The Council on Foundations and the National Council of Nonprofits stand united in opposing H.R. 1, the Tax Cuts & Jobs Act, because of significant changes to proven tax policies that have served the American people well, most notably the following:
- Severely Cutting Back Charitable Giving: Although the bill nominally retains the existing itemized deduction for charitable donations, the change of nearly doubling the standard deduction would reduce charitable giving, taking more than $13 billion a year away from charitable work in local communities, according to research by the Lilly School of Philanthropy. That change would essentially restrict who would itemize deductions to only the wealthiest five percent of taxpayers, putting it out of reach for 95 percent of American taxpayers. To prevent the massive losses in donations and the resulting reduction of services in communities, Congress should enable all Americans to receive a tax incentive for giving back to their communities by making it universally available – a universal deduction. The House bill fails to include this common-sense solution to the problems it creates.
- Politicizing Charitable, Religious, and Philanthropic Organizations: The House legislation includes language that would radically change longstanding law that has protected charitable nonprofits, houses of worship, and foundations – currently trusted by the public as neutral problem-solvers focused on their missions – from partisan politics. The Johnson Amendment, signed into law by President Eisenhower, says that, in exchange for tax-exempt status and the ability to receive tax-deductible donations, 501(c)(3) organizations may not support or oppose candidates for public office or divert charitable assets from mission to engage in partisan campaigns. The House tax bill, at Section 5201, would significantly weaken the legal protection that all 501(c)(3) organizations have had against demands from candidates for public office and their political operatives. This provision is vehemently opposed by the broad nonprofit community – charitable, religious, and philanthropic –as well as state law enforcement officials.
Vikki Spruill, President and CEO of the Council on Foundations, stated: “Our two organizations fully embrace and support the goal of a simplified tax system that seeks to grow the economy and helps all Americans to prosper and succeed. Indeed, since our very beginnings, our member organizations in every state have been solely committed to improving the lives of families and communities.” She continued, “It is unconscionable for Congress to make it harder for charitable nonprofits and foundations to serve their communities, yet that is what would occur by changing tax policy to severely reduce charitable giving.“ Spruill added, “To ensure that foundations and nonprofits can continue to do as much or more work in communities, instead of a policy that restricts charitable giving incentives to only five percent of taxpayers, Congress should make the incentives open to encourage all Americans to support their local communities through a universal deduction.”
Tim Delaney, President and CEO of the National Council of Nonprofits, stated: “The proposal to weaken the Johnson Amendment would radically change a law that has worked well for more than 60 years. Charitable nonprofits, houses of worship, and foundations vehemently oppose this change, so what dark forces are hiding and getting Congress to do their bidding for political and financial advantage? We don’t want corrosive partisanship to make us as polarized and ineffective as partisan government today. The proposal to take this important protection away is an affront to organizations that are dedicated to improving our communities through nonpartisan engagement. Current law doesn’t cost anything, but the unwanted change would cost taxpayers billions of dollars, according to the Joint Committee on Taxation.”
Delaney explained that the National Council of Nonprofits also opposes the House bill because of the far-reaching suffering and increased inequities for the American people that would occur due to deep cuts in domestic spending as a result of the $1.5 trillion more that the House bill would add to the deficit: “Cutting taxes to the point of an additional $1.5 trillion shortfall simply doesn’t make sense when the needs in our communities are so great. The massive spending cuts at all levels of government, will impose enormous, but unrealistic pressures on charitable nonprofits and foundations to fill the growing gaps.”
Spruill and Delaney concluded, “We stand united in warning Congress that it cannot assume that charitable nonprofits and foundations can fill the voids created by this and other political decisions. For these and many additional reasons, we join together to take a necessary stand: The House needs to vote down this bill and start over. We hope the Senate will do better.”
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.
About the National Council of Nonprofits
The National Council of Nonprofits (www.councilofnonprofits.org) is a trusted resource and proven advocate for America’s charitable nonprofits. Connecting the policy dots across all levels and branches of governments, the Council of Nonprofits keeps nonprofits informed and empowered to create a positive public policy environment that best supports nonprofits in advancing their missions. Working with and through the nation’s largest network of nonprofits – with 25,000-plus organizational members - we identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.councilofnonprofits.org.