For those of you who know me, you know that I’m passionate about the nonprofit sector and its participation in policy conversations. Legislation at the federal, state, and local level can often impact how nonprofit organizations and foundations operate, how they assist their communities, and how government policies encourage generosity.
These next few months will be a sprint as Congress finishes its work leading up to Election Day (Tuesday, November 8) and the end of the 117th Congress. Major pieces of legislation remain – appropriations bills that fund the government, National Defense Authorization Act, which sets national defense policy, a possible reconciliation package that may focus on prescription drug pricing and energy policy, and an industrial policy bill are all on the docket for the rest of the year.
The 2022 mid-term elections could also bring changes for the majorities in both the House and the Senate. The President’s party typically loses seats in both chambers during an administration’s first mid-term elections. Should this happen in November, and most expect it will, the Biden Administration will face challenges in advancing its agenda for the remainder of his term.
Here’s a round-up of legislation of interest to the nonprofit sector as a whole. Keep in mind that with the current Congress ending on December 31, any legislation not passed by the end of this year will need to be reintroduced in 2023.
Universal Charitable Deduction
The Universal Charitable Deduction, a charitable deduction for taxpayers who do not itemize their taxes, was first authorized in the CARES Act enacted in March 2020. The deduction was capped at $300 for both single tax filers and couples filing jointly. It was extended and expanded in late 2020 to allow single filers to deduct $600 and couples filing jointly to deduct $1200. The provision expired on December 31, 2021.
Members of both the House and the Senate introduced The Universal Giving Pandemic Response and Recover Act (S.618/H.R.1704) in 2021. This legislation would extend the deduction through December 31, 2022 and expand it to one-third the standard deduction for both single filers and couples filing jointly. While the legislation has not passed either chamber, both bills have received broad bipartisan support.
2020 tax return data released by the IRS could bolster the bills’ chances and supporters’ arguments. The data shows that –
- 42.2M taxpayers (close to 30% of individual tax returns) took advantage of the universal charitable deduction
- These taxpayers donated a total of $10.9B
- 24% of those taking the deduction had adjusted gross incomes of less than $30K
- 29% of those taking the deduction had adjusted gross incomes of between $50K and $100K. These taxpayers donated a total of $3.2B.
Given the strong support within both the House and the Senate, it is possible that this legislation could be passed as part of an end of the year “tax extenders” package. If it is passed, the provision can be made retroactive to January 1, 2022, enabling donors to take the deduction for gifts made during the 2022 tax year.
Nonprofit Sector Strength and Partnership Act of 2022
Introduced in late April 2022 by Reps. Betty McCollum and Fred Upton, the aim of Nonprofit Sector Strength and Partnership Act of 2022 is to strengthen the relationship between the nonprofit sector and the federal government. The bill would –
Establish the White House Office on Sector Partnerships,
- Establish an interagency council on nonprofit sector partnership to include representatives from cabinet agencies and other federal departments,
- Create an advisory board on the nonprofit sector made up of presidential and congressional appointees from the sector and reflecting the sector’s diversity,
- Direct Treasury to review how relevant legislation and regulation impacts charitable giving, and Direct various federal agencies to collect and improve upon the collection of data on the nonprofit sector
Although many in the sector are excited about the introduction of this legislation, it is unlikely to move in 2022. The bill’s future in the next Congress is also unknown due to Rep. Upton’s retirement from Congress at the end of this year, leaving Rep. McCollum to find a new Republican co-sponsor for this bill.
Accelerate Charitable Efforts (ACE) Act
In June of 2021, Senators Angus King and Chuck Grassley introduced the Accelerate Charitable Efforts Act or ACE Act. A companion bill in the House was introduced by Reps. Chellie Pingree and Tom Reed in February 2022. The purpose of the ACE Act is to encourage the distribution of funds from DAFs and private foundations to nonprofit organizations more quickly.
The ACE Act would modify the tax code by adjusting the deductibility of charitable contributions to certain types of DAFs. In some instances, a donor would not be able to deduct a contribution to a DAF until the DAF distributed the donated funds to a nonprofit organization. It also addresses and restricts private foundation use of DAFs, particularly the use of donations to DAFs to meet foundations’ minimum distribution requirements.
The chairs of Senate Finance and House Ways and Means Committees, Sen. Ron Wyden and Rep. Richard Neal, have not shown an interest in this legislation to date. In order for this legislation to move on its own or be attached to other legislation, both would need to be supportive. However, this legislation demonstrates the challenges faced by endowed philanthropy, especially among those who wish to reform it.
As I mentioned earlier, Election Day is Tuesday, November 8. At its core our government is participatory and it’s important for citizens to engage in our government through exercising their right to vote. If you have questions about voting in your state – need to register, update your registration, check your registration status, find your polling place, request an absentee ballot, or need day-of voting information – Vote.org, the largest nonprofit, nonpartisan voting registration and get-out-the-vote technology platform, has all this information and more.
Your vote matters! Please vote on November 8th!
