Newman’s Own Foundation Buoyed by Tax Bill’s Rescue Provision

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By Colleen Murphy

The president and CEO of Newman’s Own Foundation has lobbied for six years to save his foundation from a 200 percent tax, but didn’t know until Nov. 2 that the provision had been included in the House GOP tax bill.

“I’m really feeling tremendously grateful, actually. You never know until things actually happen,” Robert Forrester told Bloomberg Tax Nov. 3. Members in the House and Senate have viewed the change as relatively bipartisan and noncontroversial, he said.

Private foundations that own 100 percent of a business—as Newman’s Own Foundation does—must divest 80 percent of ownership within five years of acquisition or face the tax penalty, according to tax code Section 4943. Ownership of Newman’s Own Inc. was transferred to the foundation in 2008 after founder Paul Newman died.

The foundation would be hit with the 200 percent tax in 2018 unless it has divested, but would be spared if the House Ways and Means Committee bill provision—which would exempt private foundations from the penalty if they meet certain requirements—is enacted. Nonprofit advocates have previously said the change could broadly spur more innovation in the sector. The committee didn’t return a request for comment about the provision.

Forrester said he most recently met with Ways and Means Chairman Kevin Brady (R-Texas) in the spring. Newman’s Own Foundation spent more than $467,400 lobbying for the provision in 2017. It spent $654,732 in 2016, according to lobbying disclosures.

Rep. Erik Paulsen (R-Minn.) is among the Ways and Means members with whom Forrester has met. In a statement, he said he has worked to make sure foundations like Newman’s Own “can continue doing the good work they’ve done for many years.”

“An important part of fixing our broken tax code is making sure it no longer discourages or makes it harder to pursue charitable efforts,” he said.

Senate Following Suit?

Forrester has had Senate-side meetings, too, but there isn’t a guarantee the provision will be part of that chamber’s bill.

Sen. Orrin G. Hatch (R-Utah), chairman of the Finance Committee, first introduced a bill on the topic (S. 909) in April 2015. His office didn’t return a request for comment.

The Senate bill could come as early as the week of Nov. 6.

Forrester has also met with Sen. John Thune (R-S.D.), who has introduced notable charity-related bills previously—including S. 1343—which has been viewed as a key marker for how the Senate is thinking of the sector in tax reform. Thune’s office didn’t return a request for comment.

More Complexity

On the flip side, the provision “increases the complexity of tax exempt provisions and it’s not clear that there is a big benefit to that increase in complexity,” Philip Hackney, an associate law professor at Louisiana State University Law Center, said in an email. Hackney is a former senior technician reviewer in the IRS Exempt Organizations Division.

The excess business holdings provision is logical because individuals previously used charities to hold power over their company “while theoretically giving it up to charity,” he said.

“Maybe those concerns are not as great in this particular situation, but I wouldn’t be so sure,” Hackney said. “I would go with less complexity rather than more.”

To contact the reporter on this story: Colleen Murphy in Washington at

To contact the editor responsible for this story: Meg Shreve at

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