Four Things You Need to Know About the Senate’s Tax Reform Plan
The House and Senate have an unofficial deadline to vote on the tax reform package before December 22. There are several differences in the Senate’s tax reform bill which passed in the Senate recently, and the House’s version, H.R. 1 which passed in late November. Now it’s up to a committee of lawmakers, including our Congressmen Fred Upton and Sandy Levin and Senator Debbie Stabenow, to hash out those differences and produce a final version in time for the vote.
The National Council of Nonprofits is sharing a new graphic which shows the differences between the two bills and the potential impact on the nonprofit sector.
Here are the four things you need to know from the Senate’s tax reform bill, in its current form, from National Council of Nonprofits:
1. It increases the standard deduction.
What it means for the nonprofit sector, especially philanthropy: Doubling the standard deduction will limit the number of people who itemize. This would decrease the number of tax filers who can claim a charitable contribution by 95 percent. It’s estimated this could result in an annual reduction in charitable giving of up to $19.8 billion per year.
2. It maintains the Johnson Amendment, preserving nonpartisanship in the nonprofit sector.
What it means for the nonprofit sector: It’s a positive sign to keep politics out of the charitable sector and retain the public’s trust, maintaining the long-standing rule of not allowing charitable organizations to accept political donations, endorse candidates, i.e. become politicized. In the spring, CMF joined nearly 4,500 nonprofit organizations in signing a letter of nonpartisanship urging Congress to maintain the Johnson Amendment.
3. It maintains the estate tax but doubles the exemption.
What it means for the nonprofit sector: The estate tax currently impacts estates valued at $5.49 million for an individual and $11 million for a couple. Currently it is estimated that this tax provides an incentive to be charitable for those engaged in estate planning at this scale. Doubling the deduction to $11 million for an individual and $22 million for a couple will reduce the number of estates effected by this tax, costing the U.S. Treasury Department $94 billion over the course of a decade, thereby reducing an important source of charitable dollars for the nonprofit sector.
4. It proposes two new taxes on nonprofits. This includes a 1.4 percent excise tax on the net investment income of private nonprofit colleges and universities and a 20 percent excise tax on nonprofits that pay compensation of $1 million or more to any of their five highest-paid employees.
What these two items mean for the nonprofit sector: It's estimated that 11 percent of employees in Michigan work for the nonprofit sector. These proposed new taxes will increase the cost of operations of these nonprofits resulting in a reduction of resources to provide services to those most in need and potential job losses.
“It is ironic that in the 100th anniversary of the charitable tax deduction, Congress is considering legislation to limit this valued giving incentive to only 5 percent of Americans," Rob Collier, president and CEO, CMF said. "While charitable giving is part of the DNA of America, foundations will not be able to replace the projected reductions in individual giving if this becomes law. New forms of collaboration, passionate advocacy and storytelling and stronger partnerships with businesses are going to be required.”
The just released analysis of the Senate bill by the Tax Policy Center compares the Senate’s version to the current existing tax structure, “7 percent of taxpayers will pay more tax in 2019, 10 percent in 2025, and 48 percent in 2027.” Since 70 percent of charitable contributions come from individuals, a continuously increasing tax obligation projected through 2027 is projected to depress charitable giving even more at the individual level.
While CMF is in contact with our Congressional delegation, CMF members are encouraged to remind their lawmakers about the important economic role that a robust nonprofit sector plays in our state with more than 450,000 jobs and that the proposed new taxes on foundations and nonprofits will add new burdens to delivering on our mission to create vibrant communities with equitable access for all Michiganders.
Find your congressional representative here.
Connect with Senator Debbie Stabenow’s office.
Connect with Senator Gary Peters’ office.
This Thursday join CMF, MNA and the Johnson Center for Philanthropy for the webinar, How the Tax Overhaul Could Impact Our Sector. CMF will be there to answer your questions, the webinar is free, but registration is required, sign up today.
MI Participates in Pilot to Expand Support and Access to Arts Education
Americans for the Arts, the national nonprofit working to advance the arts and arts education, has released a final report on a three-year State Policy Pilot (SP3) which they launched in 10 states, including Michigan.
Americans for the Arts says the pilot is aimed to “work toward influencing implementation of federal mandates or programs at the state level,” increasing access to the arts and expanding state support of arts education.
The report states that, “the program systematically advanced arts education across the nation, making it the largest arts education advocacy grant program in the country.”
The analysis states that in Michigan the focus was on the following items:
Reconvening the Michigan Arts Education Roundtable
Establishing an ongoing collection of state data to better define the quality, reach, instruction and access to arts education
Develop a statewide campaign to activate decision-makers to support arts education
The SP3 brought together 10 states throughout three years for peer-to-peer learning and to scale and model the successful advocacy work underway.
The report details SP3 findings across the states which include:
Music and visual arts are most prominently offered in public schools, unlike dance and theatre.
Two student participation patterns were found among schools, in both there were high levels of arts participation in elementary school when it’s broadly offered, lower levels in middle school when arts are offered as elective classes and then it splits in high school, with some high school participation declining and others increasing.
There’s a positive correlation between arts education levels and graduation rates, behavior, attendance, dropout rates and college attendance.
The report notes that school size was the biggest factor in predicting the availability of arts education.
Across the board, states and policies noted the value of arts education but as the report shares there’s a lack of resources to support adequate arts education “causing a gap between the policy and the practice.”
The report shared barriers to policy implementation to support arts education:
Lack of resources, funding, data and community partnerships
Lack of support from lawmakers on policies, tax restrictions
Competing education priorities which may include narrowing curriculum, instructional time allotment, inequitable access
There are recommendations shared in the report to move this work forward, particularly in highlighting advocacy strategies that states found to be successful throughout their three-year engagement.
A few highlights include:
Sustaining core leadership: Small teams of arts education stakeholders working in this area were most successful when they sustained core leadership members.
Building relationships with coalitions: Cross-sector partnerships with foundations, businesses and other groups can help engage with the public, expand advocacy work and connect with initiatives.
Building relationships with elected officials: Look for policy opportunities to collaborate with elected officials.
Consistent and effective communications messaging: “Efforts were most successful when leaders acknowledged the need for developing a messaging campaign about the value of arts education.”
“Advocacy efforts through SP3 resulted in the Michigan Department of Education adding ‘time spent in arts, music, and physical education courses’ on their proposed Transparency Dashboard,” Sarah Triplett, director of public policy, Creative Many Michigan said. “It's important now that Michigan’s ESSA (Every Student Succeeds Act) plan has been approved by the U.S. Department of Education, that we continue to offer input on which arts-education data is most valuable to track and ensure the dashboard is interactive, user-friendly, and updated annually.”
As CMF reported in October, effective messaging about the value of the arts is part of an initiative underway in Michigan with Arts Midwest, through grant support from the Frey Foundation and the Irving S. Gilmore Foundation. Nonprofits working in the arts and culture space gathered this fall at a series of workshops in Kalamazoo, Grand Rapids and Traverse City to dive into research and opportunities to build public will around arts in their communities. This project originated from interest from CMF’s Arts and Culture Affinity Group and built upon work supported by the Michigan Council for Arts and Cultural Affairs.
Arts Midwest is currently working with a team of arts, cultural, and civic leaders across Michigan to share the early results of the Michigan workshops and develop next steps to support communities across the state in accessing and applying the research and communications tools.
Read the full report from Americans for the Arts.
Learn more about Arts Midwest.
Connect with CMF’s Arts and Culture Affinity Group.
What We’re Learning About MI’s Health Insurance Marketplace
The deadline for Michigan residents to sign up for coverage through the Affordable Care Act (ACA) is this Friday and there are some challenges facing open enrollment for 2018.
The Center for Healthcare Research and Transformation, a nonprofit and nonpartisan impact organization which has presented its research to CMF members, has released a new analysis on the 2018 Health Insurance Marketplace.
The analysis reveals:
There are challenges facing this current enrollment period as it has been cut by 51 percent from 92 days to just 45 days, the shortest open enrollment for the program yet.
Federal funding to assist people to get them enrolled in the marketplace has also been reduced by 72 percent from more than $2.2 million to approximately $628,000.
Enrollment to support the marketplace is critical to its success as Fortune reports that the nonpartisan Congressional Budget Office (CBO) has shared that the tax bill passed by the Senate removes the individual mandate for coverage and may lead to as many as 13 million people opting out of the marketplace leading to higher prices for those who remain in the marketplace.
This comes as MLive recently reported premium costs have increased 28 percent for Michigan plans in the ACA marketplace due to the end of the cost-sharing reduction payments to insurers.
However, government subsidies have also increased to offset the costs of the premium increases for those eligible for assistance.
The challenges facing the reduced enrollment period and the issue of people potentially opting out, leading to higher prices has some lawmakers like Congressman Dan Kildee spreading the word about the importance of getting health care coverage through the marketplace.
Here’s what we know about the Michigan Marketplace for 2018 via CRHT’s new analysis:
There are eight insurers participating in Michigan’s 2018 health insurance marketplace, down from 10 in 2017.
There are anywhere from 12 to 52 plans offered in each of the 83 counties in Michigan.
Across all counties, the average premium increase for the lowest cost and second-lowest cost silver plans is 33 percent and 34 percent, respectively.
Premiums for the lowest cost bronze plan increased by 16 percent, and premiums for the lowest cost gold plan increased by 6 percent.
We do know that the ACA has provided the Medicaid expansion which supports the Healthy Michigan plan that provides health care coverage to more than 677,019 low-income individuals between the ages of 19 and 64 in Michigan, reducing Michigan’s uninsured population from 12.3 percent to less than 6.5 percent.
Facing the potential of health care reform this year, the state of Michigan has advocated for continuing the Healthy Michigan Plan and the state budget recommended full funding continue for the program.
The Michigan Department of Health and Human Services has advocated for additional considerations that would build upon the existing improvements of the system but maintains any changes should not leave people without access to care.
CRHT’s research shared with CMF members earlier this year detailed how the Healthy Michigan plan, available under the ACA has impacted our economy, highlights include:
Impacted Michigan’s economy by generating 39,000 new jobs in 2016, including 22,000 outside the health care industry
Added $2.3 billion in additional spending power
Added economic activity that generates $150 million in state tax revenue annually. CHRT says this revenue offset nearly all of the state’s share of Medicaid expansion costs in 2017.
Led to a 45 percent reduction in the uninsured rate in Medicaid expansion states, which includes Michigan through the Healthy Michigan plan.
Led to 90 percent of hospitals seeing reductions in uncompensated care in Michigan in 2015
The future of the ACA is still unclear as further reform could be in the works. However, it remains in place and there’s work underway to ensure those who need health insurance get the resources and information they need to enroll in the marketplace for 2018.
Connect with CMF’s Health Funders Affinity Group.
Plan your 2018 with us! Connect, collaborate and learn with fellow CMF members
Are you looking for ways to collaborate with other funders, dive into best practices, elevate your grantmaking game and explore issues areas?
CMF has released its Learning Services 2018 Calendar, highlighting our lineup of webinars and in-person learning events, affinity group and learning community meetings and collaborative opportunities.
In 2018, we will explore a range of issues and practices that are important to your work including:
Best practices for your work relevant to your constituent group and to grantmakers more broadly.
Emerging practices and trends such as impact investing, collaborative funding, new scholarship models and beyond.
Education and engagement around issue areas such as, education, aging, rural philanthropy, healthcare, workforce development, the environment and more.
Leadership and culture programming such as the mentoring program and introduction to advanced practitioner programs focused on diversity, equity and inclusion principles and practices.
We have an exciting lineup in 2018, and more programs will be added throughout the year.
Don’t forget to browse our partner series which includes the Midwest Family Foundation Webinar Series, Midwest Corporate Giving Webinar Series, Tri-State Webinar Series, CMF-Johnson Center Grantmaking Series and much more!
Download the Learning Services 2018 Calendar.
Check out our upcoming events.