Charitable Deduction | Federal | ACR in the News | Federal Legislation

Feb 3, 2012

Only Charitable Deduction Preserved In New Buffet Rule Tax Proposal

Only Charitable Deduction Preserved In New Buffett Rule Tax Proposal

By Diane Freda
Reproduced with permission from Daily Tax Report, 22 DTR G-5 (Feb. 3, 2012).
Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033)
http://www.bna.com


The charitable contribution deduction is the only deduction that would be allowed under the Buffett rule tax proposed by Sen. Sheldon Whitehouse (D-R.I.), in legislation that would ensure that millionaires pay a minimum effective 30 percent tax rate, charitable sources told Bloomberg BNA Feb. 2.

“The legislation builds on what the president’s blueprint stated, which was that the administration is going to impose the [Buffett rule tax] on individuals with certain high incomes, but is going to hold harmless their contributions to charity,” Sandra Swirski, executive director of the Alliance for Charitable Reform, said.

The proposed legislation (S. 2059) is the second piece of good news charities have received in less than two weeks, indicating that both the administration and at least some elements in Congress intend to preserve the deduction (17 DTR G-4, 1/27/12). Charities have been cowering under a possible 28 percent limitation on itemized deductions that they said would largely kill off incentives for charitable giving. Instead the Obama administration has signalled an apparent willingness to preserve the deduction, with Whitehouse and eight co-sponsors taking up the call.

The 30 percent tax on high earners would be phased in for incomes between $1 million and $2 million, Whitehouse has said, with taxpayers paying a portion of the tax that the Buffett rule adds as they go up the line in income between $1 and $2 million. It does not fully kick in until they reach $2 million. However, those giving to charities would be eligible for a tax deduction.

Charitable Deduction Comes Off First

“Essentially the bill allows the modified charitable deduction to be deducted from adjusted gross income before the 30 percent tax rate is applied,” Evan Liddiard, partner at Urban Swirski & Associates of Washington, said.

The proposed legislation would reduce the charitable contribution deduction for taxpayers with adjusted gross incomes of more than $175,450 in 2013. The reduction attempts to mirror the limitation on itemized deductions set to become effective when the tax cut provisions from 2001 expire at the end of 2012, Liddiard said.

Those considered to be higher income taxpayers with AGI over the $174,450 threshold will lose part of their itemized deduction, including the charitable contribution deduction, for regular tax purposes beginning next year, he said. The proposed legislation attempts to give taxpayers the same result under the Buffett rule tax as they would get under the regular income tax. The Paying the Fair Share Act would signal that incentives for private giving should not be used as a revenue offset for competing priorities, according to Alliance for Charitable Reform.The group said while it is pleased that there has been wide recognition that the charitable deduction is different from all other deductions, in that it encourages people to give away their money, the creation of wealth is also important. A surtax on high-income earners could hinder that goal, it said.

“We are hopeful Congress and the Administration can come together and create a proposal that accomplishes all of these goals,” Sue Santa, senior vice president of the Philanthropy Roundtable, said.

Charitable Deduction | Press Releases | Federal Legislation

Feb 2, 2012

ACR STATEMENT ON THE CHARITABLE DEDUCTION INCLUSION IN SENATE “BUFFET RULE” PROPOSAL

WASHINGTON, D.C.— In announcing “The Paying the Fair Share Act”, a proposal for a new tax on high earners put forth by 8 Senate Democrats, the charitable deduction was specifically preserved, signaling that incentives for private giving should not be used as a revenue offset for competing priorities.

President Obama advocated for this tax proposal in his State of the Union Speech last week and noted a need to protect charitable giving in his “Blueprint” that accompanied the speech. 

“ACR believes that our tax code should encourage and incentivize private charitable giving.  We appreciate the wide recognition that the charitable deduction is different from all other deductions in that it is an incentive for Americans to give away their money as compared to other deductions and credits. However, ACR also believes that encouraging entrepreneurship and the creation of wealth is vital to sustaining charitable giving and a surtax on high income earners could hinder this goal.  We are hopeful Congress and the Administration can come together and create a proposal that accomplishes all of these goals to promote more philanthropy,” said Sue Santa, senior vice president of the Philanthropy Roundtable.

ACR is a project of The Philanthropy Roundtable and is comprised of nonprofit leaders and groups that serve as a leading voice on encouraging philanthropic freedom, increased giving and opposes legislative or regulatory proposals that could diminish private giving.

For more information about ACR contact Alison Hawkins at .(JavaScript must be enabled to view this email address) or at 202-822-8333.

###

Charitable Deduction | Federal | Federal Legislation

Jan 27, 2012

Charitable Deduction Central

NEWS

President’s State of the Union Address

1.27.12 - Bloomberg BNA reports that The Obama Administration may be stepping back from its former proposal to cap charitable deductions at 28 percent despite a proposed increase to their incomes taxes.

ACR signs onto letter defending the charitable deduction

12.15.11 - Today, ACR and The Philanthropy Roundtable joined a coalition other nonprofit organizations across the country send a letter to Senate Finance Chairman Max Baucus reminding him of the importance of the charitable deduction during this giving season. Click here to learn more

RESOURCES

Following are resources that provide background on efforts at the federal level to impact the charitable giving.


MENU:

News | Research | Opinion & Thought | Other Resources | Stay Involved



News

News stories we have highlighted and find of interest.

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Research

Studies, reports, and surveys on the impact of changes to the charitable deduction as well as proposals from a variety of sources.

Administration Proposals: President Obama has proposed limiting the charitable deduction for high-income earners in several proposals over the past few years.

Deficit Reduction: As part of federal deficit reduction talks, following are proposals that have been raised, which include changes to the charitable deduction:

  • “Gang of Six” – A Bipartisan Plan to Reduce our Nation’s Deficits Report recommends that Congress “reform, not eliminate” tax expenditures for health, charitable giving, homeownership, and retirement. (July 2011)
  • Solutions Initiative - The Peterson Foundation released six deficit reduction plans from the American Enterprise Institute, the Bipartisan Policy Center, the Roosevelt Institute Campus Network, the Center for American Progress, the Economic Policy Institute, and the Heritage Foundation. The six plans addressed all aspects of Federal spending and revenue-raising, including reforming the current tax code.
  • Bipartisan Policy Center: Debt Reduction Task Force – Restoring America’s Future Report recommends a tax credit equal to 15 percent of any donation received, similar to the Gift Aid system in Great Britain. (February 2011)
  • The President’s National Commission on Fiscal Responsibility and Reform (“Deficit Commission”) - The Moment of Truth Report proposes recommendations to reduce the deficit that call for massive discretionary spending cuts and eliminating tax incentives, including the charitable deduction. (December 2010)
  • Century Foundation, Demos, and the Economic Policy Institute – Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility Report proposes converting the deduction to a refundable credit. (November 2010)

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Opinion & Thought

Opinion and thought pieces by experts, scholars, and leaders in the nonprofit sector on the charitable deduction.

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Other Resources


Links to help you stay informed on proposals and legislation or to contact your representative.

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Stay Involved

ACR is engaged in protecting the charitable deduction through a number of ways.

Events:

Following are letters from coalitions of charitable and philanthropic organizations, including the Nonprofit Coalition, to Members of Congress and the Administration:

Interested in getting involved with efforts to protect the charitable deduction?
Contact William Coughlin (.(JavaScript must be enabled to view this email address)) for more information.

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charitable deduction

Federal Legislation

Jan 27, 2012

Tax Policy Geeks Take Center Stage—Tax Plans and Reform

Consider This…

Ok, we admit it.  We’re geeks.  Policy geeks.  Tax policy geeks if the truth be told.

Normally when we tell someone we’re interested in taxes, we get an eye roll, or worse.  Unless we are with our tax policy peers, we often feel like the skunk at the garden party.

So imagine our sense of wonder over all of the activity in tax world in the last few months.  First, Herman Cain gave us 9-9-9, next a major international tax proposal from the Chairman of the Ways and Means Committee, then a major battle over extending the payroll tax cut for employees, in addition Governor Romney’s tax returns and finally, earlier this week, the President dedicated a good amount of his 64-minute State of the Union speech to taxes and the need for tax reform.  Finally, we feel as if we are on center stage!

What does all of this mean going forward?  We’ve always said we can’t imagine major tax reform passing without a President really leaning into that effort.  We saw signs that might be in the works in the President’s speech.  At the same time, we think major tax reform in a Presidential election year may be too heavy a political lift given that tax reform –by its very nature– creates losers and a lot of those losers vote.

What we may see is the President pushing throughout 2012 for his version of tax reform with the Presidential election as the real “decider” on what we do about taxes in 2013.

112th Congress
tax reform
taxes

Charitable Deduction | Federal Legislation | State Legislation

Jan 27, 2012

ACR Newsletter 1.27.12

The latest edition of the ACR newsletter is available below.

Upcoming Event


IS YOUR CALENDAR MARKED?


Summit for Leaders
March 21, 2012
8:00 a.m. – 12:00 p.m.
Mayflower Renaissance Hotel
1127 Connecticut Avenue NW
Washington, D.C. 20036
Register Now: summitforleaders.eventbrite.com

The ACR Summit for Leaders offers a half-day of programming to provide a snapshot of the current political issues impacting philanthropy and nonprofits, and guidance on how to effectively advance your cause amid competing priorities and constant commotion. Panels including Senior Congressional Staff, policy experts and seasoned practitioners offer an insider’s look at the landscape of Capitol Hill, and how the agendas of Congress, the Administration and the states might impact the philanthropic sector. The Summit is an excellent opportunity for foundation executives, nonprofit leaders, and others interested in the intersection of public policy and philanthropy. A complete list of session and speakers will be announced soon. Click here to learn more about the ACR Summit.

Other Events on March 21:

  • Luncheon 12:00 - 1:15 p.m. Luncheon co-hosted by Alliance for Charitable Reform, Council on Foundations and the Forum of Regional Associations of Grantmakers with commentary and analysis on the Republican Primary and the General Election.
  • ACR Fly In/Speak Out (Lobby Day) Wednesday Afternoon Meetings with senior Congressional staff to discuss the importance of maintaining incentives for charitable giving such as the charitable deduction. Location: Capitol Hill. (See below for more information)
  • Reception 5:00 - 6:00 p.m. Reception to acknowledge the work of a key Member of Congress who is championing issues important to private philanthropy. Location: The Monocle Restaurant,

Register: http://summitforleaders.eventbrite.com/ or call 202-822-8333.
_______________________________________________________________________________
Foundations on the Hill
The ACR Summit for Leaders is held in conjunction with Foundations on the Hill (FOTH), hosted by the Council on Foundations and the Forum of Regional Associations of Grantmakers. We encourage Summit attendees who are eligible to participate in FOTH to visit http://www.foundationsonthehill.org for more information. Attendees must register separately for Foundations on the Hill here.

For more information contact Patrice Lee at The Philanthropy Roundtable (.(JavaScript must be enabled to view this email address) or 202.822.8333).


Washington Roundup

Here is an update from Capitol Hill:

  • State of the Union - On Tuesday night (January 24th), President Obama delivered his State of the Union address.  The policy and politics-laden speech lasted just over an hour and focused on economic issues, including a call for a tax code that promotes fairness and responsibility.  Among the tax proposals the President discussed was a minimum tax for households earning $1 million or more per year.  Building on the so-called “Buffett Rule” that was first mentioned last year, Obama said “if you make more than $1 million a year, you should not pay less than 30 percent in taxes… In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions.  On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up.”

    At first blush, this sounds like a renewed call for limiting all tax credits and deductions for high income households, including the charitable deduction.  It’s important to note, however, that the White House released an 8-page document entitled Blueprint for an America Built to Last”.  This document provides more detail to the President’s proposals and notes the Administration will “work to ensure that [the Buffett Rule] is implemented in a way that is equitable, including not disadvantaging individuals who make large charitable contributions.”  While this may indicate a retreat from previous policies that sought to limit the charitable deduction and other charitable giving incentives.  We are awaiting the release of the President’s budget on Tuesday, February 13th.  That budget should give us more details on this “Buffett Rule” proposal as well as the other tax proposals the President mentioned in his speech earlier this week.

    •  

  • Legislative Activity -
    As we discussed in our last newsletter, several provisions are due to expire on February 29th, absent Congressional action.  These include the employee payroll tax cut, an extension of unemployment benefits and the so-called “doc fix.”  Earlier this week, the House and Senate conferees met on what – if anything – to do about extending these provisions and the fight over how to pay for any extension continued.  Democrats are calling for a surtax on millionaires, while Republicans are insisting on a deeper and longer wage freeze for employees of the federal government.  Despite this continued wrangling, it is expected that they will ultimately reach a compromise by the deadline.

    The Senate Finance Committee will hold a hearing on January 31st to examine the annual round of expiring tax provisions, including the IRA charitable rollover.  While we do not expect these expiring provisions to get extended until after the election, we will be sure to monitor this hearing and report any relevant news.


    Congress also needs to reauthorize funding for the Highway Trust Fund, which is set to run out of money on March 31st.  This will ignite a new round of debate regarding pay-fors. We don’t expect any surprises here.

    In addition, we don’t expect many tax bills to pass this year. However, both the Senate Finance Committee and House Ways and Means Committee will continue to work towards tax reform with hearings and, possibly, legislative drafts for public review.  We anticipate the period after the election, known as the “lame duck session,” to be action-packed.  The end of 2012 will bring not only a new round of expiring tax provisions, but a slew of other major considerations: the expiration of the current income tax rates and preferential rates for capital gains and dividends (otherwise known as the Bush Tax Cuts), attempts to deal with the automatic cuts that are due to go into effect as a result of the Super Committee’s failure last fall (aka sequestration), and another increase in the federal debt ceiling.


Consider This…


Tax Policy Geeks Take Center Stage—Tax Plans and Reform
Ok, we admit it.  We’re geeks.  Policy geeks.  Tax policy geeks if the truth be told.

Normally when we tell someone we’re interested in taxes, we get an eye roll, or worse.  Unless we are with our tax policy peers, we often feel like the skunk at the garden party.

So imagine our sense of wonder over all of the activity in tax world in the last few months.  First, Herman Cain gave us 9-9-9, next… (keep reading)

Save the Date


ACR Fly In/Speak Out (Lobby Day) in Washington, D.C.

Mark your calendars for the ACR Fly In/Speak Out (Lobby Day) with the Alliance for Charitable Reform the afternoon of Wednesday, March 21, 2012.

Why should you attend?
With President Obama once again expected to call for limiting the charitable deduction, and some Members of Congress continuing the hunt for revenue to help pay for other priorities, 2012 is shaping up to be another challenging year for the sector.  Therefore, it is important that nonprofit leaders remind policymakers about what is at stake should policy changes drive less private giving. 

What is Lobby Day?
In short, it’s a chance to meet with policymakers and their staff.  Similar to our October event, this will provide an opportunity for you to connect with policymakers and explain the impact that a decline in private giving would have on your programs and the people you serve.

RSVP to Patrice Lee (.(JavaScript must be enabled to view this email address) or call 202-822-8333).


Making Headlines

Here are recent headlines you may find interesting:

Federal

State of the Union & Taxes: Bloomberg BNA reports that The Obama Administration may be stepping back from its former proposal to cap charitable deductions at 28 percent despite a proposed increase to their incomes taxes. ACR’s executive director, Sandra Swirski, and Diana Aviv, president of Independent Sector, both expressed optimism with these signals. Also read: Obama Lays Out Policy Proposals, Wall Street Journal, and President Vows Not to Deter Giving, Chronicle of Philanthropy

Kiplinger highlights several popular tax provisions that expired at the start of 2012, including deductions for direct IRA distributions to charity.

Investment News reviews proposed changes in federal tax policy that may affect charitable incentives including the charitable deduction and the expiration of the IRA Charitable Rollover.

Nonprofit Oversight: Rep. Charles Boustany (R-LA), chair of the House Ways and Means Subcommittee on Oversight, outlines his priorities for this year’s legislative session and his plans for more stringent oversight of nonprofit organizations.

States/Local

Kansas: In response to a recent tax proposal by Governor Sam Brownback to end itemized deductions and exemptions for Kansas taxpayers, including those for charitable contributions, Kansas House Republicans have proposed a plan that reduces personal income taxes without eliminating popular credits and deductions contributions.

Boston: According to the Mayor of Boston, nonprofit organizations have increased their voluntary contributions to the city by 24 percent over the past six months. This represents 88% of the $10.8 million amount requested under new payments in lieu of taxes (PILOT) guidelines adopted by the mayor in 2011 that call for higher voluntary payments based on an institution’s tax-exempt property value. 

Comings & Goings (Nonprofit Leadership)

Steve Gunderson: Steve Gunderson, the former CEO of the Council on Foundations, has been named the next president of The Association of Private Sector Colleges, a for-profit college trade group. Also read: APSC Press Release and Former GOP congressman to lead higher-ed group, The Hill

This Caught Our Eye…

Higher Education Philanthropy: Peter Wood, president of the National Association of Scholars, defends donors to colleges and universities against allegations that some are undermining academic freedom and integrity. Also see: Are Donors Dangerous?, Philanthropy Daily

Advocacy in Washington: Jeff Hamond, former senior Congressional staff person, makes the case for why this year presents a big opportunity for foundations to build relationships with key policymakers and their staffs in advance of the many reforms expected to be pursued by the 113th Congress.

Elections: In the Huffington Post, Robert Egger, founder of DC Central Kitchen, urges nonprofits to get involved with CForward, a PAC for nonprofit workers that encourages those running for office to recognize the importance of the nonprofit sector.

Internet Issues: Federal legislation recently introduced to end the practice of selling pirated or counterfeit goods, may have a unique impact on the charitable sector. Nonprofit website servers may be affected making them vulnerable to identity theft and cyber attacks and content on nonprofit websites could end up being blocked and removed from search results leading to a decrease in website traffic. Also see: Wikipedia and Other Web Sites Go Dark to Protest Proposed Law, Chronicle of Philanthropy

Giving Motivations: An article released by The Quarterly Journal of Economics finds that an overwhelming majority of Americans give to charity each year and that they are often motivated by either altruism or social pressure from their solicitor. Article: Testing for Altruism and Social Pressure in Giving.

Looking for ARCHIVES of this newsletter? Click here.


Further Reading

charitable deduction
112th Congress
State of the Union
IRA Tax Rollover

Charitable Deduction | ACR in the News | Federal Legislation

Jan 27, 2012

‘Obama Blueprint May Signal Retreat From Limit on Charitable Deductions’

Bloomberg BNA

This morning BNA reported that the Administration may be stepping back from previous proposals to cap charitable deductions at 28 percent.

Here’s an excerpt from the article:

“The past three budgets the president has submitted have included a limit to the charitable deduction in every single one of them, through limiting itemized deductions,” said Sandra Swirski, director of Alliance for Charitable Reform. “He’s also raised limiting the charitable deduction as a pay-for in at least two of his bills, one on health care, the other a jobs bill. So it keeps coming up.”

However, Swirski said she is now “cautiously optimistic” that when the president’s budget is revealed Feb. 13, Obama’s “stepping away” from the proposal will be clear.

She also pointed to another part of the blueprint in which the White House excluded the charitable deduction from a list of tax subsidies that should not be afforded to those making more than $1 million. The subsidies included on that list were housing, health care, retirement, and child care—but there was no mention of the charitable deduction.”

Read the full article here

charitable deduction
112th Congress
State of the Union

Charitable Deduction | Press Releases | Federal Legislation

Jan 25, 2012

ALLIANCE FOR CHARITABLE REFORM STATEMENT ON STATE OF THE UNION ADDRESS

WASHINGTON, D.C.— In his State of the Union Address last night, President Obama acknowledged the value of charitable giving stating that the Administration will work to ensure that new tax rules will not disadvantage large charitable gifts.  While the President did not specifically address the charitable deduction, this may signal a change in the Administration’s prior position on this tax provision.

For the last three budget submissions and in his jobs plan, President Obama proposed a cap on the itemized deduction, including the charitable deduction. 

“ACR is cautiously optimistic that all the pressure we and others have brought to bear may finally be resonating with the Administration. We believe that our tax code should encourage and incentivize private charitable giving. We appreciate that the President seems to acknowledge the value of charitable giving but we remain cautious and won’t speculate until we see the details of the President’s plan,” said Sue Santa, senior vice president of the Philanthropy Roundtable. 

ACR is a project of the Philanthropy Roundtable and is comprised of nonprofit leaders and groups that serve as a leading voice on encouraging philanthropic freedom, increased giving and opposes legislative or regulatory proposals that could diminish private giving.

For more information about ACR contact Alison Hawkins at .(JavaScript must be enabled to view this email address) or at 202-822-8333.

Federal Legislation | Events

Jan 17, 2012

Registration Now Open - ACR Summit for Leaders

Wednesday, March 21, 2012

Registration Now Open - ACR Summit for Leaders

The Alliance for Charitable Reform (ACR) invites you to the nation’s capital for our third annual ACR Summit for Leaders.

Wednesday, March 21, 2012
8:00 a.m. - 12:00 p.m.
Mayflower Renaissance Hotel
1127 Connecticut Avenue NW
Washington, D.C. 20036

REGISTER NOW

The ACR Summit for Leaders offers a half-day of programming to provide a snapshot of the current political issues impacting philanthropy and nonprofits, and guidance on how to effectively advance your cause in Washington amid competing priorities and constant commotion. The Summit is an excellent opportunity for foundation executives, nonprofit leaders, and others interested in the intersection of public policy and philanthropy.

Why Attend the Summit?

Amid challenging economic times, in 2011 the charitable sector was a target. With growing budget deficits and increasing pressure to fund government programs, the President and some in Congress began to explore the possibility of sacrificing so-called “sacred cows,” most notably the charitable deduction, as a means to help close the gap. Fortunately, ACR and our colleagues in the sector engaged in a successful campaign to educate Members of Congress about the critical role private philanthropy plays in strengthening our communities.

2012 will be no less challenging. Deficits continue to grow, and the hunt for money will become even more intense. And then there’s the upcoming election. All Presidential candidates have proposed sweeping tax reform plans. In this context, changes to our tax code will be the subject of much debate and discussion. We should expect some lawmakers to call for tax policy changes that could drive less private giving
A complete list of session and speakers will be announced soon.

Additional Events on Wednesday, March 21

You may also be interested in the following ACR events:

  • Luncheon 12:00 - 1:15 p.m. Luncheon co-hosted by the Alliance for Charitable Reform, Council on Foundations and the Forum of Regional Associations of Grantmakers with commentary and analysis on the Republican Primary and the General Election.
  • ACR Fly In/Speak Out (Lobby Day) Wednesday Afternoon Meetings with senior Congressional staff to discuss the importance of maintaining incentives for charitable giving such as the charitable deduction. Location: Capitol Hill. (Note – If you would like to participate in Lobby Day only, please email Patrice Lee directly at .(JavaScript must be enabled to view this email address).)
  • Reception 5:00 - 6:00 p.m. Reception to acknowledge the work of a key Member of Congress who is championing issues important to private philanthropy. Location: The Monocle Restaurant, 107 D Street Northeast Washington, DC 20002 (on the Senate side of Capitol Hill).


Also occurring Wednesday, March 21 through Thursday, March 22:

  • Foundations on the Hill
    The ACR Summit for Leaders is held in conjunction with Foundations on the Hill (FOTH), hosted by the Council on Foundations and the Forum of Regional Associations of Grantmakers. We encourage Summit attendees who are eligible to participate in FOTH to visit www.foundationsonthehill.org for more information. Attendees must register separately for Foundations on the Hill here.

    • Registration

    Register online (http://summitforleaders.eventbrite.com) or call 202.822.8333
    (Online registration closes March 14th)

    Registration is required for all events hosted by the Alliance for Charitable Reform. If you would like to participate in Lobby Day only, please email Patrice Lee directly at .(JavaScript must be enabled to view this email address). If you plan to attend Foundations on the Hill, you must register separately here.

    Note: The ACR Summit for Leaders is intended for foundation and nonprofit executives.

    For more information contact Patrice Lee at The Philanthropy Roundtable (.(JavaScript must be enabled to view this email address) or 202.822.8333).

    Summit for Leaders

    Federal Legislation

    Jan 13, 2012

    2012 Congressional Forecast

    2012 Congressional Forecast

    Well the curtain is up on 2012.  What should we expect from Washington this year?  The short answer is not much until the bitter end. 

    The longer answer:  If you thought last year was a nightmare on Capitol Hill, this year is likely to be a whole lot worse.  With control of the Presidency, Senate and House all up in the air, it is going to be all politics, all the time.

    So what can we expect in the short term?  The President is due to deliver his State of the Union speech on January 24th with the release of his budget in early February.  Expect the budget to include limits on the charitable deduction as we have seen in his previous budgets but don’t expect action on those limits this year.

    As for other Congressional business, two days before Christmas 2011, Congress agreed to a two-month extension of the employee payroll tax cut then fled town.  That extension expires on February 29th.  House and Senate members tasked with negotiating a longer term extension of that payroll tax cut have been named but the $64,000 question is will Congress be in “Let’s make a deal” mode or sink into hand-to-hand combat?  For the good of the order we hope it is the former.  However, if history is any guide it may be the latter.

    That leaves much unfinished business.  What do we do about the Bush tax cuts (i.e. preferential rates for individual income taxes, capital gains and dividends) that are set to expire at the end of 2012?  What about tax extenders such as the R&D tax credit and the IRA charitable rollover that have already expired?  What do we do about raising the debt ceiling which we are fast approaching?  And are we really going to allow over $1 trillion in spending cuts to go into effect beginning on January 1, 2013 (automatically triggered as a result of the failed Super Committee negotiations)?
    Individually, these issues are heavy lifts.  If you load them all together, they may be impossible to get off the ground.  Either way, we don’t expect Congress to have the political will to address them in a serious way until after the election, in a lame-duck session.  And of course we intend to keep you posted on all of the above. 

    112th Congress
    tax extenders
    debt ceiling
    president's budget
    president's budget

    Charitable Deduction | Federal Legislation | State Legislation

    Jan 13, 2012

    ACR Newsletter 1.13.12

    Happy New Year and welcome to 2012! We anticipate a busy year ahead and look forward to keeping you up to date on the issues that matter to our community.

    The latest edition of the ACR newsletter is available below.

    Washington Roundup


    The House will return to session from the holiday break on Tuesday, January 17, following the Martin Luther King Jr. holiday. The Senate will reconvene on Monday, January 23rd in time for the President’s State of the Union address planned for the evening of Tuesday, January 24th.

    Here is an update from Capitol Hill:

    • Current State of Play - As you may recall, on December 23rd, the President signed a bill with a 2-month extension of a payroll tax holiday, additional unemployment benefits and the prevention of a cut in fees paid to Medicare providers (known as the Doc Fix).  These provisions, which are set to again expire on February 29, 2012, are paid for through an increase in the fees charged by government-sponsored enterprises such as Fannie Mae to guarantee mortgage loans.  To garner Republican support for this short-term extension, Democrats agreed to a provision that convenes a House –Senate Conference Committee to produce a follow-on deal that would extend the payroll tax cut through the end of 2012.  (The bill also requires President Obama to approve or deny, within 60 days, a permit to begin construction of the Canada-Texas Keystone XL pipeline.) .

      Attention in Washington has now turned to this Conference Committee and, reportedly, staffers for the committee members have started meeting even though Congress remains in recess.  While negotiations promise to be heated and a compromise for how to pay for a full-year extension will be difficult to reach, staffers remain cautiously optimistic.  A spokesperson for Conference Committee conferee and House Ways and Means Chairman Dave Camp (R-MI) said “the work is ongoing and will continue so that members have the materials and information they need for productive discussions.”

      As for the “tax extenders” that expired at the end of 2011 (and that includes several items which incentivize private giving like the IRA Charitable Rollover), Senate Finance Committee Chairman Max Baucus (D-MT) has called for swift action on renewing these extenders.  However the same fight for revenue offsets that is threatening the payroll tax cut extension, will carry over to tax extenders. While we do not expect an extenders package to be passed before the 2012 elections, we believe that after the election during what’s called a “lame-duck session,” Congress will likely pass an extension retroactive to the beginning of 2012 for most, if not all, of the provisions.

      •  

    • What’s Next -
      On January 24th, the President will deliver his annual State of the Union address, and we expect taxes and tax reform to be a significant component of that speech. This is the first opportunity of 2012 for the President to set the tone for tax reform discussions the remainder of the year. Already we have learned that he will announce a plan to provide tax incentives to companies that keep and/or create jobs within the United States. Such a plan will build on previous discussions of corporate tax reform within Congress, and will undoubtedly prompt hearings in both the House Ways and Means and Senate Finance Committees. It is unclear whether any provisions affecting the charitable sector will be mentioned, but we will keep you up to date as more details of the speech are released in the coming weeks.

      In early February, following his address the President will release his FY2013 budget. As in years past, we believe he will include a limitation to the charitable deduction as part of a broader cap on all itemized deductions for upper-income taxpayers. In anticipation, we are working on several tactics and tools to highlight opposition to this proposal, both within ACR as well as with our colleagues in the private giving/non-profit coalition. One important event is an upcoming ACR Lobby Day to be held in conjunction with ACR’s Summit for Leaders on March 21st to educate Members and their staff about what’s at stake for the community if policies are implemented which drive less private giving.


    Consider This…


    2012 Congressional Forecast
    Well the curtain is up on 2012.  What should we expect from Washington this year?  The short answer is not much until the bitter end. 

    The longer answer:  If you thought last year was a nightmare on Capitol Hill, this year is likely to be a whole lot worse.  With control of the Presidency, Senate and House all up in the air, it is going to be all politics, all the time.

    So what can we expect in the short term?  ...(keep reading)

    Upcoming Event


    The Alliance for Charitable Reform (ACR) invites you to the nation’s capital
    for our third annual ACR Summit for Leaders.

    *** Registration will open on Tuesday, January 17 ***

    Summit for Leaders
    8:00 a.m. – 12:00 p.m.
    Mayflower Renaissance Hotel
    1127 Connecticut Avenue NW
    Washington, D.C. 20036

    The ACR Summit for Leaders offers a half-day of programming to provide a snapshot of the current political issues impacting philanthropy and nonprofits, and guidance on how to effectively advance your cause amid the ever-present din in Washington. Panels including Senior Congressional Staff, policy experts and seasoned practitioners offer an insider’s look at the landscape of Capitol Hill, and how the agendas of Congress, the Administration and the states might impact the philanthropic sector. The Summit is an excellent opportunity for foundation executives, nonprofit leaders, and others interested in the intersection of public policy and philanthropy.

    Other Events
    ACR Fly In/Speak Out (Lobby Day)
    Wednesday Afternoon
    Join colleagues in meetings with senior Congressional staff to discuss the importance of maintaining incentives for charitable giving such as the charitable deduction. Location: Capitol Hill.

    Reception
    5:00 - 6:00 p.m.
    You are cordially invited to a reception to acknowledge the work of a key Member of Congress who is championing issues important to private philanthropy. Location: The Monocle Restaurant

    Why Attend the Summit?
    In 2011 the charitable sector was a target. With growing budget deficits and increasing pressure to pay fully for government programs, the President and some in Congress began to explore the possibility of sacrificing so-called “sacred cows,” most notably the charitable deduction, as a means to help close the gap. Fortunately, ACR and our colleagues in the sector engaged in a successful campaign to educate Members of Congress about the critical role private philanthropy plays in strengthening our communities.

    2012 will be no less challenging. Deficits continue to grow and the hunt for money will become even more intense. And then there’s the upcoming election. All Presidential candidates have proposed sweeping tax reform plans. In this context, changes to our tax code will be the subject of much debate and discussion. We should expect some lawmakers to call for tax policy changes that could drive less private giving.

    A complete list of session and speakers will be announced soon.

    Registration
    Online registration will open January 17, 2012. Look for an email on Tuesday with a link to register for the Summit and other related events.
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    Foundations on the Hill
    The ACR Summit for Leaders is held in conjunction with Foundations on the Hill (FOTH), hosted by the Council on Foundations and the Forum of Regional Associations of Grantmakers. We encourage Summit attendees who are eligible to participate in FOTH to visit http://www.foundationsonthehill.org for more information. Attendees must register separately for Foundations on the Hill.

    For more information contact Patrice Lee at The Philanthropy Roundtable (.(JavaScript must be enabled to view this email address) or 202.822.8333).


    Making Headlines

    Here are recent headlines you may find interesting:

    Charitable Deduction

    Opinion: Voices supporting and opposing limiting or eliminating the charitable deduction continue to emerge from across the country.

    Hawaii: The president of the Hawaii Tax Foundation discusses unintended consequences of changing tax policies for high-income earners. One such consequence is that these changes lead to a decrease in charitable donations which in turn harms efforts to help the poor. As we have reported, Hawaii recently capped all deductions including those for charitable gifts.

    Kansas: Governor Sam Brownback has proposed a tax reform plan that would end itemized deductions and exemptions for Kansas taxpayers, including those for charitable contributions. Also see: Governor: Kansas, a State in Transition

    States

    Boston: Mayor Thomas Menino has introduced changes to the city’s PILOT (Payment In Lieu of Taxes) program, with a plan requiring any non-profit with more than $15 million in property to pay 25% of what they would owe in commercial taxes as for-profit businesses.

    New Orleans: Mayor Mitch Landrieu has abandoned efforts to impose property taxes on some of the city’s nonprofit organizations. His original plan was to get legislation passed that would narrow the scope of property tax exemptions and grant local governments more power to regulate the exemptions

    New York City: The City is cracking down on nonprofits, revoking property tax exemptions for those which do not make filing deadlines. The City anticipates it could recoup up to $183 million.

    Comings & Goings (Nonprofit Leadership)

    Kauffman Foundation: Carl Schramm has stepped down as head of the Ewing Marion Kauffman Foundation after a decade of leadership to return to scholarship and business. Also see: Carl Schramm Decides to Step Down as Kauffman Foundation CEO

    Urban Institute: Sarah Rosen Wartell, the co-founder and executive vice president at Center for American Progress, has been named the new president of the Urban Institute.

    This Caught Our Eye…

    2012 Outlook: The Chronicle of Philanthropy highlights the top five challenges to the philanthropic sector and the top ten nonprofits to watch in 2012. Also see: The Year of Controversial Giving (Huffington Post)

    America’s Generosity: Americans were ranked the most generous people of all nations.

    Philanthropy and Public Policy: A Washington Post op-ed raises concerns about the influence large donors and foundations wield in setting policy priorities.

    Donor Advised Funds: According to a new study, the assets of donor advised funds grew by 12 % between 2009 and 2010.

    Nonprofits Electioneering: More reporting on the nonprofits pursuing political goals.

    Silicon Valley Philanthropy: The New York Times profiles philanthropist and author Laura Arrillaga-Andreessen who is influencing her peers and tech entrepreneurs to give while living.

    Do-gooders Beware: A startup and small business expert warns about the bureaucracy and difficulties involved in forming a nonprofit organization.

    Philanthropy Buzzwords: Philanthropic advisor Lucy Bernholz counts down the top ten keywords and concepts that capture the essence of 2011 for nonprofits.

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