CS FOR HOUSE BILL NO. 75(FIN) "An Act amending certain audit requirements for entities receiving contributions from permanent fund dividends; requiring the three main campuses of the University of Alaska to apply to be included on the contribution list for contributions from permanent fund dividends; and requiring the university to pay an application fee for each campus separately listed on the contribution list for contributions from permanent fund dividends." 1:34:19 PM HEATHER BEGGS, STAFF, REPRESENTATIVE PAUL SEATON, offered a sponsor statement for HB 75: HB 75 allows greater participation in the Pick.Click.Give program by small non-profits that meet all of the eligibility requirements for the program, but do not participate due to the cost prohibitive audit requirement. The creation of the popular Pick.Click.Give program by the 25th Alaska State Legislature gave Alaskans a simple and convenient option to donate to charities and non-profits of their choice. These organizations, which provide important services to our communities, rely on donations to function. One criterion that must be met by organizations wishing to participate often stops smaller Alaskan charities and non-profits from applying. This is the required financial audit for organizations with a total budget of $250,000 or greater. The cost of the required financial audit for smaller groups is much greater than the donations received by these groups through the Pick.Click.Give program, which makes participation in the program impractical. Not only does this mean that these smaller groups will not receive donations through the program, some groups have found that exclusion from the program gives their supporters the mistaken impression that they are no longer certified non-profits. This bill eases the financial burden on these organizations and allows Alaskans a more complete choice of organizations by eliminating the financial audit requirement for organizations that do not file a federal audit. This does not remove financial accountability. All Pick.Click.Give donation recipients must be 501(c)(3) tax-exempt organizations, which are required to file the form 990 annually with the IRS. The IRS form 990 was overhauled in 2008, is a public record and accessible online to donors. The annual filing now requires disclosure of not only detailed financial information, but governance practices, policies, program services, and other compliance measures. This rigorous test of accountability is already required and provides a complete picture of finance and management of a nonprofit. Additionally, an audit is required of organizations that expend $500,000 or more in federal awards. These organizations will be required to submit a copy of this audit to the state. Entities that expend less than $500,000 in federal funds still must still make their records available for review by the federal government. This bill further requires each campus of University of Alaska to pay the $250 application fee to participate in the program, just as all other eligible organizations do. The Pick.Click.Give program encourages Alaskans to give back to their community by bringing the many worthy state programs right to their doorstep. Smaller non-profits nourish Alaskan communities on a personal level, open pathways for budding artistic talents and provide educational opportunities that fit just right with community needs. These organizations deserve the chance to connect through Pick.Click.Give to the Alaskans they serve. Ms. Beggs furthered that the bill would add a 7 percent coordination fee, which would begin in 2015, and be used for statewide marketing and outreach. The fee would be withheld from the annual payment to an organization, and be based on the contributions received through the program. She said that the Rasmuson Foundation had initially promised to fund the statewide outreach and marketing, but only for the first 3 years of the program, which made a plan for sustainability necessary. She said that non- profits that had been surveyed had expressed the desire for the marketing and outreach to continue and the percentage fee had decidedly been the best solution to keeping the program sustainable. She shared that there was a committee substitute that had been drafted that would correct the non-conforming sections of statute that the drafter had discovered. She said that the lasted version of the bill solved a number of oversights in the original legislation; The University did not object to paying the application fee, and a plan was being made for long-term sustainability. 1:39:47 PM Vice-Chair Fairclough noted that there had been a drafting error in the latest version of the bill and that there would be a corrected CS before the committee at a later date. 1:40:08 PM DAN DEBARTOLO, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION, DEPARTMENT OF REVENUE, testified that the legislation would not make any fiscal changes to the operation of the division. He said that the division supported the current version of the bill. He relayed that once pledges were made to the program the 7 percent would be taken out of the distribution amount in October through December. He explained that the money would be held in a separate account and reported to the legislature as was required to appropriate into the next year's budget. He related that the division operated the program on the $250 fee and would not be using donated monies to operate the program. 1:43:01 PM CHRIS CHRISTENSEN III, ASSOCIATE VICE PRESIDENT FOR STATE RELATIONS, UNIVERSITY OF ALASKA, testified that the University had no issues with paying the application fee. He noted that since the inception of the program the donated amount had risen from $7,000 to $28,000. He shared that for the last 2 years Exxon Mobile had matched all raised funds. Vice-Chair Fairclough related that one of the issues pointed out by the non-profit community was that the University could list all of its campuses in the program and non-profits were restricted to one individual, specific program. She noted that this gave the University the advantage of a higher rate of visual recognition by donors. She thought the issue should be considered by the committee. Mr. Christensen stated that he did not expect all of the University campuses to be listed. He said that approximately a half dozen of the campuses would not raise as much money as the cost of the application fee. He related that most people that gave to the University did not was to give a check directly to the University, but rather focus the donation on a specific campus or program. He said that there had been proposals that University programs be allowed to be listed, not just campuses however; that could overburden the list of choices for donors. He believed that there were 100's of charities on the list, a dozen of which were related to the University. Vice-Chair Fairclough OPENED public testimony. There being none Vice-Chair Fairclough CLOSED public testimony. 1:46:49 PM Vice-Chair Fairclough directed the committee's attention to the fiscal notes attached to the bill. HB 75 was HEARD and HELD in committee for further consideration.