1. Charitable Giving and Tax Reform in the 115th Congress
Planned Giving Group
of New England
November 08, 2017

2. Camp Bacchus tax reform efforts of 2013
How we got here
Camp Bacchus tax reform efforts of 2013
Camp Proposal of (1,000 + pages)
Ryan “Better Way” Proposal of (35 pages)
Trump Unified Framework Proposal (9 pages)

3. H.R. 1 “Tax Cuts and Jobs Act”
Introduced November 2nd
Mark up period November 6th – 9th
Bring to floor under a closed rule November 13
Passage in House by Thanksgiving

4. H.R. 1 “Tax Cuts and Jobs Act”
Corporate rate reduced from 35% to 20%
Creates a 25% rate for “pass through” businesses, which includes a “guard rail” provision allowing these entities to either claim only 30% of income as pass-through income or classify a high percentage of income as business income

5. H.R. 1 “Tax Cuts and Jobs Act”
Four Individual Tax Brackets 12%, 25%, 35%, 39.6%
Standard Deduction
$12,000 individuals and $24,000 married couples filing jointly
Eliminates personal exemptions and almost all itemized deductions

6. H.R. 1 “Tax Cuts and Jobs Act”
Charitable Deduction is maintained but use will be limited by standard deduction
AGI limitation is raised from 50% to 60% for cash contributions to public charities and certain private foundations.
5 year carryover period is retained
Pease limitation is eliminated

7. H.R. 1 “Tax Cuts and Jobs Act”
Estate Tax exemption doubles to $11 million individual and $22 million for couples
Estate tax is phased out entirely over six year period

8. H.R. 1 “Tax Cuts and Jobs Act”
Executive Compensation 20 percent Excise Tax
Applies to compensation in excess of $1 million paid to organization’s five highest paid employees
Includes cash and the cash value of all remuneration paid in a medium other than cash.
Exempts payments to a tax-qualified retirement plan
UBIT extends to all 501(a) entities including pension plans
Excludes research income from UBIT only if research is made publicly available

9. H.R. 1 “Tax Cuts and Jobs Act”
Excess Business –Holdings Tax
Allows private foundations to wholly own for-profit businesses when received by gift or bequest so that the profits of such businesses can be dedicated to funding the private foundation’s charitable mission.
Johnson Amendment
Repeals the Johnson Amendment as it relates to certain churches to make statements relating to political campaigns in the ordinary course of their activities

10. H.R. 1 “Tax Cuts and Jobs Act”
Private Foundation Excise Tax
Creates a new 1.4% excise tax rate on private foundations net investment income (eliminating the current two-tiered structure)
Endowments
Imposes a 1.4% excise tax on private college and university endowments for institutions that have at least 500 students and assets (other than those used directly in carrying out the institution’s educational purposes) valued at $250,000 or more per full-time student

11. H.R. 1 “Tax Cuts and Jobs Act”
Donor Advised Funds
Requires DAFs to disclose annually the average amount of grants made from their funds as well as their policies on inactive funds
Substantiation Requirements
Repeals substantiation exception for gifts reported by donee organization
Mileage Rate
Adjusts the charitable mileage rate for inflation

12. H.R. 1 “Tax Cuts and Jobs Act”
Private Operating Foundation
Would not recognize an art museum as a private operating foundation unless it is open to the public for at least 1,000 hours per year
College Athletics
Repeals special rule that provides a charitable deduction of 80% of the amount paid for college athletic seating rights

13. The Path Forward
Budget Resolution passed in October allowing for reconciliation which requires only 50 votes in Senate
Senate is drafting and revising their own bill based on H.R. 1. Bill is now expected to be released Thursday
Senate Committee markup to begin November 13
Senate intends to introduce and pass a bill before Thanksgiving

14. Senate unlikely to change the current estate tax
The Path Forward
Senate unlikely to change the current estate tax
Senate likely to make entire bill sunset after 10 years
Will vulnerable Democrats (6) break unity with party to overcome potential Republican no votes.
Senate and House bills will need to go through conference procedure to pass for president to sign
Goal remains to have a bill signed before Christmas

15. Universal Charitable Deduction
Issues of Focus
Universal Charitable Deduction
H.R “Universal Charitable Giving Act of 2017”
H.R “Legacy IRA Act”
Johnson Amendment

16. CGP “Day On Capitol Hill”
Over 50 participants
70 Meetings with Legislators
Educate legislators about the charitable deduction
Asked for support of a Universal Charitable Deduction

17. Why Should We Care? Economics In the State of Massachusetts
33,722 Non-profit organizations
455,900 employees nearly 17% of the workforce
$118.8 billion in revenue
$334.6 billion in assets

18. Stay Informed of Latest Developments
Role of CGP in Advocacy
Stay Informed of Latest Developments
Inform National Membership
Support a Unified Voice for Charitable Giving
Partner with Leading National Organizations
Leverage State and National Membership in Advocacy Efforts

19. Uncertainty is Opportunity
Interpret changes for donors, clients and organizations
Educate ourselves on changes to vehicles and tools
Stay focused on donors and build relationship
Philanthropy is not tax policy