By Hillary Evans, Vice President of Professional Learning & Public Policy, Philanthropy Southwest
Public Policy Roundup 12.15.21 (December Issue)
Congress Votes to Raise Debt Ceiling; Build Back Better Act Passage Looms
The House on December 15th voted 221 to 209 to increase the debt ceiling by $2.5 trillion, avoiding default and another standoff until after the 2022 midterm elections. This measure was approved mostly among party lines.
While Congress earlier this month approved funding the government through February 18, 2022, there several pending bills awaiting passage before Christmas. Senate Democrats hope to pass President Biden’s Build Back Better Act, a roughly $2 trillion dollar social and climate change spending bill. Passage is imminent particularly with many payments like the child tax credit payment that are set to expire by year’s end.
Passage of the BBB Act, however, continues to face opposition and concerns about how to pay for it. The Congressional Budget Office and the Tax Foundation find that the bill would increase the cumulative budget deficit over the next 10 years despite claims that the legislation is fully paid for.
Relatedly, the charitable sector continues to urge Congress to support the Universal Giving Pandemic Response and Recovery Act (S. 618, H.R. 1704) and extend the nonitemizer charitable deduction that is also set to expire by the end of the year. These expiring tax provisions could be included in year-end legislation package of tax extenders if the BBB Act is not passed this year.
Bipartisan Legislation Introduced to Fix Tax Code for Nonprofit Cemeteries
On December 9th, U.S. House Representatives Ron Kind (D-WI) and Jason Smith (R-MO) introduced the Grave Injustice Parity Act (H.R. 6226). This bipartisan legislation would fix inconsistencies in the tax code that hurt nonprofit cemeteries located in rural communities.
Specifically, there is inconsistency in the tax code in how 501(c)(13) nonprofit cemeteries are treated under income tax, estate tax, gift tax, and private foundation sections of the code. As a result, they are ineligible for certain support. Additionally, due to the lack of clarity in the definition of public cemeteries as “charitable”, community foundations are not able to use funds for cemetery upkeep. This bill would cure these inconsistences and allow deductions for transfers from estates or gifts to certain cemeteries.
Community foundations from across the country have provided lawmakers with testimonials about the impact these tax code inconsistencies have. Kyle Penney, President & CEO of East Texas Community Foundation (ETCF), who has been educating and advocating for this legislative fix for years stated:
Schoolhouse Rock makes the introduction of a bill look easy, but in fact it takes a lot of work. I am grateful for the support of Philanthropy Southwest and the great team of volunteers on the Public Policy Committee and PSW staff to stick with this unique project to support nonprofit cemeteries and the many private and community foundations who are interested in making grants to support them. In a partnership led by Philanthropy Southwest, ten community foundations around the country were able to support an advocacy project coordinated by Jeff Hamond at DC governmental affairs firm Van Scoyoc Associates. The effort resulted in the introduction of a bill in the U.S. House of Representatives affecting nonprofit 501(c)(13) cemeteries. The bill, introduced by Congressman Ron Kind (D-WI) and Jason Smith (R-MO) aims to equalize the charitable treatment of gifts to certain non-profit cemeteries from estates, gifts and private foundations. If you recall from the children’s cartoon, introduction of a bill in the House is the first of three steps to becoming law. If the bill makes it to the Senate and then to the President, the resulting law would allow community foundations and private foundations to make grants to these organizations without cumbersome expenditure responsibility procedures. In addition, the new law would allow individuals to make charitable gifts to support these cemeteries in their estate plans. Individuals can make tax deductible contributions to these cemeteries during their lifetime but cannot leave deductible gifts from their estate. This new law would fix that glitch in the tax code and open additional streams of support from foundations in the process.
PSW will continue monitoring this legislation and garnering support from House and Senate lawmakers towards passage. To read more about this legislation, please click here.
Polling Small, Rural Community Foundations
Are you a small rural community foundation that is made up of more than 75 percent donor-advised funds? If yes, please email Hillary Evans, hillary@philanthropysouthwest.org. We are conducting a member poll to determine whether such community foundations would be impacted under the community foundation definition in the proposed Accelerating Charitable Efforts Act. Thank you in advance.