13 November 2017

Universal Charitable Deduction, CHARITY Act Offered as Amendments to Senate Tax Reform Bill

WASHINGTON, D.C.— Two amendments aimed at protecting and expanding charitable giving will be considered by the Senate Finance Committee this week during the markup of the Senate tax reform bill, the Tax Cuts and Jobs Act. The first is an amendment from Sens. Debbie Stabenow (D-MI) and Ron Wyden (D-OR) that seeks to prevent almost 95 percent of Americans from being denied any tax benefits for giving to charity by expanding the charitable deduction to all Americans.

“Expanding the charitable deduction to non-itemizers will protect against the unintended consequences that will fall on charitable organizations from an increased standard deduction. A universal charitable deduction will not only unlock additional charitable giving, it recognizes the principle that all charitable gifts are analogous, regardless of whether they were given by a large or small donor. It rightly commends the effectiveness of the charitable deduction in encouraging taxpayers to support their communities and strengthen civil society. We thank Senators Stabenow and Wyden for offering the amendment and urge all Finance Committee members to support it,” said Adam Meyerson, president of The Philanthropy Roundtable.

Similar to the tax reform bill offered in the House, the Senate version nearly doubles the standard deduction, greatly reducing the number of individuals who will itemize to about 5 percent of Americans. Analysis from the Joint Committee on Taxation confirmed last week that this would cause charitable deductions to fall by 40 percent, or $95 billion. Increasing the standard deduction would reduce giving by as much as $13 billion. The Stabenow/Wyden amendment would allow taxpayers who do not itemize their deductions to take an above-the-line deduction for charitable contributions, with some limitations.

The second amendment, offered by Sens. John Thune (R-SD) and Pat Roberts (R-KS), is the Charities Helping Americans Regularly Throughout the Year, or CHARITY, Act, which they introduced in the Senate in June. The amendment includes three provisions strongly supported by ACR: a flat one-percent private foundation (PF) excise tax, an expansion of the IRA rollover to include distributions to donor-advised funds (DAFs), and a sense of the Senate urging Congress not to diminish the full scope and value of the charitable deduction in tax reform.

“This amendment includes provisions with strong bipartisan support that will increase charitable giving. Expanding the current IRA charitable rollover to include transfers to DAFs will allow local charities to benefit significantly and streamlining the private foundation excise tax will allow private foundations to focus their resources on their grantmaking. We also thank Senators Thune and Roberts for offering this amendment and encourage its inclusion in tax reform,” Meyerson said.

The current private foundation excise tax is a two-tiered system that discourages private foundations from greatly increasing their grants – such as for disaster relief – while the current IRA charitable rollover excludes transfers to DAFs. Legislation streamlining the PF excise tax has been passed on a bipartisan basis by the House before, in 2014 and 2015 as part of the America Gives More Act.

The Senate Finance Committee is expected to complete the amendment process this week followed by a vote on whether the bill should be considered by the full Senate.