Washington Snapshot - October 20, 2016

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Dynamic Scoring Released for Clinton, Trump Tax Plans

This week, the Tax Policy Center released updated analyses of the Hillary Clinton and Donald Trump plans—factoring in new dynamic scoring calculations that account for the macroeconomic effects of both plans.

According to the analysis, Secretary Clinton’s plan would increase federal revenue by $1.4 trillion over the next decade. Mr. Trump’s plan, on the other hand, is projected to cost the government $7.2 trillion in revenue over the next ten years.

With respect to the impact of each of these proposals on the philanthropic and charitable sectors, they differ. The Clinton proposal would:

  • Preserve the charitable deduction, and exclude it from the 28% cap on itemized deductions;
  • Keep the estate tax and increase rates for larger estates valued at more than $10 million;
  • Maintain current tax brackets, with the addition of a 30% minimum effective tax on income over $1 million and a 4% surcharge on income over $5 million.

The Trump plan, on the contrary, would:

  • Retain the charitable deduction but subject it to a $100,000 cap for itemized deductions;
  • Eliminate the estate tax; and
  • Create new tax brackets at 12%, 25%, and 33%.

The Council is an active member of the Charitable Giving Coalition—a group of organizations dedicated to preserving the charitable deduction—which sent letters to both campaigns urging them to protect the charitable deduction as a lifeline for charitable giving in communities across the country.

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Treasury Department Eases Restrictions on Grantmaking to Cuba

Late last week, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) announced several amendments to ease sanctions on Cuba, with the intent of creating more economic opportunity for Cubans and Americans.

Among these provisions are changes that will provide additional opportunity for charitable interactions with Cuba, including:

  1. Expanded opportunities to make grants, scholarships, and awards related to scientific research and religious opportunities to Cuba or Cuban nationals.
  2. Ability of U.S. persons or entities to provide services related to developing, repairing, maintaining, and enhancing certain Cuban infrastructure in order to directly benefit the Cuban people.

For more information, or if you have questions, please contact our legal team at legal@cof.org.

HUD Lifts Up Philanthropic, International Partnerships

The Department of Housing and Urban Development Office of International and Philanthropic Innovation (IPI) launched a monthly newsletter to highlight the latest innovations at the department and opportunities for philanthropic partners to engage. The inaugural issue highlights the UN Habitat III Convening taking place in Quito, Ecuador, this week, as well as a shared effort between HUD and the Department of Justice to address homelessness and recidivism through an $8.7 million pay-for-success initiative.

The newsletter also highlights the new Scaling Solutions guidebook to public-philanthropic partnerships. IPI has been deeply engaged in promoting these cross-sector collaborations, and HUD is one of more than twenty federal agencies and departments actively engaged in the Council’s Federal Liaisons program. Through this initiative the Council seeks to bring together federal policymakers and Council members to promote mutual relationship-building, information exchange, partnership development, and cross- sector learning. The projects detailed in Scaling Solutions demonstrate the tremendous work to-date that has enabled collaborations and the potential impact they could have.

HUD's Office for International and Philanthropic Innovation (IPI) creates and strengthens partnerships across borders and across sectors to build strong, sustainable, and inclusive communities. The office works closely with the philanthropic sector to maximize collaboration efforts between government and foundations. We encourage you to sign up to receive the IPI newsletter here. (Check the box "International and Philanthropic Innovation” on the bottom right and click “Subscribe”.)

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Exclusive from our colleagues at the National Council of Nonprofits.

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Princeton Settles Property Tax Challenge, Legislation Continues

Princeton University agreed to pay $18 million over the next seven years to settle a lawsuit brought by local residents challenging the tax-exempt status of the nonprofit university. Admitting no liability, the university agreed to make payments in lieu of taxes (PILOTs) to the local government for two years beyond its current agreement, pay $10 million into a fund designed to provide property-tax relief for lower-income homeowners, and contribute more than $1 million to a nonprofit dedicated to meeting the housing needs of poorer residents. In a news release, Princeton University’s president stated: “We had every confidence that the courts ultimately would have affirmed the University's continuing eligibility for property tax exemption on buildings and facilities that support its educational, research and service missions, but we concluded that the contributions we will make under the settlement agreement are a better expenditure of funds than continuing to incur the considerable costs of litigation.” See the analysis of the settlement by New Jersey’s Center for Non-Profits.

The litigation, brought not by public officials but private residents, generated legislation that is expected to be considered by the New Jersey General Assembly before the end of the year. The legislation prohibits a taxpayer from appealing an assessment or exemption that is granted to another taxpayer. The bill also prevents third-party challenges of financial agreements between tax-exempt organizations and local governments, such as negotiated fee arrangements or PILOT agreements. Testifying in support of the legislation, Linda Czipo of Center for Non-Profits expressed concern that the current law in the state puts a wide variety of nonprofits at risk of third-party challenges – not just large institutions like Princeton, but also “supportive housing organizations, homeless shelters, schools for people with developmental disabilities, shelters for victims of domestic violence, drug treatment centers, mental health facilities, or countless others that could be considered unpopular or controversial.”

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Proposed Changes from the Clinton Foundation

This week, the Clinton Foundation publically released a letter sent to hundreds of foundation leaders. The letter previews significant steps the foundation will need to take to pare down its programming should Secretary Clinton become president.

In a Chronicle of Philanthropy article covering the changes, Donna Shalala, head of the Clinton Foundation, reaffirmed that “There will still be a robust, dynamic Clinton Foundation…," but she acknowledged that a prospective Hillary Clinton administration would require the New York-headquartered organization to become an entirely different operation.”

The Clinton Foundation also unveiled a new communications campaign, called “Behind the Numbers” which expains individual's stories affected by the foundation's work. 

Nonprofits Need Representation

Earlier this month, professor Alan Abramson of George Mason University, wrote an op-ed encouraging the next President of the United States to create an office dedicated to working with nonprofits. He shares examples from recent years where the voice of nonprofits has been neglected as important decisions are made. His hope is for a small permanent office or to have several key staff members in the White House Domestic Policy Council (or a  similar body).

What’s the goal? According to Abramson, the goal of such an office would be to “create and carry out strategies for dealing with important nonprofit issues (such as regulations that fail to take into account nonprofit concerns) and to serve as an advocate for nonprofits, especially within government, where such a voice is missing."