Policy Alert: Senate Proposal Advances Philanthropy’s Priorities
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.
In addition to these items, the Senate legislation removes these items that were in the House-passed bill:
- An expansion of unrelated business income tax to include parking and transportation benefits (i.e., the nonprofit parking tax)
- A provision disregarding certain purchases of employee-owned stock purposes of foundation tax on excess business holdings
While the Senate proposal is not perfect – it still includes a 1 percent floor on the corporate charitable deduction, for example – is represents a significant improvement over the House bill and real progress on the sector’s top priorities.
What’s Next
Senate leaders plan to pass their version of the “megabill” before the July 4 recess. Since the Senate’s overall bill is different from the House bill in several ways, the two chambers will need to come to an agreement – it’s not clear how long those negotiations would take, although Republicans want to send a bill to President Trump’s desk before the country hits the debt ceiling sometime this summer.
What You Can Do
The Senate proposal is a win for the sector following weeks of advocacy. This week, Philanthropy Southeast members traveled to Washington to thank senators for their support and to urge Congress to keep the Senate language in the final version of the legislation.
You can also lend your voice by contacting your representatives in the House and Senate and asking them to keep private foundation tax rates where they are and to support the permanent, universal charitable deduction proposed this week.
As this legislation moves through the process, we’ll be in touch with more information – and other opportunities for you to speak up on behalf of philanthropy and your community.
