Legislature(2011 - 2012)HOUSE FINANCE 519
03/29/2012 09:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB290 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 290 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 29, 2012
9:41 a.m.
9:41:31 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:41 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Alan Austerman; Erin Harrington, Staff,
Representative Austerman
PRESENT VIA TELECONFERENCE
Diane Kaplan, Rasmussen Foundation; Candace Winkler,
President and CEO, Alaska Community Foundation; Ken
Castner, The Homer Community Foundation
SUMMARY
HB 290 ESTABLISH ENDOW ALASKA GRANT PROGRAM
HB 290 was HEARD and HELD in committee for
further consideration.
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."
9:42:22 AM
Vice-chair Fairclough MOVED that CSHB 290(CRA) 27-LS1094/E
be adopted as a working document before the committee.
There being NO OBJECTION it was so ordered.
REPRESENTATIVE ALAN AUSTERMAN stated that the bill had been
crafted in an effort to create a permanent funding source
for community foundations that would earn interest which
could be recycled back into communities. The money could be
used in a variety of methods for the benefit of the
community. He testified that the creation of the funding
source could alleviate pressure felt by local governments
to fund non-profit organizations. The bill would create a
challenge grant program; the fund would match local
community contributions up to $25,000.
ERIN HARRINGTON, STAFF, REPRESENTATIVE AUSTERMAN explained
that the legislation would establish the Endow Alaska Grant
Program. She detailed that a challenge grant mechanism
would be established that would allow local community
foundations throughout Alaska to leverage private donations
from within their communities; the money would be matched
dollar for dollar with state funds. The Endow Alaska
Program addressed several objectives: supporting long-range
community self-sufficiency, recognizing the ability of
community members to identify and respond to local needs,
act as catalyst for community conversation about
philanthropy, empowers Alaskans to invest in meaningful
local projects and envisions, and to take to-date state
dollars and turn them into a financial tool to yield
perpetual returns. Endow Alaska was inspired by a program
called Endow Iowa. The legislation envisions a relationship
between the state and the 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. She noted that in the process of working
on the bill she had learned many new terms and invited the
committee to interrupt her at any time for further
explanation.
Ms. Harrington informed the committee that currently most
qualified organization to consider as the lead
philanthropic entity was the Alaska Community Foundation.
The foundation was a statewide community organization with
more than 250 managed funds and $50 million in assets. She
provided an example using a hypothetical Kodiak Foundation.
Hypothetically, the state could provide through the Endow
Alaska Grant program annually, and the Alaska Community
Foundation would in turn offer the Kodiak Foundation the
opportunity to apply for grants. The Kodiak Foundation
would be responsible for raising $15,000 within the
community in order to meet the eligibility requirement for
a match grant. The grant funds would be placed in a
permanently endowed fund, and could not be spent on an
annual basis; creating a permanent endowment. She stated
that funding limitations, but not a funding level, had been
written into the bill to ensure that community investment
was made in diverse regions of the state. Due to the nature
of the matching grant, the funding level would be
constrained by the ability of the community to raise the
necessary funds.
Ms. Harrington walked the committee through the bill:
Sec 44.33.150, page 1 lines 6 through 12 of the bill
establishes the Endow Alaska Grant Program in the
Department of Commerce, Community and Economic
Development. It gives the department the power to
grant state funds to a "lead philanthropic entity" in
Alaska, to be further granted to community foundations
and community affiliate organizations to build their
permanent endowed funds.
Section 44.33.160, page 1 line 13 through page 2 line
9 describes the requirements for an organization to be
qualified as a "lead philanthropic entity" or a
"community foundation" under this program.
Ms. Harrington interjected that the language intentionally
described an organization that mirrored the Alaska
Community Foundation. She disclosed that conversations held
with lead philanthropic groups had revealed that the Alaska
Community Foundation would be best organization to execute
the program.
Ms. Harrington continued:
Section 44.33.170, page 2 lines 10 through page 3 line
5 describes factors that the lead philanthropic entity
should consider when considering applications for
funding; and describes the community foundations and
community affiliate organizations that are eligible to
receive funding.
Ms. Harrington noted the section was intended to provide a
geographical range to assure that foundations were being
funded in the areas that would benefit most. She
highlighted that line 25 of the bill stated that the
foundations must match the state dollar for dollar.
Section 44.33.80, page 3 lines 6 through 13 set limits
on the size and distribution of Endow Alaska grants,
and describe the allowable administrative fees for the
program.
Ms. Harrington noted that the administrative overhead for
the Lead Philanthropic Entity (LPE) would not exceed
$25,000 annually and only 5 percent of the grant funds
received by the LPE could be used for administrative
purposes.
Section 44.33.190, page 3 lines 14 through 16 provides
statutory definitions.
Ms. Harrington described the differences between a
community foundation and a community foundation affiliate.
Community foundations were independently organized non-
profit entities working to build up an endowed fund and
provide grants and other support organizations around their
service area. Community foundation affiliates were a sub-
fund within a community foundation. The affiliate retained
a local board that performed the actual fundraising at the
local level.
9:54:38 AM
Vice-chair Fairclough referred to page 2, line 17, of the
bill. She understood that the opportunity to establish a
new community foundation could allow a department to bypass
a number of communities in the effort to sign up new
communities. She expressed concern that smaller communities
would not have equal access to state funds under the
legislation. She wondered if communities could benefit from
the grants more than once, and if so, she suggested that
all communities across the region should benefit once,
before communities could apply a second time. She noted
that an urban community could have more opportunity than a
smaller community to receive state dollars.
Co-Chair Stoltze added that some communities could be
better at fundraising and organizing than others.
Representative Neuman referred to section 2, page 2, of the
bill. He opined that not all communities were equal in
fundraising and organizational abilities. He wondered how a
legitimately needy rural community, with less sophisticated
fundraising skills, could be treated equally compared to
better organized communities.
9:59:20 AM
Ms. Harrington responded to Vice-chair Fairclough. She
noted that the bill did not prohibit a community from
returning to obtain a subsequent grant in future years. She
pointed out that lines 17-18, regarding the opportunity to
establish new community foundations or affiliates, were
intended to make the bill inclusive. She asserted that the
language could be altered by the committee if the committee
deemed it necessary.
Representative Austerman remarked that the concept behind
the bill was get Alaskans involved and to spread the money
around the entire state. The bill did not specify that a
new foundation would need to be established. He shared the
desire to see more foundations grow in smaller communities.
He addressed that the grant was a challenge grant to get
communities to step forward, become involved, and take more
responsibility in the creation of their own foundations.
Vice-chair Fairclough reiterated her concern for the
"ranking of the applications" section in the legislation.
She thought that if a new organization received an
automatically high ranking, already established, smaller
foundations that had previously applied could be unfairly
treated. She queried the definition of "new" in the section
of the bill.
Representative Austerman agreed with Vice-chair Fairclough.
He reiterated that the intent if the legislation was to
encourage the development of organizations across the
state. He noted that "shall" could be changed to "may" on
line 11, in order to speak to her concerns.
10:03:50 AM
Representative Doogan requested further clarification of
the ranking system. He asked if number one was more
important than two, number two more important than three,
and so forth.
Ms. Harrington replied that that was not the intention. She
said that the organizations would look to the expertise of
the lead philanthropic entity when seeking parameters and
design of the most effective route for the communities. She
noted that due to this, state control was diminished, but
believed that it created a balance of expertise.
Representative Doogan expressed that the language should be
redrafted to clarify that the numbers did not indicate the
rank of communities by importance.
10:05:43 AM
Representative Gara highlighted that the bill protected
communities and families. He shared a story about a family
that had wished to create an endowment in the name of the
deceased mother, but lacked the funds to do so. He noted
that with the community endowments created by the bill,
they, and other families could add money to the endowment
and do great things.
Ms. Harrington agreed that the bill created a financial
tool that would spin off funds that could be used to
support priorities at the community level. It created an
opportunity for families to have a place to put money to
memorialize a loved one. She gave another example of a man
who left a large sum to the community through The Seward
Foundation. The funds helped retain the wealth generated by
its residents within the community.
Representative Gara added that it allowed families to pool
money into a larger sum than they might have been able to
give alone.
Representative Edgmon asked if "community development" was
defined in statute. Ms. Harrington replied that she did not
know.
Representative Austerman referred to Representative
Doogan's question. He stated that the word "ranking" had
been chosen by the drafters of the bill and could be
changed to "evaluating." He reiterated that "shall" could
be replaced with "may" in the interest of clarity.
Co-Chair Stoltze remarked on scandals involving several
large endowments, and voiced concern that the bill would
create highly paid administrative positions.
Representative Austerman pointed out to the committee that
there was a salary cap of 5 percent written into the
legislation.
10:11:55 AM
Ms. Harrington noted that foundation work in Homer was done
on a volunteer basis.
Co-Chair Stoltze opened invited testimony.
DIANE KAPLAN, RASMUSSEN FOUNDATION (via teleconference)
testified that The Rasmussen Foundation, working with the
Alaska Community Foundation, started a program similar to
the one in the bill. The intent was to help communities
develop the capacity to have an endowment fund. She stated
that people from around the United States were brought
together with a dozen communities in Alaska to learn about
community foundations. She shared that the core group who
wanted to initiate a fund could turn to The Rasmussen
Foundation to provide assistance by teaching them how to
become good grant makers, and learn to run the process. She
said that over $700,000 was invested over a four year
period that had generated over $4 million in funds. She
furthered that Bethel and Barrow had started their own
foundations, supported by local institutions, and taken
advantage of technical assistance and training. She offered
applause to Representative Austerman the legislation. She
urged the legislature to pass the legislation and assured
the committee that The Rasmussen Foundation was ready to
work with legislature.
10:16:35 AM
Representative Wilson queried the difference in the intent
of the proposed legislation and the mission of The
Rasmussen Foundation.
Ms. Kaplan replied that people were emotionally attached to
the local areas where they resided, which made them more
inclined to donate to community foundations immediately
close to home. She offered that residents of North Pole
might not want to donate to a foundation that benefited the
entirety of Fairbanks. She thought that people would want
assurances that the funds would benefit their specific
community. She added that 20 or more communities could
benefit from this bill.
Representative Wilson understood that the legislation would
provide motivation for community fundraising.
Ms. Kaplan replied in the affirmative. She stated that, in
her experience, people were often inspired to meet the call
of challenge grants.
10:19:41 AM
Co-Chair Thomas wondered if the program could benefit from
the Pick, Click, Give Program.
Ms. Kaplan said yes. She added that there had been
outstanding growth in community project funding that was
attributable to the Pick, Click, Give Program.
Vice-chair Fairclough referred to page 3 of the bill which
spoke to the 5 percent cap for administrative costs. She
wondered if the number was realistic.
Ms. Kaplan thought that the number was modest. She
highlighted that a lot of time went into identifying the
needs of a specific community, fundraising and grant
writing.
Vice-chair Fairclough agreed that the administrative cost
number was low. She shared that some organizations accrued
administrative costs between 12 and 22 percent.
Co-Chair Thomas spoke of critical remarks that he had read
on the Pick, Click, Give Facebook page concerning wasting
the public's money on high salaries for non-profit
administrators.
10:23:06 AM
CANDACE WINKLER, PRESIDENT AND CEO, ALASKA COMMUNITY
FOUNDATION (via teleconference), testified in support of
the legislation. She shared that the mission of the
foundation was to increase philanthropy and build community
throughout the state. She furthered that the foundation had
been working with The Rasmussen Foundation over the last
four years to develop an affiliate structure and community
foundations throughout the state. She said that the concept
was a pragmatic way to incentivize and grow individual
philanthropy and engage communities in beneficial future
opportunities. She believed that Alaskan's could relate to
the idea of a permanent endowment fund, and cited the
Alaska Permanent Fund Dividend as an example. She relayed
that the Alaska Community Foundation was 16 years old and
currently held $55 million in assets. The assets consisted
of over 280 different funds including: The Seward Community
Foundation, Petersburg, Kenai, Talkeetna, The Chilkat
Valley, The Homer Foundation, The Juneau Foundation, The
Arctic Slope Community Foundation, as well as the Alaska
Children's Trust.
Representative Edgmon revisited the question of whether it
was necessary that "community development" be defined by
statute.
Ms. Winkler responded that she did not think it was
necessary. She said that the work already being done by
community organizations defined "community development";
groups of people from the community examining the current
and future needs and opportunities for their respective
communities. She furthered that the groups were creating a
vision for their communities and raising the necessary
funds while making determinations of the best ways to
invest the funds. She felt that the legislature should
supply a definition if one was necessary for the purpose of
discussion.
Representative Edgmon thought that providing a definition
would be an additional safeguard against any potential tax
consequences.
Co-Chair Stoltze noted the administrative percentage
amounts.
Ms. Winkler relied that it was difficult to predict whether
the five percent cap was adequate. She said if the
appropriation was a large one, a $3 to $5 million
commitment, the five percent cap would be sufficient. She
expressed concern about the five percent cap at lower
appropriation numbers.
10:29:07 AM
Vice-chair Fairclough queried the current administrative
costs for the foundation.
Ms. Winkler replied that, because their portfolio held a
large endowment, the administrative costs were low in
comparison to the overall asset base; approximately 1
percent. She added that overall operating costs were at 15
percent.
Vice-chair Fairclough understood that the numbers included
the 280 funds under the foundations umbrella.
Ms. Winkler replied no. She said that the fees from the 280
funds were lower than 15 percent.
KEN CASTNER, THE HOMER COMMUNITY FOUNDATION (via
teleconference) testified in support of the bill. He stated
that small town endowments often arrived at a tipping
point; Homer had raised as much money as was wanted. He
relayed the funds had been awarded in support grants to
non-profit organizations. Additionally, other charitable
grants would be distributed. He concluded that funds
handled by the foundation had been used to do great work in
Homer and the surrounding smaller communities.
Co-Chair Stoltze closed public testimony. He noted that
there were possible amendments to be proposed as well as an
updated fiscal note.
HB 290 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 10:33 AM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 290 Alaska's Foundation Structure.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |
| HB 290 Information on Endow Iowa and Endow Kentucky.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |
| HB 290 Endow Alaska Sponsor Statement.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |
| HB290 Changes from Version B to Version E.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |
| HB 290 Sectional Analysis Version E.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |
| HB290 Amendment Thomas 3.29.12.pdf |
HFIN 3/29/2012 9:30:00 AM |
HB 290 |