What’s at Stake for Charities and Foundations in Tax Debate
December 1, 2017 | Read Time: 2 minutes
As the Senate grapples with tax legislation, here’s how the pending bill compares with the House-passed measure on key issues that affect the nonprofit world. For further background information, see a Chronicle article about what charities have been doing to influence the legislation and advocates’ last-minute push.
| HOUSE | SENATE | |
|---|---|---|
| Standard deduction | Doubles the standard deduction, which means fewer people will itemize and take advantage of the charitable deduction | Doubles the standard deduction |
| Estate tax | Doubles the exemption immediately; repeals the estate tax in 2024 | Doubles the exemption but keeps tax in place for estates of more than $11 million |
| Executive compensation | Places a 20 percent tax on compensation above $1 million for top 5 employees | Places a 20 percent tax on compensation above $1 million for top 5 employees |
| Charitable-deduction limits | Allows donors to deduct cash gifts of up to 60 percent of their adjusted gross income, up from the current limit of 50 percent | Allows donors to deduct cash gifts of up to 60 percent of their adjusted gross income, up from current limit of 50 percent |
| Donor-advised funds | Sponsoring organizations would have to report the average amount of grants made from accounts during the previous year and create a policy for inactive funds. | No provision |
| Foundation excise tax | Places a 1.4 percent excise tax on foundation investment gains. Current law provides for a 1 percent or 2 percent tax, depending on the foundation’s grant-making history. | No provision |
| University endowments | Places a 1.4 percent excise tax on the endowments of some large private universities | Places a 1.4 percent excise tax on the endowments of some large private universities. |
| Johnson Amendment | Nonprofits would be allowed to endorse and support political candidates and campaigns and still maintain their tax-exempt status. | No provision |
Correction: An earlier version of this chart mistaken said that the Senate plan would place a 1.4 percent excise tax on foundation investment gains. The Senate proposal had no provision on the excise tax.
