Extender Negotiations Coming Down to the Wire
Make Your Voice Heard!
Despite efforts to pass a “tax extenders” package with a federal spending bill by today’s deadline, negotiations between Congressional Democrats and Republicans reached a stalemate—forcing the passage of another continuing resolution to buy more time for reaching a deal that can pass Congress and will be approved by the White House by next Friday when Congress adjourns for the year
It is critical that we make our voices heard now! Take just 5 Minutes for Philanthropy to make sure your lawmakers hear from you as these negotiations come down to the wire!
Don’t miss our next day to engage! Join us in taking the final 5 minutes of this initiative on Tuesday, December 15th to connect with your lawmakers via Facebook. Click here to mark your calendars now!
Urge Congress to demonstrate support for philanthropy by making these charitable extenders permanent, and by including additional provisions that would expand the IRA charitable rollover to allow gifts to donor advised funds and simplify the private foundation excise tax in an end-of-year "extender" package.
Thanks to all of our members who have already reached out to your lawmakers the past few weeks—your efforts are critical!
CRS Releases New Report on Endowments
As our readers will recall, the House Ways and Means Oversight Subcommittee held a hearing back in October to examine the tax-exempt status of colleges and universities and to probe whether institutions' endowments might provide an antidote to rising costs of tuition.
One outcome of that hearing is a newly released report by the Congressional Research Service (CRS) called College and University Endowments: Overview and Tax Policy Options. The report considers four possible policy options for addressing the perceived issues pertaining to endowments:
- An annual percentage payout, similar to private foundations;
- A tax on university endowment earnings;
- Limitations on the charitable deduction for individuals who donate to university endowment funds; and
- Changing the tax treatment of debt-financed investments in strategies sometimes used by university endowments.
These four options reflect a concerning and growing trend that the Council has been following closely and keeping our members apprised of: the skepticism of endowed philanthropy. Neither new, nor limited in scope to university endowments, this skepticism is manifesting into actual policy proposals—as further evidenced by this report.
Comments for IRS Gift Substantiation Proposal Due Soon
As our readers are quite familiar with, the IRS has proposed a new rule on an alternative way for charitable organizations to acknowledge charitable gifts. In lieu of a contemporaneous written acknowledgment, the rule would allow charities to file an information return by February 28theach year that includes taxpayer identification information for donors who contribute $250 or more, and provide a copy of the return to these donors.
The Council will submit comments on behalf of our members, and will share these comments in next week’s edition of Snapshot. Comments are due by December 16th. Additionally, our colleagues at Independent Sector and the National Council of Nonprofits are circulating a sign on letter in opposition to this proposal.
Also recently, a letter signed by 17 Members of Congress was sent to Chairman Hal Rogers (R-KY-5) and Ranking Member Nita Lowey (D-NY-17) of the House Appropriations Committee, requesting that “rider” language be included in the end-of-year spending bill that Congress will put out by December 16th, to prohibit IRS funds from being used to “promulgate, finalize, or implement any rule that would permit or require 501(c)(3) nonprofit organizations to collect the Social Security numbers (SSNs) of donors.”
Exclusive from our colleagues at the National Council of Nonprofits.
New Jersey Tax Challenge Heard 'Round the Country
One judge’s decision—some call it precedent setting, many others say it’s an abomination—is giving hope to cash-hungry municipalities across the country that they can soon take nonprofit resources through new taxes, fees, or payments in lieu of taxes (PILOTs).
In June, a New Jersey tax court judge struck down the property tax exemption of a nonprofit hospital, asserting that the charitable nature of 21st Century nonprofit hospitals is a legal fiction and recognizing no distinction from taxable for-profit hospitals. The judge stated that if all hospitals in their current form are structured like the one at issue in the case then none are justified in receiving property tax exemption under New Jersey law, and it’s up to the Legislature to enact statutory changes that would alter this framework.
The hospital settled the case for $15 million instead of appealing and municipal officials in Newark, and elsewhere in the state reportedly are exploring challenges to the tax exemptions or seeking payments from the hospitals within their borders.
This week, a bill was introduced in the Legislature that would reaffirm the property tax exemption for modern hospitals while simultaneously creating a mandatory payment framework for hospitals to make payments to the host municipalities – essentially a statutory PILOT. The legislation would require any owner of a nonprofit “acute care hospital” to pay a “community service contribution” in the amount of $2.50/day for each licensed bed (approx. $900/year per bed), or $750/day for each licensed satellite emergency care facility of such hospital. Policymakers reportedly are planning quick action on the bill.
The pattern in New Jersey is similar to the one followed in Illinois in 2012, where a court decision striking down a hospital property tax exemption led to changes to the law. But rather then impose new taxes on hospitals and payments to cities, the statute clarified and quantified the kinds of community benefit a nonprofit hospital must contribute to earn its tax exemption. The payment schedule that the New Jersey Legislature is considering is akin to the much-maligned Boston PILOT scheme through which city officials seek to secure a fixed amount of payments from tax-exempt hospitals and other types of nonprofits.
Oregon Op-Ed Explains Why Charitable Giving Incentives are Important
In an op-ed published yesterday evening, philanthropic and nonprofit leaders in Oregon, including Susannah Morgan of the Oregon Food Bank, Jim White of the Nonprofit Association of Oregon, Jeff Clarke of Philanthropy Northwest, and Kelley Beamer of the Coalition of Oregon Land Trusts, advocated for charitable giving incentives.
The op-ed outlines the importance of enhanced deductions for contributions of food and conservation easements, and the IRA charitable rollover to Oregonians. They note that “Sen. Wyden [D-OR] is a longtime champion of a strong nonprofit sector and is taking a leadership role on this issue in Congress. However, until Congress renews and makes permanent these tax provisions, charitable donations from farmers, ranchers, small business owners and retirees will be slowed.”
To learn more about ways to get in touch with Congress, visit the Council’s website.