Public Policy Update - May 28, 2025
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).
House Bill Could Reduce Southeastern Foundation Grantmaking by More Than $260 Million Per Year
The private foundation excise tax rates proposed in the House tax bill would have reduced grants from Southeastern foundations by $267 million in 2023 alone, a Philanthropy Southeast estimate found.
Currently, all private foundations pay a 1.39 percent tax on net investment income. The House bill would double that tax rate on foundations with assets between $50 million and $250 million. Foundations with assets between $250 million and $5 billion would pay a 5 percent tax, while the largest foundations would see their tax rate rise to 10 percent.
To determine the effect of the proposed increase on grantmaking, Philanthropy Southeast reviewed data from 2023 – the most recent year available – on the assets of 12,735 grantmaking private foundations in the 11-state footprint. Here’s a state-by-state estimate of the potential loss of grant dollars due to the increased excise tax:
The figures reflect grantmaking from foundations in the 11 states – not necessarily grants going to organizations in the Southeast. They also do not include grantmaking to the Southeast from private foundations based outside the region – a group that includes several national funders that would be subject to the highest tax rate.
Senate Leaders Aim for July 4 on Tax Bill, but Serious Divisions Remain Among GOP
Senate Majority Leader John Thune (R-SD) has continued to project optimism that his chamber can pass budget legislation in time for President Trump to sign a bill into law by July 4, but doing so would require quickly resolving several disputes within the Senate GOP caucus, as well as disagreements with the House’s approach.
A recent Politico article reviewed the “early fault lines” facing the legislation, including cuts to Medicaid, the fate of clean-energy tax credits, shifting SNAP costs onto states, and the overall level of spending reductions in the bill.
Both chambers of Congress are in recess this week, but work on the bill is expected to ramp up once senators return to Washington the week of June 2.
