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AFP Call to Action: The Tax Reform Act of 2014 - What You Need to Know, What You Need to Do

The Association of Fundraising Professionals (AFP) is deeply concerned about provisions in a new tax reform bill that would decrease giving, and we urge AFP members and all fundraisers to contact their members of Congress about this negative impact.

AFP appreciates the efforts of Chairman Dave Camp (R-MI) and his staff for their recognition of the unique value of the charitable deduction in the Tax Reform Act of 2014. Chairman Camp has reached out to nonprofits to get their input, including a Feb. 14, 2013 hearing where Andrew Watt, FInstF, AFP’s President and CEO, testified.

While there are some positive proposals in the plan, AFP remains concerned about several provisions in the new tax reform plan that would negatively impact giving.

This is a critical time. It represents the first time in many years that an actual tax reform package has been introduced. With provisions possibly resulting in the loss of billions of dollars in charitable contributions per year, our members need to inform Congress about the impact of those lost funds on their organizations’ missions and the communities and individuals that they serve.

AFP urges members, all fundraisers and those involved in the philanthropic sector to reach out to their Members of Congress using the template letter at the end of this document.

Sustain the Investment in the Charitable Sector

We are grateful that the Tax Reform Act of 2014 seeks to enhance that return on investment by seeking to simply the rules around charitable contributions and including an extension of time to file for charitable deductions (through April 15). By letting donors make gifts closer to the date of their tax filings, it is possible that more people would give once they see the impact of giving on their taxes. This provision acknowledges that the charitable deduction is different than other itemized deductions in that it encourages individuals to give away a portion of their income to those in need.

Tax Reform Proposals That Would Reduce Charitable Donations

However, AFP is concerned about other provisions in the Tax Reform Act of 2014 that would diminish charitable giving.

Two Percent Adjusted Gross Income Floor

The tax reform plan includes a two percent adjusted gross income (AGI) floor for all taxpayers who itemize their contributions. Under this proposal, the charitable deduction cannot be taken until after charitable contributions exceed two percent of the taxpayer’s AGI. This approach is complex and requires further study. The Congressional Budget Office (CBO) estimated a loss of $3 billion per year to the sector if a two percent adjusted gross income (AGI) floor were imposed.[1]

The floor could alienate taxpayers who give smaller charitable gifts, and it also could undermine the next generation of philanthropists by creating a disincentive for younger donors who might lack the financial means to give larger charitable contributions.

AGI Limitations

We also are concerned about the simplification of the AGI limitations that would impact charitable contribution. The tax reform plan would reduce the AGI threshold from 50 percent to 40 percent for some types of foundations and public charities and reduce the threshold from 30 percent to 25 percent for other recipients such as certain private foundations. This change could affect gifts from major donors—as well as those who have received inheritances and wish to make significant contributions to a cause. These changes could destabilize charitable giving.

Other Provisions

Similarly, we are concerned that limiting the value of deductions for property will dampen the incentive for gifts of real estate or closely-held business interests.

AFP also plans to analyze proposals in the Tax Reform Act of 2014 that change the treatment of unrelated business income (UBIT), a five year payout requirement for donor advised funds and other provisions affecting the sector.

Chairman Camp has been a strong supporter of nonprofits and philanthropy, and we are grateful for his focus on creating a tax system that works more effectively for charities and all citizens. We look forward to working with him and the entire Ways and Means Committee on developing and refining proposals that will encourage more charitable giving and continue the commitment to the impact and change that nonprofits create.

Take Action

Please call or write to your Members of Congress.  If you call, you may use these talking points as a template:

  • I am calling on behalf of the Association of Fundraising Professionals and [INSERT THE NAME OF YOUR ORGANIZATION]. We appreciate Chairman Camp’s recognition of the value and scope of a charitable deduction in the Tax Reform Act of 2014, which includes a proposal to extension to file for the charitable deduction through April 15.
  • However, we are concerned about provisions in the tax reform plan such as a two percent adjusted gross income (also known as AGI) floor for all taxpayers who itemize their contributions. The Congressional Budget Office estimated a loss of $3 billion per year to the sector if a two percent adjusted gross income (AGI) floor were imposed.[2]
  • We also are concerned about the simplification of the AGI limitations that would impact charitable contribution. The tax reform plan would reduce the AGI threshold from 50 percent to 40 percent for some types of foundations and public charities and reduce the threshold from 30 percent to 25 percent for other recipients such as certain private foundations.
  • Similarly, we are concerned that limiting the value of deductions for property will dampen the incentive for gifts of real estate or closely-held business interests.
  • The charitable deduction is unique in that it rewards people for giving their money away. It is not a tax cut; it is an incentive to give away income to organizations that serve America’s communities and those in need. Nearly $316 billion was donated to charities in 2012.[3]
  • Reducing charitable giving would restrict America’s charities from fulfilling their philanthropic missions and harm the very people they serve—our communities and those in need. At my organization, a reduction in charitable contributions would [INSERT IMPACT STATEMENT ABOUT YOUR ORGANIZATION].
  • The charitable sector spurs economic vitality, representing $800 billion through the economy (5.5 percent of GDP), 13.7 million individuals employed (roughly 10 percent of the workforce), 15.2 billion volunteer hours and nearly $300 billion raised every year. [4]
  • We urge you and your congressional colleagues to thoroughly study the provisions of the new tax reform’s plans that might impact charitable giving and/or allow tax analysts to study their impacts on philanthropy. Thank you for your time.


If you prefer to write to your Members of Congress, you can use this template:

Dear [INSERT THE NAME OF THE MEMBER OF CONGRESS]:

I am writing to you on behalf of the Association of Fundraising Professionals (AFP) and [INSERT THE NAME OF YOUR ORGANIZATION]. We appreciate Chairman Camp’s recognition of the value and scope of a charitable deduction in the Tax Reform Act of 2014, which includes a proposal to extension to file for the charitable deduction through April 15.

However, we are concerned about provisions in the tax reform plan that would diminish charitable giving.

The tax reform plan includes a two percent adjusted gross income (AGI) floor for all taxpayers who itemize their contributions. The Congressional Budget Office estimated a loss of $3 billion per year to the sector if a two percent adjusted gross income (AGI) floor were imposed. We also are concerned about the simplification of the AGI limitations that would impact charitable contribution. The tax reform plan would reduce the AGI threshold from 50 percent to 40 percent for some types of foundations and public charities and reduce the threshold from 30 percent to 25 percent for other recipients such as certain private foundations.

Similarly, we are concerned that limiting the value of deductions for property will dampen the incentive for gifts of real estate or closely-held business interests.

The charitable deduction is unique in that it rewards people for giving their money away. It is not a tax cut; it is an incentive to give away income to organizations that serve America’s communities and those in need. Nearly $316 billion was donated to charities in 2012. The deduction’s enhancement value is clear: a calculation of the deduction shows that for every one dollar of potential tax revenue invested through the deduction, the public and communities across America receive approximately $2.50 in philanthropic services. That rate of return is extraordinary.

Reducing charitable giving would restrict America’s charities from fulfilling their philanthropic missions and harm the very people they serve—our communities and those in need. At my organization, a reduction in charitable contributions would [INSERT IMPACT STATEMENT ABOUT YOUR ORGANIZATION].

The charitable sector spurs economic vitality, representing $800 billion through the economy (5.5 percent of GDP), 13.7 million individuals employed (roughly 10 percent of the workforce), 15.2 billion volunteer hours and nearly $300 billion raised every year.

We urge you and your colleagues to thoroughly study the provisions of the new tax reform’s plans that might impact charitable giving and/or allow tax analysts to study their impacts on philanthropy.

Thank you for your time.

Sincerely,

[INSERT YOUR NAME AND TITLE]



[1] Statement of Frank J. Sammartino, Assistant Director for Tax Analysis, Congressional Budget Office, “Options for Changing the Tax Treatment of Charitable Giving,” Senate Committee on Finance, Oct. 18, 2011.

[2] Statement of Frank J. Sammartino, Assistant Director for Tax Analysis, Congressional Budget Office, “Options for Changing the Tax Treatment of Charitable Giving,” Senate Committee on Finance, Oct. 18, 2011.

[3] Giving USA Foundation 2013, Giving USA 2012 The Annual Report on Philanthropy for the year 2012.

[4] Katie Roeger, Amy Blackwood and Sarah Pettijohn, The Nonprofit Almanac 2012, The Urban Institute 2012.



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