Dear Speaker Pelosi, Leader Schumer, Leader McCarthy, Leader McConnell, Chairman Neal, Chairman Wyden, Ranking Member Brady, and Ranking Member Crapo:
The undersigned charitable sector organizations write to you to encourage you, your colleagues, and staff to carefully consider the unique nature of the charitable sector as you contemplate legislation that could impact donors and the charitable giving vehicles they use to donate to important causes in their communities and across the globe.
As you consider changes to the tax code this Congress, we appreciate the opportunity you have to advance policies that help move our society forward, and we recognize policies impacting nonprofits could be on the table. We believe any kind of policy reforms impacting the charitable sector should be achieved through thoughtful, data-driven decisions that include input from the organizations and donors being impacted.
One of the greatest benefits to American civil society is the nonprofit sector’s ability to provide effective, customized solutions for their focused, and often local, missions. In practice, that means each organization, donor and grant is unique. And what is true for many of the problems they’re solving is also true for how nonprofits and donors should be treated under the law: one size does not fit all.
For example, a variety of charitable giving vehicles allow donors to choose what works best for their charitable goals – they can give directly to a charity, they can create a private foundation and grant funds from there, or they can make an irrevocable charitable gift to a donor-advised fund (DAF), a charitable giving account that helps facilitate thoughtful philanthropic giving. The latter has been especially important in the response to the COVID-19 pandemic and its associated challenges, allowing donor-advisors ease and speed to support critical causes.
In the midst of the unprecedented pandemic that continues to challenge us in 2021, some critics of philanthropy are seeking rushed, sweeping reforms to regulate the sector and its donors, suggesting it would increase charitable giving. Unfortunately, many of the proposed reforms could actually result in less charitable giving in the long run.
The charitable sector is a far-reaching network of various foundations and organizations serving a comprehensive range of needs and initiatives. Any shift or policy change that will impact donors and the charitable giving vehicles they use to donate to important causes in their communities should take into account those broad needs, initiatives, and the nature of the charitable sector.
As you consider any proposals of this nature, we urge you to include the charitable organizations that would be directly impacted by reforms early in your discussions. As we have seen amid the COVID-19 crisis and associated challenges, the sector is far too fragile to be regulated by unnecessary one-size-fits-all mandates.