In the week leading up to April 15, commonly referred to as Tax Day, approached, the Alliance for Charitable Reform issued a series of articles examining the topics impacting the charitable sector as a result of the passage of the Tax Cuts and Jobs Act. This is the final article in that series, which discusses current legislative proposals at the federal and state level, and the need for the sector to continue to look ahead. Click here to read part 1. Click here to read part 2. Click here to read part 3. Click here to read part 4.
Many lawmakers are recognizing the alarming decline in the number of Americans giving to charity – a trend that dates back to 2006. That may be one of many reasons why legislation has been introduced in recent years aiming to right the course, and we have already seen two pieces of legislation in the 116th Congress that address the need to implement tax incentives to encourage charitable giving. The first came in January when Reps. Henry Cuellar (D-TX) and Chris Smith (R-NJ) introduced the Charitable Giving Tax Deduction Act (H.R. 651), which would expand the charitable deduction to all taxpayers.
In February, Rep. Danny Davis (D-IL) introduced a nearly identical bill (H.R. 1260) that would create a universal charitable deduction to allow all taxpayers, regardless of whether they itemize their deductions, to deduct their charitable donations. Rep. Davis is a longtime member of the House Ways and Means Committee – which has sole jurisdiction over charitable issues – and is well-positioned to lead this effort. He has also led other pieces of charitable legislation before, such as the effort to streamline the private foundation excise tax.
The tax treatment of charitable giving isn’t an issue at only the federal level – individual states wrestle with these provisions as well. The Arizona House Ways and Means Committee approved a bill in February that would allow Arizona residents to claim a charitable deduction even if they also opted for a standard deduction. In Montana, a charitable giving tax credit that has generated more than $145 million in charitable services to the state is set to expire unless action is taken by the state legislature. Nonprofit leaders in the state are urging state legislators to renew the credit.
Many of these legislative actions occurred because members of the charitable sector engaged with elected officials. Unfortunately, many Americans may not know how simple it is to reach lawmakers and make them aware of the issues our sector faces. That is why ACR unveiled its Roadmap for Action last month, which makes interacting with lawmakers even easier by providing a step-by-step guide. Simple actions like writing a letter to the editor of your local newspaper or joining a member of Congress’ tele-townhall phone call have real impact. With over 100 freshman lawmakers sworn in this session, new opportunities are available for the charitable sector to educate policymakers and, hopefully, gain some new champions for our causes. The sector needs to take advantage of this opportunity.
The full implementation of the Tax Cuts and Jobs Act is behind us, and while the sector continues to navigate this ever-shifting context, the past cannot be its primary focus. The sector needs to look ahead. A robust civil society is the backbone of this country because it is emblematic of the ideals we cherish as Americans. Charitable sector leaders need to keep looking forward and advocating for effective policy that buttresses private charitable giving for all Americans to allow civil society to flourish. When civil society is strong, the nation is strong.