This year’s mid-term elections resulted in a shift of Senate control to Republicans, as well as a stronger hold on the House of Representations. There has already been some discussion about what this could mean for nonprofits and philanthropy, and this post will consider possible short- and long-term changes for the nonprofit sector.
Changes for this year. Even before the current Congress wraps up, charity officials expect that lawmakers will make a couple of short-term changes, including
- Moving deadline for claiming the charitable deduction to April 15.
- Enact “tax extenders” for expiring provisions of the tax code including benefits for land conservation, donations to food banks, and contributions to charity from retirement accounts.
Bigger picture changes. A more comprehensive review of the tax code is possible beginning next year. While many nonprofit leaders feel confident that key charitable giving provisions won’t change, there are some potential changes that have already been floated:
- Simplifying and lowering the private foundation excise tax to 1 percent;
- Requiring donor-advised funds to pay out at least 5 percent of their assets each year (similar to the existing requirement for private foundations);
- Providing federal support for social-impact bonds;
- Changing rules (currently pending) around conducting federated campaigns.
In addition, it is expected that Orrin Hatch will take over as Chairman of the Senate Finance Committee, a position currently occupied by Democrat Ron Wyden and held for much of the 2000s by Republican Charles Grassley. Hatch is less likely to focus as heavily on nonprofit oversight and reform as Grassley did–a hallmark of Grassley’s time as Chairman was the 2006 Pension Protection Act, which introduced new regulation around supporting organizations, donor-advised funds and 990 reporting.