Congress should provide a universal charitable giving deduction for contributions through the end of 2021, according to the Wednesday letter sent to congressional offices from more than 90 charitable and other nonprofit organizations including the National Council of Nonprofits, United Way Worldwide and the American Red Cross. Charitable giving dropped after the 2008 recession and will likely drop again, the letter said.
The letter gained additional signers Thursday, to more than 140, the National Council of Nonprofits said.
Research by Giving USA has shown the 2017 tax overhaul known as the Tax Cuts and Jobs Act,
which doubled the standard deduction and thereby removed the incentive to claim charitable contribution deductions, contributed to reduced charitable giving by individuals in 2018."Nonprofits are truly indispensable and many are on the front lines of the response to COVID-19 right now, including providing child care for doctors, nurses and other first responders," Rick Cohen, the chief operating officer of the National Council of Nonprofits, told Law360. "And many were on the brink, even before this crisis hit."
Senate Majority Leader Mitch McConnell, R-Ky., and six other Senate Republicans, including Senate Finance Committee Chairman Chuck Grassley, R-Iowa, released a legislative proposal Thursday that would permit taxpayers to deduct up to $300 in charitable contributions.
The measure would also increase limits on charitable contribution deductions for people who itemize, and for corporations. The bill would suspend the 50 percent of adjusted gross income limit for individuals for 2020, the summary said.
Grassley also noted in remarks on the Senate floor that limits on cash and food inventory donations by businesses would be eased.
David Thompson, vice president of public policy for the National Council of Nonprofits, called the McConnell proposal "a start" and said it's a "negotiating document."
"On charitable giving, the good news is that an above-the-line deduction is included, albeit at a minimal $300 per person cap and it only applies starting in 2020," he said. "That's not the immediate relief that nonprofits need right now. But it is a start toward a major nonprofit policy priority."
Lawmakers could tap multiple sources to provide the $60 billion in funding nonprofits are calling for, according to the letter. Possibilities include expanding the Economic Injury Disaster Loan program for nonprofit employers and distributing money through emergency grants to nonprofits operating under grants from federal, state, local or other pass-through entities, the letter said.
"Millions of jobs in America's charitable sector are at risk unless a reliable source of cash can be provided to assure continued operations," the nonprofit groups wrote.
"America's charities employ over 12 million people, with payrolls exceeding those of most other U.S. industries, including construction, transportation and finance," the letter said.
Lawmakers this week provided employers with fewer than 500 workers a payroll tax credit to help cover the cost of paid family leave and sick leave for their employees in H.R. 6201, the Families First Coronavirus Response Act, which President Donald Trump signed Wednesday. Nonprofits welcomed the move in their letter but said they wanted Congress to build on it.
"Congress should provide payroll tax credits to all charities, regardless of size, that provide such paid family leave and sick time pay as a result of the coronavirus," the letter said.
--Editing by Vincent Sherry.
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