Washington Snapshot

Washington Snapshot: Summary of Senate Finance Committee's Hearing on Charitable Giving

Friday, March 18, 2022 - 12:44 pm
Stephanie Powers

What's Happening This Week...

Happening on the Hill

Senate Finance Committee Holds Hearing on Charitable Giving

On Thursday, the Senate Finance Committee held a hearing on “Examining Charitable Giving and Trends in the Nonprofit Sector.” Witnesses included:

  • Dan Cardinali, President and CEO of Independent Sector
  • Susannah Morgan, CEO of the Oregon Food Bank
  • Una Osili of the Indiana University Lilly Family School of Philanthropy
  • Eugene Steuerle of the Urban Institute and ACT for Alexandria

Witnesses spoke passionately about the need for Congress to act quickly to support the nonprofit sector, while members of the Committee recognized the importance of charitable organizations in responding to community needs. They also discussed the need for federal policy that directly addresses poverty and the needs of nonprofits, including the Child Tax Credit and the Employee Retention Tax Credit.

Members of the Committee raised the charitable deduction several times, praising its role in supporting nonprofits during a time of economic upheaval. Sen. James Lankford (R-OK), a sponsor of the Universal Giving Pandemic Response and Recovery Act (UGPRRA, S.618), said the nonitemizer charitable deduction would allow all Americans to respond to “the call to serve,” arguing that having the charitable deduction in place would incentivize additional giving at a critical time. The Council and many nonprofits strongly support UGPRRA, which extends the deduction for nonitemizers into 2021 and 2022 and expands it to about one-third the standard deduction ($4,000 for individuals and $8,000 for couples). Take our Action Alert and urge Congress to support this critical legislation.

In addition, while the hearing was not primarily focused on issues related to donor-advised funds, they did arise, most notably when Accelerating Charitable Efforts (ACE) Act (S.1981) sponsor Sen. Chuck Grassley (R-IA) argued that the ACE Act would lead to additional charitable funds going to nonprofits.

The Council opposes the ACE Act. Strengthening philanthropic practices and further incentivizing charitable giving are critically important issues—which is why we need to get them right without incurring unintended consequences. Legislation aimed at increasing the flow of philanthropic resources to nonprofits requires a thoughtful and inclusive process to avoid some of the unintended negative consequences we see in the ACE Act. Learn more about the Council’s position on the ACE Act.

Other highlights included Sen. Todd Young (R-IN) engaging Dr. Osili on the power of Indiana’s community foundations and asking her which barriers should be removed to allow for community foundation growth in other states. Dr. Osili called community foundations “the conveners, collaborators, and catalysts for innovation.”

The Council will be submitting comments for the record that address the needs of nonprofits and philanthropy at this critical moment. Other organizations are encouraged to submit written testimony. For information on how to submit, see the Committee’s webpage. Statements must be submitted no later than two weeks after the hearing.

Congressional Research Service and Joint Committee on Taxation Release Reports on Charitable Contributions

In advance of the hearing, the Congressional Research Service (CRS) and the Joint Committee on Taxation (JCT) released reports on the federal tax treatment of charitable contributions, including the individual charitable deduction and donor-advised funds (DAFs).

On March 14, the Congressional Research Service (CRS) released a report examining the individual charitable deduction. It found that over 80 percent of charitable deduction tax expenditures in FY2022 are associated with taxpayers who earned over $200,000, while only 5 percent of the expenditures are associated with those earning $100,000 or less. This is due in large part to the changes to the tax code in the Tax Cuts and Jobs Act of 2017, which drastically reduced the percentage of taxpayers who itemize and who can therefore claim the individual charitable deduction. While a temporary charitable deduction for nonitemizers passed as part of COVID-relief legislation, it expired at the end of 2021. The Council and our partners in the Charitable Giving Coalition continue to urge Congress to extend and expand the nonitemizer charitable deduction.

On March 11, the Joint Committee on Taxation released its hearing document, which provides an overview of the current federal laws related to charitable contributions. The document briefly talks about the impact of DAFs on charitable giving. According to the Joint Committee, as DAFs have grown more widespread, total U.S. giving has also grown: “Between 2006 and 2019 … assets held in DAF accounts increased from $31.1 billion to $141.95 billion (an increase of 356.4 percent), contributions to DAF accounts increased from $9 billion to $38.81 billion (8.7 percent of total U.S. giving for 2019, and an increase of 331.2 percent), and grants from DAF accounts increased from $5.7 billion to $27.37 billion. During the same period, the total U.S. giving increased by 52 percent.”

Happening in the Executive Branch

Census Undercount of Young Children Persists in 2020

Young children ages 0 to 4, a historically undercounted population in decennial censuses, continued to be undercounted in the 2020 Census, according to the U.S. Census Bureau. Despite major efforts by the Census Bureau to mitigate this problem, the 2020 Census had a larger undercount of young children than every other census since 1970. In addition to difficulties in counting young children experienced in previous decennial censuses and other Census Bureau surveys, the 2020 Census faced unique circumstances—the COVID-19 pandemic not only delayed collection but also disrupted living arrangements for many families, making the counting of young children even more challenging.

National COVID-19 Preparedness Plan Released

The White House released the National COVID-19 Preparedness Plan on March 2 to move the nation forward, sustaining and building on the progress made over the past 13 months. The plan focuses on four priorities:

  • Protect Against and Treat COVID-19
  • Prepare for New Variants
  • Prevent Economic and Educational Shutdowns
  • Continue to Vaccinate the World

OMB Director Receives Final Confirmation

On March 15, Shalanda Young was confirmed by the Senate in a bipartisan vote as director of the Office of Management and Budget (OMB). Ms. Young had been Acting in the position since President Biden nominated her to lead the office in March 2021. Director Young is the first Black woman in history to lead the White House office that oversees the implementation of the government’s budget.

New DOE Initiatives Support Environmental and Energy Resilience

The Department of Energy announced energy resilience and transformation funding programs:

  • $10 million in funding is available for innovative solutions that maximize benefits and minimize impacts to wildlife and ecosystems from solar energy infrastructure. The Deploying Solar with Wildlife and Ecosystem Services Benefits (SolWEB) funding opportunity will award up to nine projects to help reduce barriers, costs, and timelines for the deployment of large-scale solar energy. Research institutions, the solar industry, community-based organizations, local governments, and conservation groups are encouraged to apply. Mandatory concept papers are due April 11 at 5:00 p.m. ET.
  • Remote, island, and islanded communities can apply to receive substantial support from DOE’s Energy Transitions Initiative Partnership Project (ETIPP) to transform their energy systems and increase energy resilience. The program employs a community-driven approach to identify and plan strategic clean energy and energy resilience solutions that address a community's specific challenges. Applications are due by April 15.

Threatened HBCUs Eligible for Safe Learning Environment Funding

On March 16, Vice President Kamala Harris announced that the Administration is taking a whole-of-government approach to ensuring the safety of the learning environments of the Historically Black Colleges and Universities (HBCUs). Since the beginning of the year, more than one-third of the nation’s HBCUs have received bomb threats. Among many resources, the Administration is making available to the institutions that experienced disruptions in their campus learning environment, the Department of Education is providing grants to help ensure the safety of students. The Project School Emergency Response to Violence (Project SERV) program provides short-term, immediate funding for local educational agencies and institutions of higher education that have experienced a violent or traumatic incident to assist in restoring a safe environment conducive to learning.

Nearly 300,000 students are served annually in 100 HBCUs, across 19 states, the District of Columbia, and the U.S. Virgin Islands.

Happening in the States

National Council of Nonprofits

Exclusive from our colleagues at the National Council of Nonprofits.

Allocating State and Local Fiscal Recovery Funds

The one-year anniversary of the American Rescue Plan Act found governments still identifying ways to spend the resources in effective and creative ways. For instance, bills in Maryland would establish a five-year Small Business and Nonprofit Health Insurance Subsidies Program to provide subsidies to qualified employers and their employees to purchase health benefit plans. Nebraska’s Appropriations Committee is expected to finalize decisions this week on numerous proposals for investing in the state’s ARPA allocations. Over 20 bills addressing childcare, health, housing, and the workforce are being considered, all of which would be fully or partially funded by ARPA’s State and Local Fiscal Recovery Funds. One proposal (L.B. 1201) would appropriate federal funds for grants to nonprofits providing food assistance, and another (L.B. 1269) would target for repayment of the qualified educational debts owed by certain health professionals.

Keeping Track of ARPA Funding

Local: Local Government ARPA Investment Tracker, Brookings Institute, Feb. 3, 2022

StateARPA State Fiscal Recovery Fund Allocations, National Conference of State Legislatures, updated Mar. 2, 2022.

NationwideARPA Spending Website, National Council of Nonprofits, updated regularly.

Share on FacebookShare on TwitterShare on LinkedInShare on all
Public Policy