Washington Snapshot: Government Shutdown Averted: Debt Ceiling Looms

What You Need to Know About Public Policy This Week...

• News From the Council
• Government Shutdown Averted: Debt Ceiling Looms
• IRS Release "Tax Tip" on Charitable Deduction
• Child Tax Credit Sign-Up Period Extended to November 15
• Congress Discusses Economic Impacts of COVID-19
• What’s Happening in the States

News from the Council

This Tuesday, October 5, the Council will host a webinar on preventing funding for hate groups. Register for the free webinar and check out the accompanying report, Values-Aligned Philanthropy: Foundations Resisting Hate and Extremism, and online resource center.

Join the Council on November 4 for the virtual 2021 Public Policy Summit. Top government officials and national experts will convene with leaders in philanthropy to explore public policy issues affecting the sector. See our full schedule and register.

Government Shutdown Averted; Debt Ceiling Looms

Yesterday, Congress passed a Continuing Resolution that provides funding for the federal government until December 3. This resolves only one of the key matters on Congress’s plate this week. Earlier this week, the Treasury Department said the United States will likely reach the debt ceiling on October 18. Brookings released a summary of the economic effects of failing to lift the debt ceiling.

In addition, Congressional Democrats and the White House continue to negotiate both the bipartisan infrastructure bill (read Independent Sector’s summary) and the larger budget reconciliation package (see the Tax Foundation's summary of the revenue provisions). The future for both pieces of legislation is unclear, though lawmakers on both sides of the issue have expressed optimism about their passage in the coming months.

IRS Releases "Tax Tip" on Charitable Deduction

The IRS released a “tax tip” this week summarizing the temporary tax changes for 2021 from recent legislation, including some affecting charitable giving. Taxpayers who do not itemize can claim a deduction of up to $300 ($600 for joint filers) for cash contributions to qualifying charities. In addition, for 2021, taxpayers who do itemize are able to claim a charitable deduction of up to 100 percent of their adjusted gross income. There are some exceptions to both these provisions, including cash contributions made to a supporting organization, a donor-advised fund, most private foundations, and charitable remainder trusts.

The Council on Foundations is one of many organizations supporting the Universal Giving Pandemic Response and Recovery Act (S.618/H.R.1704), which would increase the deduction cap for taxpayers who do not itemize and extend the temporary deduction through 2022. It would also make gifts to donor-advised funds eligible for the deduction. Take our action alert to urge your members of Congress to co-sponsor the bill.

Child Tax Credit Sign-Up Period Extended to November 15

To receive the advance payments of the Child Tax Credit (CTC) and any missing stimulus payments, families that have not filed a 2021 tax return and are not signed up yet for the CTC must take action to sign up by November 15, 2021. The White House and Treasury Department, with Code for America, have created a new bilingual, mobile-friendly sign-up tool at GetCTC.org that simplifies the process for these families. Philanthropic funders are urged to support local organizations doing outreach to eligible families or providing navigators to help people sign up. Any organization that would like to track the impact of its outreach efforts can do so by signing up for Code for America’s unique URL.

If families miss receiving the advance monthly payments by not signing up in time, they can claim the full credit in 2022. If they file a full 2021 income tax return next year, they may be eligible to receive additional benefits, including the third stimulus check, the Earned Income Tax Credit, and any state tax credits. Note: without Congressional action, the credit will only be available for this current year.

Congress Discusses Economic Impacts of COVID-19

The Senate Committee on Health, Education, Labor, and Pensions; House Transportation and Infrastructure Committee; and House Financial Services Committee all held hearings on the nation’s recovery from the economic impacts of COVID-19.

During the Financial Services Committee hearing, Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell discussed successes and challenges related to the economic recovery from COVID-19. Secretary Yellen updated the committee about the anti-poverty impacts of the American Rescue Plan, including the revised Child Tax Credit, which contributed to a 24 percent decrease in food insecurity. Meanwhile, Chair Powell discussed monetary changes since his last testimony, including relative stagnation in industries hardest hit by the pandemic. However, lawmakers primarily focused on the impending debt ceiling crisis, with Secretary Yellen testifying, “It would be a catastrophe if Congress failed to raise the debt ceiling.”

Happening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

Nonprofit Charitable Giving and Games of Chance

The pandemic-induced cancellation of nonprofit fundraising events appears to have inspired lawmakers in 2021 to consider relaxing rules or expanding fundraising opportunities. For instance, legislators in Maine and New Jersey approved online raffle and ticket sales; voters in the Garden State will also consider a proposal for a constitutional amendment at the next general election to allow that proceeds from games of chance be used to support the group organizing the game or raffle. New Hampshire lawmakers relaxed the requirement of how often a member of the sponsoring charitable organization must be present during the fundraising game of chance and established a new commission to study charitable gaming. A measure pending in North Carolina would exempt nonprofits from collecting and remitting sales tax on the ticket price or admission fees at most fundraising events.

A bill introduced last month in Michigan would waive the $50 per day license fee for charitable gaming events like casino nights, sometimes called “millionaire parties.” The measure would also increase the number of licenses permitted per year through 2023 and raise the “imitation money” limit from $20,000 to $30,000. “With donations cut in half, many of Michigan’s nonprofits find themselves in dire need of financial assistance to stay afloat,” said Michigan Nonprofit Association Vice President Kelly Kuhn. “What’s at stake is not only the services and supports nonprofits provide to the residents in their communities,” Kuhn explained, “but also the jobs they create for Michiganders.”