AFP Government Relations Update: June 2017
Dear Government Relations Chair and Other Chapter Leaders:
Thank you for your interest in public policy and your leadership this year. Several important developments have occurred on Capitol Hill, and we encourage you to keep your chapter membership apprised of these issues through articles in your chapter newsletter and presentations during chapter meetings. You can re-purpose this information and other articles in any way you’d like.
1. Overall Legislative Environment/Chances of Tax Reform
A lot has been happening in Washington, D.C. over the past couple of weeks (perhaps the understatement of the year!)—though much of it has not been related to the charitable sector. Events like the Comey hearing have sidelined Congress’ attention so it hasn’t been able to focus fully on tax reform, healthcare and other matters.
But it is Congress’ intent to move on key pieces of legislation, and many of these issues are intertwined, as Congressional Republicans had originally expected to use savings from their healthcare reform bill to help fund a tax reform plan. Because of budget deadlines and other factors, Congress has a 3- 4 week window before the planned summer recess to get most of these bills completed.
We have heard, however, that Congress may dispense with their August recess to allow them to work on tax reform during that time. The White House and Congressional Republicans are intent on passing tax reform. Although the current proposals do not restrict the charitable deduction itself, proposals to expand the standard deduction would shrink the pool of donors who itemize their deductions (donors who itemize represent the vast majority of people who give).
Through our contacts with key Congressional staff and members, our work with our partners in the Charitable Giving Coalition, and the AFP Political Action Committee, AFP is advocating strongly for the creation of a universal deduction (see below) that would allow anyone to take a charitable deduction, regardless of whether they itemize or take the standard deduction. We will keep Government Relations Chairs and other chapter leaders updated as the situation on Capitol Hill develops.
2. Research on Impact of Tax Proposals on Giving
New research conducted by the Indiana University Lilly Family School of Philanthropy found that the current tax policy changes proposed by Congress and the Administration would reduce charitable giving by up to $13.1 billion.
The study used the 2014 Tax Reform Act introduced by then House Ways and Means Committee Chairman Dave Camp (R-MI) to estimate the potential effects of tax policies on charitable giving. The tax proposal released by the Administration last month and the Republican legislators’ proposal both closely mirror the Camp proposal with respect to reducing the top marginal tax rate and increasing the standard deduction.
On the other hand, researchers also found that adding a charitable deduction for non-itemizing taxpayers (a universal deduction) to the policy proposals would likely more than offset the loss in charitable giving from the proposals and generate up to $4.8 billion in additional charitable giving.
Among the study’s key findings:
- Extending the charitable deduction to non-itemizing taxpayers by itself, without the other proposals (e.g., increasing the standard deduction), could generate up to $12.2 billion in additional giving.
- Reducing the top tax rate to 35 percent and increasing the standard deduction combined have the potential to REDUCE charitable giving by up to an estimated $13.1 billion.
- The study estimates that those two proposals (reducing the top tax rate to 35 percent and increasing the standard deduction) combined would reduce charitable giving to religious congregations by up to 4.7% and reduce giving to other charitable organizations by up to 4.4%.
- If enacted separately, either of these proposals (reducing the top tax rate or increasing the standard deduction) would reduce charitable giving.
The research could help influence the debate on Capitol Hill about tax reform related to charitable giving and the deduction. There will be a Congressional staff briefing in late June to highlight the research and help educate staffers about these important issues.
The Charitable Giving Coalition distributed a press release about the new research, calling on Congress and Treasury Secretary Steven Mnuchin to pass a universal charitable deduction that would be available to all taxpayers.
3. Letter to Ways and Means Committee
The Charitable Giving Coalition, led by AFP, sent a letter in early May to Republican members of the House Ways and Means Committee, encouraging them to safeguard the charitable deduction as they begin to debate their own tax proposals for the year.
The letter was written in response to President Trump’s summary tax plan and delivered to Ways and Means Committee members just before they headed to a weekend retreat to discuss tax reform.
“We were pleased to see that the Trump Administration’s tax reform package did not include any limits, caps, or other changes to the charitable deduction,” said Jason Lee, interim president and CEO of AFP and chair of the Charitable Giving Coalition. “But the package did include a substantial increase in the standard deduction. That proposals would reduce the number of taxpayers who itemize their deductions from one-third to just five percent. That’s nearly 30 million taxpayers who will no longer have access to the charitable deduction, likely leading to a decrease in giving.”
The letter called on legislators to make the charitable deduction available to all taxpayers as a non-itemizer or universal charitable deduction. This change would retain the current levels of giving experienced by charities across the U.S. and could possibly incentivize giving even more.
AFP and the Charitable Giving Coalition also continues to work with Democrats and Independents as well to create strong levels of support for the charitable deduction across Congress.
4. Public Policy Session at the Leadership Academy
Staff and volunteer leaders involved in AFP’s public policy programs are developing a session at this year’s Leadership Academy focusing on government relations and advocacy.
The will be part update, part training, part program development and part sharing. You’ll receive up-to-the-minute intelligence from Capitol Hill, including a tax reform update. You’ll to hear from chapter leaders and AFP’s own advocacy experts on how to build a successful policy program., including chapter and state Lobbing Days and similar events.
The Leadership Academy this year is in Cincinnati, Ohio, October 20 – 22. AFP encourages all chapters to attend, and urge you to send a representative to this important session.
5. AFP Political Action Committee
The purpose of the Committee is to provide the opportunity for individuals interested in the future of philanthropy and the profession of fundraising to contribute to the support of candidates for Federal office who believe, and have demonstrated their beliefs, in the principles to which philanthropy and the fundraising profession are dedicated. The Committee is non-partisan and dedicated to the protection and advancement of the fundraising profession and philanthropy in its various forms.
AFP encourages all U.S. members to contribute to the PAC. Information about giving to the PAC can be found on the AFP website: https://reports.afpnet.org/portal_add/pac/makegift_pac_form.cfm.
Again, feel free to use these updates, articles and position statements in your own newsletter, or just cover the highlights if you want to summarize.
If you’d like to set up a meeting with your local member(s) of Congress, contact AFP IHQ at email@example.com, and we can provide talking points and other resources.