Pa. nonprofits oppose tax bills

Several provisions would hamper charities and hurt those they help

Nonprofitorganizations are tax-exempt for a reason — to improve the quality of life in their communities while ensuring that no one is left behind. Tax reform matters — even to tax-exempt organizations.

On Nov. 16, the U.S. House passed the Tax Cuts and Jobs Act. The prospect for similar legislation now before the Senate is bumpy at best. Arguments have erupted in the Senate Finance Committee and alternative bills are being drafted.

There are three things you need to know about how these tax bills would affect nonprofits:

1. By doubling the standard deduction, the House and Senate bills would reduce the proportion of individuals eligible to itemize charitable deductions to about 5 percent from 31 percent. That means 95 percent of Americans would have no tax incentive to make charitable contributions, which would reduce giving by an estimated $13 billion annually. (Last year, individuals donated about $282 billion.)

Charitable deductions are not claimed only by the wealthy: Pennsylvania residents across all income levels dig into their pockets to help their neighbors. Of the 1.4 million Pennsylvania tax filers who itemized charitable contributions in 2014, 256,500 reported adjusted gross incomes of less than $50,000.

Nonprofit organizations use private charitable contributions to provide essential goods and services, including food, education, health care, job training, affordable housing, programs for children and seniors, and assistance for victims of domestic violence. Any decline in charitable giving would reduce invaluable services provided to your community.

In contrast, a universal tax deduction would eliminate taxes on charitable deductions for all Americans, not just those who itemize.

2. The Senate bill would repeal the Affordable Care Act’s individual insurance mandate, resulting in 13 million fewer people having health care coverage, according to the Congressional Budget Office. This would affect the most vulnerable people in our communities, many of whom would turn to the nonprofits that depend on charitable contributions to provide services.

3. The House bill would repeal the Johnson Amendment, which prohibits nonprofits from endorsing political candidates and thereby encourages people from every political persuasion to rally around charitable causes in a nonpartisan environment. Repealing this prohibition would erode public trust in charitable organizations, which would be perceived as political actors.

Proponents of repeal say they support freedom of speech for nonprofits, but nonprofits already can lobby for their causes and issues, and individuals working for nonprofits are free to endorse candidates on their personal time. Nonpartisanship is a cornerstone principle that has strengthened the public’s trust in charities. What to do? Now is not the time to remain silent. Support the nonprofits you love. Join the Pennsylvania Association of Nonprofit Organizations and the National Council of Nonprofits by contacting your Pennsylvania senators andasking them to:

1. Support a universal charitable tax deduction so that individuals at all income levels would be exempt from paying taxes on the dollars they give to charity.

2. Oppose repeal of the Affordable Care Act’s individual mandate so that as many Americans as possible have health insurance.

3. Oppose repeal of the Johnson Amendment so that nonprofits, churches and foundations can operate with the greatest integrity in a nonpartisan environment.

In short: Oppose the current tax bills.