Statement of Support for Tax and Funding Deal from Dan Cardinali, President and CEO of Independent Sector:
(December 17, 2019) – The following statement is from Daniel J. Cardinali, president and CEO of Independent Sector:
“The tax and spending legislation unveiled by negotiators this week contains several victories that will support the health of the whole nonprofit sector, and we urge legislators to support it.
First, this legislation would retroactively repeal the new tax on transportation benefits that nonprofit organizations provide to their employees. 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. Indeed, research we released earlier this year predicted that the tax and its associated administrative cost would divert an average of $12,000 away from each nonprofit organization’s charitable mission, with smaller organizations losing a larger share of their budget. That research also found that 10 percent of nonprofit organizations were weighing whether they would need to drop these benefits entirely.
We are grateful for the bipartisan consensus that this tax was a mistake, and that it would be repealed retroactively. Retroactive repeal cannot undo the considerable administrative costs already borne by our sector and it cannot retroactively restore meals, shelter, or pastoral services to those who have been denied them. However, it can provide some partial financial restitution to those who have paid the tax and allow charities to restore their focus to where it belongs: their mission.
This legislation would also simplify 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, and we appreciate their partnership.
Additionally, the deal on federal spending contains increases in many federal programs that help nonprofit organizations most effectively serve their communities. These increases in programs that support health, education, nutrition, housing, environmental protection, the arts, and more are a welcome fulfillment of the possibilities created by Congress when it lifted strict budget caps earlier this year. The increases for the Corporation for National and Community Service, the Census Bureau, and the Internal Revenue Service are noteworthy for our sector’s work together.
While anyone will be able to find something that they dislike in a deal this size, we believe these victories for the whole of the nonprofit sector are too significant to ignore. On behalf of Independent Sector and its members nationwide, I thank the bipartisan negotiators and our champions for their work and urge lawmakers to support this critical legislation.”
Independent Sector is the only national membership organization that brings together a diverse community of changemakers, nonprofits, foundations, and corporations working to ensure all people in the United States thrive. Learn more at independentsector.org.
Kristina Gawrgy Campbell