                                                                    
     of individual  giving and I  think the  concepts behind                                                                    
     this bill utilize state resources  to maximize and grow                                                                    
     private  dollars that  will not  only help  build these                                                                    
     permanent  endowments  but  will   also  help  build  a                                                                    
     culture of philanthropy.   And I think that  ... is how                                                                    
     a program like  this can help all of  the nonprofits in                                                                    
     the State of Alaska that are doing such great work.                                                                        
                                                                                                                                
     To give  a bit of context  to the bill and  to the work                                                                    
     of community foundations,  I want to tell  you a little                                                                    
     bit  about the  Alaska  Community Foundation  ....   We                                                                    
     have been  around for  16 years.   During that  time we                                                                    
     have  granted  out more  than  $30  million around  the                                                                    
     State of Alaska.   We currently hold  about $55 million                                                                    
     in assets  for the benefit  of Alaskans.  From  that we                                                                    
     grant out  somewhere in the  neighborhood of  around $5                                                                    
     million  last  year  and  I  think  that's  what  we're                                                                    
     anticipating this year.                                                                                                    
                                                                                                                                
     We have  280 different  funds ...  included in  that is                                                                    
     the Alaska Children's Trust  (ACT), which just recently                                                                    
     those funds moved over from  the State of Alaska.  With                                                                    
     regard to affiliates, we  actually have five affiliates                                                                    
     that are  locally ... managed  and they set goals  at a                                                                    
     local  level,  do   local  fundraising,  make  granting                                                                    
     decisions, but  do fall under the  governance structure                                                                    
     of  the Alaska  Community  Foundation,  and that's  the                                                                    
     Seward   Community  Foundation,   Petersburg  Community                                                                    
     Foundation,   Kenai   Peninsula   Foundation,   Jessica                                                                    
     Stevens Community  Foundation, and Chilkat Valley.   In                                                                    
     addition, we  have three partner  community foundations                                                                    
     that are  their own  stand-alone nonprofits:  the Homer                                                                    
     Foundation,  Juneau   Community  Foundation,   and  the                                                                    
     Arctic  Slope  Community   Foundation  (ASCF).    Those                                                                    
     stand-alone entities do  hold permanent endowments with                                                                    
     the Alaska Community Foundation  in addition to endowed                                                                    
     funds  they held  locally.   And  then we  have a  more                                                                    
     loosely  structured  partnership  with the  many  other                                                                    
     community  foundations:  Chugiak  Eagle  River,  Bethel                                                                    
     Community Services Foundation,  and Northstar Community                                                                    
     Foundation.                                                                                                                
                                                                                                                                
     We  do  have  experience  in  managing  these  matching                                                                    
     programs. In  partnership with the  Rasmuson Foundation                                                                    
     we have  given away  more than  $1 million  in matching                                                                    
     funds to ...  our two partners and  the five affiliates                                                                    
     as they have  raised dollars.  These have  proven to be                                                                    
     a   really   effective   method  to   build   community                                                                    
     endowments.     In  a   four-year  period   the  Seward                                                                    
     Community  Foundation, an  affiliate  of ACF,  received                                                                    
     three bequests;  one of  them was  a $1.9  million gift                                                                    
     when a long-time  Sewardite passed away.   So, it's not                                                                    
     only  an  effective way  to  raise  dollars today,  but                                                                    
     there's  the  potential as  activity  and  the work  is                                                                    
     happening  in  local  communities to  plant  seeds  and                                                                    
     receive  some of  those  resources  when Alaskans  pass                                                                    
     away.   So, that's  really powerful.   The  program has                                                                    
     been  called the  Community  Asset Building  Initiative                                                                    
     (CABI)  and from  a generous  grant  with the  Rasmuson                                                                    
     Foundation, we will  be expanding to three  or four new                                                                    
     communities as  early as this  fall.  We  are currently                                                                    
     working  on  meeting  with  different  communities  and                                                                    
     determining their interest level.                                                                                          
                                                                                                                                
8:46:33 AM                                                                                                                    
                                                                                                                                
MS. WINKLER continued:                                                                                                          
                                                                                                                                
     Specific comments on  the bill, as Erin  stated, ACF is                                                                    
     not  a membership  organization.   The only  membership                                                                    
     organizations  that really  work  with foundations  are                                                                    
     Philanthropy   Northwest,   which   is   our   regional                                                                    
     association  in   Alaska.     It's  one  of   the  five                                                                    
     Northwestern  states,  and  then   there  also  is  the                                                                    
     National  Council  on  Foundation that's  a  membership                                                                    
     organization;  they are  the entity  that oversees  the                                                                    
     community foundations'  best practice standard  that is                                                                    
     referenced in the bill.                                                                                                    
                                                                                                                                
     If I were to make  comments specific to the bill, there                                                                    
     is  on page  2,  line  27, a  reference  to those  best                                                                    
     practice  standards.   And I  do think  that this  is a                                                                    
     policy  area  for   you  all  to  think   about.    The                                                                    
     terminology  says "substantially  complied" with  these                                                                    
     best practice standards for  organizations who might be                                                                    
     applying  to the  lead organization  to participate  in                                                                    
     the  matching funds.   From  my perspective,  trying to                                                                    
     administer language around  "substantially complied" is                                                                    
     complex; it entails  defining what that means.   And so                                                                    
     from my  perspective it  would be  much easier  to have                                                                    
     language that says you either  meet these best practice                                                                    
     standards  or you  don't.   I  think  then that  review                                                                    
     process happens  at a national  level and I  think some                                                                    
     of  the  questions  regarding  ...   if  you  have  two                                                                    
     community  foundations  or  ... are  unsure  about  how                                                                    
     funds are  invested or managed, ...  that national best                                                                    
     practice   standard   reviews    those   policies   and                                                                    
     practices.  And  I think it provides  the highest level                                                                    
     of  protection  for  the state  dollars  and  also  the                                                                    
     individual donor dollars  that are coming in.    That's                                                                    
     the  standard  that  Iowa  is using.    There  also  is                                                                    
     currently  draft language  at  a federal  level to  use                                                                    
     USDA funds to do a  very similar project to incentivize                                                                    
     rural communities to build endowments  and it also uses                                                                    
     the best  practice standards as  sort of the  marker of                                                                    
     how  you participate  in that  program.   So, ...  I do                                                                    
     think that the  policy decision around that  is that we                                                                    
     do have  some community foundations, that  at this time                                                                    
     in the  State of Alaska  meet those standards  [and] we                                                                    
     do have some  that don't.  And I think  that there will                                                                    
     be a  cost associated for  some of those that  don't to                                                                    
     actually  get that  best practice  standard.   And  so,                                                                    
     that is certainly a consideration.                                                                                         
                                                                                                                                
     Ken talked  a little bit  about some of  the strategies                                                                    
     to try to  address the needs of  communities that don't                                                                    
     currently  have a  community foundation.   And  I think                                                                    
     some  of his  suggestions were  good ideas.   Currently                                                                    
     the Alaska Community Foundation  does have what we call                                                                    
     an Alaska  Fund and out  of that fund any  community is                                                                    
     eligible to  apply.  We  could look at setting  up some                                                                    
     sort  of fund  that  matching funds  went  to and  then                                                                    
     state  funds ...  corresponded and  could be  open only                                                                    
     for  those communities  that did  not  have a  specific                                                                    
     local community foundation in the  region.  It would be                                                                    
     one way to kind of  aggregate that activity but provide                                                                    
     still some benefit to communities  that maybe are quite                                                                    
     small or don't have the current capacity.                                                                                  
                                                                                                                                
8:50:05 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  inquired  as  to the  criteria  used  to                                                               
evaluate applications  from communities without an  existing fund                                                               
that apply  to ACF.  She  also inquired as to  examples of things                                                               
commonly funded by community philanthropic endowment funds.                                                                     
                                                                                                                                
MS.  WINKLER stated  that such  organizations,  ACF, mostly  fund                                                               
nonprofit organizations  via the  grant program.   However, there                                                               
may  be  a few  cases  in  which  ACF  may become  involved  with                                                               
expenditure responsibility when  there is a need  in a community.                                                               
She explained  that when communities  without a  nonprofit apply,                                                               
ACF performs  basic due diligence  to ensure the nonprofit  is in                                                               
good standing with  the IRS.  If it's a  competitive project, the                                                               
proposal would be  evaluated on the criteria that  have been set.                                                               
Other  funds are  established  in such  a way  that  they may  be                                                               
funding  a  specific organization  by  design,  which means  that                                                               
there is  a basic review to  ensure the organization is  still in                                                               
compliance   and  operating   effectively.     The  process   for                                                               
determining  an affiliate  community  foundation  is complex  and                                                               
very  different than  applying  for  funding for  a  grant.   Ms.                                                               
Winkler  then related  that ACF  funds a  wide variety  of issues                                                               
based  on the  goal/mandate to  improve  the quality  of life  in                                                               
communities  throughout   Alaska.     Therefore,  ACF   may  fund                                                               
refrigeration systems, food banks,  a smolt study, revitalization                                                               
of the  Gwich'in language,  trails, parks,  and basic  health and                                                               
human service needs.   Much of what ACF funds  is dictated by the                                                               
280 different funds, she stated.                                                                                                
                                                                                                                                
8:53:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK,  referring  to  the  language  "substantial                                                               
compliance  with the  national  standards" on  page  2, line  27,                                                               
asked if  Ms. Winkler  would foresee  any problem  with "national                                                               
standards" working in small communities in Alaska.                                                                              
                                                                                                                                
MS. WINKLER answered  that the downside of  national standards is                                                               
that it  takes time and  effort to document the  practices, which                                                               
can  be costly.   There  are  some community  foundations in  the                                                               
state that do  great work, but don't meet those  criteria.  There                                                               
are  also  community  foundations  in Alaska  that  do  meet  the                                                               
national  standards,   such  as  ACF  and   the  Homer  Community                                                               
Foundation.   In fact,  ACF is  currently in  the process  of re-                                                               
certification,  which  occurs  every  five years.    Ms.  Winkler                                                               
opined that  the criteria  are doable  and provide  protection by                                                               
demonstrating that  the organization  has an  investment strategy                                                               
and policy,  a distribution  policy, a grant  policy, and  a fund                                                               
acceptance  policy.    An  external   body  reviews  whether  the                                                               
community foundation has  the policies and practices  in place to                                                               
manage the complexities of a community foundation.                                                                              
                                                                                                                                
8:55:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  requested that Ms. Winkler  work with the                                                               
[sponsor] to  develop a flow  chart of the  various organizations                                                               
and how the money could flow through them.                                                                                      
                                                                                                                                
MS.  WINKLER agreed  to  do  so.   She  then  explained that  the                                                               
affiliate organizations work  in their community to  be the face,                                                               
set  agenda,   raise  funds,  and  make   grant  recommendations.                                                               
However,  legally affiliate  organizations  are part  of ACF  and                                                               
governed  by its  bylaws,  policies,  and investment  strategies.                                                               
The aforementioned  situation provides local flavor  and autonomy                                                               
without  redundant  infrastructure.     Because  the  program  is                                                               
substantially  supported with  a  partnership  with the  Rasmuson                                                               
Foundation,  99.5  percent of  the  dollars  raised in  affiliate                                                               
foundations  stay in  those endowments  because  they don't  have                                                               
significant operational costs  as those are handled by  ACF.  She                                                               
did  note that  the Iowa  model and  pending federal  legislation                                                               
recognizes those  affiliates as  eligible and  able to  apply for                                                               
matching  funds.   However, because  there  are specific  endowed                                                               
funds that  ACF holds only  for the  benefit of Seward  and Moose                                                               
Pass, those  grants can't be spent  on grants or projects  in any                                                               
other part of the state.                                                                                                        
                                                                                                                                
8:58:50 AM                                                                                                                    
                                                                                                                                
CHAIR MUNOZ announced that HB 290 would be held over.                                                                           
                                                                                                                                

Document Name Date/Time Subjects
HB 184 sponsor stmt Ver D.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB 184 CS Ver E.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB 184 Ketchikan Resolution Motion.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 AML Support Resolution.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 Fish Tax Rev Share An.xlsx HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 Petersburg Support Resolution.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 Wrangell Support Resolution.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB 290 Endow Alaska Sponsor Statement--Version E.pdf HCRA 1/26/2012 8:00:00 AM
HB 290
HB290-DCCED-DCRA-01-20-12.pdf HCRA 1/26/2012 8:00:00 AM
HB 290
HB184 Fish Mgmt Areas Map.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 Muni Harbor Facilities.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 AK Harbormasters Port Admin Resolution.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184 Fish Tax Revenue.pdf HCRA 1/26/2012 8:00:00 AM
HB 184
HB184-DCCED-DCRA-01-20-12.pdf HCRA 1/26/2012 8:00:00 AM
HB 184