06 April 2016

Senate Legislation Aims to Expand Charitable Giving, Urges Protection of Charitable Deduction

WASHINGTON, D.C.— Senator John Thune (R-SD) and Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced today S. 2750 – the Charities Helping Americans Regularly Throughout the Year Act, or CHARITY Act – which includes three provisions strongly supported by the Alliance for Charitable Reform (ACR): a flat one-percent private foundation 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 charitable deduction during comprehensive tax reform. These provisions, among others in the bill, will allow our nation’s 1.5 million charitable organizations to continue serving the tens of millions of those in need in our communities.

“Last year, the charitable sector helped to pass a permanent extension of the IRA charitable rollover. The bill introduced today builds on that victory,” said Sandra Swirski, executive director of ACR.

The current IRA charitable rollover excludes gifts to DAFs, placing local communities at a disadvantage by cutting off a potentially powerful source of funding for the charities that would ultimately benefit from DAF grant distributions. S. 2750 allows DAFs to be an eligible vehicle for the IRA charitable rollover, promoting philanthropic freedom and ultimately leading to an increase in the number of donations to local charities.

The CHARITY Act also includes a provision to streamline the private foundation excise tax from its current two-tiered form into a flat rate of one percent, an ACR priority for several years.

“Republicans and Democrats in the House of Representatives have come together to pass a flat one-percent private foundation excise tax in the America Gives More Act in both 2014 and 2015. This is a policy that has strong bipartisan support and allows private foundations to focus their resources on grantmaking,” said Joanne Florino, senior vice president for public policy at The Philanthropy Roundtable.

The bill also contains a non-binding sense of the Senate stating that “charitable giving should be a goal of tax reform; and Congress should ensure that the value and scope of the deduction for charitable contributions is not diminished during a comprehensive rewrite of the tax code.” Sens. Thune and Wyden offered similar sentiment to preserve the charitable deduction in a letter they co-authored in 2013, which was signed by 33 senators.

ACR and our colleagues in the sector will be seeking cosponsors for this bill on Capitol Hill next week as part of Foundations on the Hill. Foundations on the Hill kicks off on Tuesday, April 12, with the annual ACR Summit for Leaders.