Federal Budget, Legislation Aim At Charities

February 5, 2015       Mark Hrywna      

Charitable giving incentives that the nonprofit community had pushed to make permanent last year were reintroduced in the new Congressional session and part of a group of bills marked up yesterday by the House Ways and Means Committee.

The charitable deduction is also targeted in the president’s new budget.

The bills included:

  • H.R. 637, Permanent IRA Charitable Contribution Act would allow individuals age 70½ or older to donate up to $100,000 to charity directly from their IRAs without incurring tax on the withdrawal. This provision expired again on Jan. 1.
  • H.R. 640, which would modify the tax rate for excise tax on investment income of private foundations from 2 percent to 1 percent.
  • H.R. 641, Conservation Easement Incentive Act of 2015
  • H.R. 644, which would permanently extend and expand charitable deductions for contributions of food inventory and land conservation easements.

Votes broke down along party lines with Republicans in favor and Democrats against. Democratic members who commented during the three-hour long markup spoke in support of the substance and purpose of the legislation but objected that there were no spending offsets and not considered within the broader context of comprehensive tax reform, according to the Council on Foundations (CoF).

The House late last year passed two extenders – making permanent provisions for food inventory donation and land conservation easements – that failed in the Senate under threat of veto. A measure to simplify the excise tax on private foundation was part of legislation introduced last summer.

As one example of the rollover provision’s impact provided by Independent Sector (IS) member Feeding America, the Forgotten Harvest food bank in Detroit received a $5,000 year-end IRA distribution from a 71-year-old man who typically donates $50 a year.

CoF President and CEO Vikki Spruill said simplifying the private foundation excise tax to a flat rate of 1 percent would allow private foundations to spend more resources on communities in need instead of tax compliance and lift an administrative burden while directing more focus to the work of a foundation.

At the end of the last Congress, IS sent an open letter to Congress signed by more than 1,000 national and state-level nonprofit partners in support of the charitable giving incentives.

President Barack Obama this week presented a nearly $4-trillion federal budget for Fiscal Year 2016, which one against includes a provision to cap at 28 percent the value of itemized deductions, including the charitable deduction, for high-income individuals.