5 Policy Moves to Watch in 2015

If there’s big tax reform this year, Orrin Hatch, the Utah senator and Senate Finance Committee chairman, will be at the center of questions like whether the charitable deduction should be changed. He’s also sponsoring social-impact-bond legislation. “The politics are ripe on this bill,” says Sandra Swirski, executive director of the Alliance for Charitable Reform.

Sparks may fly over a new federal mandate that requires states and localities passing federal grants through to nonprofits to pay part of the “indirect,” or administrative, costs that charities incur when they implement programs or provide services. “Some states and local governments will misinterpret or ignore it,” says David Thompson, vice president for public policy at the National Council of Nonprofits. “There will be a lot of hue and cry over it.”

Many nonprofit leaders are suspicious of the Republican Ways and Means Committee chairman, whose deficit-cutting proposals could affect many social programs. But the Rev. Larry Snyder, the outgoing head of Catholic Charities USA, says the congressman’s antipoverty plan, while imperfect, offers a starting point for discussion: It proposes increasing case management, expanding earned-income tax credits, and improving the criminal-justice system. Says Father Snyder, “All those things would be steps forward.”

Should donor-advised funds be forced to spend their money in a set time? Former House Ways and Means Committee chairman Rep. Dave Camp promoted the idea last year, and it’s gaining traction with pundits—and frightening community foundations. Mr. Camp has retired from Congress, but assuming a new champion will emerge on Capitol Hill, expect a big fight as Fidelity and other financial firms jump in to protect the big funds they’ve created for clients.

Nonprofits and foundations that have pushed hard to put the Affordable Care Act in place fear that a forthcoming U.S. Supreme Court decision could overturn the federal subidies that help consumers buy health coverage in many states. Following the refusal of many legislatures to expand Medicaid under the new law, that would further “widen the gap between the haves and have-nots,” says Robert Ross, president of the California Endowment. The grant maker has spent about $8-million over the past 18 months to get California to expand health coverage to a group excluded by Obamacare: immigrants who are in the country illegally.

—Drew Lindsay and Suzanne Perry

Send an e-mail to Drew Lindsay and Suzanne Perry.