May 2023 Public Policy Update

May 2023 Public Policy Update

Publication date: 
August, 2023

Washington Update: Debt Limit Update, Charitable Deduction Legislation on Tap & Relevant Hearings

The debt limit has been dominating the airwaves in Washington, with policymakers expected to have until early this summer to raise the borrowing limit without triggering a default. Last week, House Republicans narrowly advanced their proposal to address the mounting debt crisis while cutting spending in a party-line vote, though the bill is not expected to gain traction in the Democrat-controlled Senate. While both parties have expressed a desire to avoid a default, the negotiations to achieve a bill that both chambers can support will continue to dominate the conversation in DC for the next month or longer.

For the charitable sector, lawmakers in the House are preparing to introduce a companion bill to the Senate’s Charitable Act (S.566) later this month. As you may recall, that bill would restore for 2023 and 2024 the universal charitable deduction (UCD) for non-itemizing taxpayers that expired at the end of 2021, increase the cap to one-third of the standard deduction (roughly $4,600 for individuals and $9,200 for joint filers), and allow gifts to donor-advised funds to be eligible for the UCD. The Senate bill currently has 14 cosponsors (8D, 6R), and the House bill is set to be introduced with bipartisan support. House introduction comes on the heels of a recent report from the Fundraising Effectiveness Project that found charitable giving declined by 1.7 percent last year compared to 2021. The Charitable Giving Coalition is pointing to the report’s findings as underscoring the need for restoring a UCD available to all taxpayers.

Also on Capitol Hill in recent weeks, the charitable sector has found itself mentioned in a couple of committee hearings. The first was a Senate Budget Committee hearing on the costs of tax dodging by the wealthy and corporations. During the hearing, Committee Chair Sheldon Whitehouse (D-RI), a long-time donor-advised fund (DAF) critic and supporter of the Accelerating Charitable Efforts (ACE) Act, raised concerns about donors using charitable giving vehicles (specifically DAFs) to mask their identity when engaging in giving to political organizations. The second was a Ways and Means Oversight Subcommittee hearing on nonprofit hospitals and the community benefit standard. Some lawmakers on the panel voiced skepticism that nonprofit hospitals are putting enough of the funds they save from their tax-exempt status toward subsidizing care for their communities. We will continue to monitor these concerns and others lawmakers raise in future hearings to see if they prompt any new legislation or action. Stay tuned.

Take Action Now: 

The Charitable Giving Coalition is collecting signatures on a letter in support of the soon-to-be-introduced House companion bill for the Charitable Act, which was introduced by Senator Lankford (R-OK) in February and would renew and expand the universal charitable deduction for non-itemizers that was enacted in 2020 and 2021 in response to the pandemic. The full letter and sign-on is linked here: Charitable Giving Coalition Support for Charitable Act - Sign On

The deadline to sign on is May 12th.

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