Latest Reports from the Center on Nonprofits & Philanthropy

This paper attempts to better understand rhetoric over the charitable contributions deduction, arguing that debate surrounding the deduction is ultimately a projection of more fundamental debates relating to the theme of government versus charity. The phrase "government versus charity" can mean government as opposed to charity or government in opposition to charity. The first sense contemplates the need to choose which of government versus charity should supply a given good or service. The second sense contemplates the ideal regulatory posture of government in relation to charity. Competing views over the charitable contributions deduction often reduce to competing views over these two issues.

The ongoing political standoff over the budget continues to have implications for all sectors of the economy, including the nonprofit sector. Most notably, proposed changes to personal itemized deductions have implications for the charitable deduction and giving to the sector as a whole.

The conference “The Charitable Deduction: A View from the Other Side of the Cliff,” hosted by the Urban Institute on February 28, 2013 examined how the recent debate over tax changes has affected nonprofits and charitable giving. Throughout the conference, a reoccurring theme was the gap between economic analysis and political feasibility.

Since the charitable deduction first appeared in 1917, its fate has been bound up with arguments over the nature and size of government, as well as the relationship between government and the private sector. This paper examines historical debates over the deduction for charitable giving, focusing on three key periods: 1917, when the deduction was first added to the tax system; 1944, when the introduction of the standard deduction seemed to threaten the efficacy of the charity deduction; and 1981-1986, when the extension of the deduction to non-itemizers was quickly followed by a debate over curbing the deduction substantially as part of general tax reform.

This paper attempts first to clarify tax rules concerning charitable contributions by reorganizing section 170 and simplifying the language, where possible, so that the operative rules will be clearer. In addition, a revision of the estate and gift tax provisions, intended to increase uniformity, is proposed. The possibility of further substantial simplification is explored in the section by section analysis which follows the proposed code revision. Whether or not the Code is actually revised in accordance with the proposed draft, having this tool available will help analyze the statute.

Split interest and partial interest gifts have been with us for over a century. Donors have had a long-standing interest in making gifts and reserving certain critical rights with respect to the property given. This paper discusses certain important aspects of the split interest and partial interest gift rules and the problems that have become evident in their application, focusing on areas that need reform through either statutory amendment or interpretive guidance. It is vital to lower the 5 percent minimum annual payout requirement for charitable remainder trusts and adapt Section 7520 rates to current investment realities.

The Affordable Care Act established the Health Profession Opportunity Grants (HPOG) Program to provide training programs in high-demand health care professions to Temporary Assistance for Needy Families (TANF) recipients and other low-income individuals. In 2010, the Department of Health and Human Services provided five-year grants to 32 grantees in 23 states. In its first year of funding, HPOG grantees launched their programs and enrolled and trained substantial numbers of participants. This brief describes the program and the progress made by grantees in the first year of funding. It also describes efforts to evaluate the success of HPOG.

In May 2012, the Tax Court issued two decisions denying income tax deductions for gifts to charitable organizations because they failed to meet the requirements for a qualified appraisal. These cases lit a firestorm of outrage in various circles, raising questions of how strictly substation rules should be applied. This paper reviews the rationales behind the charitable contribution substantiation rules, sets out the complicated regime regarding these rules and applicable case law, and presents a number of possible reforms. Balancing the need to control overvaluation with the need to encourage legitimate charitable contributions is a difficult but important challenge.

During the Great Recession, decreases in funding and increases in service request strained public charities to do more with less. While the increase in need might encourage new public charities, the scarcity of resources could have inhibited organizations from entering the sector. According to the IRS Data Book, the IRS received nearly 30 percent fewer applications for 501(c)(3) tax-exempt status since the start of the recession in 2007. In 2008, however, the IRS eliminated the advanced ruling process for 501(c)(3) organizations. This brief investigates whether or not this drop in rulings is attributable to the recession or the rule change.

Examination of anonymous records of donations by 1.8 million people shows that many organizations that rely on public donations to achieve their missions experience very high turnover rates in their donor rolls. This pattern leads to high costs of fundraising for some organizations. Other groups, though, see much higher rates of retention year after year, suggesting that it is possible for more organizations to trim costly acquisition campaigns and the loss of potential long-term supporters. Donor Retention Matters reports on some key findings from the Fundraising Effectiveness Project. Continuing research will explore in more detail the underlying trends and patterns that affect this measure of nonprofits' connections with the communities they serve.

This fact sheet examines the effects of the American Taxpayer Relief Act of 2012 (ATRA) on charitable giving. The major individual income tax provisions are estimated to increase giving by $3.3 billion or 1.5 percent, relative to 2012 law, mainly because of the increase in the top marginal tax rate. Numerous other smaller provisions will also affect charitable giving.