Legislature(2011 - 2012)BELTZ 105 (TSBldg)

03/29/2012 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 223 TAX CRED: CONTR. TO HOMELESS SHELT/DETOX
Heard & Held
= SB 225 ESTABLISH ENDOW ALASKA GRANT PROGRAM
Moved SB 225 Out of Committee
          SB 225-ESTABLISH ENDOW ALASKA GRANT PROGRAM                                                                       
                                                                                                                                
3:42:31 PM                                                                                                                    
CHAIR OLSON  announced the consideration  of SB 225 and  noted it                                                               
was heard once before.                                                                                                          
                                                                                                                                
3:43:00 PM                                                                                                                    
SENATOR WAGONER joined the meeting.                                                                                             
                                                                                                                                
3:43:07 PM                                                                                                                    
SYDNEY  SEAY, Staff,  Senator  Olson, said  SB  225 [creates  the                                                               
endow Alaska Grant program, which  would establish a mechanism to                                                               
allow local  community foundations to leverage  private donations                                                               
from  within a  community  by matching  donor contributions  with                                                               
state funds.] The  match applies to donations up  to $25,000. She                                                               
noted that  no one  had voiced  opposition to  the bill,  and the                                                               
companion bill was HB 290.                                                                                                      
                                                                                                                                
SENATOR   KOOKESH  asked   for  the   definition  of   "community                                                               
foundation."                                                                                                                    
                                                                                                                                
3:45:42 PM                                                                                                                    
ERIN  HARRINGTON, Staff,  Representative  Alan Austerman,  Alaska                                                               
State Legislature,  directed attention to the  definition section                                                               
on page 3 of the bill. She read the following definition:                                                                       
                                                                                                                                
     "community foundation"  means a  tax-exempt, nonprofit,                                                                    
     autonomous,    publicly     supported,    philanthropic                                                                    
     institution   in  the   state  composed   primarily  of                                                                    
     permanent  funds established  by  many separate  donors                                                                    
     for the  long-term diverse,  charitable benefit  of the                                                                    
     residents of a defined geographic area;                                                                                    
                                                                                                                                
She said  a defined geographic  area could be a  single community                                                               
or region. The  definition is for Internal  Revenue Service (IRS)                                                               
purposes;  it  was  crafted  to  ensure  it  describes  community                                                               
foundations working in Alaska.                                                                                                  
                                                                                                                                
CHAIR OLSON asked if a community  has to be incorporated in order                                                               
to qualify.                                                                                                                     
                                                                                                                                
MS. HERRINGTON answered no. The  community foundation is a stand-                                                               
alone entity that  is strictly defined in IRS code,  and can work                                                               
toward the  interests of any community  or region that it  is set                                                               
up to serve.                                                                                                                    
                                                                                                                                
3:47:13 PM                                                                                                                    
SENATOR KOOKESH asked if the definition  was in the IRS code or a                                                               
state license.                                                                                                                  
                                                                                                                                
MS. HERRINGTON said the bill  creates a definition for "community                                                               
foundation" in Sec. 44.33.190. She  deferred IRS questions to Ken                                                               
Castner, chair of the Homer Foundation.                                                                                         
                                                                                                                                
SENATOR  KOOKESH worried  that  any entity  could  call itself  a                                                               
nonprofit  community  organization.   He  suggested  establishing                                                               
parameters.                                                                                                                     
                                                                                                                                
MS. HERRINGTON assured  him that the IRS  strictly regulates what                                                               
entities can be a community foundation.                                                                                         
                                                                                                                                
SENATOR KOOKESH expressed satisfaction.                                                                                         
                                                                                                                                
CHAIR  OLSON  asked  a  representative  from  the  Department  of                                                               
Commerce,   Community  and   Economic   Development  (DCCED)   to                                                               
supplement the answer.                                                                                                          
                                                                                                                                
3:48:41 PM                                                                                                                    
SCOTT  RUBY,   Director,  Division  of  Community   and  Regional                                                               
Affairs,   Department  of   Commerce,   Community  and   Economic                                                               
Development (DCCED),  explained that  the foundation  would first                                                               
need to  be formed as  a nonprofit corporation within  the state;                                                               
then  it would  have to  meet the  requirements for  a foundation                                                               
under the IRS code for nonprofit corporations.                                                                                  
                                                                                                                                
SENATOR  MENARD asked  if  the community  foundation  acts as  an                                                               
affiliate or a pass-through.                                                                                                    
                                                                                                                                
MR. RUBY directed  attention to the definitions on page  3 of the                                                               
bill.  A  "community foundation"  is  a  stand-alone entity  that                                                               
would manage its own funding.  A "community foundation affiliate"                                                               
would rely on a parent foundation.                                                                                              
                                                                                                                                
SENATOR MENARD  commented that  philanthropy is  a noble  wave of                                                               
the future.  She asked  if a  501(c)3 nonprofit  operating within                                                               
the state could endow the Alaska grant fund.                                                                                    
                                                                                                                                
MR. RUBY  answered that is  correct. He clarified that  the DCCED                                                               
grant funds would  not go to a project; they  would go toward the                                                               
endowment  these  entities  would  hold. The  earnings  from  the                                                               
endowment could then be used for projects.                                                                                      
                                                                                                                                
SENATOR MENARD noted the $25,000 cap.                                                                                           
                                                                                                                                
MR. RUBY responded  that the maximum annual  matching grant would                                                               
be  $25,000;  that  amount  would  go  into  the  endowment.  The                                                               
intention is to stimulate  community foundations and philanthropy                                                               
within a community.                                                                                                             
                                                                                                                                
3:52:14 PM                                                                                                                    
KEN  CASTNER, Chair,  Board of  Trustees, Homer  Foundation, told                                                               
the committee that  the Homer Foundation was  established over 20                                                               
years ago  and was the  first community foundation in  the state.                                                               
He  noted that  the endowment  now contributes  about $200,000  a                                                               
year to  the various  nonprofits and  charitable purposes  in the                                                               
area.  The defined  geographic area  is Ninilchik  south and  the                                                               
small communities around  Kachemak Bay. He stated  support for SB
225 and relayed  that much of the board's work  is accounting and                                                               
money  management. He  emphasized that  the community  foundation                                                               
does not do projects; it funds the work of others.                                                                              
                                                                                                                                
CHAIR OLSON asked if the investments were risky.                                                                                
                                                                                                                                
MR.  CASTNER  answered that  the  board  is fairly  risk  averse.                                                               
Between  one-third and  one-half of  the funds  are in  cash, and                                                               
much of the rest is in  the equity market. The portfolio holdings                                                               
undergo monthly  review in a  public meeting. The process  to get                                                               
the  returns  is  transparent  and  completely  above  board,  he                                                               
stated.                                                                                                                         
                                                                                                                                
CHAIR OLSON found no further questions or discussion.                                                                           
                                                                                                                                
3:55:12 PM                                                                                                                    
SENATOR  MENARD  moved  to  report SB  225  from  committee  with                                                               
individual recommendations and attached fiscal note(s).                                                                         
                                                                                                                                
3:55:50 PM                                                                                                                    
CHAIR OLSON announced  that without objection, SB  225 moved from                                                               
the Senate Community and Regional Affairs Standing Committee.                                                                   

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