SB 43-CONTRIBUTIONS FROM PERM. FUND DIVIDENDS  9:58:10 AM CHAIR MCGUIRE announced the consideration of SB 43. SENATOR GENE THERRIAULT, Alaska State Legislature, said SB 43 will encourage Alaskans to give more to charity. The Rasmuson Foundation offered to underwrite the expense of operating the system by which Alaskans can donate a portion of their permanent fund dividend to qualified organizations. The foundation will cover the expenses for three years, and the fiscal note is the estimation of the cost of running the program. The ultimate goal is to increase private philanthropy in Alaska. Alaskans who earn $100,000 or more rank 49th or 50th in the nation in terms of giving. Alaskans with lower income give more than those with middle or high income. Senator Therriault believes that SB 43 will help encourage those Alaskans to give more by making contributing easier. There is a zero fiscal note, so for the first three years, 100 percent of the donations will go to the charities. The Rasmuson Foundation would be an agent to operate the program. Participating charities would need to meet the criteria set out in the bill. The donation would be noted on the electronic application for the dividend. There would be a drop down menu for who to give to and how much. The gift could be made to a general category or to a specific group. 10:02:26 AM SENATOR THERRIAULT said the process would be easy, and he listed the criteria for participating charities. The Rasmuson Foundation is very familiar with the organizations around the state. He said he worked with the Department of Administration to make sure the program would be easy to administer. The bill has been written to steer contributions toward youth and workforce development, the arts, elderly services, low income individuals, individuals in emergency situations, disabled and mentally ill individuals, and community foundations. Anchorage and Kenai have community foundations, which build up trusts from estate gifts to support community entities, he explained. 10:04:45 AM SENATOR THERRIAULT said organizations would have to prove they meet the criteria, including having a voluntary board of directors who are all Alaska citizens. At least five percent of their annual receipts must come from contributions, and if they have a total annual budget of more $250,000, an unqualified audit must be performed. The legislation sets up a trial program that will sunset in 2010, and if it is successful, the legislature can move or eliminate the sunset date. 10:06:49 AM SENATOR GREEN asked if an elementary school would qualify. SENATOR THERRIAULT said there has been debate about including every school and the complexity of that. HEATHER BRAKES, staff to Senator Therriault, said elementary schools would not be eligible. SENATOR FRENCH asked how Senator Therriault came up with the charitable programs that would be included. SENATOR THERRIAULT said he stayed away from any groups that are in politically-sensitive areas. "So we just tried to draw the line with organizations that we believe…have general support in the public; did not stray into the political arena; their function is readily understandable, identifiable; trying to steer clear of the groups that would potentially get the effort into trouble." 10:09:31 AM SENATOR STEVENS said the university has a foundation, and he asked how to give to a particular campus. He questioned whether smaller campuses are 501C3 organizations. SENATOR THERRIAULT said he is not sure, but any group could take steps to create an organization to fit the criteria. He suggested speaking with the university. 10:11:04 AM SENATOR GREEN asked about Rasmuson Foundation's involvement. SENATOR THERRIAULT said they have agreed to pick up the expense of operating the program, and it is outlined on the fiscal note, including software and reprogramming. After three years, the foundation will step out of the program, and it will become self supporting. A portion of the donations would then be used for the operating expenses. 10:12:18 AM SENATOR GREEN asked who would do that work if the Rasmuson Foundation didn't do it. SENATOR THERRIAULT said it could come out of the contributions themselves. The drafters wanted to make it clear that a portion of the giving will underwrite the administrative expense after the three years that Rasmuson covers it. SENATOR GREEN said she is nervous about the connection with the Rasmuson Foundation. "As it and the Denali Commission came into being years ago, at different times, it was sort of our assumption, certainly mine, that there would not be a connection between the state budget and what they did as foundations or as a commission. And that seems to be kind of diminishing, that clear line between it. And it kind of bothers me; and I understand the reason, but it kind of bothers me because, would they then be inclined, in the sunset year, to become a lobbyist for the program to the government?" She said there needs to be a clear line between foundations and the state budget. 10:14:42 AM SENATOR THERRIAULT said he doesn't fully understand the concern. The Rasmuson Foundation is just pledging money over the start-up years to get the program up and running. He said it is not money like the mental health trust that started a state program. There will never be any crossover between the state treasury and the money going to the charities, he explained. CHAIR MCGUIRE said she understands Senator Green, but Senator Therriault explained the distinction well. Seed money from a foundation that puts a program into place can create a constituency and a dependency. She said it reminds her of federal matching funds, "for only ten percent, you, too, get all of these things, but then once they're gone, we're left to pick up the tab." But this is different, because the foundation just pays the set-up costs, and general funds are not used. If the program continues, the contributors will pay for it. By 2010, the state can see if people are using it. She said she likes the bill and it amazes her "that sometimes you have to motivate humans in a direction." There is no law that keeps people from giving some of their dividend to charity, but this will create a reminder and encouragement. Senator Therriault has done a good job making sure money doesn't come out of state coffers. 10:17:55 AM SENATOR THERRIAULT said he understands that some programs need state funds, but this program doesn't. If contributions are not enough to pay for it, it will sunset. 10:18:49 AM SENATOR THERRIAULT said the next year's dividend may be $1,500.00, and he hopes Alaskans will feel generous because the money "just accrues to them for drawing breath in the State of Alaska for a 12-month period." SENATOR FRENCH noted that the first few years his full donation will go to the charity, and he asked what percentage will go to administrative overhead after that. Alaskans could believe that they are giving the full amount, he said. SENATOR THERRIAULT said the major expense is the upfront programming, and then it drops down to $91,000. So the individual Alaskan can decide to check a box or write a check. 10:21:37 AM CHAIR MCGUIRE said there are always overhead costs, and citizens should know how much of their donation goes to the charity. SENATOR FRENCH said there will be an additional layer of overhead, and it is somewhat masked by the foundation's participation in the first couple of years. It may turn out to be negligible if a lot of people participate. SENATOR THERRIAULT said that when he writes a check to a charity, part of the money goes to the mailing expense. He noted that people can find out what charities have low overhead. 10:23:21 AM SENATOR GREEN asked how to declare the dividend income and if a person's tax liability goes down. SENATOR THERRIAULT said the income would be the same but then there would be the charitable deduction. MICHELLE BROWN, United Way of Anchorage, said she supports SB 43. Alaskans have a wonderful tradition of being good neighbors, but that tradition needs to grow into a tradition of giving dollars, which is a great way to invest money back into communities. Government cannot do everything, she said. Much of Alaska's quality of life comes from nonprofits and volunteers. Many organizations care for kids and connect people with healthcare. They ensure that people are housed and fed, so they can pay attention to education and work. Many issues that seem to be personal, like domestic violence, really have enormous financial and societal implications. She said SB 43 is a way for people to invest in the quality of their communities, and it is very cost effective because nonprofits are efficient. Nonprofits employ about one in ten employed Alaskans with a payroll of over $1.1 billion, so they help Alaska's economy. She said the United Way of Anchorage will help implement the legislation and has a long history of managing donor-designated fundraising. She stated that the United Way would implement the legislation as it is written, and it could be up and running very quickly. 10:27:31 AM SAMMYE POKRYFKI, Program Officer, Rasmuson Foundation, said SB 43 provides an easy way to make charitable donations to favorite nonprofits. The Rasmuson Foundation is a private family foundation funding nonprofits in every corner of the state. She said it has offered to pay for all startup costs because Alaska has more nonprofits per capita than any other state-one for every 110 Alaskans. The nonprofits are famous for doing more with less. Alaska depends on them to provide essential services, but the demand on those services far outstrips the funding available. The legislature and other major funders have indicated that nonprofits must become more sustainable. One way to do that is to augment public funding with donated charitable dollars, she stated. Supporting nonprofits makes a lot of sense socially and economically. In 2006, a study found that the nonprofit sector was a major part of Alaska's economy. There are 19 public charities among the 100 largest private employers in Alaska. They make significant expenditures in the state. Alaska nonprofits are overly dependent on federal dollars, at almost $1 billion last year alone. A big part of becoming more sustainable is increasing the amount of individual charitable giving, and SB 43 will help do that for an even bigger economic impact. 10:30:50 AM CHAIR MCGUIRE said she likes the bill and hopes to move it out on Thursday. She requested an amendment that would limit the overhead or disclose it after the Rasmuson Foundation departs. She said she would like to hear from the Alaska Permanent Fund, and it is a great bill. SB 43 was held over.