As Congress contemplates changes to the tax code, it is important to acknowledge that tax code provisions matter to philanthropy. Changes to the code can enhance and expand philanthropy’s impact. Or, they can constrain or diminish the ability of philanthropic organizations to conduct our work, ultimately hurting the communities they serve. In San Benito County, we have more than 140 nonprofits that can benefit from Congress making permanent changes to the tax law. Here are a few examples that will make a difference:
Charitable “Tax Extenders”
Congress should permanently extend the charitable “tax extenders.”
- The charitable “tax extenders”— the IRA rollover and the enhanced deductions for food inventory donations and land conservation — are valuable giving incentives.
- The need for an annual extension of the tax extenders and the lapse of provisions for 2014 creates great uncertainty, ultimately reducing charitable giving.
- The House on July 17 passed H.R. 4719, which includes the three charitable tax extenders. House and Senate leaders should work together to ensure that these provisions become law.
Private Foundation Excise Tax
Congress should simplify the excise tax to a single, flat rate of 1 percent.
- The current private foundation excise tax has a complicated, two‐tier structure which can create disincentives for unanticipated grants such as disaster aid that foundations make in times of emergency or dire need. The tax is also complicated and unpredictable for foundation staff and hinders flexibility in grant-making.
- The current tax requires constant monitoring of investments and spending – time that would be better spent serving communities.
Donor Advised Funds
Congress should maintain current law, which allows donor advised funds to benefit communities for years to come.
- Donor advised funds (DAFs) allow donors to channel philanthropic giving directly to their communities, enabling people to “give where they live”. Community foundations provide meaningful support and guidance for donors to increase their resources and make more effective and lasting investments in their communities.
Charitable Deduction
Congress should advance proposals that increase giving, not diminish it.
- The efforts of philanthropy and nonprofit organizations are supported through charitable giving. Any caps or limits on charitable giving will have a negative impact.
- If donors have less incentive to give, donations could decline by billions, obstructing the critical work of philanthropy and nonprofits.
Here are some interesting facts on Charitable Giving in America:
Government funds account for only about one-third of the revenues of America’s nonprofit organizations. The rest comes from private giving:
- American individuals, foundations, and corporate giving programs donated an estimated $335 billion to charitable causes in 2013.
- Total giving by all types of foundations was an estimated $49 billion in 2013. Giving by community foundations grew 5.7 percent in 2013.
- Independent (family and private) foundations, operating foundations, and community foundations all increased the amount they gave in 2013 compared to 2012.
- The Community Foundation for San Benito County granted $956,426 in 2013
If you would like to learn more about the Community Foundation and the nonprofits in San Benito County, please feel free to contact me, Gary Byrne, at gbyrne@cffsbc.org.