Cre8tive Philanthropy

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Investment and innovation in the for-profit social impact community.

Foundation Flat Tax Proposed

Last month Rep. Chuck Schumer, D-N.Y, proposed a 1.39% flat tax on all foundation investment earnings. The offset would be a lower age, from 70 1/2 to 59 1/2,  for the provision that allows $100,000 tax-free transfers from IRA’s to charitable causes. Additionally, private foundations would now qualify for the tax free transfer, whereas they are currently unqualified.

Private foundations are currently subject to up to a 2% tax on investment earnings but are provided exemptions if their charitable giving reaches certain qualifying amounts. The flat tax would require a tax be paid regardless of their donation levels.

The key question: would this legislation suppress the amount of money going to non-foundation charitable causes? If foundations don’t have an incentive (through tax policy) to give at higher levels, will they? Is the proposed flat tax a tax on wealthy citizens’ private foundations or a tax on charities? What is the likely outcome? How will such a policy impact behavior?

Filed under: Charitable Tax Laws, Foundations, Giving, Philanthropy

Obama’s charitable deduction reduction back on the table for 2011…

Many givers of time and money do so because they care about a cause, not for the tax breaks. Yet, it is unclear, particularly in a time of dwindling resources, rising taxation, and a challenging economic environment, what would happen to charitable gifts should the charitable tax deduction become less favorable. Some believe it’s not so bad, others think it is irresponsible.

New York just passed a law limiting charitable deductions for its wealthy. Perhaps the Obama administration should see how the changes in NY play out before gambling with the health of the nation’s charitable sector.

Filed under: Challenges, Charitable Tax Laws, Philanthropy

Foundation Excise Tax Review

Needed changes may be on the way to change the foundation rules for excise taxes. The Council on Foundations is providing key information to Congress for review. Article here.

Filed under: Charitable Tax Laws, Foundations

A Potential Boost

YAY! The Chronicle of Philanthropy. Charities and donors may get an extension of the charitable tax incentives regarding 401(k) and IRA gifts. Also, an added “bonus” to charities with defined-benefit pensions.

Filed under: Charitable Tax Laws, Giving, Philanthropy

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