Nonprofit Charitable Giving Incentives

Background on Charitable Giving Advocacy

Charitable Giving Incentives

Many performing arts organizations are classified as 501(c)(3) tax-exempt organizations just like thousands of other nonprofits in education, human services, and the full array of organizations. Without this exemption and the deductibility of private donations, nonprofit performing arts organizations and many other charitable organizations will now be unable to serve community needs.

Talking Points

  • Charitable giving incentives are an investment in the public good. These incentives encourage donors to give more, benefitting millions of people who access services provided by nonprofit arts organizations.
  • Approximately 40% of nonprofit performing arts organizations’ revenue comes from  comes from charitable giving. This support is vital as ticket sales alone do not cover the costs of artistic presentations and educational and community programming.
  • Recent changes (please see our December 2017 Action Alert, regarding proposed budget) to the charitable tax deduction will reduce giving, limiting core services and public access. Tax law impacts what, when, and how much donors give.

See the Charitable Giving Issue Brief for more details

IRA Charitable Rollover

The IRA Rollover allows donors age 70 ½ and older to make tax-free charitable gifts directly from their Individual Retirement Account (IRA) funds to charitable organizations. Donors may give up to $100,000. Known as an “extender,” Congress has been extending this tax incentive on a year-by-year basis, resulting in uncertainty for both donors and charities.

In December 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act making the IRA Charitable Rollover a permanent charitable giving incentive along with other tax extenders. President Obama signed the PATH Act into law on December 18, 2015.

Artists Fair Market Deduction

The artist fair market deduction bill, also known as the Artist Museum Partnership Act, would allow artists to take a fair-market value deduction for works donated to nonprofit institutions. Currently, artists (including writers, musicians, visual artists, and scholars) only receive a deduction based on the cost of materials even though posthumous donations of the very same work are eligible for a fair-market deduction.

What We're Asking For Right Now

  • Reinstate and expand incentives for charitable giving by enacting a universal charitable deduction available for all tax payers.
  • Ensure that tax policy changes will ensure nonprofit nonpartisanship and strengthen the capacity of the arts sector to support communities. 
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Recent Activity

Advocacy Update: IRA Charitable Rollover

PAA and other charitable giving advocates have been urging Congress this year to reinstate the IRA Charitable Rollover; recently, there has been much activity in Congress on this issue:

Rollover Not Made Permanent:

On December 11, the House voted on H.R. 5806-the Supporting America’s Charities Act-which would make the IRA Charitable Rollover permanent along with two other charitable giving incentives. This bill did not succeed.

Rollover Reinstated and Extended

On December 3, the House passed H.R. 5771, the Tax Increase Prevention Act of 2014, which retroactively renews and extends the rollover and other charitable giving incentives through the end of 2014. The Senate passed the same legislation on Dec. 16 and the bill now awaits the President’s signature.

House Votes to Reinstate IRA Rollover

The House voted to pass H.R. 5771-the Tax Increase Prevention Act of 2014-which would reinstate and extend the IRA Charitable Rollover along with other expired incentives through the end of 2014. As you recall, this provision expired at the end of 2013; PAA and other charitable giving advocates have been urging Congress this year to reinstate this important incentive. Unlike H.R. 4719 which the House passed in July, this bill does not extend the deadline through April 15 for making charitable contributions that can be included on the previous year’s tax return.

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