Public Policy Update - April 2021
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.
Southern Philanthropy Well Represented at Foundations on the Hill
Last month, SECF members turned out in force to bring one of the country’s largest delegations to Foundations on the Hill. Foundations from the region were well represented in several program sessions while organizing dozens of virtual visits with congressional leaders and staff.
Several SECF members participated in a session, Foundation Examples: Embedding Equity in Public Policy Work – the United Philanthropy Forum has made the recording of this session available to all SECF members! Please watch the discussion and feel free to share with your peers. Thank you to Darrin Goss, Sr., of the Coastal Community Foundation, Chynna Phillips of the Sisters of Charity Foundation of South Carolina and the Southern Education Foundation’s Kenita Williams for their leadership and voice on this issue!
If you participated in FOTH this year, you will have access to recordings of each session and speech via SwapCard through December 31, 2021. If you did not attend, you can still view all FOTH programming through our friends at the United Philanthropy Forum, which is providing access to the platform at a post-conference rate of $79.
Biden Infrastructure Package Includes Some Funder Priorities, Leaves Out Taxes on Wealth or Endowments
Last week, President Biden released an outline of an ambitious $2 trillion infrastructure package. While coverage of the bill has focused largely on funding for roads, bridges, electrical grids and water systems, it also includes investments in several areas of interest to grantmakers.
Biden has proposed spending $100 billion to improve access to broadband and address the “digital divide” that affects underserved populations in both urban and rural areas. The proposal would also dedicate $213 billion to affordable and sustainable housing, $137 billion for early learning, K-12 public schools and community colleges, as well as $400 billion directed at home and community-based care for elderly and disabled people.
The legislation’s cost, so far, would be covered by tax increases on corporations and income of high-earners, as well as other measures. The White House is not seeking to incorporate a wealth tax like that proposed by Sen. Elizabeth Warren (D-MA), which would tax households with a net worth above $50 million. The proposal would not affect charitable trusts or endowments.
Work on Biden’s infrastructure plan has only just started – Congress is in recess this week, though House Speaker Nancy Pelosi has signaled she would like to have a bill passed by July 4. Republican response to the proposal makes it likely the plan will be moved through the Senate via the same reconciliation process used for COVID relief legislation earlier this year.
We will continue to monitor negotiations on the package for any developments that may affect funder priorities or tax policy governing foundations.
New Giving Data Points to Effectiveness of the Universal Charitable Deduction
Last month, the Fundraising Effectiveness Project (FEP) released its fourth quarter report on charitable giving in 2020, which found giving was up 10.6 percent in 2020 compared to 2019. The largest increase in donations came from those giving $250 or less, which were up 15.3 percent from 2019. Typically, charitable giving increases during times of crisis, but that increase is normally driven by higher-dollar donations.
While there are likely many factors contributing to the increase in donations of $250 or less, FEP Chair John Biedermann said in a statement accompanying the report that “one factor that may have helped the increase in smaller gifts was the universal charitable deduction.” Biedermann also pointed out that there was a 28 percent increase in donations of $300 on December 31, the exact amount of the cap on the universal charitable deduction and likely another signal that it has encouraged more giving.
In our previous Public Policy Update, we highlighted recently-introduced legislation that would expand the universal charitable deduction. Sector advocates, led by the Charitable Giving Coalition, are working on adding additional cosponsors to the bill in hopes it will be included in the next tax package.
Treasury Department Determining Impact of COVID Bill on State-Based Giving Incentives
A provision of the COVID relief law passed this year could affect the ability of states to create or expand state-based giving incentives for gifts to community foundation endowments – within the SECF footprint, such programs already exist in Mississippi and Kentucky.
Language in the bill prohibits states and localities from using relief dollars to finance tax cuts. The provision was met with significant pushback from Republican lawmakers and attorneys general, many of whom called the provision unconstitutional.
Since its passage, Treasury Department officials have responded to inquiries from both Republican lawmakers and state officials, saying that states can enact a broad variety of tax cuts as long as federal funds aren’t used to pay for them. On March 23, Treasury Secretary Janet Yellen responded with a letter to 21 attorneys general with the same message, while also pointing out that if a state did use federal funds to offset a tax cut, they would not have to return all of the relief funds they received, only the funds used to pay for the tax cut.