The American tradition of private philanthropy is one of our nation’s greatest strengths. It reflects the principle that civil society, not government, is best equipped to meet the needs of communities across the country. Private giving bolsters various health care, education and community initiatives, along with other important causes that strengthen the fabric of our society.
At Philanthropy Roundtable, we are deeply concerned about the House Ways and Means Committee’s proposal to increase the excise tax on private foundations—an action that would discourage charitable giving and harm mission-driven organizations. Higher taxes on private foundations would put the burden of paying for out-of-control government spending on the backs of vulnerable Americans by taking funds from charitable foundations that support communities and putting them in the U.S. Treasury.
This move will hurt people in every state. Money taxed from foundations is money not spent on scholarships for low-income students, grants to faith-based charities, support for veterans’ programs or relief in times of crisis. It means less money available to respond to environmental disasters like devastating hurricanes, tornadoes and wildfires.
There are more than 191,000 foundations in the United States, which Americans rely on to support critical work done by more than 1.5 million nonprofits in communities all over the country. These foundations represent the commitment of individuals and families who choose to devote their private resources to the public good. In 2023 alone, foundations gave more than $100 billion away to charities. Increasing the excise tax on foundations is, in effect, a penalty on generosity and a barrier to the voluntary solutions that work best and strengthen our free society.
These funds are set aside for charity and charity only—and those who rely on charity during times of need stand to lose the most. As the administration is rightly looking at reducing the size and scope of a bloated federal bureaucracy, nonprofits are uniquely positioned to fill gaps and respond to the needs of their communities.
Federal government cannot, and should not, be relied on to meet all the needs of communities across our country. To funnel money from private foundations supporting organizations doing important work on the ground to send it to Washington stands against everything advocates of limited government and individual freedom believe.
We need to incentivize private giving – not punish it by telling generous Americans that the more they give, the more they’ll be taxed. We urge policymakers to reject any increase in the private foundation excise tax. Instead, they should champion policies that recognize a robust civil society—driven by voluntary giving—is far more effective than top-down approaches and inefficient government programs.
At Philanthropy Roundtable, we will continue to defend the right of Americans to give freely and shape and improve the world around them through private charitable initiatives.
