MCF's Bob Tracy and Katina Mortensen went to Washington D.C. for Foundations on the Hill in March and met with Minnesota's 10 Congressional delegation offices. The meetings were focused on promoting philanthropy and charitable giving through federal tax policy and covered a variety of topics, including:
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Expanding the Charitable Giving Tax Incentive to Everyone
With tax reform, the tax incentive to give is now only available to approx. 10% of households. We’re already seeing some concerning changes in 2018 giving patterns, and we encouraged members of the Minnesota delegation to revisit how charitable giving is incentivized. MCF would like to see a universal charitable deduction or universal tax credit that incentivizes all taxpayers – regardless of income – to give. There’s bipartisan interest in this issue, and we imagine interest will increase in 2020 after donors more fully understand their giving incentive [or lack thereof]. Minnesota is a leader in this space as we are one of two states with a non-itemizer deduction at the state level.
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Repeal the New UBIT Taxes & Requirements on Nonprofits, Foundations, and Places of Worship
Tax reform included a new tax on nonprofit employee fringe benefits, putting an onerous 21% federal tax on employee transportation and parking benefits. It also required nonprofits with more than one unrelated business or trade to compute unrelated business taxable income separately for each trade or business. These new taxes and requirements for nonprofits are costly and burdensome, diverting money from mission [estimated to cost an average of 12K for fringe benefits and 15K for siloing income streams]. We asked members of the Minnesota delegation to support the repeal of both provisions. There’s bipartisan interest in addressing this issue in the immediate term – potentially as part of a tax extenders bill. Minnesota is also leading in this conversation as the state legislature is considering not conforming with these provisions.
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Private Foundation Excise Tax Simplification
We anticipate the CHARITY Act will be reintroduced later this spring, which is expected to include the private foundation excise tax simplification. There's been bipartisan support in the Minnesota delegation on this issue in the past, and we let the delegation know that we'll be in touch once there's an opportunity to engage with this topic.
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Community Foundations & Donor Advised Funds
We anticipate that donor advised funds may be a topic of interest in this Congress. MCF's tax policy subcommittee is actively engaged on this topic and we encouraged Congressional delegations to use us and our members as a resource on this topic. We emphasized that we want to be a part of the conversation if the tax treatment or regulations around these funds is under discussion.