Bill Would Extend Charitable Benefits, Encourage Nonprofit Giving

The House passes a bill that would encourage nonprofit donations by extending the tax benefits of giving food to charities and donating land for conservation as well as reducing the foundation excise tax from 2% to 1%.

The America Gives More Act, HR 4719, which passed on a bipartisan 277-130 vote, would make permanent three temporary tax items that have been regularly extended on an annual basis. The measure would again allow seniors to lower their taxable income by donating money from their Individual Retirement Accounts.

Specifically, it would allow people over 70 1/2 years old to reduce their taxable income when they roll over funds from their IRAs to charities and extend the deadline for claiming a charitable tax deduction from the end of December until tax day, April 15. This deduction last expired Dec. 31, 2013 and is currently not in effect. This act would remove the uncertainty over the IRA charitable deduction, according to House Ways and Means Committee Chairman David Camp (R-MI).

“There are numerous provisions in the tax code that encourage giving, and H.R. 4719 – the America Gives More Act – ensures that some of these provisions are made permanent,” Camp says.

The Private Excise Tax Simplification provision would reduce the current two-level excise tax (1-2%) on private foundations to a single 1% excise tax rate. This provision would incentivize giving and increase the funds available for the estimated 115,249 U.S. private grantmaking and 5,368 operating foundations to carry on their charitable activities.

The Fighting Hunger Incentive provision would permanently restore the expired tax deduction for donating food inventory to charity as well as increase the donation limits. The Conservative Easement Incentive provision would allow people to once again gain a tax deduction by donating a charitable land easements (typically a restriction to prevent development) to preserve farmland and forests. This section would make the deduction permanent and increases the donation limits.

The charity tax provisions would cost about $16 billion in forgone taxes over 11 years and Democrats slammed the plan for not providing revenue to offset those losses.

However, advocates say that the tax extenders bills will eventually pass, but it is not certain whether the provisions on the foundation excise tax and charitable-deduction deadline will be part of a final bill.

Outlook: The House version had strong bipartisan support. The Senate has historically renewed the three expired provisions along with the other fifty-seven temporary tax provisions. However, the president has threatened to veto the measure for failing to offset the deductions with additional revenue. It is anticipated that the bill will eventually be adopted and sent to the president later this year.

About Frank Klimko

Frank Klimko is a nationally known journalist, grants expert and speech writer/speaker. He has years of experience helping nonprofits devise lists of the right funding opportunities and secure funding from these foundations and corporate entities. Clients have focused on an array of areas including child care, homeless, hunger and K-12 education. Additionally, he is a Freedom of Information Act expert, who has helped numerous clients with securing proprietary information from the federal government. Currently, Frank Klimko writes the Children & Youth Funding Report and Private Grants Alert, which are Washington DC-based publications. CYF is a daily publication covering Congress, the Education Dept. and the various federal regulatory agencies. PGA, another daily publication, covers the world of private philanthropy.
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