Nonprofit groups and their causes stand to benefit greatly from a set of tax breaks permanently signed into law this week. An array of nonprofits applauded the measures in general, particularly one that eases tax penalties for retirement-account holders who donate to charity.
The passage of a tax-extender bill was a particularly nice holiday gift for the American public, but charitable nonprofits were perhaps the happiest about the news.
A coalition of associations and charitable nonprofits joined together last week in applauding Congress for passing the Protecting Americans from Tax Hikes (PATH) Act of 2015, a bill to turn a series of popular tax breaks into a permanent part of the tax code. The law was passed as a part of the budget deal between congressional Republicans and the White House.
One particular tax break, which allows individual retirement account (IRA) owners over the age of 70.5 to donate as much as $100,000 per year with no tax penalty, was of huge benefit to the nonprofit community as a whole. And two other benefits—one that broadens the category of corporations eligible for tax breaks when donating food and another that allows landowners to reduce taxable income by giving up development rights to a portion of their land—were closely watched by charitable groups and conservation groups, respectively.
In a joint statement shared by 12 different groups—including the National Council of Nonprofits, Independent Sector, the Council on Foundations, and the Girl Scouts of the USA—the law’s passage earned huge praise. The groups noted that the tax breaks—despite showing great success in increasing donations of money, food, and land—created much uncertainty for nonprofits over the years.
“Making these vital charitable provisions permanent law ends years of uncertainty for donors and foundations alike,” noted Vikki Spruill, the CEO of the Council of Foundations, in a statement. “Permanence will open new opportunities for giving. I applaud leaders in Congress for taking this step and thank all of our members and colleagues who worked side-by-side to make this possible.”
While the measure represented a degree of victory, some nonprofit leaders see room to do more. For example, in a comment to the Chronicle of Philanthropy, Joanne Florino, the Philanthropy Roundtable’s senior vice president for public policy, noted that the association “would have liked to have seen an expansion of the rollover to include distributions to donor-advised funds.” Nonetheless, she credited the IRA rollover as “certainly a win for philanthropy.”
Beyond benefits of specific interest to the world of nonprofits, the PATH Act also makes permanent a wide variety of tax breaks, including a deduction for educator expenses; mass-transit benefits for employees; higher-education benefits, such as the American Opportunity tax credit; and deductions on state and local sales taxes.