Jeffrey D. Byrne
President + CEO
Another Congressional session, another attempt at making permanent the federal charitable tax extenders that impact the ability of nonprofits to serve their constituencies. While critics argue these tax breaks help the rich get richer, the voice of nonprofits and those they serve is getting lost.
On February 12, the U.S. House of Representatives passed the America Gives More Act (H.R. 644), providing permanent tax deductions for gifts of food to food banks, land set aside for conservation and gifts to charities made directly from individual retirement accounts (IRAs). It is a bill similar to one that passed last Summer but failed to make it through the Senate. At this time, there is no date set for Senate consideration of H.R. 644.
Closely timed to the House passage of the bill was the release of a White House statement threatening to veto the legislation. The Administration characterizes the bill as an effort “to continue and create tax breaks that primarily benefit higher-income individuals.” Unfortunately, what is lost in this debate is the fact that charitable tax breaks benefit all donors (not just those in the highest wealth brackets) while providing financial support to nonprofits who provide services to individuals and families in need.
Older donors can be significantly impacted by the America Give More Act. The permanent provision allowing tax-free distributions only benefits individuals who are at least 70 ½ years old. When the deduction is allowed to lapse as it has been every year since 2008, then extended on an annual basis, it diminishes the giving incentive it was meant to create.
Last year, the incentive was not approved until December 19 and expired on December 31. This sort of “lip service” to tax breaks does not benefit anyone. The uncertainty it creates reduces charitable giving and increases the tax burden on older Americans. And this, in turn, hurts the nonprofits they support.
Now is the time to educate and advocate on the impact charitable giving incentives have on the services that nonprofits provide to people all across the socioeconomic spectrum. Included in the message of donor benefits must be the message that without these incentives, the critical funding nonprofits rely upon to provide much-needed services will diminish.
It is important that nonprofit Boards of Directors and Staff have the knowledge necessary to take a proactive stance in educating their elected officials on the challenges they will face if incentives to charitable giving are reduced or eliminated. As the Congressional search for revenue sources continues, every option is being evaluated and charitable tax breaks and deductions are no longer considered untouchable. The time is now for nonprofits to make their voice heard. Our Senators and Representatives need to hear from their constituents at the grassroots level during this debate on tax reform, specifically its impact on charitable giving incentives.
Not only can nonprofits advocate, now – more than ever – they should. So, you may ask, what should we do?
- Prepare thoroughly and do your homework. Familiarize yourself with your elected officials: their bios, backgrounds, roles on committees and voting records.
- Schedule a meeting with the appropriate House Member and Senator to introduce yourself, your nonprofit and the services you provide to your community (aka the elected official’s district). You can find your legislators’ names and contact information here.
- Establish a relationship with the legislator that allows you to serve as a resource on issues related to your mission and the nonprofit sector. This means making more than one contact. Consider inviting the legislator to tour your organization and meet some of your staff, donors, volunteers and those you serve (aka the legislator’s constituents who vote). This also means having the facts and data you will need to support your case at your fingertips.
- Make a clear request. Carefully frame the need for supporting charitable tax deductions and incentives and how the absence of such will negatively impact the funding nonprofits rely upon to provide services to the people who rely upon them.
Contact your Senator in support of H.R. 644. At this time, there are no plans scheduled to hear H.R. 644. Let your Senators know that the sooner this legislation is in place, the sooner your donors will feel empowered to make the gifts that will make a difference in your communities.
The saying, “You’re either at the table or on the menu” is very appropriate here. Now is the time to pull up a chair at the legislative table to help ensure everyone understands how charitable giving incentives benefit donors and those served by nonprofits, ultimately impacting individuals and families across the socioeconomic spectrum.