Last week, the U.S. House of Representatives released a much-publicized tax overhaul proposal. It’s an extensive, 400+ page bill, but we are particularly concerned about two components that could negatively impact the way nonprofits operate and fulfill their missions.
Charitable Giving
While the legislation does not change the itemized deduction taxpayers can take for charitable donations, it nearly doubles the standard deduction. This increase in the standard deduction would likely have the unintended consequence of reducing donations to nonprofits by billions each year, as fewer taxpayers will be itemizing their returns to receive deductions for these types of contributions.
Donations are crucial to the operating budgets of nonprofits like Mass Audubon. While donations to nonprofits are not typically made solely for tax reasons, tax incentives have been proven to increase generosity. By increasing the standard deduction, the proposed tax overhaul would effectively eliminate the charitable giving tax incentive for millions of Americans.
Mass Audubon supports instead a universal charitable deduction that would enable all taxpayers to receive a tax incentive for their charitable donations.
Donations help Mass Audubon carry out our mission of protecting the nature of Massachusetts
Keeping Nonprofits Nonpartisan
The legislation would also weaken the Johnson Amendment, a longstanding protection in the federal tax code that prohibits tax-exempt 501(c)(3) nonprofits, like Mass Audubon, from endorsing, opposing, or contributing to political candidates. Changes to the Johnson Amendment could politicize charitable nonprofits and foundations, which directly counteracts our abilities to engage in our missions and work with elected officials of all parties at the local, state, and federal levels of government. We’ve written to our delegation in the past on this issue through our membership in the Massachusetts Nonprofit Network.
The House Ways and Means Committee is scheduled to start its review of the bill today, and the bill is then expected to go to the House floor next week. The Senate is also expected to release its own version soon. Mass Audubon is contacting our congressional delegation to let them know we oppose these measures in the federal tax overhaul proposal, and you can help too.
Let your US Representative know that we need to enact a universal charitable deduction available to every taxpayer, and that we need the Johnson Amendment to remain strong. Don’t know who your US Rep. is? Find out here.