Public Policy Update - July 2020
Each month, SECF provides members with monthly updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand, SECF's vice president of member engagement, at firstname.lastname@example.org.
Bills to Expand Charitable Giving Introduced in House and Senate
Two Southeastern lawmakers are among the lead sponsors of bipartisan, bicameral proposals to expand the temporary universal charitable deduction put into law earlier this year.
In the Senate, Sen. Tim Scott (R-SC) is a lead sponsor of the Universal Giving Pandemic Response Act (S. 4032), which would expand the temporary $300 universal charitable deduction included in the CARES Act to one-third of the standard deduction, or roughly $4,000 for individuals and $8,000 for joint filers. The increased deduction would be available for tax years 2019 and 2020. Rep. Mark Walker (R-NC) has partnered with Rep. Chris Pappas (D-NH) to introduce an identical version of this legislation in the House.
The lead sponsors on the bill have indicated they are trying to get the expansion included in the next COVID relief package, which is expected in late July. The Senate Finance Committee is also considering expanding the universal charitable deduction in the next package, but committee members are also interested in adding compliance provisions to reduce the cost to the federal government and avoid fraud.
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Recent Data on Charitable Giving Is a Mixed Bag
According to Giving USA’s latest annual report, released June 16, Americans gave an estimated $450 billion to charity in 2019, a 2.4 percent inflation-adjusted increase from 2018. However, recent data from the Fundraising Effectiveness Project shows individual giving fell 6 percent in the first quarter of this year compared to last year. The number of donors also dropped 5.3 percent in the same time, continuing the nearly two-decade trend of fewer Americans giving to charity.
Republicans on the House Ways and Means Committee put out a statement that argued the new Giving USA report demonstrated that the 2017 tax bill did not negatively impact charitable giving like many had predicted it would. Additionally, the Treasury Department put out a release about the record levels of giving; however, it did not use inflation-adjusted numbers.
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California Donor-Advised Fund Legislation Passes State House, But Future Is Unclear
On June 10, the California General Assembly passed a bill, A.B. 2936, that would allow the state Attorney General to engage in rulemaking to implement reporting requirements on donor-advised funds (DAFs). The legislation could threaten donor privacy because it places no restrictions on the Attorney General’s rulemaking authority – DAF sponsors could be required to who is giving to them and what charities they are granting to.
The bill now moves to the Senate, where it is expected to be considered by the Senate Judiciary Committee in the second half of July. However, this timeline could be pushed forward if the legislature decides to only focus on bills related to the COVID-19 pandemic for the remainder of this year’s session.
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Bill Would Clarify Unemployment Reimbursement for Nonprofits
New legislation would add clarity to a provision in the CARES Act that, some feared, would force some tax-exempt organizations to pay 100 percent of the costs of unemployment benefits paid to employees laid off as a result of the COVID-19 pandemic up-front in order to receive reimbursement later.
While the CARES Act included a provision that guaranteed the federal government would cover 50 percent of the unemployment benefit costs that self-insured nonprofits are required to pay to their state, Department of Labor guidelines issued in April said these nonprofits must first pay the state the full amount owed before receiving a reimbursement, which could put self-insured nonprofits in a potentially untenable cash crunch.
To rectify this situation, Sen. Tim Scott (R-SC) introduced the Protecting Nonprofits from Catastrophic Cash Flow Strain Act (S.4001), which clarifies the congressional intent was for the federal government to cover 50 percent of the cost up-front before a nonprofit pays its unemployment insurance to the state. This would prevent nonprofits from getting hit with burdensome upfront costs that the federal government is already obligated to cover.
The bipartisan bill has 17 Senate co-sponsors, including Senate Finance Committee Chairman Chuck Grassley (R-IA) and the committee’s lead Democrat, Sen. Ron Wyden (D-OR). The language of this bill was also incorporated in the HEROES Act, which passed the House on May 15.
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