Council on Foundations Statement on House Tax Reform Legislation

Thursday, November 2, 2017
Arlington, VA

Today, the Council on Foundations released the following statement from President and CEO Vikki Spruill:

“For nearly 70 years, the Council on Foundations has worked to inspire and expand a culture of charitable giving and enhance philanthropy’s ability to contribute to vibrant, healthy and thriving communities across the globe. Today’s legislation introduced in the House of Representatives fails to enhance those efforts in a number of significant ways.

While its sponsors will tell you that they have “protected” the charitable deduction, they have done so in only the narrowest sense. The overall impact of this bill will be to reduce charitable giving by billions of dollars, increase the taxes of millions of working class Americans who no longer benefit from the deduction, and weaken the ability of charities across our nation to improve their communities. By doubling the standard deduction and thus reducing by approximately 25 million the number of Americans who will itemize on their taxes, this bill removes the incentive of the charitable deduction for many taxpayers. This will result in billions of dollars less in charitable giving, which means billions less going to meet growing community needs. Additionally, the legislation doubles the estate tax limit and then (over the next six years) repeals it entirely. Even with that timed phase down, repealing the estate tax also eliminates incentives to give to charity. We are disappointed that, although there were numerous options under consideration, the bill’s authors failed to include any version of the Universal Deduction that we believe would have helped to offset these blows to charitable giving.

The bill does include a simplification of the private foundation excise tax to a flat 1.4%. While we do not believe that this is the ideal level, it is a step in the right direction. Additionally, AGI limits for cash contributions to public charities and certain private foundations would be increased from the current 50% to 60%. The new reporting requirements for organizations sponsoring Donor Advised Funds, while not overly onerous, were not paired with a provision that would allow the rollover of IRA’s to DAFs, and thus missing an opportunity to help protect or increase charitable giving.

Finally, the authors of the bill have included provisions to weaken the Johnson Amendment, which for 60 years has kept electoral politics out of the charitable sector. This misguided provision opens the door to politicking and political machinations taking over the work of organizations devoted to the common good.

The Council will continue to analyze the bill and work with House and Senate leaders on legislation that empowers our nation’s decades-long tradition of charitable giving. The Council also looks forward to galvanizing our members, who live in every congressional district, to work with their elected representatives to improve this legislation. For years, philanthropy has worked hand in hand with citizens to play a critical role in improving our communities. We hope to see legislation that enables this rich tradition.”

###

About the Council on Foundations

An active philanthropic network, the Council on Foundations (www.cof.org), founded in 1949, is a nonprofit leadership association of grantmaking foundations and corporations. It provides the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance and sustain their ability to advance the common good. With members from all foundation types and sizes, the Council empowers professionals in philanthropy to meet today’s toughest challenges and advances a culture of charitable giving in the U.S. and globally.