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Tax Reform and Philanthropy

Editor’s Note:

Jeffrey Byrne + Associates is committed to sharing information that affects the nonprofit sector. We are a proud member of The Giving Institute, and as such, we also belong to the Charitable Giving Coalition. Formed in 2009, the Coalition is dedicated to preserving the charitable tax deduction, which is crucial to ensuring our nation’s charities receive the funds necessary to fulfill their essential philanthropic missions.

Firm President + CEO Jeffrey Byrne currently serves as The Giving Institute’s representative to the Charitable Giving Coalition. Stay tuned during 2015 for updates and ways you can become part of positive action to ensure the charitable deduction and other tax provisions retain their positive impact in supporting essential community services.

Jeffery D. ByrneJeffrey D. Byrne
President + CEO

The debate over tax reform will continue into 2015. While there are several areas with the potential to affect charitable giving, I would like to focus on two that will have immediate positive impact on philanthropy: saving the charitable giving deduction and making permanent the IRA rollover.

The Charitable Giving Deduction
First, a little background on the charitable giving deduction. Congress enacted the charitable giving deduction in 1917, four years after instituting the federal income tax. Many changes to the framework of this deduction have taken place over the past 98 years, but the deduction has not been in jeopardy of elimination until late 2012, when politicians began talking in earnest about lowering or even eliminating the deduction to reduce the federal deficit and avert the year-end “fiscal cliff.”

But nonprofits counter that the charitable deduction is a vital and unique incentive. According to Giving USA, those who itemized their charitable contributions made up more than 80 percent of the total estimate (more than $230 billion) for giving by individuals in 2012. For every $1 a donor can deduct, the public receives approximately $3 of benefit. No other tax provision generates that kind of positive public impact. Proponents of preserving the deduction feel very strongly that the government cannot and will not find a better way to leverage private investment in nonprofit and worthy causes.

According to the Charitable Giving Coalition, nonprofits generate $1.1 trillion every year in the form of jobs and services and account for more than 5 percent of the GDP. One in 10 U.S. workers are employed by the nonprofit sector, which provides 13.7 million jobs. Employees of nonprofit organizations received roughly 9 percent of wages paid in the U.S., and the nonprofit sector paid $587.7 billion in wages and benefits. Research reveals the “ripple effect” of foundation grantmaking supports millions of jobs and billions of dollars in economic growth that extend for generations.

Research also indicates individuals feel strongly about the charitable giving deduction as well. According to the United Way, 79 percent believe reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve. Sixty-two percent indicate they would have to reduce their contributions by a significant amount – by 25 percent or more if the deduction were reduced or eliminated. Two out of every three Americans (67 percent) are opposed to reducing the charitable tax deduction.

The IRA Charitable Rollover
The IRA Charitable Rollover, enacted in 2006 in the Pension Protection Act, encourages older Americans to give out of their Individual Retirement Accounts. IRA owners age 70½ or older can donate up to $100,000 to charitable organizations directly from their IRA, without treating the distribution as taxable income. The gift from an individual IRA counts toward the annual Required Minimum Distribution (RMD) and aids donors in avoiding and reducing taxes.

Since its passage, the rollover provision has proven to be very popular with taxpayers and beneficial to charities. But because the provision was only temporary, the IRA rollover provision must be extended regularly or it will cease to exist as an option for donors. This uncertainty makes it difficult for donors and recipient charities.

The provision is part of a package of 55 temporary tax extenders that were reinstated retroactively for only the 2014 tax year, but expired again on January 1, 2015. Making the rollover permanent is important to donors who donate a portion of their IRA distribution each year – and to recipient nonprofits.

Don’t Be Shy. Engage.
Elected officials from both sides of the aisle understand and appreciate the invaluable services nonprofits provide. While our government leaders are faced with incredibly difficult decisions regarding fiscal policy, this new year is the time to break the cycle of debate and make permanent the charitable deduction and create a permanent tax incentive to allow older Americans to include the IRA Charitable Rollover in their year-round giving plans.

It is our responsibility as leaders in philanthropy to participate and actively engage with our elected officials regarding these critical issues. Our elected officials need our active involvement and expertise in helping them maneuver through the maze of policy options.

During the coming year, please reach out to your Congressional Representatives and U. S. Senators to let them know of the positive impact the charitable giving deduction and the charitable IRA rollover has had on your organization. Keeping elected officials informed on the positive impact of legislation within their districts is critical to persuading Congress to preserve these proven charitable giving incentives.

To learn more about the Charitable Giving Coalition and how you can take action to preserve the charitable giving deduction, visit

For more information on reinstating and permanently extending the IRA rollover, visit

About JB+A:
Jeffrey Byrne + Associates, Inc. is a nationally-recognized fundraising and financial development firm that specializes in building organizational capacity and conducting major gift, capital and endowment campaigns solely for nonprofit organizations. Led by founder and President + CEO Jeffrey Byrne, its team of consultants has successfully guided more than 300 nonprofit organizations through campaigns raising more than $1,000,000,000.
Jeffrey Byrne + Associates is committed to nonprofit fundraising success and serves a broad spectrum of clients throughout the United States, across all subsectors of the industry: arts, culture + humanities, education, environment, faith-based, healthcare, senior living and social services. Visit for more information.

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