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On Monday, the Senate Finance Committee released its portion of the “megabill” the chamber is set to consider this month – and unlike the bill the House passed last month, the proposal would keep private foundation excise tax rates where they are now while also establishing a permanent, universal charitable deduction.

The release of the language, which will be folded into the bill the Senate is planning to vote on next week, comes after weeks of advocacy from Philanthropy Southeast members and others across the charitable sector, who argued that the House-passed bill would take philanthropic resources out of communities – where they can be most effective – to generate federal revenue.

The draft legislation would preserve the flat, 1.39 percent tax on private foundations’ net investment income. It stands in contrast to the House bill, which would increase rates as high as 10 percent on the largest foundations.

The Senate proposal also includes a longtime priority for the sector: a permanent, universal charitable deduction available to all people filing a tax return, including those who do not itemize. In this case, single filers would be able to deduct up to $1,000 in charitable contributions, while joint filers could deduct up to $2,000.

The Senate language also proposes that those filing an itemized return must contribute at least 0.5 percent of their adjusted gross income to charity in order to seek a deduction. Filers who itemize but fall below this threshold would still benefit from the universal charitable deduction.

Philanthropy Southeast Members Headed to Washington, Will Urge Senate to Reject Increase in Private Foundation Excise Tax

Several Philanthropy Southeast members are set to head to Washington, D.C., next week to meet with Senate offices and call on senators to reject a proposed increase in the private foundation excise tax.

The Capitol Hill visits, coordinated in partnership with the Council on Foundations and supported by public policy consultants at Integer, are part of a full-court press by the sector to remove the tax increase on net investment income – as high as 10 percent on some foundations – from the reconciliation package the House passed last month.

Philanthropy Southeast member outreach will focus on the need to keep charitable resources in their home states, where they can be used to support community organizations and address pressing needs.

Along with calling for the removal of any tax increase on private foundations, members will also ask that the Senate bill include a strong, permanent universal charitable deduction – the House bill has a small deduction that would eventually expire.

Send a Message to Senators: Keep Philanthropic Resources Where They Belong – At Home

While some foundation leaders are going to Washington, phone calls and emails can also be an effective way to urge lawmakers to reject any increase in the private foundation excise tax.

The best time to reach out to your senators is right now – here are a few points to make when you call or write:

• The House reconciliation bill would reduce charitable giving to key nonprofit organizations in every state by millions of dollars each year.
• These dollars would normally go to nonprofit organizations to help them address critical needs, improve lives and enrich communities. Instead, under the House bill, they’d be sent to Washington.
• For nearly 60 years, Congress has recognized that private foundation assets should be protected. The private foundation excise tax started at 4 percent in 1969 and has only declined since then.
• The money from any tax increase would make up only a sliver of federal revenues but is much more critical to the work of foundations and the organizations they support.

When you contact lawmakers, tell them about specific programs that could be threatened if your foundation had to pay more in taxes – these stories are a powerful way to show the human impact of reducing philanthropic resources.

Visit the Senate website if you need to obtain contact information for your state’s senators.

Sector Calls on Senate to Remove Provisions from Tax Package Harmful to Nonprofits and Philanthropy

Following passage in the House last week of the “One Big Beautiful Bill Act,” organizations representing both nonprofits and philanthropy are calling on the Senate to remove provisions that would harm charitable giving.

“We are deeply concerned that – as currently constructed – the One Big Beautiful Bill Act will adversely affect nonprofit organizations across the nation that are working to improve lives and strengthen communities,” the letter reads. “The nonprofit sector must not be used as a revenue source to pay for other unrelated policies. As the tax package advances through Congress, we urge you to remove these harmful provisions, which undermine the work of nonprofits, and to instead bolster support for these vital institutions.”

The letter has already drawn the support of the Council on Foundations, Independent Sector, United Philanthropy Forum and National Council of Nonprofits. Specifically, it asks for the removal of these provisions from the House-passed bill:

• An excise tax increase on private foundations with more than $50 million in assets under management.
• Limitations on itemized deductions, including the charitable deduction.
• A 1 percent floor on the deduction of charitable contributions from corporations
• An increase and expansion of the Unrelated Business Income Tax (UBIT) to include fringe benefits, including transportation and parking benefits.

Your organization can view and sign the letter here. You can also share the letter with your nonprofit partners and encourage them to sign as well!

The letter is only one example of ways that philanthropy is defending itself – The Chronicle of Philanthropy has more on those efforts (subscription required).

Following a lengthy overnight session on the House floor, Republicans managed to pass a massive tax and spending package on Thursday morning by a single vote.

The bill contains several provisions affecting the charitable sector directly, including:

A massive increase in the private foundation excise tax: The bill would increase the private foundation excise tax on net investment income for foundations with assets under management above $50 million. Currently, all private foundations pay a simplified, flat rate of 1.39 percent. The rate would rise to 10 percent for the largest foundations. Here are the details:

The increase in the private foundation excise tax would deprive community nonprofits of resources, even as the support they receive via federal grants is on the decline and proposed cuts to safety net programs would but added strain on the sector.

Universal Charitable Deduction: The bill creates a universal charitable deduction available to all tax filers, regardless of whether they itemize their return. It would allow a $150 deduction for single filers and $300 for joint returns. While this is far smaller than the deduction proposed in the Charitable Act – which would allow a deduction up to one-third of the standard deduction – it does represent some progress on an issue important to the charitable sector.

Floor for Corporate Charitable Contributions: The bill would require that corporations contribute at least 1 percent of their taxable income to qualify for a charitable tax deduction. This proposal would reduce incentives for corporate giving. According to CECP, the median corporate grantmaker donates 0.92 percent of its pre-tax profit – under this bill, that level of giving would not be incentivized.

“Parking Lot Tax”: The bill would increase a nonprofit’s unrelated business taxable income (UBIT) for fringe benefits, including transportation or parking benefits. It carves out an exception for religious organizations.

Along with these provisions, the bill would require significant cuts in key safety net programs, putting added pressure on nonprofits – especially those concerned with health care and food insecurity. These cuts include:

House Committee Approves Big Hike in Private Foundation Excise Tax

This morning, after a marathon markup session that began Tuesday afternoon, the House Ways & Means Committee, which oversees tax policy, approved its portion of a massive legislative package moving its way through Congress.

The legislation contains several provisions that will impact philanthropy and the charitable sector – and many of them threaten philanthropy’s ability to support communities during a time of need.

A roundup of the key provisions in the bill follows and our partners at Integer have provided a detailed analysis of the hearing and all amendments considered for those interested.

Increase in the Private Foundation Excise Tax: The bill would massively increase the private foundation excise tax on net investment income for the largest foundations. Currently, all private foundations pay a simplified, flat rate of 1.39 percent. Under the new legislation, private foundations with assets under management above $50 million would see a tax increase. Here are the details:

The increase in the private foundation excise tax would deprive community nonprofits of resources, even as the support they receive via federal grants is on the decline. You can join the effort to oppose this tax increase by calling your representatives in Congress and urging them to remove this language from the bill on the House floor.

Universal Charitable Deduction: The bill creates a universal charitable deduction available to all tax filers, regardless of whether they itemize their return. It would allow a $150 deduction for single filers and $300 for joint returns. While this is far smaller than the deduction proposed in the Charitable Act – which would allow a deduction up to one-third of the standard deduction – it does represent some progress on an issue important to the charitable sector.

On Monday, Republicans on the House Ways & Means Committee released the text of their portion of a massive legislative package making its way through Congress.

The language confirms earlier reporting that the committee is seeking to increase the private foundation excise tax on net investment income - as high as 10 percent on the largest foundations. Specifically, the legislation would create a tiered system as follows:

Lawmakers need to hear from you: Tell them this tax increase would deprive community nonprofits of resources during a time of budget cuts and uncertainty around federal funding.

Late Friday, Politico reported that "House Republicans are aiming to put big new taxes on private foundations amid their push to raise revenue for their sweeping domestic policy legislation."

If this proposal became law, it would threaten billions of dollars in giving to community nonprofits and represent an unprecedented attack on charitable giving.

The reporting by Politico has not been confirmed, but we expect to learn as early as today whether the increased excise tax will be included in legislation the House Ways & Means Committee is expected to consider this week. The legislation could also include other provisions that help or harm the charitable sector.

Once bill text is released, it will be critical that lawmakers hear from you and know that any legislation they consider should boost the charitable sector, not limit its ability to make a positive impact in communities across our region.

You can prepare to act now by looking up your member of Congress and their contact information.

We will be in touch soon with more information. Thank you for everything you do, and for standing up for our sector! 

Philanthropy Southeast regularly provides members with updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand at jaci@philanthropysoutheast.org.

View Our Town Hall & Webinar on In-District Meetings

Recordings of our April 22 Member Town Hall and our April 29 webinar on in-district meetings are now available on the Philanthropy Southeast Program Archive!

The Town Hall, focused on how philanthropy is supporting nonprofits and communities amid uncertainty, drew more than 100 attendees and featured reflections from Cory Anderson of the Winthrop Rockefeller Foundation, the Community Foundation for Greater Atlanta’s Frank Fernandez, Kerri Forrest from the Coastal Community Foundation of South Carolina, and the Southern Education Foundation’s Kenita Williams.

Our webinar on in-district meetings included an update on the policy and legislative landscape in Washington, including recent executive orders, and insights from two members who have organized meetings with lawmakers in their communities: Betsy Pennewill of the Community Foundation of Sarasota County and The Blocker Foundation’s Whitney Saunders.

We plan to hold other webinars as the policy environment changes – keep an eye on our website and your email for future event announcements!

Philanthropy Southeast regularly provides members with updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand at jaci@philanthropysoutheast.org.

Legislation to Allow IRA Rollover to DAFs Introduced in House

A bill that would allow individual retirement account (IRA) holders to make qualified charitable distributions to donor-advised funds was introduced last week in the House.

The legislation (H.R. 2891), which has bipartisan support, was introduced by Reps. Adrian Smith (R-Nebraska) and Jimmy Panetta (D-California), who both serve on the House Ways & Means Committee.

“This bill provides seniors with greater flexibility to direct their charitable giving to support the causes they believe in,” said Smith. “This in turn opens the door to empower more American charities to do more good for our communities.”

Allowing IRA holders to rollover assets to DAFs has long been a policy priority for Philanthropy Southeast and the broader charitable sector.

“Older Americans can’t use their IRA charitable rollovers to give through donor-advised funds,” said Rep. Panetta.  “Our bipartisan bill would fix that by allowing these rollovers to go into DAFs, giving donors the flexibility to give smarter and support a broader range of causes. This commonsense change empowers generosity, strengthens local communities, and reflects how people actually want to give."

The bill has attracted the support of three lawmakers from the Southeast: Reps. Vern Buchanan (R-Florida), Terri Sewell (D-Alabama), and Donald Beyer (D-Virginia).

Philanthropy Southeast regularly provides members with updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand at jaci@philanthropysoutheast.org.

Save the Date for Our April 29 Webinar on In-District Meetings

Foundations on the Hill isn’t the only way to meet lawmakers and staff in-person – meetings at district or state offices can be just as productive and give you a chance to talk to political leaders on your home turf.

Learn more about these meetings, how to set them up, and how to get the most from them, at our upcoming webinar – join us at 10:00am ET on Tuesday, April 29 to hear from policy experts and Philanthropy Southeast members who have organized their own in-district meetings!

Registration for this webinar will open soon – keep an eye out for further updates!

Supporting Philanthropic Freedom

At its most recent meeting, the Philanthropy Southeast Board of Trustees approved a new policy position that supports the First Amendment rights of funders to support the charitable causes and communities of their choice.

“Philanthropy Southeast believes funders have a First Amendment right to direct their philanthropic efforts toward the charitable causes and communities they choose, and that such freedom is necessary to achieve our goal of an equitable and prosperous South,” the statement reads.

The position statement comes as the charitable sector faces increased scrutiny and criticism around its efforts to address systemic inequity and support historically marginalized groups. 

This includes an executive order released by the White House on January 21 ordering federal agency heads to work with the Attorney General on a report that would identify “[a] plan of specific steps or measures to deter diversity, inclusion, and accessibility programs or principles” and recommend investigations of large companies and organizations, including “foundations with assets of 500 million dollars or more.” (More on this below.)

The order gave agencies 120 days, or until May 21, to recommend targets for investigation.

Philanthropy Southeast’s statement notes that efforts to stifle the freedom of philanthropy will not only harm communities but also have negative effects across the sector.

“For the health of our region’s philanthropic sector, it is critical that individuals and organizations are free to determine how and where their resources are directed,” the statement reads. “This freedom of expression, and the diversity of ideas it fosters, also creates a richer environment for our members to learn from one another.”