The U.S. Senate will soon vote on its Fiscal Year 2025 budget reconciliation legislation, entitled the One Big Beautiful Bill Act. This legislation is the product of months of work by legislators and their staffs, and the charitable sector has undertaken a comprehensive, coordinated effort to shape it. Unfortunately, the proposal before the Senate today would — on balance— hurt the work of our sector and make it harder to meet the needs of those we serve. Independent Sector urges legislators to oppose this bill and to continue to work on budget legislation that strengthens America’s charitable sector and communities.
Even while the legislation increases the federal deficit, it raises government revenue from provisions impacting the sector and cuts funding for programs that provide vital support to people our sector serves. This approach is misguided. Furthermore, two of the most damaging provisions in this bill—limiting the value of itemized deductions and creating a floor for corporate giving—would eliminate far more in charitable donations than they would raise in government revenue. These provisions are a lose-lose-lose for taxpayers, for nonprofits, and for communities. Independent Sector will continue to advocate for their removal.
To be clear, the legislation in its current form represents a dramatic improvement from the version advanced by the House Ways and Means Committee in May. We are grateful to legislators who heard our concerns about massively increasing taxes on private foundations, saddling nonprofits with a confusing tax on parking and transit benefits, and granting the Secretary of the Treasury overly broad authority to suspend tax-exempt status. Charitable sector advocates should take some encouragement from the meaningful contributions they made educating Congress about how harmful these provisions would be if enacted. That is how our system of governance is supposed to work.
Independent Sector also deeply appreciates that Senators—led by Senator James Lankford (R-OK)—are attempting to boost charitable giving by offering a permanent charitable deduction for Americans who do not itemize their tax return. The bill largely offsets the cost of this deduction by adding a floor for itemized givers. We do not yet know what the combined impact of these proposals will be on giving both in terms of total dollars donated and the number of Americans who choose to give, but we will work with legislators and advocates to understand and refine them as we learn more.
Last fall, Independent Sector wrote to tax committee leaders, urging them to advance legislation that would bolster the health of the charitable sector through four key lenses: financial resources, human capital, trust, and civic engagement. By raising taxes on the work of charitable organizations overall, cutting safety net spending, and reducing charitable giving by Americans, this bill clearly fails the first test. The bill’s approach to human resources is disappointing as well. Despite extending and expanding tax credits for child care and paid leave, it continues to exclude nonprofit employers from these valuable incentives. Through the lenses of trust and civic engagement, we appreciate that this legislation does not attempt to break down the longstanding firewall between charity and partisan politics.
The American public and the sector have been clear: charitable organizations should not be used as a piggy bank to fund other policy priorities. Legislators have addressed some of these concerns in recent weeks, but much more work remains to be done. Rather than rushing to complete a flawed product by an artificial deadline, Senators and Representatives should continue to craft legislation that truly strengthens the work of the charitable sector.
