On November 9, House Republicans unveiled their Tax Cuts and Jobs Act (H.R.1). Our colleagues at the Montana Nonprofit Association prepared an excellent analysis on the impact of the legislation on nonprofits. With thanks to MNA, we share their thoughts here.
The 429-page bill carries many implications for nonprofits and private foundations. MNA is concerned about two provisions in particular. First, the partial repeal of the Johnson Amendment erodes nonprofit nonpartisanship. Second, the standard deduction is doubled, which almost decimates charitable giving incentives for all but 5% of taxpayers. The bill will be marked up in the next few days, so now is the time to be very clear with our congressional delegation on the impact of these provisions. Join us in advocacy that protects the nonprofit sector.
Foraker agrees with MNA and we call on Alaska nonprofits to get in touch with our delegation – see contact information below.
H.R. 1 Weakens the Johnson Amendment
The Johnson Amendment is a law currently in place which protects nonprofits by ensuring we cannot and do not endorse candidates for office. H.R. 1 includes language that would significantly weaken the protection from partisan politics that has for decades enabled charitable nonprofits, houses of worship, and foundations to remain focused on their missions without an overshadowing partisan agenda. As written, the new provision (Sec. 5201) grants a partial exemption from the Johnson Amendment to houses of worship and their auxiliary organizations. The bill potentially changes the nature of faith-based organizations by allowing political candidate endorsements from “the pulpit.” This not only erodes public trust in the charitable nonprofit sector as nonpartisan, but also includes ambiguous language which lends itself to abuse and an increase in dark money in campaigns. As if we need more of that.
Foraker joins with MNA in requesting that the Johnson Amendment be retained in the current tax code.
H.R. 1 Hurts Individual Philanthropy
The House tax reform legislation only nominally retains the existing itemized deduction for charitable donations. Here’s how it works: the bill increases the standard deduction to $24,400 for couples and half that, $12,200, for individuals, up from $12,700 and $6,350, respectively. However, by nearly doubling the standard deduction, it effectively puts this important incentive to give out of reach for an estimated 95 percent of American taxpayers. This decrease in the number of people who itemize would result in a decrease in charitable giving in the U.S. by up to $13 billion annually, according to a study from the Lilly School of Philanthropy. The measure fails to include a universal deduction or other incentive sought by a broad coalition of nonprofits and foundations that would enable all Americans to receive a tax incentive for giving back to their communities. This is especially important in Montana where we stand to lose more itemizers because our income is lower than in other states. Another blow to rural philanthropy.
Foraker strongly encourages Alaska nonprofits to review this analysis from MNA along with information from the National Council of Nonprofits and the International Association of Fundraising Professionals AFP. Then call our delegation and let them know how this proposal would affect your ability to carry out your mission. They will care about the impact on Alaskans and our communities. AFP has developed talking points that you can use to help tell your own story.
If you have questions, please contact Mike Walsh, Foraker Vice President of Public Policy, at email@example.com. Below is how you reach each member of the delegation.
- Senator Lisa Murkowski. Contact information
- Senator Dan Sullivan. Contact information
- Representative Don Young. Contact information
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