Proposed Tiered Excise Tax Implications for Nonprofit Revenues

In an effort to better understand how the House-proposed private foundation excise tax increase could affect Minnesota nonprofits, MCF has created an estimate of the impact on grantmaking to nonprofits.

Based on 990 data, MCF estimates that there was approximately $1.6 billion in grantmaking from endowed Minnesota-based private foundations in 2023. If this tiered excise tax proposal had been in place, MCF estimates that approximately $23.6 million (or 1.5%) fewer grant dollars would have gone to Minnesota communities and nonprofits in 2023 due to the higher tax burden.

MCF is using data from United Philanthropy Forum and Candid for this estimate. United Philanthropy Forum and Candid researched the excise tax paid based on investment income in private foundations' recent 990s, and applied the proposed new tax to determine the tax increase in each state.

Looking at the country as a whole, it is estimated that this tiered tax system would have taken an estimated $2.9 billion in charitable assets away from local nonprofits and the communities they serve.

To better understand the proposed legislation and see its potential impact on private foundations and the broader charitable giving ecosystem, visit United Philanthropy Forum's Tax Overview page.