PUBLIC POLICY UPDATE - SUMMER 2012
Charitable Deduction Still at Risk
The President’s FY2013 Budget included both the Buffett Rule proposal and the 28 percent cap on itemized deductions for high-income taxpayers. The Buffett Rule notably included a “carve-out” specifically for charitable deductions, preserving the status quo despite making changes to the other itemized deductions. We believe that the Buffett Rule language regarding charitable deductions indicates that the Administration is beginning to understand that the charitable deduction is unique as the only deduction that encourages people to selflessly give money away.
AFP, as the Chair of the Charitable Giving Coalition, sent a letter on behalf of the coalition to the White House thanking the Administration for including the Buffett Rule carve-out but also requesting that the Administration reconsider the 28% cap.
AFP will provide guidance shortly, but in the meantime, we urge our members to meet with their Members of Congress and urge them to preserve the charitable deduction.
We also urge our U.S. members to consider contributing to the AFP Political Action Committee (AFP PAC). The AFP PAC enhances our advocacy reach by giving us greater access to key Members of Congress. You can make a contribution to the AFP PAC online here.
AFP and the Charitable Giving Coalition are coordinating a Lobby Day in November following the election to ensure that Members of Congress are aware of the importance of the current charitable deduction. It is anticipated that Congress will consider substantive issues such as tax reform after the election, so the timing of the Lobby Day will be ideal.
The Senate Finance Committee recently held a hearing on tax reform to discuss the Domenici-Rivlin package (developed by a bipartisan commission last year).
The Domenici-Rivlin plan would replace itemized deductions with a tax credit which the Congressional Budget Office (CBO) estimated would result in a loss of $8 billion in charitable contributions per year (another study puts that number closer to $10 billion.
AFP continues to hear that “everything is on the table,” including the charitable deduction when it comes to tax reform. Even Members of Congress on both sides of the aisle who have been champions of the charitable sector in the past appear open to changes to the charitable deduction given the importance of tax reform.
IRA Rollover Provision Awaits Reinstatement
The IRA Rollover provision expired at the end of last year. It is anticipated that a tax extenders bill will be passed to extend that provision and other expired tax provisions, but this year is unique with tax reform on the table and the election on the horizon. It is difficult to gauge whether the tax extenders bill will be enacted this year.
Please take a few minutes to complete the IRA Rollover Provision Survey. This survey will allow AFP to track gifts received by organizations, which will make our advocacy efforts much more effective and convincing on Capitol Hill. After you have completed the survey, please email it to Jason Lee, AFP’s General Counsel, at email@example.com or fax it to him at 703-684-0540.
AFP also urges its members to contact their Members of Congress and urge them to reinstate the IRA Rollover provision in the tax extenders bill as soon as possible.
As passed in the Pension Protection Act of 2006 and extended up until it expired on Dec. 31, 2011, the IRA Rollover provision exempts from taxable income any funds transferred (“rolled over”) from an Individual Retirement Account (IRA) to a charitable organization. The following limitations apply:
- The donor must be age 70½ or older.
- The cap on annual IRA rollovers is $100,000.
- The contribution must be a direct gift to a charity (no planned gifts).
Earlier this year, AFP submitted written comments to the House Ways and Means Committee urging it to reinstate the IRA Rollover provision and to extend it permanently or at least for a significant period of time.
*New* AFP Chapter Advocacy FAQ Document Now Available!
With the guidance and input of the AFP U.S. Government Relations Committee, AFP has produced a one-page Chapter Advocacy FAQ document. Please distribute it to your chapter leaders and members. It is an invaluable tool for chapters to launch or enhance their advocacy and lobbying efforts.
Senate Version of the Postal Reform Bill Preserves the Nonprofit Rate
As was reported by the Alliance of Nonprofit Mailers, the section of the House-version of a U.S. Postal Service reform bill in Congress that would have eliminated discounted nonprofit postal rates during a 12-year period has been removed from the legislation. This is a significant victory for the charitable sector.
None at this time, but AFP will call upon its members to act if necessary.
The Nonprofit Times wrote this article about the House bill and the nonprofit rate.
Kansas Seeks to Eliminate its State Charitable Deduction and Restrict Nonprofit Advocacy
AFP submitted talking points to its Kansas members in response to Gov. Sam Brownback’s proposal to completely eliminate the state charitable deduction.
In addition, AFP is prepared to help Kansas nonprofits receiving state funding preserve their right to lobby legislators on issues of importance to the organizations and their constituents.
AFP urges its Kansas members to contact their state legislators and the governor and advocate in support of the state charitable deduction and the state’s nonprofits’ ability to contact and educate legislators about relevant issues.
AFP Submits Charitable Giving Recommendations to Parliament
The House of Commons Standing Committee on Finance began holding hearings on tax incentives for charitable donations early this year. Prior to the hearings, AFP submitted the following recommendations to the committee:
- Increase the flow of charitable funds in the wake of the recession and encourage Canadians to enhance their charitable giving by establishing a “stretch” charitable tax credit.
- Extend the exemption from capital gains tax to charitable gifts of private company shares and land and real estate.
None at this time.
In our submission, we also urged the committee to consider the potential impacts on charities and charitable giving if the committee chose to contemplate accountability and transparency measures in addition to the tax incentives issues. We recommended that the committee seek charitable sector input to ensure that the sector can lend its own expertise and experience to the process.
With the assistance of Sussex Strategy, Andrea McManus, CFRE, chair of AFP, testified before the House of Commons Standing Committee on Finance on May 3, 2012 during its hearing on tax incentives for charitable donations.
AFP has drafted a number of fundraising cost questions and answers for AFP and Imagine Canada to use in case the issue comes up during future hearings.
Canada’s National Philanthropy Day Legislation Receives Second Reading in the House
On June 7, 2011, Senator Terry M. Mercer, CFRE (Liberal, Nova Scotia-Northend Halifax) introduced Bill S-201 that would permanently recognize National Philanthropy Day® every November 15th. The bill was passed by the Senate on December 1, 2011. The bill received its second reading in the House on May 16, 2012, and was referred to the Standing Committee on Canadian Heritage. The committee is poised to take up the bill in the first week that Parliament reconvenes in the fall.
Every member of AFP should be asking their MP for their support of the NPD legislation.
NPD acknowledges the entire spectrum of support provided by the voluntary sector and recognizes the profound impact that philanthropy has on the fabric of society. An estimated 50,000 people attend more than 125 NPD events and celebrations across North America every year. Celebrations take place in every province and major metropolitan area in Canada.
During National Philanthropy Day and throughout the month of November, Canadian AFP chapters honor exemplary local philanthropists, volunteer fundraisers, corporations, foundations, media outlets, children and young adults, and fundraisers at every level for their outstanding work in and contributions to the community. They also use this special occasion as a chance to educate the public about the importance of informed charitable giving and meaningful volunteerism.
Canada Revenue Agency Releases Revised Fundraising Guidance in April
The Canada Revenue Agency introduced a revised, more user-friendly version of the fundraising guidance on its website on April 20, 2012.
None at this time.
Every registered charity in Canada must provide the CRA with their fundraising expenses and revenues. This process often resulted in inconsistently reported results and lowered the value of information donors need to make informed decisions.
To address the importance of transparent and accurate information, the CRA undertook a lengthy and detailed review of their reporting process and procedures in 2008. AFP was one of many groups invited to submit content during this consultation. This feedback was considered and in many cases incorporated. The resulting CRA Guidance on Fundraising was released in June 2009. AFP, in conjunction with partners such as Imagine Canada and the Health Charities Coalition of Canada, has continued to provide direct feedback on the Guidance to the CRA.
AFP provided comments to the CRA in August 2011 regarding the proposed revisions.
It is anticipated that AFP will host a webinar that will provide more insight about the Fundraising Guidance to members and non-members. Look for an upcoming announcement.