Charitable Giving Incentives

The Issue
The tax treatment of charitable contributions can have a significant effect on charitable giving. While efforts to improve incentives have increased in recent years, much of this the legislation is either not permanent or does not address all forms of charitable giving.

MANP’s Position
MANP supports legislation that increases and preserves charitable giving incentives. This includes, but is not limited to, IRA Charitable Rollover, deductions for non-itemizers, and enhanced deductions for volunteers and for charitable contributions of in-kind donations.

Charitable Giving Incentive Status
On October 3, President Bush signed into law the Emergency Economic Stabilization Act of 2008(HR1424). Tacked onto the act was a tax extenders package that included the IRA Charitable Rollover and food inventory giving incentives.

How does IRA Charitable Rollover Work?
Currently, the IRA rollover permits individuals age 70½ and above to make charitable donations of up to $100,000 from Individual Retirement Accounts (IRAs) and Roth IRAs without having to count the distributions as taxable income.

How does Food Inventory Giving Work?
The incentives permit grocery stores, farmers, ranchers, small business owners, and restaurateurs to donate “wholesome food for hungry Americans” and have the same access as corporations to the enhanced tax deduction for contributions of food inventory.

To learn more about this program visit the Independent Sector.

Brief History of Charitable Giving Incentives
Efforts to increase charitable giving incentives have been ongoing the past decade.

• The CARE Act , though defeated three times (2002, 03 and 05), provided a precedent for charitable giving reform. Portions of the CARE Act have been included in subsequent legislation.
• The Estate Tax offers significant giving incentives.
• The Panel on the Nonprofit Sector issued reports in 2004 and 06 that contained giving incentive recommendations, some of which were included in the Pension Protection Act of 2006.
• The Pension Protection Act of 2006 contains IRA Charitable Rollover and changes some cash and non-cash contribution deductions.
• The Public Good IRA Rollover Act of 2007 proposed to extend and broaden IRA Rollover incentives by making them permanent, removing the $100,000 annual limit on donation, making all charities eligible to receive donations, and providing IRA owners with a planned giving option starting at 591/2.

The Pension Protection Act of 2006
On August 17, President Bush signed into law the Pension Protection Act that includes a package of charitable giving incentives and safeguard measures as well as changes to exempt organization tax rules. The law does not include non-itemizer deduction, but does include IRA Charitable Rollover provision and increases contribution deductions for food, book, and certain conservation property. The IRA Charitable Roller expires December 31, 2007.

The CARE Act
The CARE Act (2002, 03, 05) provided a basis for the charitable giving incentives included in subsequent legislation. Provisions of the CARE Act not enacted: a non-itemizer deduction; an adjustment to the basis of S corporation stock for certain charitable contributions; enhanced deductions for charitable contributions of literary, musical, artistic and scholarly compositions; and mileage reimbursements for charitable volunteers excluded from gross income.