While the United States continues to claim the title of world’s most generous nation – with Americans donating a record $471 billion to charity last year – proposed Congressional legislation threatens to change the rules for philanthropy. In an op-ed published in RealClearPolicy, Patrice Onwuka, Philanthropy Roundtable adjunct senior fellow, lays out the federal proposals that, if passed into law, would restrict charitable giving.
Below are excerpts from the op-ed entitled “End These Threats to America’s Generous Spirit”:
“With a banner year for demonstrative generosity, why would Congress want to change the rules for charitable giving? It’s important to spell out how the proposed reforms, even if well intentioned, would weaken private philanthropy by restricting how, when and where people give to charity and sabotage the diversity that makes the charitable sector unique.
Senators Angus King (I-Maine) and Charles Grassley (R-Iowa) introduced the Accelerating Charitable Efforts (ACE) Act (S. 1981) this year, which proposes new regulations on private foundations and donor-advised funds (DAFs) with the intention of speeding up gifts to charities, but the bill will suppress giving instead.
The ACE Act removes critical incentives that make DAFs broadly appealing, especially among middle-class households. It sets time limits on the life of a DAF, imposes a payout requirement such as 15 years and delays the charitable tax benefit until the funds are distributed. Severe punishments for not disbursing funds and increased administrative costs would decelerate giving to the detriment of the charities and people they benefit. The ACE Act also restricts how private foundations can employ DAFs to further their charitable missions and increases reporting requirements that may chill giving.
Also, the House of Representatives recently advanced a new 5% surtax on people with incomes above $10 million (which rises to 8% for those with incomes above $25 million) to fund President Biden’s $1.75 trillion social spending plan. Redistribution of wealth through tax proposals like this — and other ideas that have been floated such as a new billionaires tax — can have the unintended consequence of backfiring on private charity.”
Please continue reading “End These Threats to America’s Generous Spirit” at RealClearPolicy.