More than 40 philanthropic leaders representing eight states came to Washington, D.C., last month to connect with policymakers during the latest edition of Foundations on the Hill.
This year’s event followed significant legislative victories in 2025, including the enactment of a universal charitable deduction and the defeat of a proposal to raise the private foundation excise tax.
Even after last year’s success, there are several key policy priorities that Philanthropy Southeast members discussed during their meetings with lawmakers and staff – in particular, the importance of standing up for philanthropic freedom at a time when the sector is facing scrutiny from Congress and executive agencies while also navigating the impact of recent executive orders.
Philanthropy Southeast members emphasized that philanthropic freedom allows foundations to work together with partners on the ground to determine where they can make the most impact – without worrying about political pressure or interference.
Lawmakers were also asked to support legislation (H.R. 2891 / S. 3975) that would allow people to roll over funds from IRAs directly to a donor-advised fund, and to join the recently relaunched congressional Philanthropy Caucus.
Bill to Fund Military Operations Could Open Door to Tax Changes Affecting Charitable Sector
In recent weeks, some congressional Republicans have floated the idea of another reconciliation package to fund military operations in the Middle East – an approach that could result in tax policy changes affecting philanthropy.
Spending bills typically require 60 votes in the Senate to avoid a filibuster. However, with Democrats and even some Republicans opposed to the administration’s actions in Iran, it is unlikely that strategy would work.
Instead, some Republicans have discussed using the same reconciliation process employed to pass last year’s “One, Big Beautiful Bill.” While that process requires only a bare majority in the House and Senate, it also comes with a strict requirement that any new spending be offset by either new revenue or spending cuts.
For philanthropy, that means lawmakers could resurrect a failed proposal to increase the excise tax on some private foundations – last year’s House reconciliation bill would have increased the tax to as high as 10 percent on the largest foundations. Other methods of tapping the sector for tax revenue are also possible, as are budget cuts that could affect communities in the region and place additional strain on nonprofits.
There is no guarantee, however, that congressional leaders will try for another reconciliation package. According to Punchbowl News, House Ways & Means Committee Chair Jason Smith (R-Missouri) is skeptical that another GOP-only budget bill will gain enough support to make it to President Trump’s desk.
With the House currently in recess, it will be at least a few more weeks before the prospects for a “reconciliation 2.0” become clear.
Last Year’s Reconciliation Bill Projected to Reduce Overall Giving by $5.69B
Despite the addition of a universal charitable deduction in last year’s reconciliation bill, a new report projects the legislation will have a significant, negative effect on charitable giving overall.
The report, “The Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill,” was released by Indiana University’s Lily Family School of Philanthropy. Its authors anticipate that while more individuals will engage in charitable giving due to the bill’s changes, the overall amount of giving will decline. Specifically, the report projects:
- 6-8.7 million more donors due to the universal charitable deduction
- A $4.39 billion increase in giving due to the universal charitable deduction
- A $2.43 billion decrease in giving due to the 0.5 percent floor required for the itemized charitable deduction
- A $6.1 billion decrease due to the 35 percent cap on the value of the itemized charitable deduction
- A $1.55 billion decrease due to the 1 percent floor on the corporate deduction
“Tax policy changes shape charitable giving, and their effects vary across different policies, types of donors and ways of giving,” said Patrick M. Rooney, Ph.D., professor emeritus of philanthropic studies and economics at the Lilly Family School of Philanthropy. “Changes that affect high-income households and large corporate donors have the greatest influence on total giving levels. Policies that broaden incentives to give, such as the newly enacted universal charitable deduction, are likely to increase the number of people who give.”
Treasury Department and IRS Seeking Comments on Regulatory Priorities
The Treasury Department and the IRS are currently accepting recommendations for projects to include in their 2026-27 Priority Guidance Plan (PGP), an annual document that outlines the administration’s tax regulation priorities.
There will likely be significant overlap between the upcoming agenda and the current PGP, given that it was released late and that implementing the One Big Beautiful Bill Act remains a top priority.
The current agenda includes multiple items relevant to philanthropy, such as finalizing DAF regulations proposed in 2023, updating expenditure responsibility regulations, and issuing guidance on the Johnson Amendment, which limits nonprofit political activity.
The public commenting window provides another opportunity for philanthropy to elevate its priorities. The agencies are accepting comments through May 29.