Organizations supporting liberty and free-market policies are sounding the alarm about the potential tax hike on private foundations, which poses a grave threat to charitable giving. In an early version of the “One Big Beautiful” tax bill released by the House of Representatives, a punishing excise tax hike was proposed that would increase what private foundations have to pay to the government, taking dollars away from delivering on their missions.
Senate Republicans removed this tax hike from their version of the bill, but there is a chance that it could be added back by those who don’t understand the harm this steep tax increase would do to private charity.
Philanthropy Roundtable has been a leading voice against the potential 600% excise tax increase on private foundations and the potentially catastrophic impact it could have on those who rely on charitable services.
Read on for insights from conservative leaders and organizations who are sharing powerful examples of how the private foundation tax will harm their communities and society.
The Daniels Fund Board Member and former Secretary of Veterans Affairs Jim Nicholson in The Wall Street Journal
“America’s greatest safety net isn’t the government—it’s generosity. A proposal that passed the House last week as part of the ‘One Big Beautiful Bill’ would increase the excise tax on private charitable foundations by up to sixfold. That would discourage the philanthropy that has long defined the American spirit. Why would conservatives, who have rightly fought against tax increases in the past, now take aim at private charities?
“Some believe that American philanthropy is dominated by left-leaning activists. But center-right foundations are successfully tackling America’s toughest problems. These groups emphasize empowerment, personal responsibility and the dignity of work, and they refuse to treat people as victims of circumstance.”
Read more here.
DonorsTrust President and CEO Lawson Bader in Washington Examiner
“Congress has been working for months to craft a budget to achieve the president’s agenda. Many Republicans claim it’s a solid piece of conservative legislation that will make good on Trump’s promise. But there’s a fly in their ointment.
“A proposal in the House’s original ‘one big, beautiful bill’ would raise taxes by over 600% on private foundations that not only support local charities but also support Trump’s goals and are vital allies in his effort to rein in wasteful spending. Ostensibly, this tax, albeit a progressive one, is intended to raise revenue. But it smacks of political motivation.”
Read more here.
National Taxpayers Union
“The House-passed bill increases excise tax rates on foundations with endowments over $50 million. The rate increases with the size of the endowment, with the largest rate of 10% of income on endowment assets over $5 billion. Without significant additional refinement, this could harm the valuable services and education that foundations provide to the nation. NTU urges removal of this provision.”
Read more here.
American Enterprise Institute
The excise tax debate has flagged many problems but not yet gotten to the core issue. Its opponents are certainly correct in pointing out that it will reduce charitable giving. Even under the current low and flat tax rate, funders are hard pressed to maintain their charitable spending power given the 5% payout requirement and the costs of inflation. The increased excise taxes will raise this hurdle even higher, leading to shrinking endowments and grantmaking budgets.
Read more here.
The Pelican Institute for Public Policy CEO Daniel Erspamer in The Center Square
If foundation resources are drained by punitive taxes, policy organizations across the country will have fewer resources to champion free-market solutions, promote government accountability and educate citizens about the benefits of limited government. That’s not just bad for think tanks – it’s bad for democracy itself.
Read more here.
Hillsdale College President Larry P. Arnn in City Journal
“… Hillsdale College has long declined federal money, even though we perform a public good. Our endowment, built carefully and slowly by the gifts of private citizens, sustains that independence.
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Yet today, that very independence is under attack—not by a newly proposed tax, but by the expansion of a tax that has quietly existed for eight years.
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“The revenue raised by taxing Hillsdale’s endowment would be negligible in the federal budget. But the damage done to our ability to serve our students, to maintain the independence of our faculty and to carry forward our mission would be profound. It would force us to cut resources, to limit opportunities, to pass burdens onto students and their families—all in the name of a fairness that is not fair.”
Read more here.
Mountain States Policy Center
Congress is currently debating many important issues as part of the “Big Beautiful Bill” (BBB). One very concerning proposal that may be flying under the radar compared to the other provisions is a section in the House version of the BBB that would impose a 600% tax increase on charitable foundations. Thankfully, this massive tax increase is not included in the Senate version.
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Congressional leaders plan to vote on the final version of the BBB before the fourth of July. There is nothing beautiful about imposing a big 600% tax increase on charitable foundations. Let’s hope we’re also celebrating the defeat of this misguided tax increase when the fireworks go off on Independence Day.
Read more here.
