Senators launch bipartisan call for reinstatement of tax breaks for donors who do not detail their returns
Lawmakers from both parties on Thursday called for restoring the charitable deduction for donors who don’t itemize their taxes, a priority for nonprofits nationwide, but a key senator did not make a commitment. on whether to support legislation to increase disbursements from foundations and donors. funds advised.
“The charitable deduction is a lifeline, not a loophole,” said Sen. Ron Wyden, a Democrat from Oregon, who said there would be bipartisan support for renewing and expanding the deduction. He made his comment during a hearing of the Senate Finance Committee, which he chairs.
Senator James Lankford, a Republican from Oklahoma, echoed that call, saying he was “passionate” about expanding the charitable deduction.
Lankford noted that donations increase each December. “It’s not because of the Christmas spirit; it’s because of the tax deduction,” Lankford said.
Lankford is a co-sponsor of bipartisan legislation that would extend the break to the 2022 tax year and raise the maximum deduction to around $4,000 for singles and $8,000 for couples.
Despite his general support for allowing all taxpayers to deduct charitable donations, Wyden did not sign on as co-sponsor of the Lankford bill, and he declined in a hallway interview after the hearing to say if he supported this particular approach. “I’m very committed to increasing the number of Americans who have the ability” to deduct charitable donations from their taxes, Wyden said.
Speakers at the hearing were Dan Cardinali, CEO of Independent Sector; Susannah Morgan, CEO of the Food Bank of Oregon; Una Osili, associate dean for research and international programs at Indiana University Lilly Family School of Philanthropy; and Eugene Steuerle, co-founder of the Urban-Brookings Tax Policy Center.
All speakers agreed that charitable giving continues to lag behind the need for services as the pandemic drags on and other economic shocks hit the nation’s most vulnerable people.
In response to the pandemic, Congress passed a tax relief allowing people who don’t itemize their taxes to deduct charitable donations, something they couldn’t do before. The limit is $300 for individuals and $600 for couples. This tax relief expired at the end of 2021.
Donor Advised Funds
While the hearing largely focused on expanding the charitable deduction, Senator Charles Grassley, an Iowa Republican and former finance committee chairman who still sits on that panel, raised the issue of increased disbursements from foundations and donor-advised funds.
Grassley is a co-sponsor of a bipartisan bill that would require contributors to donor-advised funds to distribute the money to charity within 15 years to receive tax benefits. The bill also includes incentives for foundations to increase their payout to 7% of assets per year; the law currently requires a 5% disbursement rate for foundations.
Oregon Food Bank’s Morgan enthusiastically endorsed the increased payment requirements. “When I hear about rich people putting money aside to improve the future,” she said, “my response is to improve the future right now.”
Senator Sheldon Whitehouse, a Democrat from Rhode Island, asked about the administrative burden of payment legislation. What happens, he asked, when a donor deposits money into a donor-referred fund account and distributes some of that money each year – how does the fund manager track- he what dollars are distributed in 15 years?
“You go into a very complicated logistical tracking to determine when each dollar came in,” Whitehouse said.
Morgan replied that her nonprofit already does something similar to prevent food waste, and it’s not difficult. “We track our inventory like that,” she said. “When we receive a truckload of oranges, we know when they have come in and when they have to come out.”
In an interview after the hearing, Wyden did not say whether he supports the payments legislation, saying he plans to discuss the issue further with Mike Crapo, the top Republican on the Senate Finance Committee. .