Tax Breaks, Transparency On State Agendas
Tax Breaks, Transparency On State Agendas

Nonprofits in New Jersey are pressing a second time for a state tax deduction on donations to charities. Meanwhile out West, legislators in Colorado have passed new rules for greater transparency of who is paying for ballot initiatives.

The NJ Center for Nonprofits (NJCN) is working with the state’s charitable community to urge the legislature and Gov. Phil Murphy to enact a state-level income tax deduction incentive for donations. After a proposal to enact a state-level tax deduction on charitable donations two years ago failed at the height of the COVID-19 pandemic, leaders at the NJCN are soliciting support from the 38,000 New Jersey charitable nonprofits, collecting signatures expected to be presented to the governor and legislature sometime after May 26. 

The NJCN has a letter template organizational leaders can send to state officials to advance the proposal and also a mass letter to sign. The letter states that “nonprofits are still facing significant hurdles in addressing the needs of people that are increasingly relying on them,” after the pandemic erupted in 2020. Rising expenses and client demand are outpacing the funds required to provide services, officials wrote in the letter.

State Senator Anthony M. Bucco (R-District 25) is a co-sponsor of the bill which has bipartisan support. Senate Bill 2013 calls for a state income tax deduction for all New Jersey taxpayers who donate to charities within its borders. Similar bills were twice approved since 2020 by the Senate but died in the Assembly, he said.

“I think this bill should have been passed a long time ago and we continue to need to work on this so people will be encouraged to donate,” Bucco said.

Meanwhile, the Colorado legislation, SB237, would require tax-exempt organizations to disclose to the Colorado Secretary of State the expenditures, purpose, date, name and address of payee and the ballot question or ballot issue for every $1,000 spent after $5,000 has been exceeded in a calendar year on a ballot question or ballot issue.

David L. Thompson, vice president of public policy for the National Council of Nonprofits (NCN) in Washington, D.C., said he does not think the Colorado legislation is a serious concern to nonprofits established in the state and it wasn’t on the NCN’s radar. But, Thompson said, the pending bill could cause some discomfort. The bill has passed both the House and the Senate and is awaiting the signature of Gov. Jared Polis.

“It will require more disclosure and who the donors are for anyone spending more than $5,000 on a ballot issue. Generally, you don’t want public disclosure if you’re taking on a controversial subject, such as abortion,” Thompson said.

The legislation also would identify an organization’s major purpose based on the percentage of its expenditures spent on ballot measures. An organization would be considered an issue committee if more than 30 percent of its spending in the past three years was in support or opposition of two or more ballot issues.