Bill Would Expand Incentives for Gifts to Donor-Advised Funds

A bipartisan bill introduced in the Senate on Wednesday would expand tax incentives for people who donate to charity from individual retirement accounts — a provision made permanent last year — to include gifts to donor-advised funds.

The Charities Helping Americans Regularly Throughout the Year Act (S. 2750), sponsored by Sen. John Thune, a Republican from South Dakota, and Sen. Ron Wyden, a Democrat from Oregon, would also change the foundation excise tax on net investment income to a flat rate of 1 percent. Currently the tax has two tiers: It is regularly 2 percent, but a foundation that makes grants that exceed its average payout amount over five years qualifies for a 1 percent tax.

Efforts to change the excise tax failed last year, to the chagrin of the Council on Foundations and the relief of critics such as Ray Madoff, director of the Boston College Law School Forum on Philanthropy and the Public Good.

Additionally, the bill would require nonprofits to file paperwork electronically.