Leading Boldly
Resources to Support You in the Wake of Executive Actions Impacting Our Sector & Our Communities
Active Legislation
The House advanced its reconciliation package by a vote of 215-214-1. In the current One Big Beautiful Bill, which is now with the Senate, the provision to increase the excise tax on endowment income at private foundations would reduce the grant dollars going to communities by nearly $60 million. Under the current 1.39% flat tax rate, Michigan’s private foundations pay more than $24 million in federal taxes (United Philanthropy Forum).
Additionally, we are concerned with the following pieces of the bill:
- Private foundation excise tax: This provision would create a tiered excise tax on net investment income of private foundations of up to 10% for the largest foundations. It would also include assets (and in some cases net investment income) of related organizations when calculating foundation assets.
- 1% floor for charitable contributions from corporations: Under the House-passed version of the bill, corporations would have to donate 1% of their taxable income before getting a deduction for their charitable giving.
- UBIT fringe benefits: The bill brings back a provision from the 2017 tax bill that would include fringe benefits (such as parking) as part of a nonprofit's unrelated business taxable income.
- Universal charitable deduction: A provision to temporarily reinstate a universal charitable deduction for non-itemizers ($150 for individuals, $300 for joint filers for tax years 2025-2028) remains in the House-passed bill.
- Tax-exempt status: The provision that could have allowed for the termination of tax-exempt status for organizations designated as “terrorist supporting organizations” was removed from the bill before its passage in the House. However, the bill remains in flux and this provision could reemerge as it moves to the Senate.
The legislation also includes multiple tax changes:
- An increase in the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 for individuals earning under $500,000.
- Stricter timelines for Medicaid work requirements and expansions to popular tax breaks, such as the SALT deduction increase.
Resources related to this bill from Council on Foundations:
- Updated summary of the One Big Beautiful Bill (H.R.1)
- One-pager on protecting philanthropy to share with Hill offices
- Estimated impact of the increased excise tax by state (This resource is a members only resource - please ensure you are logged into the Council on Foundation’s website to access this data)
Additional Updates and Resources
The new tax bill passed the House and will now head to the Senate. As we have shared, if passed, this legislation would significantly challenge the foundational ways philanthropy operates, threatening resources, operational support and the flexibility to meet the needs of our communities. Contact your representative in Congress today and ask them to oppose increasing the excise tax on private foundations. As of May 22, the provision that would give executive authority to revoke nonprofits' tax-exempt status is not included in the House-passed bill. Our sector will continue to raise its voice around that provision in case further changes may occur in the Senate.
Lobbying against an increase to the private foundation excise tax and other threats to charitable status and resources is permissible under current law as self-defense activity. As always, we recommend active engagement in robust self-defense with the advice of your legal counsel.
Related Resources:
- Understanding Proposed Tax Changes for US Private Foundations (United Philanthropy Forum)
- Framework for Proactive Advocacy, which includes key messaging and analysis of the legislation (United Philanthropy Forum)
- Protecting Nonprofits from Executive Branch Overreach (National Council of Nonprofits)
- Protecting Nonprofits in Tax Reconciliation (National Council of Nonprofits)