Government Affairs Committee

Association of Fundraising Professionals - click here to return to our home page

NATIONAL AFP LINKS:

Fellow Fundraising Professionals:

Whether you are a large or very small nonprofit, it’s a good idea to know your representatives in all levels of government. You can find names and contact information online:

Federal:

www.senate.gov/
www.house.gov/

State:

legis.state.nm.us/

Local:

Check with your municipality or county

Federal

President Bush Signs H.R. 4 (August 2006)
Please click here to view information about this topic on the NM Planned Giving Council web site.

Call to Action: Call your Congressional Representative
Estate Tax: Impact on Children and Families (July 2006)

Background
This year, Congress is considering legislation to repeal or modify the estate tax. The Senate is planning to vote on the measure during the week of June 5th and House consideration will likely follow.

The estate tax is levied against taxable estates and is most often characterized as an “inheritance tax.” It is the federal government’s only tax on accumulated wealth which raises significant revenues. The tax affects only those most able to pay, and the collected funds are then used to support a range of programs.

Under the tax cut law enacted in 2001, the estate tax will be reduced in coming years, repealed in 2010, and then reinstated in 2011 to pre-2001 levels. The Administration has called for making the repeal permanent after 2010.

In the Senate, full repeal of the estate tax is unlikely to have enough support, so Senators have begun to negotiate a reform proposal instead of full repeal. Senator Kyl (R-AZ) has offered an alternative proposal, which the Senate is likely to consider. His proposal sets a flat tax rate of 15 percent with a $3.5 million exemption. This represents a change from a $1 million exemption and a top tax rate of 55 percent. Kyl’s proposal would reduce federal revenues nearly as much (78%) as would full repeal of the estate tax.

Message: Both a permanent repeal or the Kyl reform proposal would jeopardize federal funding for children’s services.
Repealing the Estate Tax will reduce funding for children’s programs, lead to significant financial losses and aggravate the deficit.

If the Estate Tax is repealed or modified, the federal government will lose a significant amount of revenue.

Tax experts predict that if the estate tax is repealed, nearly one trillion dollars in federal revenues will be lost over ten years.

To make up for lost revenues, Congress may likely reduce funding for other federal programs - which include a number of vital services desperately needed by America’s children and families.

If the government continues its spending patterns while decreasing federal revenues, our children will likely inherit the legacy of an enormous federal deficit.

The Estate Tax is one of few progressive elements in our tax system: If eliminated, it will accelerate the growing difference between the wealthy and the less fortunate.

Charitable giving will decrease: The Estate Tax encourages wealthy Americans to make charitable donations due to their tax-exempt nature.

Wealthy Americans will lose the incentive to donate, resulting in charities losing up to $10 billion per year.

Foundations and charities will have far fewer resources available to serve children and their families.

Government Relations Update (March/April 2006)
There has been a lot of activity in the United States legislatively since the beginning of the year. Here’s a brief update on the issues that are the most pressing, but for the latest information please visit the public policy section of the AFP website.

Deficit Reduction Act: In February, the House approved the Deficit Reduction Act conference report by a vote of 216-214. The President signed it into law on February 8, 2006. The conference report changes a Medicaid “transfer of assets” provision that may discourage many older Americans from making charitable contributions and significantly reduce charitable donations from this population.

Tax Reconciliation Bill: Also in February, the House appointed conferees, and the House and Senate prepared to conference on the tax reconciliation bill. As AFP reported in its Oct.-Nov. public policy update, the Senate version of the bill contains both charitable incentives and reforms while the House version of the bill contains only a computer equipment donation provision (and no reform measures).

It is anticipated that the Conference process will lag well into March. For more information, please go to: http://www.afpnet.org/ka/ka-3.cfm?content_item_id=22870&folder_id=2466

White House Philanthropy Summit: More than 25 AFP leaders attended the National Conference on Faith-Based and Community Initiatives, hosted by the White House, on March 9 in Washington, D.C. The purpose of the conference was to emphasize the important role that corporations and foundations play in funding social services. The White House also released the results of a data collection effort showing federal discretionary grant activity with faith-based charities in 2005.

At lunch, President Bush addressed the conference’s participants. He emphasized that the federal government needed to do its part to support faith-based organizations. Most importantly, President Bush reaffirmed his support for the IRA rollover provision. He noted that “seniors now have to pay taxes on a portion of their individual retirement account savings, and so why not allow them to take part of that money and send it to charitable organizations, as opposed to paying tax on it.” For a copy of the president's full remarks, click here.

AFP was pleased to hear the president voice his support for the IRA rollover provision, one of the association’s legislative priorities over the past several years. With President Bush’s words in mind, AFP plans to continue to push for the inclusion of the IRA rollover provision in the tax reconciliation bill (H.R. 4297) that Congress is currently working on.

AFP Holds Lobby Day in New York Regarding Ethics Education Legislation: The New York Assembly and Senate introduced bills A09061 and S04745 respectively that would require professional fundraisers and solicitors who raise more than $1 million to complete courses in the law and ethics of fundraising and philanthropy. Representatives from AFP New York Chapters, as well as staff from AFP’s International Headquarters, met with key Assembly Members, Senators, and their staffs to discuss this legislation on Jan. 30 in Albany, N.Y. For those New York members who have strong ties with their Assembly members or Senators and are willing to speak to them about this issue, please contact Jason Lee at .

Senate and House Begin to Conference on Tax Reconciliation Bill
(Feb. 13, 2006) The House and Senate will meet this week to begin to hammer out a final agreement on a tax reconciliation bill that may contain major charitable giving incentives and reforms to the sector.

Different versions of the bill, H.R. 4297, have passed both bodies of Congress. The House version contains just one measure related to charity (donations of computer equipment). In contrast, the Senate version contains such giving provision as:

Tax-free distributions from individual retirement accounts for charitable purposes. (IRA Rollover provision); Deduction for portion of charitable contributions to be allowed to individuals who do not itemize deductions. (Nonitemizer provision) and Enhancement of charitable deduction for contributions of food inventories.

It should be noted that the version of the non-itemizer deduction in the Senate bill could result in a tax increase for millions of taxpayers, according to a report by Congress' Joint Committee on Taxation. The proposal would allow non-itemizers a charitable deduction for the amount of their annual contributions above $210 (or $420 for couples filing jointly).

However, at the same time, the measure would reduce the deduction that itemizers receive for their charitable gifts. Under the proposal, the first $210 of an itemizer's annual charitable contributions (or the first $420 for couples filing jointly) could not be counted towards the deduction. AFP is currently working to determine the overall impact of this provision on charitable giving.

Charitable Reforms and New Fees
Several charitable reforms also were included in the bill, including provisions that impose new user fees on donors claiming certain deductions. For charitable contributions of "certain easements on buildings in registered historic districts," there is imposed a new $500 IRS filing fee for any contribution that is greater than 3 percent of the fair market value of the building, or $10,000.

Another area of concern is the section of the bill that modifies substantiation and recordkeeping requirements for certain charitable contributions. In the recordkeeping portion of this provision, no deduction is allowed of any contribution in the form of cash, check, or other monetary gift unless the donor maintains a record in the form of a cancelled check or some form of receipt from the donee.

The bill also would detrimentally affect deductions for clothing and household items.

The measure contains a myriad of additional provisions addressing reforms for donor advised funds, supporting organizations, information sharing by state and federal officials, increased penalties, annual notices from small (under $25,000 annual revenue) organizations, and many other items.

AFP Action
AFP is working with conference negotiators to ensure that charitable giving incentives will be included in the final bill. Discussion of the bill is just beginning, and AFP may be distribute an Action Alert at an appropriate time to encourage members to send letters to their Representatives and Senators. If this occurs, AFP will provide materials such as talking points and sample letters.

House Passes Tax Reconciliation Bill Without Charitable Giving Incentives or Reforms
(Dec. 19, 2005) On Thursday, Dec. 15, 2005, the U.S. House of Representatives approved H.R. 4297, the Tax Relief Extension Reconciliation Act of 2005, by a vote of 234 - 197. H.R. 4297 extends several current-law provisions that are expiring in the near future. For instance, the lower tax rates on capital gains and dividends are extended in the bill. The House version does not contain any of the charitable giving incentives or the charitable reform provisions found in the Senate approved companion legislation, S. 2020, the Tax Relief Act. However, H.R. 4297 appears to have a charitable giving incentive related to computer donations that AFP believes will allow the House and Senate to negotiate charitable giving provisions during conference.

The Senate's bill includes key CARE Act giving incentives, including:

Tax-free distributions from individual retirement accounts for charitable purposes (IRA rollover provision)

Deduction for a portion of charitable contributions to be allowed to individuals who do not itemize deductions (nonitemizer provision)

Modification of charitable deductions for contributions of food inventories (food donation provision)

Although AFP was pleased to see the inclusion of the IRA rollover provision in the Senate bill, it is concerned about several charitable reforms that also were included in the bill, including provisions that:

impose new user fees on donors claiming certain deductions

modify substantiation and recordkeeping requirements for certain charitable contributions (creating more paperwork and bureaucracy for charities)

change deduction rules for clothing and household items

It is unclear whether the House and Senate will complete their conference on their bills before the end of the year. AFP will continue to monitor the situation and work with members of congress to both advocate for charitable giving incentives, such as the IRA rollover provision, and voice its opposition to overly burdensome charitable reforms.

Hosted and Maintained by: ABQweb, a division of L&S Marketing, Inc.
Questions? Contact our