President Bush is expected to sign into law this week the largest group of new charitable-giving provisions in decades. The changes are contained in the pension bill, H.R. 4, which passed in the last days before the House and Senate adjourned for the summer.
A major feature of the law will allow some taxpayers to donate up to $100,000 a year from their individual retirement accounts, or IRAs. It also raises higher personal contribution limits for IRAs and 401(k) accounts. This change in the IRA donation capability could pump as much as $400 million in new donations into the nonprofit sector, according to the United Way of America.
“These reforms and new tax incentives will strengthen the nation’s charities,” United Way of America President Brian Gallagher said. “They are an important step forward.”
But in the race to recess for the summer break, not every proposed change made it into the final version of the bill. Deleted during negotiations was language allowing individuals who don’t itemize on their tax filings to receive a deduction for charitable donations. This tax incentive would primarily have benefited middle- and working-class contributors. The United Way supported the bill, even without the deleted provision, but the D.C.-based Council on Foundations blasted the final language, alleging Congress rushed its work on the bill.
“The process for the passage of this legislation was fatally flawed in that it was secretive and closed. There was no opportunity for us to amend, change or correct those sections that negatively impacted the philanthropic sector,” council President and CEO Steve Gunderson said. He was critical of the decision to delete the bill’s other major change, IRA charitable rollovers to community and private foundations.
Gunderson, a former Congressman, suggested Congress didn’t understand how such provisions could aid foundations.
“Congress does not understand the important role of foundations, and particularly the significance of donor-advised funds and supporting organizations, in strengthening American communities,” he said.
Council spokesperson Gabriela Schneider said the foundation made specific recommendations to the Senate Finance Committee on what shape the bill should take.
“We have been trying to educate the Congress on our work as part of the nonprofit sector panel” that was assembled to brief and advise the legislators, she told The Examiner. The Council on Foundations and the United Way expressed hope that the omitted provisions could find their way into other legislation, or into an update of the new law.
“The United Way will continue to support the creation of a charitable deduction for the two-thirds of American taxpayers who do not itemize,” said Patrick Lester, director of Public Policy United Way of America in Alexandria. “We think it is critical to democratize charitable giving.”
Have information about area nonprofits? Contact Frank Sietzen at [email protected].
