Report Issued on Proposals to Increase Charitable Giving

Date01 August 2019
Published date01 August 2019
August 2019 7
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
amount — be limited to $100,000 of contributions over
a six-year period — the applicable period — prior to or
during the child’s attendance at the institution of higher
education. Deductions claimed for gifts in excess of that
amount during the applicable period would be recap-
tured (taken into gross income).
Full deductibility of gifts to colleges and universities
would thus turn on whether or not the contribution is
a specified contribution. The term specified contribu-
tion would mean, with respect to a specified college
or university at which an applicable child of a restricted
contributor is enrolled during a year, a contribution that
would otherwise be deductible if made to the institu-
tion or a related organization by a restricted contributor
or by another entity at the contributor’s direction, or
otherwise by means of a donor-advised fund or pri-
vate foundation or in satisfaction of the contributor’s
The concept of the specified contribution would
therefore depend on whether or not the institution is
a specified one. A specified college or university would
be an institution of higher education other than an
institution that (1) has a written policy that prohibits
as a factor in admissions decisions consideration of
contributions from an applicant or family member of
an applicant and the financial ability of an applicant or
family member to make a contribution, and (2) demon-
strates to the satisfaction of the IRS that the policy is
properly enforced.
Rounding out the parade of definitions, an applicable
child would be, with respect to a restricted contributor,
an individual who is a child of the restricted contributor
or a descendant of such a child (existing IRC § 152(c)(2)
(A)). A related organization is defined in this proposal as
an organization that (1) controls or is controlled by the
specified college or university involved, (2) is controlled
by one or more persons who also control the specified
institution, or (3) is a supported organization or a sup-
porting organization with respect to a specified college
or university.
This legislation would amend the Higher Educa-
tion Act to require any institution that receives federal
financial aid to establish this type of policy and report
the number of applicants, admitted students, and
enrolled students who are the children of donors. The
Department of Education would make the data publicly
available. Institutions would be required to include this
information on their annual information returns.
The press release quotes Sen. Wyden: “While mid-
dle-class families are pinching pennies to pay tuition and
graduates are buried under tens of thousands of dollars
in student debt, wealthy families are greasing the skids
to get their children into elite schools on the backs of
those same families and graduates. It’s absurd that the
tax code subsidizes the top 1% buying their way into
Independent Sector commissioned a report exploring
policy proposals to offset the potentially negative impact
on charitable giving that is anticipated, largely due to
enactment of the Tax Cuts and Jobs Act. This report
analyzed five tax policy proposals involving amounts of
charitable giving and the number of households that
contribute. These proposals are:
a nonitemizer charitable deduction without
a nonitemizer charitable deduction with a cap
($4,000 for single filers and $8,000 for married
couples filing jointly),
a nonitemizer charitable deduction with a floor
(allowing a deduction of 50 percent of the value of
charitable gifts under 1 percent of AGI and a full
deduction for gifts over 1 percent of AGI),
an enhanced nonitemizer charitable deduction pro-
viding a higher-value deduction for low- and middle-
income households, and
a nonrefundable charitable giving tax credit (25
The key findings of this report are:
The tax credit option has the largest positive impact
on the amount that would be contributed ($37 bil-
lion) and the number of participating households
(10.6 million). This proposal would reduce federal tax
revenues by $33 billion.
The unlimited nonitemizer charitable deduction
could generate up to $26 billion in additional chari-
table contributions and induce up to 7.3 million addi-
tional households to donate. The federal revenue loss
would be as much as $22 billion.
The nonitemizer charitable deduction with a cap
would generate fewer additional charitable dollars
than is lost to the federal fisc.
The nonitemizer charitable deduction with a floor
could bring in up to $7 billion more in charitable giv-
ing than is lost in federal revenue.
The nonitemizer with a cap has the largest impact on
donors per dollar cost to the Treasury. This option
would bring in as many as 352 new donor house-
holds per million lost in federal revenue.
This report was researched and written by the Indi-
ana University Lilly Family School of Philanthropy. It was
funded by the Charles Stewart Mott Foundation and the
Fidelity Charitable Trustees’ Initiative. [1.4]

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