The holidays likely came early this year for the nonprofit sector because the spending package passed by the House of Representatives yesterday—and that it is expected to pass the Senate and be signed by the president—also includes two tax policy wins for the sector: the repeal of the nonprofit tax for transportation benefits, and the simplification of the private foundation excise tax.
House Passes Tax and Spending Deal
The House of Representatives passed two sets of spending bills on December 17, ahead of the December 20 deadline to fund the government in 2020. As opposed to last year’s negotiations—which ended in the longest government shutdown of U.S. history—this time lawmakers locked in a bipartisan spending deal that would provide $49 billion in additional funding for the federal government during the next nine months. Independent Sector is a member of the steering committee that advocated for raising the budget caps.
The bipartisan agreement includes money for research into gun violence, permanent repeal of three major health insurance taxes, no new funding for international family planning help, millions for election security grants, billions in added Pentagon cash and a 3.1 percent pay raise for federal civilian employees—Politico reported.
If signed into law, this spending package also includes two tax policy wins for the nonprofit sector. The first one, is the retroactive repeal of the tax that nonprofits must pay for offering transit and parking benefits to their employees, enacted in the 2017 tax law. This tax is misapplication of the Unrelated Business Income Tax (UBIT) statute, a burden on the nation’s third largest employment sector, and a massive diversion of charitable resources. Independent Sector—along with members of the UBIT coalition—worked closely with members of Congress to get this tax provision repealed.
The second one, is the simplification of the private foundation excise tax at a single rate of 1.39 percent. Without incurring a cost for taxpayers, this simplification would eliminate the current, two-tiered system that has long discouraged private foundations from increasing their grantmaking during times of great need. Independent Sector has worked on this issue with other organizations for many years.
Universal Charitable Giving Bill Introduced
Ahead of Giving Tuesday, Rep. Mark Walker (R-NC) reintroduced The Universal Charitable Giving Act (H.R. 5293). This legislation would establish a universal charitable deduction for individuals and married couples who do not itemize, in addition to the standard deduction. This would be an above-the-line deduction up to one-third of the new standard deduction – about $4,000 for individuals and $8,000 for married couples.
Earlier this week, Rep. Walker announced that he will not be running for Congress next year after a court ruled redistricting in North Carolina. Instead, Rep. Walker said he would be interested in running for a Senate seat in 2022—Politico reported.
Number of Donors and Dollars Keeps Dropping
Earlier this month, the 2019 Third Quarter Fundraising Report from the Fundraising Effectiveness Project was released. This report compares fundraising year-to-date in 2019 (the first three quarters of the year) to the same time period in 2018. The report finds that major gifts continue to lag behind 2018 performance and total revenue from gifts is down 4.6 percent, though that metric is improved from a decline of 7.3 percent at the end of the second quarter—The Nonprofit Times reported. The number of donors is also down 3.6 percent year-to-date compared to a 5.8 percent decline through the second quarter.
.ORG Internet Domain to be Privatized
The private equity firm Ethos Capital is in the process of buying Public Interest Registry (PIR), the company that owns every .org domain on the web. The sale is expected to be finalized during the first quarter of 2020.
Last month, Independent Sector along with other 8,900 nonprofits signed a petition letter against the sale. The nonprofit sector is worried that this purchase could bring increases in domain prices, particularly with the possibility of eliminating the cap on domain prices. Add your own name or that or your organization today.