June 2021 Public Policy Roundup

June 2021 Public Policy Roundup

Publication date: 
June, 2021

By Hillary Evans, vice president of professional learning & public policy, Philanthropy Southwest

Public Policy Roundup 6.15.21 (June issue) 

Bill Introduced to Reform Philanthropy 

On June 9, Senators Angus King (I-ME) and Chuck Grassley (R-IA) introduced the Accelerating Charitable Efforts (ACE) Act. The purpose of this legislation is to “reform private foundations” and “ensure that donor-advised funds (DAFs) make resources available to working charities within a reasonable period of time.”  This legislation includes a complex set of incentives and penalties by:

  • Creating two new giving vehicles for DAFS
    • 15-year DAF holders - could take an immediate tax benefit if they disburse assets within 15 years; if funds are not disbursed in 15 years, DAF holder would face a 50% excise tax penalty on assets held in a DAF
    • 50-year DAF holders – contributions must be distributed within 50 years of the donation or an excise tax will be imposed on the sponsoring organization
  • Including a new definition of community foundation for the first time in the tax code and providing a carveout for certain DAFs at these community foundations
    • DAF holders with assets up to $1 million are exempted from the new payout rules; DAF accounts larger than $1 million would be subject to a 5% payout each year or distribute the funds within 15 years
  • Creating new rules for private foundations
    • Preventing private foundations from counting administrative expenses, e.g., salaries or travel expenses to a donor’s family members, towards the minimum distribution requirement
    • Not permitting private foundations to count distributions to DAFs as qualifying distributions to meet minimum distribution requirement; and requiring report out of any distributions to DAFs on the Form 990-PF
    • Eliminating the 1.39% excise tax applicable to private foundations when distributing at least 7% of net assets or to limited duration foundations
  • Creating new rules for public charities
    • Not treating distributions received from DAF sponsoring organization as public support from another public charity unless sponsoring organization is not DAF sourced

For a more detailed analysis of the bill, please see the Morgan Lewis summary. These provisions mirror the proposals that were introduced last fall through The Case for an Emergency Charity Stimulus and the Initiative to Accelerate Charitable Giving. On June 12, Council on Foundations, The Community Foundation Public Awareness Initiative, Independent Sector, Philanthropy Roundtable, and United Philanthropy Forum sent a joint letter to Congress urging lawmakers to only consider reforms that are supported by data, increase charitable giving, build trust in our sector, reflect the on-the-ground experience of both the organizations and donors being impacted, and include voices from a broad representation of the philanthropic sector.

With ongoing infrastructure negotiation talks dominating the policy agenda, it is uncertain how much bipartisan support this bill will receive. Infrastructure funding and provisions of this bill could be incorporated into the budget reconciliation bill expected to move this fall.  Philanthropy Southwest is continuing to gather information and will be participating in a national working group convened by United Philanthropy Forum to determine consensus, coordinated feedback and alternative solutions to this philanthropy reform legislation.  

GivingUSA 2021 Annual Report Released

On June 15, the GivingUSA Foundation published its GivingUSA 2021: The Annual Report on Philanthropy for the Calendar Year 2020. Overall giving in the 2020 calendar year reached a record high of $471.44 billion in annual giving. While individual giving reached $324 billion, it comprised less than 70% of total giving for only the second time on record. There were also declines in giving to arts and culture, health and with corporate giving. Giving by foundations increased by 17.0%, to an estimated $88.55 billion, a 15.6% growth rate adjusted for inflation. Click here to read the Lilly School of Philanthropy press release. In the Charitable Giving Coalition's statement, the Coalition said that they are encouraged by the increased giving in an unprecedented year but warned that we are not out of the woods yet, with nonprofit employment down and other sector declines in giving.  The overall increased giving should bolster efforts to enact the bipartisan Universal Giving Pandemic Response and Recovery Act (S. 618, H.R. 1704), increasing the cap on and extending the availability of the universal charitable deduction.

State Policy Spotlight: Podcast on Redistricting in Arizona; Texas Legislative Session Debriefed

Podcast on Redistricting in Arizona

The Vitalyst Health Foundation, an FCCP member, recently released this podcast on redistricting with their partners at One Arizona on redistricting. The conversation covers the connections among fair redistricting, health equity, resource distribution and racial justice. 

Webinar on Texas Legislative Session

On June 17, Alliance for Justice’s Bolder Advocacy Program will host a discussion about how nonprofit advocates boldly stood up for the rights of Texans during the 87th Legislative Session. Nonprofit leaders will share their legislative successes and the challenges to come. This session will discuss how nonprofits and advocates will continue to advocate during the special session and interim on issues related to voting rights, LGBTQ+ rights, women's rights, criminal justice reform, and more! Please click here to learn more and to register.

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