November 5, 2017; eJewish Philanthropy
It is true that the Trump administration’s new tax “reform” proposal has the potential to directly affect how nonprofits operate and raise funds, but it is also true that along with the recently approved budget resolution, the reform plan will drastically reshape the direction of the federal government, as well as the lives of many it serves. Depending on the lens nonprofit organizational leaders choose to evaluate the plan as it moves through the legislative process, the pros and cons of the bill will look very different.
On Monday, NPQ printed the position of the National Council of Nonprofits, which overall panned the package on the basis of what it might do to nonprofits of all sizes and shapes across the country. But the analysis from the Jewish Federations of North America (JFNA) looks very different, taken as it was from a closer vantage point. JFNA shared their view in a recent edition of eJewish Philanthropy:
Favorable provisions
- Charitable contribution deduction: preserves the existing charitable contribution deduction as one of only three remaining itemized deductions
- Increase in adjusted gross income limit on annual charitable deduction: boosts from 50 to 60 percent
- Pease amendment repeal: eliminates limitation on itemized deductions
- Private school tuition relief: expands Section 529 plans to cover elementary and secondary schools
Harmful provisions
- Donor-advised funds increased record keeping: imposes annual distribution and inactive fund provisions
- Private activity bond repeal: eliminates an important source for capital project financing
- Disability access tax credit repeal: negatively impacts the disability community
- Johnson Amendment weakening: undermines important protection for charities
- Endowment excise tax: adds an anti-planned giving and anti-endowed giving provision
Is it at this level that nonprofits should focus their lens? Or is there a larger, more global perspective that these direct impacts should be weighed against?
The National Council of Nonprofits thinks it critical that both the micro and macro perspective be kept front and center. In a recently released statement, Tim Delaney, President and CEO of the National Council of Nonprofits, placed the fate of nonprofits under tax reform as it is currently written in a multidimensional context:
The cost of tax reform is too high if children cannot get the food, shelter, and support they need. The price is too great if citizens can no longer find a haven in charitable nonprofits like houses of worship from the caustic partisan politics ripping our country apart. And we as a nation cannot afford tax reform if it forces our government to make false choices between the domestic needs of our people and our common defense. Fixes are readily available to overcome these and many other fatal flaws in the tax reform bill released today, but it will require reasonable people in Congress agreeing to agree for a change.
A memo from William C. Daroff, Senior Vice President for Public Policy, entitled “Comprehensive Tax Reform: Impact on Federations,” laid out JFNA’s overview. “From a fundraising perspective, if the tax bill becomes law before the end of the year, it presents tax planning opportunities for our donors, because as a general rule, the value of charitable contributions for many will be greater in 2017 than in 2018.” The memo also urges its readers to proactively consider the fundraising risks and benefits of the tax reform plan as currently written.
Bishop Frank J. Dewane of Venice, Florida, has written to Congress about a larger context: “You are urged to recognize the critical obligation of creating a just framework aimed at the economic security of all people, especially the least of [them].” Is this not the lens the nonprofit community should use when evaluating the proposed changes? Is protecting or enhancing the ability of nonprofits to raise funds enough to protect the poor and vulnerable from the potential negative outcomes of Trump-style tax reform? Making it harder to raise funds can harm nonprofits’ ability to fulfill their missions. But is not greater harm possible if the overall changes being proposed severely limit government’s ability to provide critical services and supports, or if it hurts the overall economy? If rates are cut as broadly as is proposed, and the resulting increase in the national debt hurts the economy as badly as many economists predict, will not the harm be even greater for the nation—and for nonprofits, which will face a very challenging environment with a less robust government to serve as a backstop?
Nonprofit leaders should not shy away from looking at these larger impacts and be willing to consider that what might be good for the nation might not be optimal for their single organization. That balance is difficult, but it is the work leaders must do.—Marty Levine
