No matter your political persuasion you are probably, as I am, looking forward to the Nov. 4 election being over so we can stop being bombarded by all of the negative political ads. It will be nice when the dust settles and Congress gets back to work.
In this time of polarized politics and gridlock, we hope that charitable giving can serve as one area of common ground. In July the U.S. House of Representatives passed the America Gives More Act (H.R. 4719) with a rare bipartisan vote of 277-130. It now needs to pass the Senate.
One provision in the bill would make permanent the IRA Charitable Rollover, which allows donors to direct distributions from their IRA directly to a charity. A gift directly from an IRA doesn’t show as income on the donor’s tax return, avoiding any tax consequences.
Currently, this type of gift is not allowed because the previous provision expired last year. However, in the past, when Congress finally got around to extending this charitable giving tool for one more year, it was made retroactive. This on-again, off-again policy leads to incredible confusion, which can all be resolved by making this a permanent provision when the Senate passes this bill.
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The bill also simplifies the convoluted tax on private foundations. Fortunately, your Community Foundation is a public charity, and we are not required to pay this excise tax.
Private foundations, on the other hand, currently have a two-tier excise tax that actually discourages them from making extraordinary gifts in the event of unforeseen needs, such as natural disasters. These gifts above and beyond their normal grant-making can increase their future-year taxes. Simplifying the tax to one tier will remove this penalty and enable private foundations to be more nimble and address urgent needs in their communities.
We hope that the U.S. Senate will pass the America Gives More Act with bipartisan support, as the House did, making charitable giving one area of common ground.
We are also closely monitoring several provisions being talked about as part of comprehensive tax reform that would negatively impact charitable giving.
For example, Congress is considering imposing a cap or limit on the value of the charitable tax deduction as part of an overall effort to either raise additional federal revenue or make adjustments or “simplifications” to the tax code. But, reducing the charitable deduction is not the solution to budget concerns.
A strong nonprofit sector is an important part of the solution to address the ongoing needs in our communities. A study by the Charitable Giving Coalition found that for each $1 deducted, communities received $3 in public benefits. We hope our lawmakers understand the impact that nonprofits are making in our communities every day through the generous support of charitably minded citizens in the community.
Phil Hanson is president and CEO of the Truman Heartland Community Foundation, which serves the Lee’s Summit area.