Posts tagged ‘taxes’

July 7, 2016

Should You Worry about Election-Year Tax Plans?

As Americans, we should be generally concerned with who our next President will be. The outcome has both personal and professional implications for you, even if you’re one of my international readers.

Presidential Seal by Jason Seliskar via FlickrWho will be best for the future of the nation and the world? Who will voters elect?:

Whether you’re a nonprofit manager, fundraising professional, and/or donor, you should also be concerned about which of the candidates will be best for the charity sector. Government policies, particularly tax policies, can have a significant impact on charitable giving.

If new government policies lead to greater economic growth, nonprofit organizations will likely benefit. Giving USA has shown that charitable giving consistently correlates to roughly two percent of Gross Domestic Product. So, if the nation experiences more robust economic growth, we can expect more robust philanthropic growth. The converse is also true.

If new government policies lead to greater personal income, nonprofit organizations will likely benefit as Giving USA has revealed that giving also consistently correlates to approximately two percent of personal income.

So, which Presidential candidate is best? Well, that’s a simple question with a complex answer. Evaluating the potential impact of each plan will never generate a consensus among economists. Furthermore, it’s doubtful that any of the plans will be adopted as presented. Congress will still have its say. And Speaker of the House Paul Ryan has introduced his own tax proposal.

While I will not tell you which candidate will be best for the country and the nonprofit sector — I don’t happen to own a crystal ball — I will provide you with a few key, relevant highlights of each plan. I hope you’ll then take the time to learn a bit more about each candidate and his/her proposals so that you can make an informed choice this November and be prepared when change arrives.

I also encourage you to visit the seemingly non-partisan website I Side With to take a quiz that will match your answers with the positions the candidates have taken on a variety of issues. At the conclusion of the quiz, you’ll be told how your positions align with those of each of the candidates. The results might surprise you. If you’re one of my international readers, I still encourage you to take the quiz to see how our presidential candidates align with your values so you’ll know who to root for.

Now, let’s take a brief look at some of the highlights from the various tax proposals:

December 21, 2015

Breaking News: Charitable Giving Incentives Made Permanent!

The US Congress has approved and President Barack Obama has signed the so-called Tax Extenders package that not only includes a number of charitable giving incentives, such as the IRA Charitable Rollover, it has made those incentives permanent.

An article in Forbes, prior to passage of the legislation, nicely outlines the measure’s major provisions including the key charitable giving incentives:

  • deduction allowed for charitable contribution of real property for conservation purposes,
  • taxpayers over age 70 1/2 may make donations directly from an IRA and will not be taxed on the amounts (up to $100,000),
  • a shareholder in an S corporation will be required to reduce his basis in the S corporation’s stock under Section 1366 only for his share of the basis of property contributed by the S corporation; not the fair market value.

This is a tremendous moment for the nonprofit sector. Not only have these important giving incentives been renewed, they have been made permanent!

We all owe thanks to the staff and volunteers of the Association of Fundraising Professionals, particularly General Counsel Jason Lee. AFP has taken the lead in fighting to get these giving incentives and making them permanent.

Santorum and MJR

Sen. Rick Santorum (R-PA) and Michael J. Rosen on Capitol Hill.

For more than a decade, I’ve worked with my AFP colleagues, first as a member of the US Government Relations Committee, then founding Board Member of the AFP Political Action Committee, and then as Board Chairman of the AFP PAC.

Our efforts date back to assisting with the drafting of the CARE Act with then-Sen. Rick Santorum (R-PA). The bill was co-sponsored by then-Sen. Joe Lieberman (D-CT). Despite the bipartisan effort, the CARE Act failed to pass. However, certain charitable giving incentives that were part of the CARE Act were adopted, on a year-to-year basis, including the IRA Charitable Rollover. It took a decade but, finally, the incentives are now permanent!

I’m proud to have been able to play a significant role on this issue. I’ve enjoyed working with other passionate volunteers and staff.

We also need to take this opportunity to thank The Charitable Giving Coalition and its member organizations along with every individual who has worked for this legislation.

Let’s take a much deserved victory lap! Let’s do an end-zone dance! Let’s toast this achievement! Then, let’s get back to work. There’s much to be done to promote the giving incentives.

To help you promote the IRA Charitable Rollover, The Council on Foundations has put together an excellent free, downloadable toolkit that includes:

  • Talking points, a fact sheet, and web content;
  • An event presentation;
  • Tools that explain which available options might best serve donors;
  • Donor and professional advisor advertisements.

You can download the Council’s “Charitable IRA Worksheet” for donors by clicking here. You can find the full toolkit by clicking here.

September 30, 2015

Extra! Extra! Updates to 6 Popular Posts

Fundraising news is dynamic. It’s constantly changing. So, I thought I’d look back on some of my more popular posts of the past several months and provide you with important updates to some of those stories.

“Cheating Death”

About a year ago, I outlined my personal battle with a very rare form of cancer: Appendicial Carcinoma with Pseudomyxoma Peritonei. While my recovery following last year’s 14-hour surgery has been good, I hit a bump in the road last week when a post-surgery complication sent me to the hospital for the week. That’s why I haven’t posted and haven’t engaged much on social media.

The good news is that my problem resolved naturally. Now, I’m working on regaining strength and the more than seven pounds I lost. As I return to “normal,” I’ll resume regular blogging and engagement.

I thank you for your patience and support.

“Update: Spelman College Returns Gift from Bill Cosby”

Spelman College terminated the William and Camille Olivia Hanks Cosby Endowed Professorship and returned the establishing donation to the Clara Dog Reads Newspaper by Steve Eng via FlickrElizabeth Jackson Carter Foundation, established by Camille Cosby. The move comes as the negative news surrounding Bill Cosby continues to mount.

Now, Central State University in Ohio has changed the name of the Camille O. & William H. Cosby Communications Center to the CSU Communications Center. The Cosbys had given the University a donation of $2 million to name the Center. It is unclear whether or not the University has returned the contribution. The University has failed to respond to my request for more information.

“Special Report: Hillary Clinton Wants to Limit Charitable Deduction, Could Cost Charities Billions”

As the US presidential campaign season heats up, some candidates have released their tax proposals. Hillary Clinton’s plan could cost the nonprofit sector billions of dollars in voluntary contributions each year. In an unscientific reader poll, 91.67 percent of respondents said they opposed Clinton’s proposal to reduce the charitable giving deduction.

Recently, Jeb Bush released his tax plan which preserves the deduction for charitable giving as it now stands. Donald Trump’s tax proposal also preserves the charitable giving deduction.

When attempting to evaluate which tax proposals will be best for the nonprofit sector, we need to consider a number of factors:

  • Does the proposal preserve the tax deduction for charitable giving?
  • Will the proposal increase personal income?
  • Will the proposal help grow the economy?

The calculus is certainly complex. However, we do know that charitable giving incentives work, that people give more when their personal income is greater, and that charitable giving correlates closely to the growth (or decline) of Gross Domestic Product.

August 10, 2015

Special Report: Hillary Clinton Wants to Limit Charitable Deduction, Could Cost Charities Billions

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column. New subscribers will also receive a free e-book from researcher Dr. Russell James.]

 

Hillary Clinton, the current frontrunner for the Democratic Party nomination for President of the USA, put forward a plan that could cost the nonprofit sector billions of dollars in voluntary donations.

Hillary Clinton

Hillary Clinton

Like President Barack Obama, Clinton announced that she would seek to impose a cap on tax deductions, including the deduction for charitable giving.

On the campaign trail, Clinton proposed the “new college compact.” At a town hall meeting in New Hampshire on Monday, August 10, Clinton announced a plan to reduce the cost of four-year public schools, make two-year community colleges tuition-free, and cut student loan interest rates.

To pay for the $350 billion plan, Clinton would seek to impose the same 28 percent cap on itemized deductions that we have seen in Obama’s proposed budgets. Charitable deductions are not exempt from this plan. Currently, taxpayers may claim up to a 35 percent charitable deduction.

When Obama proposed a similar tax policy, the Charitable Giving Coalition issued the following statement:

Any caps or limits on charitable giving will have a devastating impact on charities and nonprofits. If donors have less incentive to give to charities — donations will decline, impeding the important work nonprofits do for the millions of Americans who rely on them. For example, up to $5.6 billion in charitable giving would be lost each year if the President’s proposal to cut the charitable deduction were enacted.”

Like the Obama plan, the Clinton proposal would also negatively affect charitable giving. Nevertheless, “Clinton aides believe their plan will help build enthusiasm for her candidacy with younger voters,” according to an Associated Press report.

The cynical effort of the Clinton campaign to buy the youth vote reminds me of two quotes from Alexis de Tocqueville, the 19th century philosopher and historian:

July 23, 2015

IRA Rollover Poised to Make a Comeback

I have some good news.

The US Congress has begun the process to revive the Charitable IRA Rollover which expired at the end of 2014. Now, it’s time for you to take action.

On Tuesday, July 21, 2015, the Senate Finance Committee approved a number of tax extender provisions including the IRA Rollover. While the Committee considered making the IRA Rollover provision permanent, it ultimately settled on a two-year extension.

US CapitolFinance Committee Chairman Orrin Hatch (R-UT) said, “This markup [of the bill] will give the Committee a timely opportunity to act on extending a number of expired provisions in the tax code that help families, individuals and small businesses. This is the first time in 20 years where a new Congress has started with extenders legislation having already expired, and given that these provisions are meant to be incentives, we need to advance a package as soon as possible.”

Ranking Committee Member Ron Wyden (D-OR) said, “The tax code should work for, not against, Americans. We need to extend these tax provisions now in order to provide greater certainty and predictability for middle class families and businesses alike. However, as we look beyond next week, it’s critical we all recognize and take action to end this stop and go approach to tax policy through extenders.”

The House of Representatives has yet to take action though Rep. Paul Ryan (R-WI), Chairman of the Ways and Means Committee, remains interested in legislation that would make the IRA Rollover permanent. However, ultimately, the House might bring its thinking into alignment with the Senate Finance Committee. The House is expected to take up the issue as early as September.

When Democrats controlled the Congress, the IRA Rollover extensions were done a year at a time and often very late in the year. This made it challenging for both donors and nonprofit organizations to plan and to take full advantage of the provision.

With Republicans in full control of Congress, the House and Senate are considering the IRA Rollover provision earlier in the year and are considering a longer extension term. These are both good things for donors and charities.

It remains to be seen when final action will be taken and what that action will look like. It’s also unclear whether the Obama Administration will support the measure.

The Charitable Giving Coalition has long advocated for the IRA Rollover and other provisions that provide incentives for charitable giving. In addition to encouraging Congress to take action, the Coalition has sent the following letter to all Presidential candidates:

February 13, 2015

Special Report: House of Representatives Approves IRA Rollover…Again

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are usually not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

The US House of Representatives has passed a bill to renew and make permanent the IRA Rollover, a measure long-supported by the nonprofit sector. Congress approved the bill by a vote of 279-137. Of note, 39 Democrats joined with the Republican majority to ensure passage by a wide margin. The bill now moves to the Senate.

Like a similar measure passed last year, H.R. 644 — Fighting Hunger Incentive Act of 2015 includes the following components:

  • The IRA Rollover provision,
  • Extension and expansion of the charitable deduction for contributions of food inventory,
  • Enhanced deduction for gifts of qualified conservation easements,
  • Modification of the excise tax on the investment income of private foundations.

Unfortunately, President Barack Obama has once again vowed to veto the bill if it reaches his desk in its present form. The House would need 290 votes to override a veto.

Making Sausages 4 by Erich Ferdinand via FlickrThe White House opposition to the bill might be because the bill does not contain any provision that would pay for the tax breaks it would provide. The Congressional Budget Office has concluded that the bill would add to the Federal deficit.

Last year, the Democrat-controlled Senate failed to take any action on the comprehensive charitable giving incentive measure passed by the House. Now that Republicans control the Senate, there is a greater expectation of action this year. However, it remains to be seen if the bill can be modified to garner presidential support.

December 16, 2014

Special Report: Congress Passes the Charitable IRA Rollover

At 7:32 PM (EST) this evening, Dec. 16, 2014, the US Senate passed HR 5771, the bill that retroactively extends several tax provisions, including the IRA Rollover. The law will expire on Dec. 31, 2014, without any grace period. However, it’s important to note that the measure will not become law until signed by President Obama, which is expected.

While approval of the IRA Rollover is good news, it unfortunately comes extremely late in the year. This means most nonprofit organizations will be unable to fully take advantage of the provision. Nevertheless, there are a couple of simple actions you can take:

  1. Look at your donor file to see which individuals have made gifts from an IRA in the past. Then, call those donors to let them know of the opportunity for 2014, assuming President Obama signs the measure. At the very least, email those donors.
  2. Email all of your older donors to alert them to the opportunity for them to give from their IRAs. Even if they don’t take advantage of the IRA Rollover, they’ll appreciate that you informed them about this late breaking news.

December 7, 2014

Special Report: House of Representatives Approves IRA Rollover

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are usually not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

On Wednesday, Dec. 3, the US House of Representatives passed a short-term tax extenders bill. The bill extended certain tax provisions for 2014, including the IRA Rollover, a provision long supported by the nonprofit sector. The package would cover 2014 but NOT apply to 2015 or beyond. The bill now goes to the Senate.

US Capitol by Glyn Lowe Photoworks via FlickrSen. Harry Reid (D-NV) has questioned whether the Senate will have time to pass the House bill before the end of the year. However, Sen. Ron Wyden (D-OR), Chair of the Senate Finance Committee, and the White House have shown a willingness to move forward with this one-year retroactive fix, according to Jason Lee, General Counsel at the Association of Fundraising Professionals.

For more information about the bill, click through to:

The Hill“House Approves Slate of Tax Breaks”

The Hill“Reid Indicates Senate Might Not Pass House Tax-Extender Bill”

The sad reality is that even if the tax extenders bill passes the Congress and is signed by Pres. Obama, there is precious little time for charities to take advantage of the IRA Rollover provision in 2014.

December 5, 2013

Special Report: No Tax Reform Bill in 2013

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

A tax reform bill will not be introduced in the US Congress before the close of 2013, House Ways and Means Chairman Dave Camp (R-MI) indicated to The Hill.

US Capitol by Kevin Burkett via FlickrGiven that this is the first week of December and that House Republicans plan to leave Washington at the end of next week for the holiday break, the news is not surprising, even while important.

As soon as one month from now, the House could resume wrangling over a possible tax reform bill, according to Jason Lee, General Counsel for the Association of Fundraising Professionals. However, while the issue will be on the table in 2014, it will be a major challenge for Congress to move something as significant as a tax reform bill with the mid-term elections looming in November.

October 4, 2013

New Pew Report Sheds Light on Tax Deductions and Philanthropy

[Publisher’s Note: Michael J. Rosen, CFRE will be interviewed by CausePlanet in a free webinar about his award-winning book, Donor-Centered Planned Gift Marketing. Learn more and register for the October 17 program by clicking HERE. If you need a speaker or trainer, contact Rosen today.]

A new report issued by the Pew Charitable Trusts provides valuable insights into the effect that tax deductions and credits have on charitable giving. The report comes at a critical time as federal and state governments continue to look for additional sources of revenue including cuts to charitable-giving tax deductions.

The Pew report, written by Elaine S. Povich, looks at the impact of tinkering with tax write-offs for charitable giving in a number of states including Kansas, Michigan, Missouri, New York, North Carolina, and Vermont. The report nicely summarizes the impact of tax policy on philanthropy:

Tax incentives for charitable giving directly affect donations, particularly from high-income donors, according to Jon Bakija, an economics professor at Williams College. ‘Tax incentives for charitable donations in the US succeed in causing donations to increase, probably by about as much or more than they cost in terms of reduced tax revenue,’ he wrote in a paper published recently by the journal Social Research.”

Bakija went on to write:

This strengthens the case for the tax subsidies for donations.”

In an illuminating case study, the Pew report looks at what happened in Hawaii when the state government imposed a cap on the charitable giving tax deduction. According to Mallory Fujitani,Money Grab by Steve Wampler Photography via Flickr of the Hawaii Department of Taxation, the state expected the move to generate about $12 million to the state treasury. Unfortunately, the move cost charities $50 million to $60 million in lost donations, according to Tim Delaney, President and CEO of the National Council of Nonprofits.

In other words, Hawaii found that for every new dollar of tax revenue it generated from the cap on the charitable giving deduction, charities lost five dollars!

David L. Thompson, Vice President of Public Policy at the National Council of Nonprofits, summarized the experience of the various states that have tinkered with the charitable giving deduction:

What we learned in the states is that the charitable deduction is not just a nice thing for taxpayers, it’s vital to the communities. All politicians from across the political spectrum have come to the same conclusion that we are hurting our communities by discouraging giving to charities.”

Given the crystal clear Pew report, the experiences of various states, and the findings of academic research studies, a number of important questions come to mind:

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