Nonprofits are bracing for a thorough congressional re-examination of tax laws and other policies that affect their work, and many of their leaders have trekked to Capitol Hill to make their voices heard.
Here are a few of the policy makers positioned to have the greatest influence on the debates:
From his perch as chairman of the Finance Committee, Mr. Hatch, a Utah Republican, will be in charge of tax deliberations in the Senate.
When he took over the committee in 2015, many thought Mr. Hatch would take a lighter approach to nonprofit oversight than did Sen. Chuck Grassley of Iowa, who was long the senior Republican on the finance panel and was known as a regulatory bulldog.
While he has pushed for legislation designed to encourage giving and social innovation — including an unsuccessful attempt to pass a bill that would have funneled $300 million over 10 years into state and local social-impact bonds — Mr. Hatch has also shown glimpses of his predecessor’s bite. In 2015, for instance, he put nonprofit art museums on notice, investigating 11 institutions to determine whether they served the public or were just tax-exempt vehicles to showcase a wealthy person’s private collection. Summarizing his findings in a letter to the Internal Revenue Service, Mr. Hatch said that while he did not believe any of the museums should lose their tax-exempt status, he would keep a close eye on them.
“I remain concerned that this area of our tax code is ripe for exploitation,” he wrote.
The Texas Republican chairs the House Ways and Means Committee, where tax legislation originates.
Nonprofit leaders, including Sandra Swirski, executive director of the Alliance for Charitable Reform, and Christopher Gates, executive vice president at the Council on Foundations, have expressed confidence that Mr. Brady wants to protect tax provisions like the charitable deduction that are designed to promote gifts to nonprofits.
Last summer Mr. Brady led a GOP task force that issued a broad blueprint on taxes. In their wish list, House Republicans stated that a robust economy was the best way to ensure charitable giving. But a tax incentive helps, they wrote, adding that the Ways and Means Committee “will develop options to ensure the tax code continues to encourage donations, while simplifying compliance and record-keeping and making the tax benefit effective and efficient.”
Mr. Brady has also indicated that his committee will move to repeal the Johnson Amendment, which prohibits nonprofits from endorsing political candidates. President Trump says he wants to scuttle the rule, which opponents say inhibits the free speech of religious leaders who want to offer opinions on candidates from the pulpit.
“Places of worship across America need to be free to practice their faith without worrying about Washington or the IRS targeting their religious freedom,” Mr. Brady said at the Conservative Political Action Conference last week.
Mr. Grassley has spent his tenure as a senior member of the Senate Finance Committee cracking down on nonprofit abuses. In 2015, when Republicans regained control of the Senate, he stepped aside to let Sen. Orrin Hatch become chairman. But becoming the panel’s No. 2 GOP member hasn’t dimmed Mr. Grassley’s fervor for rooting out signs of nonprofit mismanagement and fraud.
His most recent efforts have centered on the American Red Cross — a regular target over the years, particularly for its responses to the September 11, 2001, attacks and the 2010 Haiti earthquake. Mr. Grassley has called into question the charity’s spending and accounting practices and criticized it for not being more forthcoming with information.
He has also worked to sharpen oversight of nonprofits’ practices regarding executive compensation and husbanding of large endowments. Expect him to remain vigilant in the current Congress.
Sens. Ron Wyden and John Thune
In 2015, Mr. Wyden of Oregon, the top Democrat on the Senate Finance Committee, and Mr. Thune, a South Dakota Republican who also sits on the panel, teamed up to push legislation designed to encourage charitable giving. Their bill would have allowed people to donate directly from their individual retirement accounts to donor-advised funds. Currently, such gifts can be “rolled over” from IRAs to nonprofits, but donor-advised funds are excluded.
The legislation would have also reduced the foundation excise tax on investment gains to 1 percent. Foundations currently pay a 2 percent tax, with some exceptions.
As the Finance Committee delves into tax policy over the next several months, expect the two senators to play an important role safeguarding the charitable deduction, which Mr. Wyden has called “a lifeline, not a loophole.”
In 2014, when the House last attempted to draft comprehensive tax changes, Mr. Tiberi, an Ohio Republican, served as the deputy of Rep. Dave Camp, then the chairman of the Ways and Means Committee. The Camp bill raised several points of concern for nonprofits. For instance, the legislation would have limited executive pay, and called for requiring donor-advised funds to direct their assets to charity at a quicker rate. It would have also instituted a “floor” on the charitable deduction, applying it only to gifts made in excess of 2 percent of a taxpayer’s adjusted gross income.
In the years since, Mr. Tiberi, a former real-estate agent, has demonstrated an interest in nonprofits. He is co-chair (with Rep. John Lewis, a Georgia Democrat) of the House Philanthropy Caucus and in February he introduced legislation to make permanent the New Markets Tax Credit for commercial developers that make loans to nonprofits to invest in business projects in distressed communities.
The New York Republican has been front and center in efforts to get elite colleges and universities to steer more of their endowments into direct student aid. Mr. Reed is the author of a bill that would require institutions with the biggest endowments to spend at least 25 percent of their investment returns on scholarships for low-income students.
Other nonprofit endowments are not currently being targeted, but foundation advocates are wary. In a broad tax overhaul, they say, all aspects of the tax code are up for grabs.
Several other lawmakers have an intimate knowledge of philanthropy and might prove influential in the upcoming debates:
- Sen. Mark Warner is one of more than a dozen members of Congress appointed to serve as a trustee of John F. Kennedy Center for the Performing Arts. The Virginia Democrat and his wife, Lisa Collis, also founded the Collis-Warner Foundation, which supports health and educational nonprofits.
- Florida Republican Rep. Vern Buchanan served on the Community Foundation of Sarasota County’s Board of Directors and, with this wife, founded the Vernon G. & Sandra J.C. Buchanan Family Foundation.
- Democratic Rep. Jared Polis founded the Jared Polis Foundation, which supports education in his home state of Colorado.
