Government Relations

 

AFP Government Relations August 2020 Update
By Terry Monteleone, CFRE, CSPG, TLM Consulting, Government Relations Chair

AFP plays an important role in promoting legislation to encourage philanthropy and support nonprofit organizations like our own.  Keep up to date and please contact your representatives to add your voice.  Sample letters and additional information will be provided to all AFP members at crucial moments to weigh in. 

Current AFP legislative priorities and recent or pending legislation include:

Universal Giving Pandemic Response Act:   A bipartisan group of six Senators has introduced a bill to expand the universal charitable deduction from the current limit of $300 to $4,000 for individuals and $8,000 for couples. 

The Universal Giving Pandemic Response Act (S. 4032), is sponsored by Sen. James Lankford, along with Christopher Coons (D-DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC) and Amy Klobuchar (D-MN). The House companion bill (H.R. 7324) was introduced by Representatives Mark Walker (R-NC) and Chris Pappas (D-NH). 

The universal charitable deduction was first enacted through the CARES Act, signed into law earlier this year, but only provided a $300 deduction per tax return.

The enhanced universal charitable deduction in the Universal Giving Pandemic Response Act would apply to giving in tax years 2019 and 2020. Donors who have already filed for 2019 could amend their returns.

The legislation could significantly increase giving from mid-level donors as the recent doubling of the standard deduction eliminated the incentive for many donors to itemize their expenses anymore, including charitable contributions. According to research by Independent Sector, the bill could generate up to $17 billion in new annual giving if the provision were made permanent.

The Universal Giving Pandemic Response Act is a legislative priority for AFP, and sample letters to Congress and other resources will be distributed in the near future.

Legacy IRA Act:  This bill expands the existing IRA Charitable Rollover that was first created by Congress in 2006 and made permanent in 2015. 

The IRA Charitable Rollover provision allows individuals to make direct tax-free charitable gifts up to $100,000 from their IRA starting at age 70 ½. Since its enactment, the IRA Charitable Rollover has generated millions of dollars in new or increased contributions to local and national charities. According to a recent report, the average growth of IRA rollover gifts from 2017 to 2018 was 73.8%. 

The Legacy IRA Act (S. 1257 and H.R. 3832) would expand the IRA Charitable Rollover to allow seniors starting at age 65 to make tax-free IRA rollovers to charities through life-income plans (charitable gift annuity or charitable remainder trust). It provides a guaranteed income for the senior for life and supports charities without negatively affecting federal tax payments since the senior’s annual retirement income from the plan is fully taxed.

The bill is estimated to cost the government $106 million over 10 years (the bill creates a four-year trial period), while the charitable sector estimates that the Legacy IRA Act could raise up to $1 billion each year for charities.

The Senate bill was introduced by Sen. Kevin Cramer (R-ND), while the House version was introduced by Rep. Don Beyer (D-VA).

The Legacy IRA Act is another legislative priority for AFP, and sample letters to Congress will be distributed shortly.

HEROES Act:  On May 15, the House passed the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, which is meant to be the latest in a line of stimulus bills (the CARES Act was one, see below). The House passed the bill as a way to begin negotiations with the Senate, but so far, the Senate has yet to consider it. It is doubtful at this point that the HEROES Act will be considered, but parts of it may be included in other legislation.

Some of the key elements of the HEROES Act include:

  • Strengthening the Payroll Protection Program to ensure that it reaches underserved communities and nonprofits of all sizes and types, and responds flexibly to small businesses by providing $10 billion for COVID-19 emergency grants through the Economic Injury Disaster Loan program.
  • Setting aside 25 percent of PPP funding for eligible employers with 10 or fewer employees, and for community financial institutions the bill would set aside the lesser of 25 percent or $10 billion from remaining funds under the interim funding bill passed in April.
  • Mandating that the Federal Reserve’s Main Street Lending Program, which was established utilizing CARES Act funds and is backstopped by the Treasury Department, includes nonprofit organizations as eligible borrowers. It also stipulates that the federal government should immediately offer a low-cost loan option tailored to the unique needs of nonprofit organizations with deferred payments, and that the loan may be forgiven solely for nonprofits predominantly serving low-income communities that are ineligible for a PPP loan.
  • Extending the paid leave provisions under the Families First Coronavirus Response Act to nonprofits and other employers with more than 500 employees. Applying the paid leave provision only to smaller employers was a last-minute change to the Families First Act back in March.

CARES Act:  The Coronavirus Aid, Relief, and Economic Security Act was a $2.2 trillion stimulus plan that contained funding opportunities for charities and enhanced charitable giving incentives. Most of the funding has now been distributed, but fundraisers should be aware of several charitable giving incentives contained in the bill. 

  • Temporary Universal Charitable Deduction—Taxpayers who do not itemize their deductions can take a one-time deduction of up to $300 for gifts made to charitable organizations. The deduction is ONLY for gifts of cash made in calendar year 2020 and does not cover other types of gifts or contributions made to donor-advised funds or private foundations.
  • Suspends the 60 percent adjusted gross income limitation for individuals’ charitable contributions for the year 2020. In a typical year, individuals can only take a charitable deduction of up to 60 percent of their adjusted gross income, no matter how much they give. For 2020, there is no limit, making cash contributions fully deductible.
  • Increases the cap on how much corporations may deduct for charitable gifts from 10 percent of taxable income to 25 percent. In addition, the limitation on deductions for food donations by corporations increases from 15 percent to 25 percent in 2020.
  • Waives for 2020 the required minimum distributions from retirement plans, such as pensions and 457 plans. Any minimum distributions from retirements plans that would have been required in 2020 can be delayed until 2021. This change reduces the incentive for donors to make gifts from their individual retirement account (IRA)—the IRA Rollover Provision