US Tax Reform Proposals and Potential Implications for Charitable Organizations and Impact Investing
JULY 13, 2017
12: 15 – 1:30 PM (ET)
Our first Grunin Center webinar was facilitated by Ruth Madrigal, a partner at Steptoe & Johnson. Ruth has extensive experience, both within the government and in private practice, advising on a wide variety of legal and tax policy issues affecting charities and other tax-exempt entities.
In this discussion on issues pertaining to US tax reform and its potential implications for both impact investing and charitable organizations, Ruth discussed some of the current US tax reform proposals and what they could mean for charitable organizations and impact investing. The webinar group discussed such proposals as the House Republican Blueprint (including the controversial Border Adjustment Tax) and the Camp “Draft,” and recent bills including the CHARITY Act and the Investing in Opportunity Act. And we explored the question of how the charitable sector can maximize its impact. It was noted that those who work on Capitol Hill want to hear from the public and now is a great time to act to make positive changes in the tax system. We discussed how those in the impact investing space can maximize this opportunity to advance the goals of impact investment and also eliminate barriers to entry. We explored such ideas as Corporate Social Responsibility (CSR), hybrid organizations, community economic development, and incentives for investors for supporting communities in need. The question was then posed: How can we improve the environment for impact investing and charities? What is the value of charities and the non-profit sector and how can tax-reform be used as an opportunity to strengthen the sector? There is also growing concern that federal tax rules could make it increasingly difficult for a charity to be able to serve charitable beneficiaries in perpetuity.
Other countries, including the UK, have innovative ideas they are working on, such as the social investment tax relief program. Other questions touched on include federal versus state and municipal level reforms, and the difficulty of measuring impact.
Charitable giving remains critically important, and should be promoted. Some ideas for expanding impact in this space include a universal charitable deduction, while some issues of potential concern include UBIT and lessening protections for endowments. Ultimately, tax reform presents an opportunity to enact provisions that support charities and other entities that create positive social change.
This discussion is an extension of the conversation that we started during a lunch table talk at this year’s conference. See below for the full 2017 Conference Agenda and Bibliography.
Please see the links below for further information:
House Ways and Means Committee Republicans “Blueprint” (2016)
"Technical Explanation of the Tax Reform Act of 2014" (Camp Proposal), prepared by the Joint Committee on Taxation staff
"Tax-Exempt Organizations and Charitable Giving," Senate Finance Committee Staff Tax Reform Options for Discussion
CHARITY Act (Sen. Thune – Sen. Casey)
Investing in Opportunity Act (S.293 Sen. Scott; HR 828 Rep. Tiberi)
More information on the Investing in Opportunity Act
Joint Statement on Tax Reform, July 27, 2017
Integrating the Corporate and Individual Tax Systems: The Dividends Paid Deduction Considered