New Bills Raise Concerns for Philanthropy
On May 15, the House Ways and Means Committee held a mark up to consider five bills that would create new transparency and disclosure requirements for tax-exempt organizations, as well as increase penalties for the unauthorized disclosure of taxpayer information. The Committee approved all five. Below are the three we believe would most impact philanthropy:
Foreign Grant Reporting Act (H.R.8290): Requires section 501(c) organizations to include foreign grant recipients on their annual returns to the IRS. It also requires organizations to disclose this information for indirect contributions, i.e. subgrantees. The committee unanimously approved this bill.
Impact on Philanthropy: Private foundations are already required to disclose the name, address, and total grant amount for all foreign grant recipients, as well as the type of recipient. This bill would require public charities and other 501(c) organizations to do the same. The Council is concerned that these additional disclosure requirements could create significant risks for grant recipients, particularly for organizations doing work in sensitive areas. In addition, we’re concerned that the definition of indirect contributions is very broad and could be difficult to administer.
American Donor Privacy and Foreign Funding Transparency Act (H.R.8293): Requires many tax-exempt organizations to publicly report aggregate contributions from foreign nationals, grouped by country. The bill also includes donor privacy protections, restricting some federal government agencies from collecting and publicizing donor information from tax-exempt organizations.
Impact on Philanthropy: The Council is concerned the bill would create a burden on nonprofits, which would have to verify the nationality of their donors. Currently, nonprofits must report the names and addresses of substantial donors to the IRS. Asking organizations to also collect information about their donors’ nationality could mean losing the trust of their donors as well as the communities they serve.
End Zuckerbucks Act (H.R.8291): Prevents 501(c)(3) organizations from providing direct or indirect funding to official election organizations. Specifically, the bill would prohibit below-cost services, scholarships, subsidies, or direct, in-kind, or indirect funding to state and local governments.
Impact on Philanthropy: Like laws passed in more than 25 states, this bill would prohibit philanthropic and other charitable organizations from providing financial or other support to aid in the administration of an election. The bill does have an exception for providing space as a polling place for state and local government.
Committee approval is only one step in this process. Next, the bills must be brought to the House floor for consideration by the full House. The legislation is then sent to the Senate, where, assuming regular order, it would be considered by the Senate Finance Committee and need to be approved by the full Senate before being sent to the President for signature. If any changes are made by the Senate, those changes must be reconciled by both chambers, and the bills voted on again, before going to the White House.
Our team has already been engaging congressional offices to ensure that they better understand philanthropy’s work, as well as the impact of these legislative proposals on the charitable ecosystem. As we learn about legislative developments or other activities from inside the beltway, we will be sure to share what we know with you. Join our Public Policy Action Network and sign up for Washington Snapshot to receive regular policy updates and stay engaged. And as you meet with your representatives in Congress—or if we can support your legislative engagement work—let us know at govt@cof.org.
