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Legislative Bills Updates

Tax Policy Proposals Would Reduce Charitable Giving, New Study Finds

Lowering top rate, raising standard deduction cuts donations; adding non-itemizer deduction increases giving, Indiana University Lilly Family School of Philanthropy research suggests

Tax policy changes proposed by Congress and the Administration would reduce charitable giving by up to $13.1 billion, new research conducted by the Indiana University Lilly Family School of Philanthropy indicates.

Researchers also found that adding a charitable deduction for non-itemizing taxpayers to the policy proposals would likely more than offset the loss in charitable giving from the proposals and generate up to $4.8 billion in additional charitable giving.

The study used the 2014 Tax Reform Act introduced by then House Ways and Means Committee Chairman Dave Camp (R-MI) to estimate the potential effects of tax policies on charitable giving. The tax proposal released by the Administration last month and the Republican legislators’ proposal both closely mirror the Camp proposal with respect to reducing the top marginal tax rate and increasing the standard deduction.

The study was commissioned by Independent Sector, a national membership organization of nonprofits, foundations and corporations, with funding from Leadership 18, an organization comprising national human service nonprofits.

Among the study’s key findings:

  • Extending the charitable deduction to non-itemizing taxpayers by itself, without other proposals, could generate up to $12.2 billion in additional giving.
  • Reducing the top tax rate to 35 percent and increasing the standard deduction combined have the potential to reduce charitable giving by up to an estimated $13.1 billion.
  • The study estimates that those two proposals combined would reduce charitable giving to religious congregations by up to 4.7% and reduce giving to other charitable organizations by up to 4.4%.
  • Each of these proposals alone (reducing the top tax rate and increasing the standard deduction) also would reduce charitable giving.
  • Adding a non-itemizer deduction while lowering the top tax rate to 35 percent and increasing the standard deduction would likely more than offset the amount of charitable giving that would otherwise be lost under those two proposals, generating an estimated additional $4.8 billion in giving, beyond the offset.

“When talking about changes in tax policy, it is important that the debate is informed by research. This study provides important information about the expected effects of the proposed tax policy changes and the extension of the charitable deduction to non-itemizers,” said Patrick M. Rooney, associate dean for academic affairs and research at the Indiana University Lilly Family School of Philanthropy.

Much of the research on this topic relies on tax data from itemizing households only, but by using data from the school’s Philanthropy Panel Study (PPS) and the University of Michigan’s Panel Study of Income Dynamics, the new study includes giving by both itemizing and non-itemizing households and can isolate the giving behaviors of each. PPS allows the study to track behaviors of the same 9,000 households over time and provides more information about the households studied. It uses a much larger and nationally representative cross-section of lower- and middle-class households—the households who would be the most affected by extending the charitable deduction to non-itemizers.

By combining the researchers’ approach to calculating the effect of a change in tax price among different income brackets with PPS data about household giving by non-itemizers, the study is able to estimate the different effects that the proposed policies would have on different income brackets. The use of PPS data also allows researchers to estimate the relative effects that adding a non-itemizer deduction would have on giving to religious congregations as compared to giving to other charities.

Download the full report.

About Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change in the world. The school offers a comprehensive approach to philanthropy through its academic, research, and international programs, and through The Fund Raising School, Lake Institute on Faith & Giving, and the Women’s Philanthropy Institute. Learn more. Follow us on Twitter @IUPhilanthropy and “Like” us on Facebook.

(This press release was distributed by the Indiana University Lilly Family School of Philanthropy and reprinted here with permission). 


Government Relations Update: March 2017

Several important developments have occurred on Capitol Hill, and we encourage you to keep your chapter membership apprised of these issues through articles in your chapter newsletter and presentations during chapter meetings. You can re-purpose this information and other articles in any way you’d like.

1. Johnson Amendment Sign-On Letter of Support

AFP has been working with the National Council of Nonprofits and other organization to support the Johnson Amendment, which prohibits charities from engaging in electoral politics and raising funds for political candidates. While AFP International already has signed on to the letter, we encourage chapters to sign on as well. The deadline is March 31.

To sign on to the support letter, click here: https://www.givevoice.org/community-letter-support-nonprofit-nonpartisanship

You can see AFP’s official position on the Johnson Amendment here: http://www.afpnet.org/Audiences/MemberNewsDetail.cfm?ItemNumber=42417

2. Trump Administration’s 2018 Budget Blueprint

In mid-March, the White House released a Fiscal Year 2018 Budget Blueprint. While not a formal, detailed budget for 2018, the document provided a high-level overview of key spending priorities and included significant cuts to numerous federal departments and agencies. The Blueprint can be found here: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/2018_blueprint.pdf

The Nonprofit Times noted that “President Donald Trump’s first federal budget proposes deep cuts in discretionary spending to many departments that impact nonprofits while boosting financial support to defense, homeland security and veterans’ affairs.” These cuts included the elimination of the Corporation for National and Community Service, National Endowment of the Arts, and The Community Development Block Grants (CDBG) program, which provides funds to local food banks and Meals On Wheels.

AFP released its official position on the budget blueprint on March 17. You can find the full statement here:http://www.afpnet.org/Audiences/NewsReleaseDetail.cfm?ItemNumber=42847

3. Tax Reform

With healthcare reform likely concluded for the foreseeable future, Congress is, according to most sources, now looking at tax reform. It’s still unclear how the charitable deduction and other giving incentives might be affected. We will keep chapter government relations chairs updated as debate begins to crystallize around certain tax plans, and will provide alerts if immediate action is needed.

4. State Bills-Rhode Island

AFP International assisted the Rhode Island Chapter in providing comments to the General Assembly about H. 5621, a bill that would have created unconstitutional and burdensome disclosure requirements for professional fundraisers and solicitors in the state. The chapter submitted comments opposing the bill to the Corporations Committee. During a hearing, it was decided that the legislation would be kept in the committee for further study, meaning it is likely done for the year.

Just as a reminder, if you hear about state bills or local proposals and/or regulations that are being considered, please do not hesitate to contact the AFP Public Affairs Department at paffairs@afpnet.org. We can assist in developing official comments, position statements, communications to members and other resources.

5. AFP Political Action Committee

The purpose of the Committee is to provide the opportunity for individuals interested in the future of philanthropy and the profession of fundraising to contribute to the support of candidates for Federal office who believe, and have demonstrated their beliefs, in the principles to which philanthropy and the fundraising profession are dedicated. The Committee is non-partisan and dedicated to the protection and advancement of the fundraising profession and philanthropy in its various forms.

AFP encourages all U.S. members to contribute to the PAC. Information about giving to the PAC can be found on the AFP website:https://reports.afpnet.org/portal_add/pac/makegift_pac_form.cfm.

In addition, there will be a PAC reception at the AFP International Fundraising Conference in San Francisco on April 30 at 6:00 p.m. in the Sierra J Room of the Marriott Marquis. Come by, learn about the PAC’s work and make a contribution.

Again, feel free to use these updates, articles and position statements in your own newsletter, or just cover the highlights if you want to summarize.

If you’d like to set up a meeting with your local member(s) of Congress, contact AFP IHQ at paffairs@afpnet.org, and we can provide talking points and other resources. And as always, if you hear about local


Legislative Contact Information

The following resources are provided to help increase awareness of your place in the legislative and government budget allocation process.  We believe in the power of our members to change and support our communities.

Alliance for Justice is a national association of more than 100 organizations which represent a broad array of groups committed to progressive values and the creation of an equitable, just, and free society.  Utilize this website to learn about nonprofit advocacy, including the rules regarding lobbying, the definitions of lobbying, and lobbying limits for nonprofit organizations.  There’s even a “Getting Started” section dedicated to nonprofits considering creating an advocacy or public policy initiative.

Examples of the resources provided:

Public Charities CAN Lobby, Guidelines for 501(c) (3) Public Charities

What is Lobbying?

Electing the 501(h) Expenditure Test

Be sure to check out The Alliance for Justice Nonprofit and Foundation Advocacy program helps foundations and nonprofits influence policy and public opinion byoffering workshops, examples of documents, and technical assistance.

The Center for Lobbying in the Public Interest encourages you to “Make a Change for your Cause”.  The CLPI works to promote nonprofit advocacy and create systemic change in three related ways: messaging and outreach, training and presentations, protecting and expanding the rights of nonprofit lobbying rights.  Check out the“Nuts and Bolts” section of their website for helpful PDFs on topics such as: “Lobbying Tactics” and “Advocacy Tactics”.

The Texas Legislature Online an essential resource for finding bills, following the status of a bill, reviewing hearing schedules and contacting your legislator. 

The Texas Tribune is a nonpartisan, nonprofit media organization that promotes civic engagement and discourse on public policy, politics, government, and other matters of statewide concern. This website covers multiple legislative topics impacting the state of Texas.


Priority Issue: Building on the Charitable IRA Rollover

Late in 2015, Congress reached agreement on a package of tax bills which President Obama signed that made several charitable giving incentives permanent, including the Charitable IRA Rollover. That provision allows taxpayers over 70½ to make donations directly from an IRA and will not be taxed on the amounts—up to $100,000.

AFP’s next priority is to build on that victory and expand the application of the Charitable IRA Rollover Provision. For example, The CHARITY Act (S. 2750) would make donor-advised funds an eligible charity for purposes of the IRA rollover law. Read the eWire article on the CHARITY Act here.

In addition, the IRA Legacy Act, (HR 5171) would now expand the Charitable IRA Rollover by enabling IRA owners age 65 or older to transfer up to $400,000 per year (for individuals 70½ or older, the combined ceiling for direct and life-income transfers from their IRAs is $400,000, with a $100,000 cap for direct transfers) from their IRA to a life-income plan, including charitable remainder trusts and charitable gift annuities.

AFP is currently advocating in general for the expansion of the Charitable IRA Rollover, talking with various Congressional offices about chances of passage this year. We are also keeping an eye on the Congressional calendar and seeing what legislative vehicles will move this year and if a Charitable IRA Rollover could be attached to it.

AFP is not asking for action right now, but growing member awareness about these issues at chapter meeting is important.


Secondary Issue: IRS ACT Report and Recommendations

The Exempt Organizations (EO) Subcommittee of the IRS Advisory Committee on Tax Exempt and Governmental Entities, co-chaired by AFP President and CEO Andrew Watt, FInstF, has released its annual report to IRS leadership. This year’s report, “Stewards of the Public Trust:  Long-Range IRS Planning for the Future of the Exempt Community,” makes 12 recommendations to the IRS to prepare it for its future work in overseeing and regulating exempt organizations. 

The recommendations include:

  • Ensure that EO staff are equipped to carry out the responsibilities of EO
  • Give exempt organizations the tools they need to be tax compliant, including detailed audit data, relevant, user-focused guidance and an easily navigated website          
  • Assure cyber integrity both through technology tools, data collection and secured cyber storage
  • Foster two-way communication between the IRS Exempt Organizations division and the nonprofit sector by finding ways to solicit input from a greater number of voices (including small nonprofits) and provide open channels for stakeholders to take issues to the IRS.

In connection with the report, the subcommitee conducted extensive interviews with EO leaders, practitioners, and regulators to identify challenges and gaps for the IRS regarding its oversight of and guidance to the sector.  

While AFP is currently taking no action on the report, we will be working with the IRS and others to ensure the recommendations are supported and enacted.

The full report can be found here.


FYI: Charitable Giving Coalition Responds to Op-Ed on Trump Plan

In May, Senator Judd Greg (R-N.H.) suggested in a column in The Hill newspaper (published in Washington, D.C. and read significantly by members of Congress, staff and other policy makers) that  Donald Trump “could cut tax rates dramatically” and pay for it by “slicing back the major deductions such as those for health insurance, state and local taxes, and charitable donations.”

The Charitable Giving Coalition, which AFP chairs, responded with a letter outlining the impact and value of the charitable deduction. The full letter can be read here.


April 6, 2016

New Charity Package Introduced in Senate

Senators John Thune (R-S.D.) and Ron Wyden (D-Ore.)  have introduced a series of charity provisions called The CHARITY (Charities Helping Americans Regularly Throughout the Year) Act, which calls on the Senate to  ensure that the “value and scope of the deduction for charitable contributions is not diminished during a comprehensive rewrite of the tax code.”

The CHARITY Act, S. 2750, builds on several significant charitable tax provisions that were signed into law late last year, including one that makes permanent a law allowing taxpayers at least 70 ½  to make charitable contributions directly from their IRAs.

Long-term, the key provision is the non-binding Sense of the Senate that states that "encouraging charitable giving should be a goal of tax reform. Congress should ensure that the value and scope of the deduction for charitable contributions is not diminished during a comprehensive rewrite of the tax code."

The backing of the bill from both Thune and Wyden is a strong demonstration of the bi-partisan support that the charitable deduction has in Congress. Getting additional Senators and Representatives to support the bill this year will make a strong statement for future deliberations about tax reform and the fate of the deduction.

Other provisions in The CHARITY Act (S. 2750) would:

  • Make donor-advised funds an eligible charity for purposes of the IRA rollover law that permits an IRA owner at least 70-and-a-half-years old to exclude from their gross income up to $100,000 per year in distributions made directly from the IRA to certain public charities.
  • Simplify how foundations are required to calculate the federal excise tax imposed on investment income.
  • Authorize the Treasury Department to adopt regulations that align the simplified standard mileage tax deduction rate for personal vehicle use for volunteer charitable services with that for medical and moving purposes.
  • Promote transparency by requiring nonprofits to file their paperwork electronically.
  • Encourage philanthropic enterprises wishing to donate profits to charity by creating a limited exception to the excess business holding tax rules.

“I want to thanks Sens. Thune and Wyden for their continued leadership on giving and nonprofit issues,” said Andrew Watt, FInstF, president and CEO of AFP. “There are several provisions in the bill that will affect different parts of the sector and encourage donors to consider giving in different ways. This legislation sets the next marker for our work in public policy, and we’ll be working with House and Senate offices to grow support for the bill, including reaching out to AFP chapters to get them engaged in the legislation as well.”

The full text of the bill can be found here, and a summary of the provisions can be read here.

AFP will be closely monitoring the bill’s progress and will alert members if action is necessary


January 7, 2016

IRS Withdraws Substantiation Proposal Thanks to Thousands of Nonprofit Comments 

Thanks to thousands of comments from nonprofits across the country, the Internal Revenue Service (IRS) has dropped its proposal to create a new substantiation form that could have had charities asking for donor's Social Security numbers. 


THANK YOU if you submitted comments to the IRS using AFP's template submission system. Your input matters, and this successful outcome demonstrates that the process works. We can make a difference and help advance policies that support the fundraising profession while protecting our donors and their privacy. 



To read the IRS announcement, click here. 



Last fall, the IRS had proposed new regulations that would modify its requirements that nonprofits obtain a "contemporaneous written acknowledgement" for contributions of $250 or more. Under current law, a donor claiming a deduction of $250 or more is required to obtain and keep a contemporaneous written acknowledgment for a charitable contribution. 



The regulations would have created a new "optional" information form that charities would file with the IRS by February 28 each year, as well as provide a copy to each donor who had given $250 or more for their tax return. Most concerning among the form's requirements was the mandate for the nonprofit to collect the donor's tax identification number (their Social Security number in most cases), an action which would impose other legal requirements on nonprofits to retain and protect those Social Security numbers from identify theft. 



But the IRS received enough comments from concerned fundraisers and nonprofits, including formal comments from AFP, that it has decided to drop the proposal. This move should end the matter, but AFP will alert members if additional action is required. 



Questions can be emailed Jason Lee at jlee@afpnet.org. 



Thank you again for your participation in AFP and the public policy process!