Editor’s Note: We’ve updated our newsletter schedule to track with the end of congressional sessions to highlight the most important developments here in Washington. The timing will vary, based on the congressional calendar, but you can expect a newsletter from us about once a month. In the meantime, we’ll be sharing significant developments through our email News Alerts and in real time on our Twitter feed (@ACReform) through our #HillScoop and #SectorScoop updates.
>> Federal: Blog Series on Tax Reform Impacts
>> Federal: What We Learned from Congresswoman Judy Chu
>> Federal: DAF Legislation in California
>> Federal: Ways and Means Members Point to Charitable Sector in Tax Hearing
>> Other News You Can Use: Taxpayers First Act
>>Federal: Roadmap for Action
>>Consider This: Notre Dame Cathedral
>> Top Reads: Could charitable giving become a tax law casualty?
In advance of April 15, commonly referred to as Tax Day, the Alliance for Charitable Reform published a series of entries on our blog examining the topics impacting the charitable sector as a result of the passage of the Tax Cuts and Jobs Act.
Check out the five-part series here:
Last week, ACR staff and local nonprofit leaders met with Rep. Judy Chu (D-CA) in her Pasadena office where attendees discussed alarming trends in charitable giving and how lawmakers can tackle them. Rep. Chu is a member of the Ways and Means Committee, which has sole jurisdiction in the House over the charitable sector. Chu helped found the nonprofit Asian Youth Project in 1989 and is an active participant in the local charitable sector.
During the meeting, Rep. Chu heard from leaders about fundraising struggles they’re facing as their donors still remain uncertain of when and how much they should give, as well as how grantmaking organizations are having to make tough choices about where to make grants given greater demand from the public charities.
Given her deep knowledge of the nonprofit sector, the Congresswoman understood the concerns of local nonprofits and committed to finding out what the Ways and Means Committee has planned to address them. She also shared that the repeal of the unrelated business income tax (UBIT) on transportation and parking fringe benefits is a high priority for the committee.
It’s no secret that our sector is concerned about charitable giving trends post-tax reform, but what’s perhaps more concerning is the steady decline in Americans giving to charity over the past 13 years. We’re hopeful Rep. Chu will champion solutions in Congress that can reverse the concerning trends and expand charitable giving in America.
For an overview of the meeting and more information on the charitable giving trends we discussed, head to our blog.
Last month, California State Assemblywoman Buffy Wicks introduced donor-advised fund legislation. The bill was originally scheduled to be considered at a hearing this week, however, last week the chair of the Assembly Judiciary Committee pulled the bill from the hearing, which means it will not be considered until January 2020 at the earliest.
The legislation, AB 1712, is being promoted by the state nonprofit association as well as the activist group NextGen California. The intent appears to be to increase transparency within donor-advised funds and possibly set the stage for a minimum payout level for individual funds in future legislation. As currently drafted, the bill also gives substantial liberty to the Attorney General to determine what information should be disclosed, which raises substantial concerns about donor privacy.
ACR coordinated with Southern California Grantmakers and Philanthropy California to submit comments in opposition of the legislation, as well as connect them to more than 15 national stakeholders. It was shortly after our opposition letters were submitted that the bill was pulled from consideration last week. You can find ACR’s comments here.
Our Take: The broad authority the bill gives the AG is cause for concern, and the many California-based philanthropists and organizations we are working with share our concerns. The groups working with us have shared these concerns with Assemblywoman Wicks and she seems amenable to amending the bill to at least partially address the donor privacy issue, but a lot of work needs to be done to ensure the language adequately addresses our concerns. Now that it is a two-year bill, we have more time to prepare for its consideration.
On March 27, the House Ways and Means Committee held a hearing entitled “The 2017 Tax Law and Who It Left Behind.” While charitable issues were not expected to be the main focus of the hearing, charitable giving was mentioned on several occasions, by both witnesses and committee members. The two topline concerns were a decline in charitable giving and the unrelated business income tax (UBIT) on parking and transportation.
Our Take: The number of times these issues were brought up certainly confirms lawmakers are concerned about the 2017 tax bill’s impact on nonprofits, which we expect the Committee to further examine in a hearing more specific to our sector later this year.
To read more about the hearing and what was discussed, check out our recap here.
On April 9, the Taxpayers First Act, (H.R. 1957), which would overhaul IRS operations, came to the House floor and passed on a voice vote. The legislation is now in the Senate and we expect lawmakers, who are in recess until April 29, to take this up when they return to Washington. It is important to note the legislation includes a provision that would require tax-exempt organizations to file Form 990 electronically.
This bill was included in a House Ways and Means Committee markup on April 2. In addition to the IRS legislation, the committees considered two other tax bills: the SECURE Act (H.R. 1994), intended to spur retirement savings, and the BRIDGE for workers Act (H.R. 1759), which would extend reemployment services and eligibility for unemployment compensation.
Our Take: While there is always a possibility other tax provisions could be tacked on to the IRS legislation, we heard from Chairman Grassley that when the Senate takes up this legislation that the upper body is unlikely to do so. From a comity perspective, by passing all three bills with bipartisan support, the House Ways and Means Committee has proven there still remain issues that members of Congress can work together on in a bipartisan fashion.
As you may recall, ACR has a new Roadmap for Action for the 116th Congress, which offers a 12-month plan to engage with lawmakers and influencers in your community and in Washington.
April’s action item is to write a letter to the editor of a local paper about charitable giving and how you are engaging in your community and with lawmakers. As May approaches, also consider requesting an in-district meeting with your local Congressman to discuss issues affecting the charitable sector. You can find all the resources you need here.
Recent conversations around charitable giving, whether it be donor-advised funds in California or pledges to rebuild the Notre Dame Cathedral in Paris, have centered on big philanthropy and just how far philanthropic freedom should extend.
We’ve read critiques that the wealthy have too much control of philanthropy, and that if they’re going to be giving away tax-free money, the public ought to know where it’s going. We’ve also heard the suggestion that wealthy philanthropists should relinquish control of their money and let others decide where it should go.
This all raises concerns around donor privacy, philanthropic freedom and donor intent, all of which we’ve written at length about on our blog and colleagues have written about at The Philanthropy Roundtable.
We’re not here to comment on tax policy in other countries; however, this conversation is an opportunity to focus on the glaring problem: less and less Americans are giving to charity, which is therefore concentrating philanthropy among fewer and fewer donors.
The bigger problem isn’t that wealthy philanthropists continue to give their money away, with no benefit in return, but it’s that Americans are more often choosing not to contribute to civil society than they once did.
A legislative solution? Allow all donors, regardless of income or itemizer status, to deduct charitable gifts from their taxes. Changing this fading culture of giving is going to take more than a tax deduction, sure, but it’s a good start and could even help democratize philanthropy.
- National – Could charitable giving become a tax law casualty?
- National – New Tax Could Hit Many Nonprofits Paying $1 Million-Plus Employees
- National – Senate Leaders Tell IRS to Investigate Charitable Gifts in College-Admissions Scandal
- National – Tax Reform Has Made Donor-Advised Funds Far More Popular
- National – Fresh Research Podcast: Episode 14: Donor-Advised Fund Grants During Recessions
- National – Give To Charity Without Giving Up Your Tax Deduction
- National – The True Story of Nonprofits and Taxes
- Local – Donations to Colorado charities fell flat last year and some are blaming Trump’s tax law
- Local – Some local nonprofits are seeing fewer donations in wake of federal tax law changes
- Local – Changes to deductions from Tax Cuts and Jobs Act may lead to reduced charitable giving
- Local – Congressman Smith Bill Seeks to Give Taxpayers More Flexibility to Donate to Charity
- Opinion – Charities Should Urge Congress to Force the Rich to Pay Their Fair Share in Taxes
- Opinion – Tax law changes affect charitable giving
- ACR Blog – The Cap on the SALT Deduction: The Charitable Sector’s Unexpected Fight After Tax Reform
- ACR Blog – Millions Decline to Itemize: What It Means for Giving
- ACR Blog – Surprise a Common Denominator for Many Tax Filers
- ACR Blog – Warning Signs Accompany Preliminary Data on Charitable Giving After Tax Reform
- ACR Blog – Looking Ahead: Legislation in the Works
- ACR Blog – The Philanthropy Roundtable Defends Donor Privacy in Maine
- ACR Blog – ACR Convenes California Nonprofit Leaders to Meet with Rep. Judy Chu (D-CA)
- ACR Blog – Donations to Restore Notre Dame Spark Backlash
Please feel free to email us at email@example.com if you have any questions, stories or topics you would like us to include in our newsletter.
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