    [Senate Hearing 117-811]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-811

                        EXAMINING CHARITABLE GIVING AND
                         TRENDS IN THE NONPROFIT SECTOR

    =======================================================================

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 17, 2022

                                   __________

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Printed for the use of the Committee on Finance

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    54-579 PDF                WASHINGTON : 2024

                              COMMITTEE ON FINANCE

                          RON WYDEN, Oregon, Chairman

    DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
    MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
    ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
    THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
    BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
    SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
    MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
    ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
    MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
    SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
    MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
    CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
    ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                         JOHN BARRASSO, Wyoming

                        Joshua Sheinkman, Staff Director

                    Gregg Richard, Republican Staff Director

                                      (II)

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
      on Finance.....................................................     1
    Lankford, Hon. James, a U.S. Senator from Oklahoma...............     3

                                   WITNESSES

    Cardinali, Daniel, president and CEO, Independent Sector,
      Washington, DC.................................................     5
    Morgan, Susannah, CEO, Oregon Food Bank, Portland, OR............     6
    Osili, Una, Ph.D., Efroymson chair in philanthropy and economics,
      and associate dean for research and international programs,
      Lilly Family School of Philanthropy, Indiana University,
      Indianapolis, IN...............................................     8
    Steuerle, C. Eugene, Ph.D., co-founder, Urban-Brookings Tax
      Policy Center; Center on Nonprofits and Philanthropy, Urban
      Institute; and ACT for Alexandria, a community foundation,
      Washington, DC.................................................    10

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Cardin, Hon. Benjamin L.:
        Letter from Apra Maryland....................................    35
    Cardinali, Daniel:
        Testimony....................................................     5
        Prepared statement...........................................    35
        Responses to questions from committee members................    41
    Crapo, Hon. Mike:
        Prepared statement...........................................    48
    Lankford, Hon. James:
        Opening statement............................................     3
        Submissions for the record...................................    48
    Morgan, Susannah:
        Testimony....................................................     6
        Prepared statement...........................................    60
        Responses to questions from committee members................    61
    Osili, Una, Ph.D.:
        Testimony....................................................     8
        Prepared statement...........................................    64
        Responses to questions from committee members................    68
    Steuerle, C. Eugene, Ph.D.:
        Testimony....................................................    10
        Prepared statement...........................................    78
        Responses to questions from committee members................    87
    Wyden, Hon. Ron:
        Opening statement............................................     1
        Prepared statement...........................................    93

                                 Communications

    American Alliance of Museums.....................................    95
    American Heart Association.......................................    97
    Anthony, Melanie.................................................   101
    Association of Art Museum Directors..............................   102
    Association of Fundraising Professionals.........................   103
    Beugen, Paula J..................................................   107
    BIPOC Executive Directors Coalition of Washington................   108
    Business Coalition for Fair Competition..........................   108
    California Association of Nonprofits.............................   115
    Center for Fiscal Equity.........................................   116
    Colorado Nonprofit Association...................................   120
    Community Foundation Public Awareness Initiative.................   122
    Council for Advancement and Support of Education.................   128
    Council on Foundations...........................................   130
    Food Donation Connection.........................................   133
    Girl Scouts of the USA...........................................   134
    Heymann, Jon.....................................................   135
    Horvath, Aaron, Ph.D. and Jean Lin, Ph.D.........................   136
    Idaho Nonprofit Center...........................................   138
    Indiana Philanthropy Alliance....................................   142
    Initiative to Accelerate Charitable Giving.......................   144
    Iowa Council of Foundations and United Ways of Iowa..............   145
    Jewish Federations of North America..............................   145
    League of American Orchestras....................................   151
    Michigan Nonprofit Association...................................   154
    National Council of Nonprofits...................................   157
    National Health Council..........................................   163
    National Taxpayers Union.........................................   165
    NH Center for Nonprofits.........................................   168
    Nonprofit Alliance...............................................   170
    Philanthropy Colorado............................................   171
    Snape, William J., III...........................................   172
    Theatre Communications Group.....................................   177
    United Philanthropy Forum........................................   179
    United Way.......................................................   181
    Vanguard Charitable..............................................   193
    YMCA of the USA..................................................   195

                        EXAMINING CHARITABLE GIVING AND
                         TRENDS IN THE NONPROFIT SECTOR

                                   ----------

                            THURSDAY, MARCH 17, 2022

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10:07
    a.m., via Webex, in Room SD-215, Dirksen Senate Office
    Building, Hon. Ron Wyden (chairman of the committee) presiding.
        Present: Senators Cantwell, Carper, Cardin, Brown, Bennet,
    Casey, Warner, Whitehouse, Cortez Masto, Grassley, Thune,
    Cassidy, Lankford, Daines, and Young.
        Also present: Democratic staff: Chris Arneson, Tax Policy
    Advisor; Joshua Sheinkman, Staff Director; and Tiffany Smith,
    Chief Tax Counsel. Republican staff: Jamie Cummins, Tax
    Counsel; and Jeffrey Wrase, Deputy Staff Director and Chief
    Economist.

       OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
                 OREGON, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The Finance Committee will come to order. We
    meet this morning to discuss ways to look at promoting
    charitable giving in America. Our people are generous, and
    that's why charity is one of the key incentives that's right at
    the heart of the American tax code, and it is a top priority
    for Democrats and Republicans on this committee.
        My own view is that the charitable tax deduction is a
    lifeline and not a loophole. There has never been more accuracy
    in that than there was in early 2020 when the pandemic arrived
    in the United States. Over the course of a few weeks in March,
    the pandemic wiped out a quarter-million jobs in my home State
    of Oregon. Our State has a workforce of just over 2 million
    people. In a flash, Oregon's unemployment rate jumped by 10
    percentage points.
        As terrible as those figures are, other States had it even
    worse. More than 22 million Americans lost their jobs or had
    their hours reduced to zero. The unemployment rate hit 14.8
    percent, the highest ever recorded. That economic devastation,
    added to a hunger crisis, has been causing pain for American
    families for far too long. According to the Children's Defense
    Fund, prior to the pandemic more than 10 million American kids
    grew up in households where they just did not have enough to
    eat. Black and Latino families were twice as likely to be short
    on food. And again, that was the situation before anybody had
    heard of COVID-19.
        The crisis exploded in 2020. Everybody remembers the images
    of cars stacked up for miles outside of food pantries. My good
    friend Susannah Morgan is here, a long-time leader of the
    Oregon Food Bank. I was out there with her at those food
    pantries where we were putting boxes of food into those cars
    one after another for just, it seemed like forever.
        There was an added challenge of feeding vulnerable kids,
    many of whom were unable to get the free lunches they rely on
    in school for nutrition. So, as you have probably picked up, I
    think we are very fortunate to have my Portland neighbor
    Susannah Morgan, the CEO of the Oregon Food Bank, with us. She
    will describe how the crisis hit Oregon families like a
    wrecking ball, as well as how her terrific organization was
    able to respond to the 1,400 pantries across Oregon and in
    southwest Washington.
        The record shows that in 2020 in Oregon and across the
    country, Americans stepped up again and again when their
    neighbors needed help, when charitable giving reached new
    highs. The Federal and State Governments stepped up. Now there
    are some important lessons this committee ought to consider as
    we go forward, because there are still millions and millions of
    people across the country who need support.
        Organizations like the Oregon Food Bank are still seeing
    demand at higher levels than they did in 2019. Two quick
    examples: first, the CARES Act, which the Congress passed in
    March of 2020, included a tax deduction for charitable
    donations of up to $300 for the vast majority of taxpayers who
    do not itemize their tax returns. The 2017 tax law took some of
    the punch out of the existing charitable deduction by greatly
    reducing the number of taxpayers who itemize. So the new $300
    deduction helped to correct a big flaw in the 2017 law, and it
    helped promote giving in 2020. It was extended and expanded in
    2021, but it expired on January 1st. I believe there is going
    to be bipartisan interest in reviving it and expanding it to
    promote even more giving.
        Second, in addition to promoting donations, the Senate also
    ought to be looking at ways to help our nonprofits operate.
    Let's help them keep their doors open, and help keep their
    workers on the job. The CARES Act created an Employee Retention
    Tax Credit that saved a lot of jobs nationwide. It was extended
    and expanded in 2021. The credit was designed with parity for
    nonprofits in mind so that these nonprofits and their workers
    could certify and benefit, just like other employers.
        Last year, with Senator Brown, Senator Klobuchar, and
    Senator Schatz, I also introduced a bill called the WORK Now
    Act. That would also help nonprofits grow and hire. It would
    create a new grant program to help nonprofits retain staff,
    hire the unemployed, while also supporting efforts to scale up
    the services that are offered.
        Let me just close by saying organizations like the Oregon
    Food Bank--and we are lucky to have them in virtually every
    nook and cranny of our country--those organizations are the
    backbone of America. In addition to promoting charitable
    giving, it is a no-brainer that the Congress ought to find
    smart ways to help our nonprofits do their essential work as
    well. There is lots for the committee to discuss.
        I want to thank our witnesses for joining the committee,
    and I also want to express my appreciation to members of the
    Finance Committee. This will be the close of what amounts to a
    triple header for the committee this week. We began the week
    with a very important hearing looking at security and trade
    issues relating to the Indo-Pacific. Yesterday we dealt with
    the enormously important question of finally getting relief to
    Americans who are just getting crushed by these prescription
    drug bills. And today we are going to look at how to promote
    charitable giving.
        So I want to thank my colleagues. That is a pretty big
    load. There is a lot going on this week in the United States
    Senate.
        [The prepared statement of Chairman Wyden appears in the
    appendix.]
        The Chairman. Let me recognize Senator Lankford.

               OPENING STATEMENT OF HON. JAMES LANKFORD,
                      A U.S. SENATOR FROM OKLAHOMA

        Senator Lankford. Mr. Chairman, thank you. And thanks for
    holding this hearing. It is an extremely important issue to be
    able to discuss the health of our nonprofit sector and how we
    can support and encourage their continued work. This is an
    issue that is very near and dear to me. I served for more than
    20 years with nonprofits. I am very passionate about the work
    of nonprofits. And this is also a policy issue for our Nation
    as well.
        Let me first say ``thank you'' to those who serve in the
    nonprofit sector, both who are here and who are all over the
    country. You do remarkable work and are the real safety net in
    times of need. I tell people all the time, we really have three
    safety nets in America. While most folks look at government and
    say, that is the safety net, we really have three different
    safety nets. The first one is the family. The second one is the
    community that is dominated by churches, nonprofits--both
    secular and faith-based nonprofits that are out there--and then
    the third is government.
        If the family fails, and if the local community and the
    nonprofits are not able to meet the need, then government is
    the third option there. So the key aspect is to be able to make
    sure all three of those safety nets stay healthy and stay able
    to do their task. That is what happened during COVID-19, quite
    frankly.
        Our charities and our nonprofits rose to the occasion. They
    served countless Americans facing uncertainty and difficulty
    all across the country. But they were not immune, either, from
    the effects of COVID-19, based on their workforce, their
    operations, their organizational structure itself.
        According to the Johns Hopkins Center for Civil Society
    Studies' 2020 Nonprofit Employment Report, during the first 3
    months of the pandemic, from March through May of 2020, the
    nonprofit sector lost an estimated 1.6 million jobs, reducing
    the nonprofit sector by over 13 percent. As of the end of last
    year, the sector is still down nearly half a million jobs.
        We know that encouraging more Americans to give will help
    direct additional resources to nonprofits to ensure they can
    continue to provide vital services to our communities. In 2020,
    in the CARES Act, we included a provision to allow taxpayers to
    take a deduction of up to $300 for charitable gifts they make.
    Then in December of 2020, we extended that provision so that
    taxpayers could deduct $300, or $600 for joint filers, for
    gifts given in 2021.
        As a result of that, in 2020 we had a record amount of
    giving to nonprofits. Unfortunately, this provision expired at
    the end of last year. This provision is a non-itemizer
    charitable deduction and acts as both a lifeline to a nonprofit
    sector that felt the effects of COVID-19, and it also answers
    the call to service. It is an incentive for people to be able
    to give.
        Now again we are reminded of how crucial these
    organizations are, both in local communities and
    internationally, as we see the nonprofit community respond to
    the devastating crisis in Ukraine currently. They are
    supporting Ukrainian citizens with care, housing, and food, and
    that is being done by a tremendous number of nonprofits.
        Having the charitable deduction in place can incentivize
    even more giving at critical times like these. This provision
    is something I am very passionate about and have worked on for
    several years with a great group of partners through the
    introduction of the Universal Giving Pandemic Response and
    Recovery Act last year.
        I have folks who catch me all the time and say that
    Americans are very generous. They will give without the tax
    deduction, so the tax deduction is not necessary to encourage
    Americans to give. I always smile at them and say, go to any
    nonprofit in America, pick any one of them, and ask what their
    highest month of giving is, and they will always smile at you
    and say ``December.'' That is not because of the Christmas
    spirit; it is because that is the end of the tax year, and they
    know if they are going to get the deduction, they have to do it
    right now, which is also why for many nonprofits in 2020 and
    2021, they had a very large number of gifts the last week of
    December of $300, the exact amount of that tax incentive.
        I thank nonprofits for their work, and I want to make sure
    that we continue to be able to encourage their work as the
    safety net in our society. For all of you who are experts on
    this panel today, thank you for giving your time and your
    effort, both in your written testimony and the oral testimony
    you will give. I thank you for your steadfast dedication to
    your work.
        Mr. Chairman, I also ask that Ranking Member Crapo's
    prepared statement be included in the record
        The Chairman. Absolutely, we will do that. And we are all
    going to work, as we have done on a bipartisan basis, on these
    issues.
        [The prepared statement of Senator Crapo appears in the
    appendix.]
        The Chairman. You know, Senator Lankford--we are going to
    the witnesses in a moment--touches on an important point.
    People say, ``Why do we need anything in the tax code? We are a
    good people. We are going to give. We are going to help.''
        I share that view. We are going to help, and there is no
    question about it. But as I indicated, I think the charitable
    tax deduction is a lifeline. And based on everything I have
    seen, it does affect the number of gifts someone can make, and
    the size of the gift. So that is what this debate is all about,
    and this committee has a strong history of being supportive of
    charities, and we are going to continue that.
        Let me introduce our witnesses, and then we will go right
    to them. Our first witness is Dan Cardinali, the president and
    CEO of the Independent Sector, a national organization and
    nonprofit. Our second witness is Susannah Morgan, the
    inimitable CEO of the Oregon Food Bank. Our third witness is
    Una Osili, who holds the Efroymson chair in philanthropy and is
    associate dean for research and international programs with the
    Indiana University Lilly Family School of Philanthropy. Our
    fourth witness is well-known to many on this committee, Gene
    Steuerle, co-founder of the Urban-Brookings Tax Policy Center
    of the Urban Institute's Center on Nonprofits and Philanthropy,
    and co-founder of ACT for Alexandria.
        Thank you all for coming. We will make your prepared
    statements a part of the record.
        Mr. Cardinali, lead us off.

     STATEMENT OF DANIEL CARDINALI, PRESIDENT AND CEO, INDEPENDENT
                         SECTOR, WASHINGTON, DC

        Mr. Cardinali. Thank you very much. Chairman Wyden, Senator
    Lankford, and members of the committee, thank you for holding
    this hearing, and for the opportunity to share our perspective
    today. I serve as president and CEO of Independent Sector, a
    national membership organization made up of nonprofits,
    foundations, and corporate giving programs nationwide. Our
    members and their networks reach into every State and district
    and touch every life in America.
        I have spent my entire professional life working and
    volunteering in the charitable sector. It is clear to me that,
    despite the tectonic shifts we are living through, our Nation's
    charitable spirit is alive and well. It is also evident to me
    that that spirit is not fully unleashed. The charitable sector
    is the foundation on which our democracy is built and continues
    to evolve. When its foundation is weak, so is our Nation. The
    charitable sector is also the engine of our collective
    flourishing, a place where people come together to solve
    problems, a trusted partner for community and government
    leaders, and our economy's third largest employer.
        For generations, policymakers have recognized the
    importance of this sector by providing a tax deduction for
    donations made to charity. I understand that by incentivizing
    Americans to support the charitable sector, the Nation can do
    more collectively beyond government and individuals going
    alone.
        Today the charitable sector is made up of about 1.8 million
    organizations, 12 million professional staff, and nearly 70
    million volunteers. But despite that strength, it is not immune
    to the ravages of domestic and global challenges. With the loss
    of over 1.6 million jobs during the pandemic, the sector is
    still struggling to recover. It lags well behind the for-profit
    recovery and is still down almost half a million jobs. At the
    same time, organizations have had to adapt to new operational
    challenges while facing increased demand for services.
        With that, let me discuss how Congress and the charitable
    sector can work together to strengthen civil society and help
    people thrive. In 2020, Congress created a temporary charitable
    deduction for non-itemizers, but allowed it to expire at the
    end of last year. Every day that this lifeline remains expired,
    it is a blow to our charitable recovery and a missed
    opportunity for those in need. I urge you in the strongest
    possible terms to restore the non-itemizer charitable deduction
    quickly, and to significantly increase or eliminate the cap.
        We are grateful to the members and the leaders of this
    committee who worked for the creation of that deduction and who
    continue to work for its restoration and expansion. Restoring
    and expanding the itemizer charitable deduction is essential to
    generating giving at a scale that our Nation actually needs.
    However, this is not just a conversation about dollars. The
    non-itemizer deduction also sends a powerful message to combat
    the decade-long decline in the number of Americans who give to
    charity at all. A charitable sector that is funded by the
    wealthy will look very differently and will serve America very
    differently.
        I hope you will keep in mind the unique nature of the
    charitable deduction. By definition, a donor receives no direct
    benefit for their gift. The charitable deduction simply
    encourages taxpayers to give away a portion of their income to
    benefit others.
        In addition to restoring and expanding the non-itemizer
    charitable deduction, I also urge you to take action on four
    key priorities that are addressed in my written testimony.
    First, I urge you to restore the Employee Retention Tax Credit,
    which is critical in helping nonprofits keep people employed
    and serving their communities. Second, I ask you to pass the
    Legacy IRA Act, which would expand the opportunity for seniors
    to make contributions to charity through their retirement
    accounts. Third, I ask you to increase the charitable mileage
    rate to be on par with the business rate, at least temporarily,
    which can bolster our diminishing volunteer force. Lastly, I
    ask you to consider a set of policy solutions that are needed
    to strengthen the partnership between nonprofits and the
    Federal Government as a whole. I would welcome the opportunity
    to discuss these solutions, which we call the ``seat at the
    table'' initiative, either today or in the future weeks ahead.
        So, I want to thank you for your support and the
    opportunity to testify today. The charitable sector will
    continue to step up to respond to the needs of society and,
    with your support, will build upon this work to ensure that all
    people thrive.
        Thank you.
        [The prepared statement of Mr. Cardinali appears in the
    appendix.]
        The Chairman. Thank you very much, Mr. Cardinali.
        Ms. Morgan, welcome.

                  STATEMENT OF SUSANNAH MORGAN, CEO,
                     OREGON FOOD BANK, PORTLAND, OR

        Ms. Morgan. Good morning. Chairman Wyden, members of the
    committee, thank you for the opportunity to share my on-the-
    ground perspective regarding charitable giving in the nonprofit
    sector. My name is Susannah Morgan, and I am the CEO of Oregon
    Food Bank. Our network is among the largest in the country,
    with a central warehouse that provides resources to 21 regional
    food banks, which then support over 1,400 pantries, free-food
    markets, and meal sites across Oregon and southwest Washington.
        Our mission is to end hunger and its root causes. To build
    communities that never know hunger, we need living-wage jobs,
    affordable housing and child care, and protection from
    discrimination. When we hit tough times, we need government
    safety nets like SNAP to ensure everyone has access to food.
    Food banks should be the last resort when other systems have
    failed, and food alone will never solve hunger.
        I have worked in anti-hunger efforts for 26 years across
    several States, and the past 2 years have been the most
    challenging of my career. More than 865,000 people sought
    emergency food assistance through the Oregon Food Bank network
    in 2019, nearly one in five of our neighbors. In 2020, this
    number rose like a tsunami to a jaw-dropping height of 1.7
    million people, and in 2021 remains painfully high at over a
    million of our neighbors. Even with the outpouring of community
    support, we could not have kept food flowing without
    significant State and Federal action.
        As we began to run out of food due to the enormous increase
    in demand, Governor Kate Brown came through with $1 million a
    week for food purchases until USDA commodities arrived through
    the CARES Act. Congressional aid reached communities directly
    through enhanced unemployment and SNAP benefits, relief
    payments to families, and more. The Child Tax Credit alone
    drove down child poverty by an incredible 41 percent and
    reduced food insecurity by 26 percent. Combined, these actions
    helped us to meet the crisis head-on and ensure that hunger did
    not spiral out of control.
        Charitable giving incentives are an important piece of this
    equation as well. Let me share one extraordinary week I had,
    tied to decisions made by this committee. On a Monday, early in
    the pandemic, my colleague in The Dalles, OR called me over the
    moon excited because she had just located the perfect building
    for a regional food bank. The purchase price was $750,000. On
    Wednesday, a local philanthropist expressed interest in making
    a $1-million donation, thanks in part to tax law changes that
    allowed 100-percent deduction of her adjusted gross income. On
    Friday, she committed to fund the purchase of the building in
    what is surely the shortest capital campaign ever.
        The work of this committee clearly influences expressions
    of love and generosity in our communities. And from where I
    sit, it is incredibly important that you consider how future
    tax policy changes may impact Federal revenue. Even at our
    scale in Oregon, for every meal we provide, SNAP provides ten.
    Charity organizations simply cannot replace Federal funding for
    the programs and resources our families need to thrive.
        So, I humbly ask you to act to strengthen Federal revenue
    and advance policies that prevent hunger from happening. The
    best thing Congress can do to reduce hunger is to invest in
    proven solutions that support families directly. Reinstate the
    Child Tax Credit. Modernize SNAP to reflect the true cost of
    healthy food. Invest in housing and child care. Raise revenue
    by requiring the wealthiest corporations, individuals, and
    estates to pay what they owe.
        And it is important that any new incentives are designed to
    encourage charitable giving that helps our communities now.
    Hunger is a crisis today. And charitable support is needed now,
    not tucked away for some hypothetical future. Sustain the 100-
    percent adjusted gross income deduction. Increase the amount
    private foundations must grant annually. Ensure donor-advised
    funds have minimal annual distributions and spend-down
    timelines.
        As we speak, our communities face uncertainty around the
    impact of global events, the cost of living, and whether a new
    variant might emerge. Hunger remains an epidemic. This is not
    over. We need Congress to continue supporting our neighbors
    through proven policies, and I believe that together we can
    still emerge stronger.
        It has been an honor to be with you today. Thank you for
    your time and attention.
        [The prepared statement of Ms. Morgan appears in the
    appendix.]
        The Chairman. Thank you very much, Ms. Morgan, and I was
    smiling about a couple of things. One, on the ground I have
    seen you in action, getting all those boxes of food out. I
    think you gave us the theme that everybody can connect with,
    and that is ``never know hungry.'' It says it all. Thank you
    for all your work.
        Now the third witness, Dr. Una Osili, chair in philanthropy
    at the Indiana University. Thanks for coming.

    STATEMENT OF UNA OSILI, Ph.D., EFROYMSON CHAIR IN PHILANTHROPY
          AND ECONOMICS, AND ASSOCIATE DEAN FOR RESEARCH AND
     INTERNATIONAL PROGRAMS, LILLY FAMILY SCHOOL OF PHILANTHROPY,
                  INDIANA UNIVERSITY, INDIANAPOLIS, IN

        Dr. Osili. Chairman Wyden, distinguished members of the
    committee, thank you for the opportunity to speak today about
    how the pandemic is influencing charitable giving. Philanthropy
    has long been a cornerstone of our Nation. Even before we were
    a Nation, many early Native American giving traditions were
    rooted in mutual responsibility and reciprocity. Philanthropy,
    both formal and informal, has played a visible role in
    responding to the pandemic.
        During the COVID-19 era, philanthropy has been
    unprecedented in size, scale, and scope. Religious
    congregations, grassroots organizations, community foundations,
    and nonprofits in areas such as housing and food insecurity
    have demonstrated resilience and creativity in meeting urgent
    needs.
        It is important to emphasize that charitable giving grew
    during the first year of the global pandemic, with 2020 being
    the highest year of charitable giving on record at $471
    billion. Total philanthropy increased by 3.8 percent in
    inflation-adjusted terms. Sixty-nine percent of this total was
    contributed by living individuals, foundations, and charitable
    bequests; corporations account for the remaining 31 percent.
        Research has long established that charitable giving is
    linked with key economic, financial, and social factors. In
    2020, giving was influenced by robust end-of-the-year financial
    markets, increased need, and a heightened awareness of racial
    inequity that was fueled by the racial justice movements.
    Furthermore, with rising economic and health insecurity, the
    philanthropic sector is facing greater demand for services, and
    nonprofit organizations are adapting to new technology,
    staffing shortages, and virtual modes of engagement. In 2020,
    online giving increased by 21 percent.
        Philanthropy also plays a vital and increasingly visible
    role in the global economy. The outpouring of cross-border
    generosity in response to the COVID-19 pandemic has been
    tremendous, and private donors are addressing global needs
    using new vehicles, including crowdfunding, cryptocurrency, and
    collective giving. Despite this progress, addressing
    humanitarian issues, including the war in Ukraine, will require
    an acceleration of efforts to harness private-sector resources.
    The 2022 Global Philanthropy Environment Index identifies
    obstacles to expanding these cross-border philanthropic flows.
    In particular, the Index found more than a third of the 91
    economies that are included reported restrictive policies on
    cross-border giving.
        While it is true that total charitable giving has been
    increasing during the global pandemic, the racial justice
    movement, and the unfolding humanitarian crisis, we must also
    be concerned about post-pandemic giving patterns by Americans
    of all income backgrounds. Despite the economic upheaval
    produced by COVID-19, recent data show that affluent households
    remain committed to charitable organizations, with 88 percent
    giving to charity in 2020, consistent with the 90-percent rate
    measured in 2017. However, recent data from the Philanthropy
    Panel Study, the most comprehensive study of American giving,
    showed that the fraction of low- and middle-income American
    households that contribute to charity decreased from two-thirds
    to half, a decline of 17 percentage points between 2000 and
    2018. For younger Americans, declines in giving rates have been
    particularly significant.
        Looking ahead, we have an opportunity to address issues of
    equity and efficiency among donors and nonprofits, since giving
    is becoming more concentrated among high-income households. A
    growing body of work has examined the effects of extending the
    charitable deduction to non-itemizers. This work indicates that
    a non-itemizer charitable deduction could increase both the
    size of charitable donations as well as induce an expansion of
    the number of households that give.
        There are many issues to consider when investigating the
    impact of tax policy. Nonprofit leaders and policymakers will
    need to consider the effect of tax policy on charitable giving
    dollars, the number of households that donate, Treasury
    revenue, and issues of donor equity and efficiency. Making
    timely decisions about policies that support and enhance the
    longstanding norms and traditions of American generosity can
    help us strengthen the role of philanthropy now and in the
    future.
        Thank you for the opportunity to testify today, and I am
    happy to answer any questions.
        [The prepared statement of Dr. Osili appears in the
    appendix.]
        The Chairman. We will have some momentarily.
        Dr. Steuerle?

       STATEMENT OF C. EUGENE STEUERLE, Ph.D., CO-FOUNDER, URBAN-
         BROOKINGS TAX POLICY CENTER; CENTER ON NONPROFITS AND
       PHILANTHROPY, URBAN INSTITUTE; AND ACT FOR ALEXANDRIA, A
                  COMMUNITY FOUNDATION, WASHINGTON, DC

        Dr. Steuerle. Mr. Chairman and members of the committee, it
    is an honor again to testify before you. The views I express in
    my testimony are my own and should not be attributed to the
    Urban Brookings Tax Policy Center, its trustees, or its
    funders.
        While a temporary increase in the standard deduction
    substantially benefited many taxpayers, it contributed to a
    reduction in charitable tax subsidies by about 30 percent and
    left only about one-tenth of households taking a charitable
    deduction. I doubt that Congress or the public will long
    support such a narrowly targeted lifeline, in your own words,
    Senator Wyden. I view this as a great opportunity to reform
    incentives that strengthen the communal efforts that have long
    defined our Nation. And my job, as I have been requested, is to
    talk about some of the tradeoffs for the amount of money that
    Congress might be willing to put forward. You will be getting
    many suggestions for reforms, including mine, but my primary
    suggestion is to pick among them only after comparing options
    under a cost-effective rubric, and put gains for the community,
    for the charitable beneficiaries, as the major objective of the
    effort.
        The classic distribution in revenue tables that we get when
    we do tax analysis does not actually measure directly what goes
    to the charitable beneficiaries. And there are three parties,
    as you said, Senator Lankford, to this transaction: the
    householder taxpayer, the community, and the Treasury. That is,
    whether you decide in favor of the $50 billion of current
    annual subsidies that go to charities under current law or the
    $70 billion that was available under current law, you need to
    compare options on a cost-neutral basis. Then you have your
    talented Joint Committee staff show the net amount of giving
    going to the charitable beneficiaries under different
    combinations. Finally, when shown any particular option, always
    consider alternatives that would generate more gains for the
    community and for charitable beneficiaries and fewer windfalls
    for taxpayers.
        The rest of my testimony focuses primarily on four issues.
        First, relative to cost, gains for charitable beneficiaries
    will be greatly limited by caps on deductions, and they will be
    enhanced through floors that limit the amount of giving to the
    excess of something like over 1 percent or more of AGI.
        Secondly, almost all proposals for an expanded deduction
    provide windfalls to a group we call ``switchers,'' those
    itemizers who switch to the standard deduction and then take
    the new charitable deduction. There is often no gain for
    charitable beneficiaries at all from those switches.
        Third, gains for charitable beneficiaries can be further
    enhanced by exchanging improved compliance for a stronger
    incentive.
        And fourth, many of the most cost-effective reforms--such
    as allowing deductions at the time of tax filing--take
    advantage of insights from behavioral science. Senator
    Lankford, you referred to this when you referred to people
    thinking about giving at the end of December. They also think
    about giving when they file their tax returns.
        So why do caps and ceilings matter? Caps concentrate
    incentives onto giving that would occur anyway, while floors
    concentrate them among giving beyond what one would do in the
    absence of a tax subsidy. As one example, compare a universal
    deduction with and without a 1-percent floor. Using research
    methods commonly applied, failure to provide a floor cost
    Treasury $17 billion, while generating only $2 billion extra
    for charitable recipients and $15 billion in windfalls for
    taxpayers, simply because of not accepting that type of floor.
        Any reform should also account for IRS's limited ability to
    administer hundreds of millions of charitable transactions
    under current outdated systems of reporting. Fortunately, this
    is an opportune time for Congress to create a system of
    electronic filing for charitable contributions. I have little
    doubt that third-party intermediaries can create an efficient
    system of reporting to IRS, and we could use the revenues that
    would be picked up from improved compliance to provide a higher
    and better incentive for charities and for the recipients of
    their output of goods and services.
        Finally, behavioral science suggests that high bang for
    buck reforms that allow deductions at the time of tax filing
    simplify life for donors of their lottery winnings and provide
    matching grants to charities.
        In sum, charitable deduction reform can strengthen our
    Nation's longstanding tradition of giving and working together
    to provide maximum gains for charitable beneficiaries in the
    community, at whatever level of subsidy Congress decides.
    Consider how caps significantly weaken and floors significantly
    strengthen the incentive provided. At the same time, we need to
    decrease rather than add to compliance burdens for IRS and
    consider how making incentives more salient can add to
    charitable giving.
        Thank you for this opportunity to testify before you, and I
    would be glad to work with you on these issues in the future.
        [The prepared statement of Dr. Steuerle appears in the
    appendix.]
        The Chairman. Thank you. Let me see if I can do a couple of
    points quickly.
        Is it correct that we are now seeing a need for assistance
    exceeding 2020 levels, and that each of you expect that to
    continue? Is that correct? Is there any dissent at the table?
    Does everybody agree with that? You are free to dissent. That
    is why we have hearings.
        Mr. Cardinali. I am not sure that I disagree. But one point
    that I would add to that is, that if you dig into the numbers,
    there have been a number of extraordinarily wealthy people
    making enormous gifts that have perhaps distorted the number
    slightly around the amount of giving. So it would be worth
    digging into the numbers and seeing the impact of some very
    large philanthropic gifts which seem atypical. And whether they
    will be sustained or not is a question I think we are all
    wondering about.
        The Chairman. But on the basic proposition that the need
    for assistance exceeding 2020 levels, you expect that to
    continue with some possible ramifications for very large gifts?
        Mr. Cardinali. Yes.
        The Chairman. Okay. So the second question stems from the
    first. Do you believe that the current donations and grants,
    for the most part--and let's take Mr. Cardinali's point--do you
    think current donations and grants are sufficient to meet the
    needs?
        I am pretty sure you all said ``no.'' Does anybody disagree
    with that?
        [No response.]
        The Chairman. Okay, we will put that one down as a ``no.''
    Don't be bashful, because I am absorbing your very important
    points.
        Dr. Steuerle. Senator, with Dr. Osili's numbers, you know,
    charitable giving, even at 2020 levels, is not at past peak
    levels as a share of our income. And as our economy has grown
    sixfold over the last century, our ability to increase giving--
    that share of giving--has not really occurred. So I think all
    of us believe that we could do much more as a Nation on this
    front.
        The Chairman. Very good. So it is always important to look
    at both the past, because it is a guide to prologue, and to
    kind of weigh, as Dr. Steuerle did, the tradeoffs.
        Which programs--let's just go right down the line here. We
    have passed novel programs to respond to the pandemic. Which
    programs were the most successful, based on your hard evidence?
    We will start with you, Mr. Cardinali.
        Mr. Cardinali. I think many of them were very effective,
    but I would mention three that come to mind. The first would be
    the Paycheck Protection Program, which protected 4.1 million
    jobs, according to the Johnson Center on Philanthropy, keeping
    front-line workers engaged during a pandemic. The second, of
    course, would have been the CARES Act and incentivizing giving
    that enabled people to reach into their pocket and
    incentivizing everybody to do that. Whether or not they could
    get out the door and volunteer, they could certainly write a
    check and donate. And third would be what Ms. Morgan mentioned,
    and what I would also agree with: the Employment Retention Tax
    Credit that kept employees.
        The Chairman. Very good.
        Programs most effective, Ms. Morgan?
        Ms. Morgan. The Child Tax Credit, Senator Wyden, which
    drove down child poverty and child hunger to rates I have not
    seen in 26 years. I have been in anti-hunger work for 26 years,
    and we have not ended hunger yet, and we are not stopping until
    we do. And so, yes, we need the charitable incentives, and we
    need Federal responses. This is a ``both and.''
        The Chairman. Okay.
        Professor?
        Dr. Osili. Yes, I would agree that the CARES Act overall,
    the PPP program, and the direct stimulus payments to households
    really strengthened the country's ability to withstand the
    pandemic. In particular, the Penn Wharton budget models
    estimate that the impact of these stimulus packages boosted GDP
    5.5 percent.
        When we think about what drives charitable giving,
    incentives certainly affect not just the amount that people
    give, but the vehicles they use and the timing of those gifts.
    In addition, economic factors affect their ability to give in
    the first place. So American households give when they have the
    resources, the means to give. The charitable deduction and the
    incentives provide that boost you could see around the timing,
    the amount, and the vehicle.
        The Chairman. Dr. Steuerle?
        Dr. Steuerle. I would include Paycheck Protection. As a
    founder of the community foundation in Alexandria, I would also
    say even the support that went to the cities that actually came
    back out through our community foundation and through all the
    charities in Alexandria, right across the river, to support
    many of the efforts to provide food, shelter, clothing, and
    other items that have been made possible.
        So it actually extends far beyond just given what is in the
    tax code. I suppose my one exception, Senator Wyden, is I think
    most of these provisions were good as temporary provisions, but
    such items as the $300 deduction--I think most estimates
    suggest that it does not provide much of an incentive in the
    long run because it is not applied at the margin. People give
    more than $300; it is a windfall in the form of a tax break. I
    think it was a good symbol during the crisis, but as a long-
    term project, just like Paycheck Protection, I think we have to
    look further.
        The Chairman. I have long watched your scholarship on this
    and share much of your thinking. This was particularly
    important because we wanted to give more people an opportunity
    to be involved. That was the point.
        The 2017 tax bill said, yes, you've got opportunities if
    you are really up at the top of the economic system. The whole
    point of the $300 effort was to get more people mobilized at
    the grassroots and talking about why they were helping our
    wonderful Oregon Food Bank. We will continue this discussion.
        Also, Dr. Steuerle, I would like you to flesh out for the
    Finance staff how you envision this set of electronic
    improvements as it relates to charitable giving. Because we
    know the IRS is in the Dark Ages with respect to technology.
    The comprehensive budget that passed last week is going to give
    them hundreds of millions of dollars more. So we are moving in
    the right direction. But if you have some ideas that are doable
    and cost-effective, I am all ears.
        Thank you all, and let's go to Senator Lankford.
        Senator Lankford. Thank you. As I mentioned before, and
    several of you have mentioned, this is something that I think
    is extremely important that we deal with--the non-itemizer
    charitable deduction--to incentivize more donations on the
    lower end and to be able to keep that going. The data, I think,
    also supports this, and we have talked a little bit about this,
    but I want to raise a couple of things in some stories here.
        Compared to 2019, after the $300 deduction was enacted in
    the CARES Act, gifts of less than $250 grew by 15 percent in
    2020. So, contrary to most examples of growth in giving during
    the times of crisis typically, the growth in these small gifts
    outpaced the growth in the larger contributions by 1.5 times.
        When compared to 2019, there was a 28-percent increase in
    $300 donations on the final day of 2020. That is the exact
    amount of actually what the donation amount was. So there is
    obviously some connection there, and I wonder what that would
    have been if the number would have been higher for that time
    period as well.
        According to the Fundraising Effectiveness Project
    comparing 2019 to 2020, the overall number of donors grew by 7
    percent in 2020. New donors increased by 18 percent, and
    overall giving increased by over 10 percent. On top of that,
    based on their analysis of over $46 billion in charitable
    giving, the Blackbaud Institute estimates that charitable
    giving in the U.S. grew by 9 percent in 2021.
        So how do we keep this going? And how do we continue to be
    able to fan the flame of this? I will tell you, it is
    significant, and we have seen it be significant. Let me just
    give you a few stories from my State of Oklahoma.
        Amy from Family and Children's Services was writing in and
    said, ``When the new tax laws were amended during the pandemic,
    it actually gave me more incentive to dig deeper because I knew
    that not only would the nonprofit organizations get the
    proceeds they needed, but I also got something in return to
    help my spending that was not available to me prior to this. It
    was a win/win.''
        Tom, who is the Chief Development Officer at Family and
    Children's Services in Tulsa said, ``I often get asked as a
    fundraiser for nonprofit, `How is annual giving going? And have
    we seen a decline since we were not able to do in-person
    events?' '' He said, ``In fact, we saw a 17-percent increase in
    first-time donors, and amongst donors 40 years or younger. A
    few of them said that the tax deduction made them more
    generous, and they were able to do something even more than
    what they thought they could before because of that
    advantage.''
        Melissa, who is the director of community engagement at
    ReMerge in Oklahoma City, said, ``Last year we had 10 gifts of
    $300. Three of those donors were new donors who stated that the
    tax credit had impacted their decision and the size of their
    gift.''
        Angie, who is the chief development and marketing officer
    at Sunbeam Family Services, great group, said, ``When universal
    tax deduction was enacted, Sunbeam experienced an increase both
    in total donations and the average donation amount.''
        So we have seen not only just those stories, but a lot of
    other evidence. I have worked to be able to expand this. And I
    think we can further support our nonprofits. Several colleagues
    and I have joined together to expand this. Under our bill,
    taxpayers would be able to do a charitable deduction of a third
    of the standard deduction--just over $4,000 for single filers
    and $8,000 for joint filers.
        This bill ensures that every American who gives--not just
    those with high incomes and those who itemize on their tax
    returns--but others are able to give and to be able to give at
    larger amounts, and they are incentivized to do that.
        I do want to thank my fellow sponsors--Senators Coons, Lee,
    Shaheen, Tim Scott, Klobuchar, Collins, Cortez Masto--as well
    as other members of this committee who have co-sponsored the
    bill--Senators Stabenow, Hassan, and Brown--for their support.
        We do have a lot of support from the community on this bill
    as well. I have letters here with me today representing
    thousands of organizations, in every State. We have one letter
    that a coalition has signed with 1,500 nonprofits that have
    signed on, and another with hundreds of local United Ways.
        Mr. Chairman, I believe these letters and others have
    already been submitted for the record, but I would ask that a
    few other letters that have also come in today be included in
    the record as well. The Oklahoma Center for Nonprofits, Faith
    and Giving, the Jewish Federations of North America, the
    National Philanthropic Trust, the National Council on
    Nonprofits, the Philanthropy Roundtable, and Philanthropy
    Southwest have all written in in addition to that.
        The Chairman. Without objection, they will go into the
    record now.
        [The letters appear in the appendix beginning on p. 48.]
        Senator Lankford. So now that I have completely spoiled all
    of my time for questions making a statement, I would love to be
    able to visit with all of you at great length on this, but the
    chairman is an ogre on time, so I am going to have to be
    attentive on this.
        Mr. Cardinali, I do want to talk about how the deduction
    influences the behavior of non-itemizers. What have you seen on
    that?
        Mr. Cardinali. Well, first of all, thank you for your
    leadership. And I think Independent Sector stands squarely
    behind pretty much everything you just said.
        The one additional item that is important is, by expanding
    the non-itemizer deduction, we actually incentivized people to
    participate in their community. It expands the number of
    donors. And we know once a donor starts, there is a high
    probability that they will continue to give. So we will build
    out a pipeline, and it links to volunteerism. It gets them out
    into their community, so they are donating, they are
    volunteering, and that builds civic trust.
        So, 100 percent behind your points.
        Senator Lankford. Thank you. I would only mention one other
    thing. Mr. Cardinali earlier said that, by definition, when you
    are giving like this, it cannot be beneficial to you. I would
    say, when people give to nonprofits, it is very beneficial to
    them and the community, and to them personally. The old ``it's
    better to give than to receive'' definitely kicks in when you
    are giving.
        The Chairman. It lifts the spirits and makes you feel you
    are helping the community. Well said.
        Senator Grassley?
        Senator Grassley. I thought you had a Democrat to go ahead
    of me.
        The Chairman. We have you up at this time. Go ahead.
        Senator Grassley. I am very happy to go.
        Ms. Morgan, I am going to start with you. This is a quote
    from your testimony: ``Hunger is a crisis today, and charitable
    support is needed now, not tucked away for some hypothetical
    future,'' end of quote. I am sure that is a statement working
    charities in Iowa and across our country would agree with.
        Today there are over a trillion dollars sitting in private
    foundations and assets held by donor-advised funds totaling
    $160 billion, a 360-percent increase since 2006.
        Senator King and I have introduced the Accelerating
    Charitable Efforts Act, which is focused on ensuring that tax-
    deductible contributions to a foundation, or a donor-advised
    fund, reach their ultimate charitable destination within a
    reasonable period of time.
        Could you elaborate on why it is important for working
    charities like yours not to have hundreds of billions of
    dollars of charity money effectively sitting on the sidelines?
        Ms. Morgan. Thank you for the opportunity, Senator
    Grassley. The Oregon Food Bank has been greatly impacted by
    supply chain disruptions during the pandemic. So, prior to the
    pandemic, 865,000 people--that is one in five people in Oregon
    and southwest Washington--asked for assistance, and we relied
    heavily on donations from growers, food distributors, and food
    manufacturers to meet the need. Supply chain disruptions have
    meant that donations are down well over 50 percent, because
    they cannot give us what they do not have in excess. So we are
    purchasing food at a higher rate than we have ever purchased
    before.
        So, we have more people who need food assistance, and fewer
    resources in order to meet that food assistance. So, when I
    hear of wealthy folks tucking money away in hopes that it will
    make the future better, my response is, make the future better
    right now for my neighbors who are struggling to put food on
    the table.
        Senator Grassley. Thank you.
        Mr. Cardinali, I have a good history of working with your
    organization, probably a long time before you ever got involved
    in it, but they have helped me a lot during the early part of
    this century with a lot of investigations and reforms that I
    have done. We passed some legislation, but I also recall from
    the 2005-2007 era that you put out some good work that helped
    us do probably even more than what we had intended to do by
    legislation. So I appreciate the Independent Sector's attention
    to the importance of robust self-regulation and oversight in
    fostering a healthy nonprofit sector. As I indicated before--I
    want to repeat--it was a pleasure working with your
    organization during my tenure as chairman of this committee in
    the 2000s to improve nonprofit governance and accountability.
        Could you elaborate on what the Independent Sector has been
    doing to foster good governance and self-regulation of the
    nonprofit sector since the release of that report, ``Report on
    Good Governance and Ethical Practices''?
        Mr. Cardinali. Thank you for the partnership, and it has
    been transformative in striking a balance. We think that is
    very healthy for a sector that has two components, one being
    self-regulation, where those principles that you referred to
    are still an extremely downloaded and used resource across the
    sector--setting a standard of good behavior, ethical
    governance, use of appropriate fund raising--and a set of tools
    that allow people and boards to make good decisions about
    difficult challenges in a changing and dynamic world. But as
    you may recall well, that was also designed with appropriate
    government oversight. So it is actually a two-part tension:
    self-regulation and government.
        So we, of course, denounce bad actors that take advantage
    of the sector, but that is a minority of folks that often make
    the news. But we do need appropriate support from the IRS and
    the exempt organizations office there to be able to lean into
    when there are bad actors, so that we do not diminish public
    trust in America.
        We know that right now, every year we measure the trust
    that the general population has for nonprofits, and it is quite
    high--higher than government or business. So protecting that
    trust through striking the tension of appropriate self-
    regulation and appropriate government oversight is important.
        I do want to be clear. I am not calling for additional
    government oversight, just appropriate government oversight.
        Senator Grassley. Thank you.
        The Chairman. Thank you, Senator Grassley.
        I believe next is Senator Carper.
        Senator Carper. Senator Carper is here. Good morning, Mr.
    Chairman. Good morning, colleagues and witnesses.
        The Chairman. Senator Carper, turn the power up. Is it at
    our end?
        Senator Carper. I think it is at your end.
        The Chairman. That is perfect.
        Senator Carper. Can you hear me?
        The Chairman. Yes.
        Senator Carper. All right; thank you. First of all, thank
    you for holding this very, very important hearing, and a timely
    hearing. My wife and I are getting ready to submit all kind of
    tax-related materials to our CPA, so we are reminded that we
    should be looking into our charitable giving. So this is
    actually something that is very, very real in our lives, and I
    know others' too. But I want to thank each of our witnesses for
    your willingness to testify before the committee today.
        Nonprofit organizations and charities are an invaluable
    part of the communities in Delaware, and I know that is true
    across the country. They provide critical support for some of
    the most vulnerable among us. Throughout the coronavirus
    pandemic, nonprofits in Delaware and the other 49 States
    throughout America have risen to the occasion to help their
    neighbors keep a roof over their heads, put food on the table,
    get vaccinated, and a whole lot more.
        When we support our local nonprofits, we show our
    commitment to building a strong community. Having said that,
    research has found that as time goes by, fewer households are
    giving to charity. I think that has been mentioned a time or
    two already today. In fact, studies have shown that only about
    half of Americans are donating to charities these days. That is
    down from about two out of three a couple of decades ago. And
    since then--as I understand it--donations from lower- and
    middle-income households have declined. Charitable giving
    overall remains pretty much stable, but the increases are
    concentrated among higher-income households, which is where you
    would hope we would find most of the giving that takes place.
        A question--this will be for everybody on the panel--but
    could you take a couple of minutes to share your thoughts with
    us on why we are witnessing this decline in widespread
    charitable giving, what steps we ought to consider taking in
    order to reverse this trend, at the same time making sure that
    those who are capable of giving continue to do so? Please, in
    any order you would like to go.
        Dr. Osili. I can start. At the IU Lilly Family School of
    Philanthropy, we've been tracking the share of Americans who
    give to charitable organizations for many years. At the
    beginning of the 21st century, two-thirds of Americans gave,
    and this was consistent over time, until the time of the Great
    Recession of 2008. At that time we saw that number begin to
    decline. It's important to note that when the economy
    recovered, following the Great Recession, we did not see that
    number go up again. In fact, it has continued to decline, and
    in the most recent analysis in 2018, for the very first time,
    less than half of Americans gave. It's also worth noting that
    among younger Americans, that decline has been even more
    pronounced. In fact, for the overall public--that figure
    declined 17 percentage points--but for young Americans it's
    more than a 20-percent decline at the time of the Great
    Recession. So, with that concept----
        Senator Carper. How do you explain that?
        Dr. Osili. How do we explain that?
        Senator Carper. Yes.
        Dr. Osili. I'm sorry. There are several factors to look at.
    We have investigated the world of economic factors, that
    changes in income, employment, and wealth, account for about a
    third of that decline. The other half or so of the change is
    due to a number of other factors. First, we have already heard
    about trust levels: declining levels of trust, social capital.
    But also religious participation has been shown to be linked,
    and not just to religious congregations, but also to giving
    more broadly. So, looking ahead, as we continue to build this
    strong tradition of American generosity, we need to make sure
    that it's broad-based across income and age groups. It's
    important to recognize that economic factors play a role, and
    certainly looking at the role that the charitable deduction
    plays, not just in providing an incentive and sending a strong
    signal about the government's commitment to the private
    provision of public goods, but also the other factors. We've
    heard about what role trust plays, but also what the charitable
    sector can do to continue to build the relationships and
    engagements and the sense of commitment that Americans have.
        Senator Carper. Dr. Osili, I am about to run out of time. I
    want to be able to hear from at least one other witness. Thank
    you for all that you shared with us.
        Susannah Morgan, just a few thoughts for us from the Oregon
    Food Bank. The Delaware Food Bank sends their best to you and
    your team. Go ahead, Susannah.
        Ms. Morgan. Thank you. I do not have academic data, but
    what I will tell you is, the Oregon Food Bank had 40,000 new
    donors in the last 2 years. So we have gone from a database of
    30,000 to a database of 70,000 donors in the last 2 years.
        So a combination of the environmental factors in which one
    in four people in Oregon were experiencing hunger, so everyone
    knew someone who was needing food assistance--this was not
    ``them,'' this was ``us.'' And hunger was impacting ``us.'' A
    combination of an outpouring of love--because that is really
    what community donations are, it is love in the form of a check
    for our community--and what the Federal Government did to
    support trust and to authorize and provide credibility to the
    nonprofit community through the tax code.
        Senator Carper. Well, that is great. I think my time has
    expired. I wish I had time to ask others, but thank you all for
    joining us today.
        The Chairman. I thank my colleague.
        Senator Cortez Masto?
        Senator Cortez Masto. Thank you, Mr. Chair. And I want to
    say ``thank you'' to the Ranking Member and Senator Lankford
    for co-chairing this important committee with you. I also
    cannot thank you enough for just calling the hearing today to
    highlight what we see here: the good bipartisan work that
    Congress can do when we work together to be able to deliver for
    all Americans, including many of the nonprofits across the
    country and here today.
        As we know, the CARES Act established that charitable
    deduction for non-itemizers in 2020, and the COVID relief
    package passed in December of 2020 added an extension of the
    $300 charitable deduction for 2021. So I am proud to have
    worked with my colleagues on this committee, Senators Lankford
    and Scott, to co-lead the bipartisan Universal Giving Pandemic
    Response Recovery Act to expand and extend a tax deduction for
    charitable giving. The bill would build on the bipartisan work
    and ensure that Nevadans who donate to charities, religious
    organizations, and other nonprofits are able to deduct their
    contributions from their Federal taxes.
        This legislation recognizes the generous donations many
    Americans have given to these lifesaving organizations, and
    incentivizes further charitable giving during the coronavirus
    pandemic. I know firsthand that during the height of the
    challenging time of COVID-19, nonprofits, community
    organizations, and religious organizations have provided
    immeasurable relief and support to struggling families in
    Nevada. Places like Betty's Village, an inclusive residential
    housing community for people of diverse abilities, was opened
    by Opportunity Village at the height of the pandemic. And I
    fought for the ability of nonprofits to qualify for the PPP
    loans during the pandemic. And because of that, my office was
    able to help them secure that loan and help provide housing in
    the community for people of diverse abilities.
        By passing the Universal Giving Pandemic Response Recovery
    Act, we can ensure that nonprofits like Betty's Village can
    sustain the critical services they provide beyond the pandemic.
    So, thank you again to our bipartisan partners in the Finance
    Committee--Senators Lankford, Scott, Brown, Hassan, and
    Stabenow--for working on this important legislation.
        Let me start with Ms. Morgan. I so appreciate what you do.
    I am a big supporter of our Northern Nevada Food Bank in Reno,
    and Three Square, and all of the food pantries across the
    country, so thank you for your commitment there. I also know--I
    just recently had a roundtable discussion in Reno, and it
    included many of our community's leaders, including members of
    the Northern Nevada Food Bank, to talk about the crisis parents
    are dealing with right now with the lack of access to
    affordable child care. And I am curious.
        You highlighted in your testimony how important Federal
    response was in addressing that tremendous need during the
    pandemic. It has since stopped, and can you discuss how
    critical support like the CTC was in meeting the overwhelming
    need, and how much harder it will be for organizations like
    yours to meet the community needs when you see an increase in
    that need over the last couple of years?
        Ms. Morgan. Thank you so much, Senator, and so much love to
    our colleagues in Nevada doing food bank work. The numbers tell
    the story, right? For us in Oregon in 2019, it was 860,000. In
    2020, it was 1.7 million people asking for food assistance. And
    in 2021, it was just over 1 million.
        What is the difference between 2020 and 2021? The Federal
    response, and in some cases, the reopening of economies as we
    became more accustomed to the pandemic. But from my analysis on
    the ground, it is primarily the Federal response. It was the
    increased unemployment compensation. It was the direct payments
    to families. It was the Child Tax Credit that made the
    difference, so that folks did not have to show up at a food
    pantry and ask for a box of food.
        We want to live in a world where no one has to ask for
    food, where everybody can get all the food they need for their
    families, and we think that, in partnership with the Federal
    Government, we can get there.
        So yes, I am scared about this year ahead as the provisions
    of the CARES Act and other Federal provisions sunset. What then
    will happen? Are we going to see another tsunami of need? Are
    we going to see mothers crying in line because they are worried
    about feeding their babies? So thank you, Senator, and the
    entire committee, for everything you can do to help us help our
    communities.
        Senator Cortez Masto. Thank you. I yield the remainder of
    my time, although little it is. Thank you, Mr. Chairman.
        The Chairman. I thank my colleague. Important points, as
    always.
        I think Senator Thune is either online or----
        Senator Thune. Yes, Mr. Chairman, I am online.
        The Chairman. Great. Terrific. Senator Thune?
        Senator Thune. Thank you, Mr. Chairman, for holding today's
    hearing on charitable giving, and thanks to our panelists for
    your testimony on behalf of the nonprofit and charity sectors.
        Charitable giving is critical for local communities in
    South Dakota, and we need to continue to encourage this
    bipartisan priority in a fair and effective manner. In 2020,
    during the first year of the pandemic, charitable giving in the
    United States by individuals, bequests, foundations, and
    corporations, reached a record high of $471 billion. Overall
    charitable giving in the country in 2020 increased by 5.1
    percent over 2019, and when adjusted for inflation, the total
    amount increased 3.8 percent.
        So my question, Dr. Osili, is, can you tell us which
    categories of charitable giving saw the biggest increases in
    2020? And how do you think the pandemic has changed Americans'
    charitable giving patterns?
        Dr. Osili. Thank you for that very insightful question.
    There were three factors that contributed to the growth in
    charitable giving. Certainly, number one was the recovery of
    the economy, especially the strong financial markets at the end
    of 2020. We also had increased need, as we have heard from my
    colleague from Oregon. And in addition to that, we had the
    racial and social justice movements in 2020. So all those
    factors combined, led to what we saw in terms of charitable
    giving.
        As we unpack the data, there were three areas that stood
    out in terms of increases, in particular, what we call public
    society benefit, which is the sector that includes the umbrella
    of causes such as donor and side funds, the national funds, and
    also United Way, United Jewish Appeals, and civil rights
    organizations that are leaders in terms of charitable giving
    growth. We also saw strong growth in education and in basic
    needs charities, which include organizations like the Oregon
    Food Bank. In terms of areas that did not perform as well in
    2020, it is worth noting that arts and culture organizations
    were severely impacted by the pandemic because many of them
    were not able to hold in-person events--
    income-generating and fundraising events that usually involve a
    face-to-face gathering.
        So overall, the charitable sector grew, but not all
    organizations benefited, and certainly not all subsectors
    experienced the growth that we saw.
        Senator Thune. Thank you. So, since the increase in the
    standard deduction, overall charitable giving amounts have gone
    up. The number of individual itemized deductions claimed for
    charitable giving has gone down. And to put that another way,
    overall giving amounts have increased while the number of
    itemized donations has decreased.
        Dr. Steuerle, given the significant increase in the
    standard deduction, which resulted in fewer individual
    taxpayers itemizing deductions than in 2018, are the estimates
    of non-itemizer giving before and after 2018 necessarily
    comparable? And could you speak to any current data that
    directly measures the magnitude of charitable giving by non-
    itemizers?
        Dr. Steuerle. So we know in the years after 2017, in point
    of fact, giving did increase a bit. However, what also happened
    during that period was, we were at the end of a long period of
    economic growth.
        We also had income actually increasing, surprisingly, in
    2020 because of the Federal subsidies that flowed through. So,
    as Dr. Osili mentioned, we are not quite sure what is going to
    happen as we move forward into the future. In fact, there are a
    number of projections that say giving will decline. When you
    reduced the charitable incentive as much as happened in 2017,
    you essentially took 6 cents out of every dollar that was given
    to charity away from those charities. That is, the Federal
    Government used to provide about 21 cents on the dollar for
    charitable giving and dropped it to about 15 cents.
        So we think that that probably led to some decline; maybe
    it was not 6 cents, but it certainly was not zero, in terms of
    the effect. There is something we do not measure well as
    economists. We are actually not good at measuring long-term
    effects of different provisions. And I think the symbolism and
    the signals provided by giving a deduction only to about one-
    tenth of taxpayers is pretty powerful, and it speaks to the
    earlier questions you and some other Senators have had about
    what we can expect for the future in terms of community
    participation. I think it sends a very bad signal, and I think
    I am sure all the people at this table agree that we need to
    have a more universal set of incentives, partly just as a
    signal. I cannot tell you what the full effect of that signal
    would be, but I think it would be quite powerful.
        Senator Thune. Thank you.
        Mr. Chairman, my time has expired, but let me just say how
    important it is that we encourage and incentivize charitable
    giving in this country. I do not think there is anything that
    we do as a matter of public policy that contributes more to
    meeting the needs of Americans in so many different areas of
    our economy, but certainly what happened during the pandemic is
    a reminder of the effectiveness of charitable giving and the
    need for us to encourage it. So, thank you.
        The Chairman. Senator Thune, thank you. And you and I have
    been fortunate enough to be able to lead a number of these
    bipartisan efforts to promote charity, and I look forward to
    continuing to work with you.
        We are happy to have Senator Cardin.
        Senator Cardin. Mr. Chairman----
        The Chairman. Senator Cardin, just one quick point before
    you proceed. I would just say to colleagues, we are getting
    down to wrapping up, and if colleagues on either side of the
    aisle would like to either come in person or be available to
    make their presentation online, now is the time to do it.
        Senator Cardin?
        Senator Cardin. Well, Mr. Chairman, first, thank you for
    holding this hearing. I appreciate it very much. I think it is
    very important that we highlight what we can do in this
    committee's jurisdiction in regards to the nonprofit
    communities. So, thank you all very much. And I would ask
    consent that the statement from Apra, Maryland Chapter, be made
    part of the record.
        The Chairman. Without objection, so ordered.
        [The statement appears in the appendix on. p. 35.]
        Senator Cardin. I understand there has been a good deal of
    discussion about some of the tools that were made available
    during the coronavirus that affected the nonprofit community.
    As chair of the Small Business and Entrepreneurship Committee,
    I appreciate the references to the Paycheck Protection Program
    particularly. I just really want to make an observation first.
        In the early stages of that negotiation, it was not certain
    at all that the nonprofit community was going to be included,
    because the Small Business Administration does not include the
    nonprofit community in many of its programs. The 7(a) program
    did not include this. This was a real expansion of the efforts
    on behalf of nonprofits.
        And it was clearly the right thing to do. The nonprofit
    community--there are so many small entities that have all the
    challenges of a small business. And during the pandemic, they
    were really hurt badly from the point of view of their
    financial resources, but as well their mission, in order to
    carry it out. So I am pleased that it was able to keep active
    and alive the nonprofit community, the tools that were made
    available from the Small Business Administration in the
    bipartisan effort here in the United States Senate.
        And I want to compliment the chair on the Employee
    Retention Tax Credit, which has also been mentioned. Senator
    Wyden was the leader on that particular initiative, and we
    thank him. And there was a moment where we were having
    challenges as to whether smaller entities were going to be able
    to participate, and Senator Wyden was our hero in keeping that
    there.
        I am distressed, Mr. Chairman, to learn that you are having
    challenges in getting that process through the IRS. And one of
    the things I think we could do as a committee is recognize that
    smaller entities, including nonprofits, do not have the
    financial wherewithal to be able to take on the bureaucracy as
    larger companies can. We should really work, in the
    administration of the IRS, for the sensitivity of smaller
    entities, whether they are for-profit or nonprofit. And I know
    from the nonprofit community in Maryland, so many of them
    really need that particular help.
        And then lastly, I just really want to underscore the
    efforts that--when we talk about the non-itemizers, the smaller
    contributors, those who are giving to their community, again it
    is usually--many of those dollars go to the smaller of the
    nonprofits.
        So once again, I think we need to have a sensitivity to
    smaller entities. I am very happy about all the nonprofit
    community, believe me. But I do think we need to be able to
    help the smaller nonprofits deal with a lot of the bureaucratic
    issues we have, as well as the financial issues in the tax code
    itself.
        And I have asked the chairman--he has been cooperative
    here--I hope we will have an opportunity to look at the
    Internal Revenue Code from the eyes of smaller entities and
    have policies that help deal with their realities in the tax
    code itself.
        Would any of you want to respond to that? Mr. Cardinali, I
    know you have been engaged with the smaller entities. Your
    comments?
        Mr. Cardinali. So first of all, thank you, Senator, for
    your comments. I agree. The ERTC has been game-changing. I
    appreciate the committee's leadership there. The Paycheck
    Protection Program saved 4.1 million jobs by the Johnson
    Center's estimates, which kept people employed and able to take
    care of our community during the pandemic.
        And this last point you made regarding strategies for the
    sector to actually fully be able to partner with government in
    a way that will allow it to best serve government, both as a
    resource as well as an implementer--we have been working on a
    piece of legislation that Representative McCollum is about to
    drop, we hope, called the Nonprofit Sector Strength and
    Partnership Act of 2022, which would basically establish
    permanently an office of nonprofits in the White House. It
    would set up an interagency council coordinated by that office,
    and then a Federal group of bipartisan nonprofit leaders, so
    that we would not run the risk of having something like the
    Paycheck Protection Program be left to just advocates on the
    outside. There would be people in government who would have a
    knowledge of how the sector needs to be supported.
        Thank you for your leadership.
        Senator Cardin. Thank you.
        The Chairman. Senator Cardin, let me just follow up on the
    thoughtful points you made. And I think there may be an
    opportunity, given the extra money that is going to the IRS
    that you and I and this committee strongly supported because,
    to a great extent, one of the areas we agree on is that they
    are kind of in the Dark Ages on some of these issues relating
    to technology and having skilled individuals, and their being
    able to recruit--and because we found that Amazon was paying
    more than the IRS.
        I would be very interested in working with you on trying to
    make sure that some of that extra money that was just signed
    into law last week was for small business-focused efforts as it
    relates to these issues. I would be interested in your
    reaction. We are waiting for Senator Brown, but Senator Cardin,
    as is usually the case, is out in front with respect to being
    innovative. He has ideas for making reforms in the entire
    agency, with Senator Portman, that we are looking forward to.
        But what about moving right now, given the fact that that
    money was just increased here in the last couple of days, to
    address some small business concerns you are talking about?
        Senator Cardin. Well, I can tell you, having as my partner
    the chairman of the Senate Finance Committee will give me a
    much better opportunity to get some results with the IRS. So I
    accept.
        The Chairman. I thank my colleague. And with that bold
    explanation Senator Cardin has made, we can now have Senator
    Brown, a great friend of charity. Thank you, Senator Cardin.
        Senator Brown?
        Senator Brown. Thank you, Mr. Chairman.
        Ms. Morgan, I would like to start with you. You told us in
    your testimony that charity organizations simply cannot replace
    Federal funding for the programs and resources our families
    need to thrive. I would do a really quick shout-out to the work
    that United Ways all over Ohio have done in terms of getting
    people connected to the Child Tax Credit and Earned Income Tax
    Credit.
        I know Chairman Wyden is not giving up on the importance of
    those and extending them. But put that aside for a second.
        The very first thing you said Congress should do to reduce
    hunger is reinstate the Child Tax Credit expansion. That makes
    sense, given we saw a significant drop in hunger levels. We saw
    a 40-
    percent drop in poverty. We know it relieves anxiety for
    families, particularly at the end of the month. And it gives
    them, as someone said, the joy of a little bit of breathing
    room in their personal finances, especially when rent is due at
    the end of the month.
        There are a number of us on this committee--let me just
    back up for a second. So, Ms. Morgan, if you would, just tell
    us about your experience with the Child Tax Credit and how the
    lapse in advance payments strained nonprofits like yours?
        Ms. Morgan. Thank you very much, Senator. As I have said
    before, we saw a huge tsunami of need in 2020, and that dropped
    in 2021. So what we were finding was our neighbors--and 70
    percent of the people who work at Oregon Food Bank have
    experienced hunger. So it was our neighbors who were facing
    hunger who had the choice to not have to go to a food pantry or
    a meal site, but could instead go to a grocery store and ensure
    that they could put meals on the table for themselves and their
    families.
        And as you can imagine, as all of you can imagine, if you
    are hungry, nothing else matters. So there is the Chinese
    proverb that says, ``The man who has food has many problems.
    The man who does not have food has one.'' Because it is a basic
    need. We need to eat three times a day.
        We know that when Congress, when the philanthropists invest
    in basic needs, it creates opportunity and space for all the
    other things: better parenting, better education, better work
    habits. We have the opportunity to participate civically. So we
    need our basic needs met in order so that we can be fully human
    and fully American. And this is a great opportunity for
    Congress to continue to participate in that work.
        Senator Brown. Thank you very much, Ms. Morgan.
        My next question is for Mr. Cardinali. I have heard all
    around my State from nonprofits like the YMCA that the early
    termination of the Employee Retention Tax Credit really hurt.
    Many nonprofits relied on that credit when budgeting and
    planning for workforce needs. That is why I am co-sponsoring
    Senator Hassan's bill to reinstate it.
        Give us a few examples, if you would, Mr. Cardinali, of how
    the early termination of ERTC actually hurt nonprofits.
        Mr. Cardinali. Thank you, Senator, and thank you for your
    leadership in Ohio and nationally. I can give you a very
    concrete example about not just the early termination but
    actually something that was mentioned earlier regarding the IRS
    and their slowness in being able to actually provide these
    reimbursements.
        So specifically, an example out of Maryland that was
    received just this week--I think it was submitted by one of the
    Senators--that in 2021 they have received their credit, but
    they have not received either payment from 2020. So not only
    are we looking at the importance of it, the ERTC, as a way of
    nonprofits keeping themselves employed, which was a great
    innovation--I want to thank the committee again for it; it was
    a game changer--but now, having it being repealed in the last
    quarter really threw off planning. Anybody who has run a
    nonprofit knows that you have to plan very carefully on cash
    flows, and you rely on both public and private sources. And
    when you get a massive disruption, it not only throws off the
    individual employees that you may not be able to pay, but your
    operations, and it destabilizes your culture internally.
        So I would just encourage this committee to double down on
    reinstating the ERTC and ensuring that the IRS is able to have
    the resources necessary to be able to get those reimbursements
    out in a timely manner.
        Senator Brown. Thank you, Mr. Cardinali.
        I will just make a closing comment. I don't want to go over
    the time. I know you know we are diligent on this committee,
    and the chair is really leaning into this to make sure the IRS
    has the resources and workforce it needs to carry out its
    mission after years of underfunding. It was so impressive, even
    with that shrunk staff, if you will. We passed the Child Tax
    Credit; Senator Bennet especially, on this committee, and I
    worked together with the chairman and passed it in March and
    immediately talked to the Secretary of the Treasury, and those
    checks were out the door July 15th, August 15th, September
    15th, October 15th. And in my State, literally the families of
    2.2 million children have benefited from that. And we know the
    difference it made, in not just cutting the rate of poverty,
    but the difference it made in how it just made people's lives
    better and a little bit easier.
        So it is really important that the overworked and
    underresourced IRS gets the help that it needs. And I thank all
    of you for that.
        So thank you, Mr. Chairman, I yield back the time.
        The Chairman. Thank you, Senator Brown. And Susannah Morgan
    spoke for a lot of Oregonians when she said right out of the
    gate how much she appreciates the Child Tax Credit. And you and
    Senator Bennet on this committee, supported by Senator Casey as
    well, have been the ring leaders on one of the things I am
    proudest that this committee has done. Dollar-for-dollar, it is
    making a huge difference for kids. And we know in our home
    town, you know this, Ms. Morgan, when I go out and ask people,
    ``What did you spend the Child Tax Credit on?'', they say
    things like ``shoes for kids.'' We hear shoes. In our part of
    the world, it rains once in a while. Shoes are really
    important. So, thank you, Senator Brown, and Senator Bennet,
    and Senator Casey, for all the leadership on it.
        Now we are going to go to, in order of appearance, Senator
    Young then Senator Casey.
        Senator Young. Thank you, Mr. Chairman, for holding this
    hearing. And I want to welcome our witnesses, in particular Dr.
    Osili, a fellow Hoosier. I am grateful for your presence here
    today.
        I would like to begin by asking a couple of questions about
    community foundations. We take great pride in our community
    foundations in the State of Indiana, and, Dr. Osili, as you
    know, beginning in 1990, the Lilly Endowment began an
    initiative known as GIFT, or Giving Indiana Funds for Tomorrow.
    This is a way to help establish and strengthen community
    foundations across the State of Indiana. When GIFT began, there
    were fewer than 12 community foundations, and today there are
    94 community foundations. We have 92 counties, so of course
    that is more than one per county. Indiana is the only State in
    the country with a community foundation in every single county.
    And we have the country's highest concentration of community
    foundations.
        Dr. Osili, how does this structure--the only State in the
    country with a community foundation in every single county--
    enable our State to better serve local communities?
        Dr. Osili. Thank you, Senator Young, for your leadership.
    Indiana is unique. We have, as you noted, a community
    foundation in every single county, probably the highest
    concentration of any State in the country.
        There are over 700 community foundations nationwide. We
    have seen in this crisis that community foundations have played
    a vital role not just in collaborating and coordinating, but
    also avoiding duplication and connecting donors to need. One
    takeaway from the work in Indiana is the idea that every single
    American is a philanthropist. You do not have to have millions
    of dollars. People of all different backgrounds can
    participate.
        And in this crisis, in our communities, community
    foundations have been the conveners, the collaborators, and
    also the catalysts for innovation, bringing new ideas to the
    forefront and helping donors to better understand those local
    communities. I think there are some important examples and
    models that other States and other communities can learn from.
    So, thank you for mentioning that.
        Senator Young. Well, that was an excellent segue, Dr.
    Osili, because it begs the question. Since we are in
    Washington, DC, and I know my colleagues and their staff are
    watching attentively, are there major barriers that you might
    speak to regarding establishing more community foundations
    around the country?
        Dr. Osili. We have an endowed chair in community
    philanthropy at the Indiana University Lilly Family School,
    under Dr. Laurie Paarlberg. And one point she has noted is that
    in every State there is the potential, of course, to expand the
    work of community foundations, but every State is different,
    and we have to look at what those barriers are at a State
    level. What we have seen that has really worked in Indiana is
    having foundations that are willing to help support through
    matching grants programs. But in other States, we have had
    incentives for contributions to community foundations. I think
    Kansas is one of them where there is an incentive.
        So as we look at how to support community foundations, I
    think what we have learned so far is just the role that they
    play. And I think my colleague, Dr. Gene Steuerle, can also
    share his example here in Virginia. They can really help
    support that sort of leadership and innovation that is often
    lacking in a crisis.
        Senator Young. Well, thank you, Doctor. And I will be
    submitting for the record some questions to the other
    witnesses. If you have thoughts on barriers that we can
    eliminate to ensure there is greater uptake in community
    foundations that you can learn from, what I will take some
    liberties with and call the Indiana model, that would be
    fantastic.
        So, in my remaining bit of time here, Dr. Osili, I would
    like to highlight a column you wrote recently for the
    Indianapolis Business Journal. You stated that the pace of
    technological innovation in the philanthropic sector is
    increasing, and it is going to need to accelerate this year and
    in future years. We have had some really notable examples where
    the Central Indiana Community Foundation has partnered with an
    Indianapolis-based tech company, Selflessly, and met with some
    success in ensuring that companies have the tools to track and
    manage their charitable giving.
        In short, Dr. Osili--I will, again, submit some questions
    to you to ask in greater detail about this topic, but why is it
    so important for organizations in the charitable giving space
    to embrace technological innovation?
        [The questions appear in the appendix.]
        Dr. Osili. An excellent question, Senator Young. Just to
    put this in perspective, online giving grew by double digits
    over the last year. And today, online giving accounts for 10
    percent of charitable giving overall, the highest ever on
    record. What this means is nonprofits have had to shift a lot
    of their engagements, service delivery, and even just their
    day-to-day operations online. And many nonprofits were not in a
    position to do so; they did not have the resources or the
    capability.
        When we look at workplace giving--a very important channel,
    since about $6 billion is given through workplace giving--
    companies also face this challenge of shifting online because,
    in the past, workplace giving was done in person. They've had
    to quickly shift this giving opportunity online. So what we are
    looking at is an acceleration in innovation, and a need for
    greater reliance on technology for giving. And we are also
    seeing many nonprofits pivot, in other words, take advantage of
    these new technologies. But there is a lot more work that needs
    to be done, and I think as we look ahead, we are also going to
    need to think about some of the smaller organizations that have
    not necessarily adapted at such a rapid rate. What do they
    need? And religious congregations, we should also remember,
    many of them have had to start receiving donations online and
    may not have done so before.
        So what this highlights is just a gap in the need itself
    and where the organizations are in their move towards making it
    easy to give online.
        The Chairman. We are going to have to move on----
        Senator Young. Thank you, Doctor.
        The Chairman. I will tell Senator Young that his interest
    here is very welcome, because we are seeing something of a tech
    boomlet here as it relates to ways in which we can bring more
    value out of these incredibly important charitable deductions.
    So, good point.
        Senator Casey, and then we will go with Senator Daines.
        Senator Casey. Thank you, Mr. Chairman. I want to thank the
    panel. I apologize that I was not here for your testimony
    today. I had to chair the Aging Committee hearing and was not
    able to move between hearings. But I really appreciate you
    being here today.
        Like so many Senators, I have been a supporter of the
    nonprofit sector and policies that facilitate responsible
    charitable giving. I also want to commend the nonprofit sector
    for their work, especially through the past couple of years of
    this pandemic, as they continued to serve during both an
    economic crisis and a health crisis. Sixty-three thousands
    nonprofits in Pennsylvania employ 15 percent of the
    Commonwealth's workforce. So, in my home State, I can only
    extend my gratitude and respect for their work and their
    contributions.
        I just have two questions, one for Mr. Cardinali and one
    for Ms. Morgan. But I will start with you, Mr. Cardinali. You
    reference in your testimony the changing profile of charitable
    giving, mentioning that the share of individual contributions
    would have declined if it were not for the donations of a few
    wealthy individuals. In my home State of Pennsylvania,
    households give 2.7 percent of their income to charities, but
    charitable contributions and their associated subsidies are
    disproportionately skewing to top earners.
        We know that the ability to deduct charitable contributions
    from your taxable income serves as a real incentive to give.
    What are the forces behind this changing profile of giving?
        Mr. Cardinali. Thank you, Senator, for your leadership and
    support of the nonprofit sector. I have spent a lot of time in
    Pennsylvania in my years with communities and schools, and you
    and your colleagues have been remarkable.
        There are a couple of things that I want to mention about
    your question. I think if we think about the incentive--and I
    mentioned this earlier in my testimony, that the charitable
    deduction is giving your money away for somebody else, not
    buying a home, or being subsidized in any other way. So from a
    policy point of view, we believe that extending that incentive
    to everybody paying taxes is just good for community and good
    for America.
        Secondly, when the tax structure incentivizes those who are
    disproportionately economically better off, they will have a
    set of interests that might not be representative of the entire
    community. They might privilege organizations like
    universities, which I hold in high regard, or arts
    institutions, which are critically important to community. But
    they might not be in touch with or connected to organizations
    like food banks that could benefit immensely. And Ms. Morgan
    and I had breakfast yesterday morning, and she was talking
    about the number of donors that she had, and they are primarily
    small donors who are not currently incentivized by the tax
    code.
        So I think if we just think at a basic level regarding a
    tax code that could really pull this altruism into community,
    how could we not benefit from it?
        There is a second piece that I would like to mention about
    this point, and that is that when folks are incentivized to
    give, we know that they are then incentivized to volunteer. I
    ran an organization, Communities in Schools, with 4,000 staff
    and 40,000 to 60,000 volunteers. So without volunteers, we
    could not have developed an evidence-based intervention that
    mitigated the effects of poverty for K-12 students.
        So donations are directly related to supporting volunteers,
    which then is this public good that partners with government.
        Senator Casey. Thanks very much.
        Ms. Morgan, I am going to ask you my final question. You
    had, in your testimony, talked about the way the Federal
    Government can act to help organizations like the Oregon Food
    Bank to achieve your mission. And one statement in your
    testimony just leaped out at me, and I am quoting here: ``The
    Child Tax Credit alone drove down child poverty by an
    incredible 41 percent and reduced food insecurity by 26
    percent.''
        I think the first part of that, we have heard a lot of. A
    lot of people know because of the good work of Senator Brown,
    Senator Bennet. Working with the Finance chair, your home State
    Senator, Senator Wyden, the Child Tax Credit, the enhanced
    version of it, became a reality. We know it reduced poverty by
    that much, but we did not hear nearly enough about the
    reduction in food insecurity by 26 percent. So that is a
    positive action the Federal Government took in the passage of
    the Rescue Plan.
        We also know that in addition to the positive impact it
    had, it reminded us how much of someone's income can be spent
    on food. We are told that 60 percent of low-income families who
    receive the Child Tax Credit, the enhanced version, spent it on
    food; 16 percent spent it on child care. We have one more
    opportunity to take full advantage of the Rescue Plan in the
    next couple of weeks, and that is to make people aware of
    another, a separate tax credit, the Child and Dependent Care
    Tax Credit, which will allow families to get up to $4,000 per
    child, and up to $8,000 per household, to pay for child care.
        Anything else other than those? I know there are others you
    can mention, but I know we are out of time, so if you could
    just mention one or two things in addition that the Federal
    Government could invest in, and then I am done.
        Ms. Morgan. Thank you, Senator. I am not going to cite
    legislation for you because that is not my area of expertise,
    but I do want to say that you have amazing food banks in
    Pennsylvania--Pittsburgh, Philadelphia, Harrisburg--that are
    wonderful partners. And I would like to just drive home the
    fact that hunger is a symptom. Its cause is poverty. And
    poverty itself has a cause, which is systemic inequities. It is
    not an accident that our communities of color are more likely
    to be hungry. It is not an accident that single moms are more
    likely to be hungry. It is because we have designed systems to
    prevent prosperity and allowed those to happen.
        And so I would say that actions like the ones that you have
    suggested, where we distribute wealth and tear down barriers to
    prosperity, are exactly what we need our Federal Government to
    do.
        Senator Casey. Thanks very much.
        Thanks, Mr. Chairman.
        The Chairman. I thank my colleague for all his good work.
        Dr. Steuerle. Can I just add one quick footnote?
        The Chairman. Very briefly. We still have Senator Daines
    and Senator Whitehouse, but go ahead, Doctor.
        Dr. Steuerle. This is just very brief, Senator. For 10
    years now I have sponsored at the Urban Institute an effort to
    put out something called Kids Share, and we measure what goes
    to kids in all these programs in the budget. So I would be glad
    to provide that to you. I should add as a footnote to that,
    that almost all programs for children are scheduled to decline
    relative to GDP over time in the budget by the way that they
    are structured.
        The Chairman. Very good.
        Senator Daines and then Senator Whitehouse.
        Senator Daines. Mr. Chairman, thank you. I want to first
    start off by thanking our nonprofits in Montana and across our
    country for truly their tireless work they have done serving
    our communities during the past 2 years, a couple of tough
    years. Needless to say there were a lot challenges, and I am
    grateful our nonprofits stepped up, and it is good to see.
        Montanans and Americans also stepped up to the plate. These
    nonprofits would not be having a better year without the fact
    that we had people who were very generous, contributing a total
    of $324 billion in 2020. That is a 2.2-percent increase from
    2019, and the highest total dollar amount ever. When including
    bequests, foundations, corporations, a total of $471 billion
    was donated to charity in 2020 in the middle of a pandemic. And
    the enactment of legislation like the Legacy IRA Act, which was
    introduced by Senators Cramer, Stabenow, Rosen, Cornyn, and
    myself, I believe would further boost charitable giving by
    expanding the amount that our seniors can give to charity tax-
    free from their IRAs. The philanthropy of Americans certainly
    warms my heart and yours, but unfortunately Congress is not
    doing enough to police some bad actors out there who are
    abusing the charitable sections of the tax code.
        One area that comes to mind are the fraudulent, syndicated
    conservation easement transactions that we have seen accelerate
    over the past several years. In fact, just 2 weeks ago a grand
    jury returned an indictment against seven defendants for their
    role in an abusive syndicated conservation easement scheme.
    According to the indictment, the defendants and their co-
    conspirators sold over $1.3 billion in false and fraudulent
    charitable contributions. I should have said ``deductions'' and
    not contributions there. These were essentially cookie-cutter
    deals in which investors were promised a 4 to 1 return on that
    money they invested within a matter of months. As explained in
    marketing material that accompanied the deal, an investor who
    contributed $100,000 to the scheme could receive $170,000 back
    within months of purchasing their syndication unit by claiming
    a $400,000 charitable deduction.
        The government has known about this very specific tax
    shelter for years, and yet it continues. According to the IRS,
    syndicators claimed nearly $36 billion in unwarranted
    deductions alone between 2010 and 2018, with $9.2 billion
    claimed in 2018.
        Senator Stabenow and I have legislation to put an end to
    these shady deals, which also has the support of the chairman,
    former chairman Grassley, and other members of the Finance
    Committee and the Senate. I believe Congress needs to pass our
    bill this year. The abuse needs to end. And just to be very
    clear, I am very much pro-conservation easements. In fact,
    Montana is one of the leading States. It is a great way to
    incentivize the private sector, private landowners in the
    realms of conservation. It is the abuse of these syndicates
    that is the issue.
        Dr. Steuerle, this is just one example of a few bad actors
    unlawfully profiting under the guise of philanthropy. My
    question for you is, what could be done to better protect the
    integrity of charitable laws, which I fully support?
        Dr. Steuerle. Senator, this is really a tough issue, but
    tax administration is something, as everyone on this committee
    knows, that does not get well funded. So one thing is just
    simply to increase the money that goes into tax administration.
        But another, which is really tough I think--and my
    testimony is largely about making tradeoffs--is, if we are
    willing to put in some tighter rules with respect to charitable
    contributions, how they are recognized, what can get by, we can
    use those resources to fund the types of incentives that
    members of this committee want to provide, as you yourself have
    talked about.
        I think that is a way to corral the charitable community to
    join with you in this effort. I think one of the dilemmas--and
    I am being quite blunt about it--is it is very hard for the
    community as a whole to speak out against, particularly, their
    members. They might speak out against the greatest abuses, but
    when it comes to some simplification, say we are only going to
    allow easements when they meet certain tough criteria, you will
    get feedback from those who are probably good actors who say,
    ``Well, I don't want to bear the additional administrative
    costs.''
        So the way to win this battle is to offer a higher
    incentive, say put that money towards a better charitable
    incentive, and that way we can get the members of the
    charitable community to join with you in this effort.
    Otherwise, I think it is often a losing battle to just pretend
    that we can just hope that maybe a couple more dollars to IRS
    are going to solve the problem. IRS should have more resources,
    but that is not enough. You really have to get the charitable
    community behind the type of effort you are talking about.
        And I will mention some tradeoffs here in terms of
    reporting as well. It is also an issue with 990 reporting,
    which IRS delays getting out. The individual taxpayer is one of
    your best sources for information on what is going on. The
    better we get 990 reporting put out to the public as it is
    required to be, and on a timely basis, the better the
    individual taxpayer, the households out there, can join in your
    effort to create a stronger community.
        Senator Daines. I am out of time, but I will just end with
    a comment on good actors and bad actors. Again, there are many,
    many, many more good actors on conservation easements----
        Dr. Steuerle. I fully agree.
        Senator Daines. And they are fully behind this legislation,
    because it is a few bad actors here who are tainting the good
    efforts of our land trusts, and they are very supportive and
    would love to see this passed here, and I hope we can. We have
    a good bipartisan start here, and I hope we can get this signed
    into law. Thank you.
        The Chairman. The time of the gentleman has expired, and I
    want him to know, as we have talked about this issue so often,
    I am in very strong support of this, as you know. Chairman
    Grassley and I led efforts to look into these kinds of abuses.
    So there have been four of us on this committee, two Democrats,
    two Republicans, and, Senator Daines, your point that you just
    explored here a minute ago is spot-on in the sense that we know
    how important these are in the West, where the Federal
    Government owns so much of our land, and we are talking about a
    small minority that unfortunately is really abusing a very
    valuable tool for the vast majority of folks, particularly
    Westerners, who use it in a thoughtful way.
        So I just want you to know, we are in this battle until we
    get it done. This a chance for the two of us to send a message
    to all the scofflaws out there, the people who are not willing
    to be in the majority and comply with the rules. And we are
    going to stay at it until we have fixed it.
        Senator Daines. I thank you, Mr. Chairman. Thanks for your
    support. I think I sense a movement.
        The Chairman. Not just a movement. You see a grassroots
    mobilization. And as you know, we have a lot of businesses with
    us--environmental folks, businesses, community leaders. So we
    are on it. Thank you.
        Senator Whitehouse, we have a vote on, and you may actually
    be at the vote.
        Senator Whitehouse. No, I am here.
        The Chairman. There you are. We are going to have Senator
    Whitehouse, and then we are going to finish up. After Senator
    Whitehouse is done, I will give a lengthy closing address of
    about 2 minutes.
        Senator Whitehouse?
        Senator Whitehouse. Thank you, Mr. Chairman, very much.
        My question has to do with donor-advised funds, and it is
    for Ms. Morgan. As you know, the connection between a
    charitable donation and the tax deduction for it is to
    encourage people for the benefit the public receives. With
    donor-advised funds, you have the predicament that the donor
    gets the deduction now, but the charitable benefit may not
    happen for years. And depending on a variety of circumstances,
    it may not happen actually ever.
        There is an estimated $140 billion set aside for future
    gifts in donor-advised funds with no requirements for the funds
    to actually be distributed to charities. And one study taking a
    look at donor-advised funds found that 35 percent of them did
    not make a single distribution in 2020, which was kind of a
    high-need year for charitable giving.
        So I am working with a number of my colleagues on trying to
    have a reform of donor-advised funds. I would like your
    thoughts on the importance of that. One of the pieces of
    pushback that we have gotten is that it creates a very
    significant administrative burden for the donor-advised funds,
    particularly ones that persist through time, where donations
    come in on year 1, year 2, year 3, year 4, year 5, and then
    donations are going out year 1, year 2, year 3, year 4, year 5,
    and you get into a very complicated piece of logistical
    tracking to try to identify when each dollar came in so you can
    find out when it went out, and whether it met the distribution
    requirements.
        So if I could ask for your thoughts generally on whether
    this is an area that you think needs attention, and
    specifically if you have ideas on ways to grapple with the
    tracking of timing of individual dollars, sort of an accounting
    predicament, I would be grateful to hear from you about that.
    And if anybody else cares to chime in, please--I do not want to
    extend the hearing, but please do feel free to send in
    responses if I have asked you a question for the record. Send
    in a written response.
        So with that, Ms. Morgan?
        Ms. Morgan. Thank you very much, Senator. I am sure that my
    colleagues at Independent Sector have a wealth of research on
    some very specific policy recommendations on this. From where I
    sit on the ground, we track our inventory like that. We get a
    donation of a truckload of oranges, we have to know when they
    show up and when they go out, and who they go to. So I am not
    particularly sympathetic to complex tracking requirements,
    because I live with them every day.
        Our sense is that hunger is a crisis right now. Before the
    pandemic, it was one in five Oregonians; it has gone up to as
    close to one in four during the pandemic. The idea that money
    is getting tucked away, that is not benefiting our neighbors,
    our communities, ourselves, right now is anathema to me.
    Philanthropy means the love of humankind. And the act of
    philanthropy is the act of showing love. Should there be
    charitable incentives to encourage them? Well, of course there
    should, like giving ice cream to a kid for getting a good grade
    on an exam. But the getting a good grade is a reward in itself,
    and participating in the community is a reward in itself.
        I believe that, in general, charities are with you,
    Senator, on the idea of the need for reform for donor-advised
    funds, and that it needs to be crafted carefully so that it
    does not have unintended consequences.
        Senator Whitehouse. Good. Well, thank you. I will use the
    last 30 seconds of my time to support what the chairman said
    about our common interest in making sure that conservation
    easements are used properly and honestly. My father is no
    longer with us, but he spent his retirement as chairman of the
    Piedmont Environmental Council, which at one point had the most
    dense array of conservation easements anywhere in the country,
    and he did an outstanding job of preserving that historic
    countryside. So I am a firm believer in the value of
    conservation easements and happy to be a part of Team Wyden and
    Team Daines on that.
        Thank you very much.
        The Chairman. Thank you, Senator Whitehouse, for all your
    leadership on environmental issues. Terrific panel. Thank you
    all so much.
        I especially want to thank my good friend Susannah Morgan
    for making the trek to Washington, DC, a trek of more than
    3,000 miles. She may beat me home, because it looks like I am
    going to be doing a red-eye tonight to make it to central
    Oregon first thing in the morning, but I really want to thank
    her for all her leadership.
        This is a terrific panel. Senator Crapo is, of course, the
    ranking minority member. He has been involved in a number of
    matters that have involved a negotiation this morning, and he
    really wanted to be here.
        We are going to work on this in a bipartisan way. That is
    the way we try to do everything that we possibly can. Now, it
    is not always possible, and I always kind of use that because,
    with respect to the Child Tax Credit, I went to the floor of
    the United States Senate in December, and I asked unanimous
    consent to extend the expiring Child Tax Credit for a year. And
    unfortunately, there was objection from the other side of the
    aisle.
        So then I came back in January, and I asked unanimous
    consent to again extend the Child Tax Credit for a year, and
    again there was an objection from the other side. So sometimes
    it is not possible. But I will tell you, there are a lot of
    opportunities right now for bipartisanship.
        You have given us an enormously important one as it relates
    to charitable giving. We are also working in a bipartisan way
    with respect to competing with China, mental health, retirement
    savings. So I really appreciate your giving us a very good
    update on what the challenges are.
        And apart from the fact that we are still coming out of a
    crisis, the pandemic, we want to give more certainty and
    predictability to all of you so that you are in a position to
    talk to workers, and donors, and others. That is where I think
    we stand, not just for the next 15 minutes, but for the days
    ahead.
        You have given us a lot of good ideas. Let me also say
    that, for the record, the questions are due on March 24th.
    Members have to submit their questions for the record by March
    24th. We thank all our guests again,
        With that, the Finance Committee is adjourned.
        [Whereupon at 12:02 p.m., the hearing was concluded.]

                                A P P E N D I X

                  Additional Material Submitted for the Record

                                  ----------

                     Submitted by Hon. Benjamin L. Cardin,
                          a U.S. Senator From Maryland

                                 Apra Maryland

    March 16, 2022

    Apra Maryland is the professional development and networking resource
    for
    Maryland-area fundraising professionals who harness information and
    data to drive philanthropy. With our 160 members, we urge your support
    of the Universal Giving Pandemic Response and Recovery Act (S. 618/H.R.
    1704).

    In March 2020, as part of the Coronavirus Aid, Relief, and Economic
    Security (CARES) Act, Congress enacted a $300 charitable deduction for
    Americans who do not itemize their Federal income taxes. In December
    2020, Congress extended this universal charitable deduction
    availability through 2021 and increased the cap to $600 for joint
    filers with the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
    Unfortunately, this important lifeline for Maryland's charitable
    nonprofits expired at the end of 2021.

    The universal charitable deduction has been an essential aspect of
    COVID-19 pandemic relief for Maryland's 30,880 charitable nonprofits.
    The Association of Fundraising Professionals' Fundraising Effectiveness
    Project reported that in the last quarter of 2020, ``. . . general
    donors giving less than $250 have come out in a huge way during the
    pandemic'' with a ``+15.3% [year to date] change.''

    The bipartisan Universal Giving Pandemic Response and Recovery Act (S.
    618/H.R. 1704) would extend the availability of the universal
    charitable deduction through 2022, eliminate the current exclusion of
    gifts to donor-advised funds, and increase the maximum deduction to an
    amount not to exceed \1/3\ of the standard deduction.

    Apra Maryland supports the extension and expansion of the universal
    charitable deduction and urges the Maryland Congressional Delegation to
    adopt legislation to that effect. We support S. 618/H.R. 1704,
    preferably with amendment to make a permanent universal charitable
    deduction, not to exceed \1/3\ of the standard deduction.

    Thank you,
    Theresa Clark
    President

                                     ______

                    Prepared Statement of Daniel Cardinali,
                     President and CEO, Independent Sector
        Chairman Wyden, Ranking Member Crapo, and members of the committee,
    thank you for the opportunity to share a perspective from the nonprofit
    and charitable sector at today's hearing. I serve as president and CEO
    of Independent Sector, a national membership organization founded in
    1980 made up of nonprofits, foundations, and corporate giving programs
    nationwide. Working together, our approximately 500 member
    organizations and their networks reach every State and district and
    touch the life of every American in one or many ways. They range from
    some of the largest charities in the world to all-volunteer
    organizations, and from major philanthropic institutions to small
    foundations, academic centers, community-based organizations, and more.
    Independent Sector's core aim is to support these organizations and all
    civil society, working toward a healthy and equitable nonprofit sector
    to ensure all people living in the United States thrive.

        It is an honor to represent Independent Sector's members and the
    broader nonprofit sector along with my fellow witnesses today. Our
    sector's strength--like our Nation--lies in its diversity. With that in
    mind, I also strongly urge you to draw upon the vast wealth of
    knowledge and community-based context in comments submitted for the
    record by several of our member organizations and other leaders in the
    nonprofit sector, including the Girl Scouts of the USA, Council on
    Foundations, Association of Art Museum Directors, League of American
    Orchestras, Jewish Federations of North America, YMCA of the USA,
    United Way Worldwide, Opera America, Dance/USA, American Alliance of
    Museums, National Council of Nonprofits, National Health Council,
    Goodwill Industries International, Association of Fundraising
    Professionals, and Faith and Giving.
                       importance of the nonprofit sector
        Before considering the nonprofit sector's impact on the people it
    reaches, I ask you to consider its importance to something even more
    fundamental: representative democracy itself. In the course of their
    daily commitment to promoting the common good, the organizations that
    form our civil society nurture a marketplace of ideas analogous to the
    way that for-profit organizations sustain a marketplace of goods.
    Without either of these marketplaces, American democracy would be in
    grave peril. The fragility of democracy is on clear display around the
    globe, and nonprofit organizations play a critical role--within
    America's borders and beyond them.
    Advancing Human Flourishing and Solving Problems Together
        Over our more than 250-year history as a Nation, civil society has
    been the place where young people are educated to realize their
    potential and contribute to society, cultural institutions enrich our
    lives and unleash our creativity, and religious institutions provide
    meaning and build community rooted in values. Without these essential
    institutions and community members leading and volunteering in them,
    our citizenry would be greatly diminished.

        The nonprofit sector is the place where people have been coming
    together to solve problems for as long as there has been a community to
    serve. Whether they are providing housing, health care, nutrition,
    workforce development, education, disaster relief, cultural
    inspiration, spiritual guidance, environmental conservation, or any
    number of other essential services, nonprofit organizations are run by
    community-based boards of directors. This means they have a keen and
    powerful sense of what holds a community together, what it needs, what
    it most values, and what might be pulling it apart. They offer an
    unmatched look at the fabric of community life in America.

        The COVID-19 pandemic has challenged Americans like nothing else in
    our lifetime. As with any monumental challenge, the nonprofit sector
    has confronted this pandemic heroically and in innumerable ways. As
    just one example, the Bethlehem Inn in Bend, OR provides safe and
    inclusive shelter for men, women, and children across central Oregon
    who are working their way out of homelessness. Each year, the Inn has
    the capacity to compassionately serve 1,100 adults with shelter,
    nutritious meals, clothing, hygiene essentials, and opportunities for
    addiction counseling, life-skills training, and housing and employment
    applications. Throughout the pandemic and economic crisis, charitable
    support from the community helped keep the Bethlehem Inn's doors open.
    Not only did they continue providing services while taking precautions
    to successfully prevent a COVID-19 outbreak, but they also responded to
    profound community need by opening a second location that will continue
    providing opportunity for people who have fallen on hard times.

        The world has watched the crisis in Ukraine unfold in real time,
    but the nonprofit sector has not merely watched; it has sprung into
    action. Aided by the generosity of donors from around the world,
    nonprofits have provided emergency medical and humanitarian assistance
    within Ukraine, supported essential journalism, and offered nutrition,
    health, counseling, shelter, and more to an ever-growing number of
    Ukrainian refugees in bordering countries. The speed and effectiveness
    of the nonprofit sector's response could never be duplicated by
    government programs or well-meaning businesses.
    Trusted Doer and Partner
        Nonprofit organizations are woven into and reflect the communities
    they serve, and they work every day to improve lives and build a
    brighter future. No sector is closer to the realities or the people on
    the ground or has as deep an understanding of the problems communities
    face. With this understanding and proximity comes the trust to drive
    innovation and collaboration to get things done.

        As a result, the nonprofit sector is an essential partner for
    government leaders with big goals. From health care to housing,
    education to environmental protection, government at every level relies
    on nonprofits to generate innovative new solutions and provide critical
    services throughout the country. This collaboration does not always
    properly recognize the expertise, capabilities, and needs of nonprofit
    organizations, and could be improved with additional structures and
    policies.
    Economic Driver and Job Creator
        While the organizations and people that serve in the nonprofit
    sector are driven primarily by their charitable missions, they drive an
    essential part of the Nation's economy. Over 10 percent of the private
    workforce in the United States is employed by a nonprofit organization,
    and with more than 12 million paid workers, the nonprofit sector
    employs more people than the finance and real estate sectors combined,
    outpacing manufacturing at the national level and in 27 States.
    Further, these organizations pay $670 billion annually in wages,
    supporting families in communities across America.\1\ Despite its
    ``tax-exempt'' moniker, the sector pays a significant amount of taxes;
    in 2010, 501(c)(3) organizations paid $35.2 billion in payroll
    taxes.\2\
    ---------------------------------------------------------------------------
        \1\ Lester M. Salamon and Chelsea L. Newhouse, ``The 2020 Nonprofit
    Employment Report,'' Nonprofit Economic Data Bulletin no. 48.
    (Baltimore: Johns Hopkins Center for Civil Society Studies, June 2020).
        \2\ National Center for Charitable Statistics (NCCS), the Urban
    Institute, the Nonprofit Almanac 2012.
    ---------------------------------------------------------------------------
                         health of the nonprofit sector
        Last fall, Independent Sector published our second annual ``Health
    of the U.S. Nonprofit Sector''\3\ report--an evolving resource that
    collects the most current data on the health of the U.S. nonprofit
    sector across multiple dimensions in a single, accessible format. While
    there are many ways to assess the health of a system as large and
    complex as the nonprofit sector, the report focuses on health
    indicators in four categories: Financial Resources, Human Capital,
    Governance and Trust, and Public Policy and Advocacy. These are the
    lenses through which Independent Sector considers trends in the
    nonprofit sector.
    ---------------------------------------------------------------------------
        \3\ Grayson et al., ``Health of the U.S. Nonprofit Sector,''
    Independent Sector, October 2021.
    ---------------------------------------------------------------------------
    Financial Resources
        Much like for-profit counterparts, the pandemic deeply disrupted
    the finances of many nonprofit organizations as fee-for-service and
    other earned revenue evaporated and COVID-19 precautions increased the
    cost of operations. Organizations that historically relied on in-person
    fundraising events faced particularly acute challenges. Unlike for-
    profit businesses however, nonprofits saw a huge surge in demand for
    assistance as their communities confronted immense health and economic
    challenges.

        If nonprofit costs have increased as a result of the pandemic while
    earned revenue has decreased, revenue from charitable donations has
    been more difficult to assess, in part because it is distributed
    unevenly across the nonprofit sector. According to Giving USA, total
    charitable giving increased in 2020, although donations from
    individuals would have dropped without the broad and robust giving of
    one particular donor. According to the Fundraising Effectiveness
    Project, charitable giving through the third quarter of 2021 largely
    kept pace with 2020 levels, with a small decrease in the number of
    donors and a small increase in the total amount in donations. Another
    recent study from researchers at American University and George Mason
    University found no significant increase in giving to organizations led
    by or serving communities of color in 2020 or 2021, despite increased
    attention on their missions.

        While the trends in dollars donated over the past 2 years may be
    somewhat varied, the longer-term trajectory of the number of Americans
    donating is clear and alarming. Twenty million fewer American
    households gave to charity from 2000-2016, a decline of 13 percent.\4\
    ---------------------------------------------------------------------------
        \4\ Chelsea Jacqueline Clark, Xiao Han, and Una O. Osili, Changes
    to the Giving Landscape (Indianapolis, IN: Indiana University Lilly
    Family School of Philanthropy at IUPUI, 2019).
    ---------------------------------------------------------------------------
    Human Capital and Workforce
        The nonprofit sector is powered by people, including nearly 12
    million employees as well as approximately 70 million volunteers who
    step up to serve their communities in various ways. During the worst of
    the recent economic crisis, nonprofit organizations lost over 1.6
    million jobs and the sector was still missing approximately 459,000
    jobs as of December 2021,\5\ the most recent estimate available. While
    the economy as a whole has recovered more than 90 percent of lost jobs,
    the nonprofit sector lags at merely 72 percent and is not likely to
    break even until the end of 2022. These lost and missing jobs have
    particular ramifications for women, who make up approximately \2/3\ of
    the nonprofit sector's workforce.
    ---------------------------------------------------------------------------
        \5\ COVID-19 December Jobs Update, Johns Hopkins University Center
    for Civil Society Studies, January 2022.

        Importantly, these job loss numbers are the work of nonprofit
    researchers and reflect highly informed estimates based on 2017 data.
    The Bureau of Labor Statistics publishes quarterly data about a wide
    range of sectors and subsectors, but the nonprofit sector only receives
    such data every 5 years unless charitable resources are diverted to
    purchase the data from the Bureau. Although this issue is beyond the
    Finance Committee's jurisdiction, the lack of regular government data
    about the third-largest workforce in America is deeply unfair and
    ---------------------------------------------------------------------------
    constrains the ability of policymakers to respond to changing needs.

        While trends in America's non-stipend volunteer force (as opposed
    to AmeriCorps participants, for example) are somewhat more difficult to
    measure, it too plays a vital role in helping the nonprofit sector
    serve those in need. One recent report found that 66 percent of
    volunteers had decreased the amount of time they volunteer or stopped
    entirely due to the pandemic.\6\
    ---------------------------------------------------------------------------
        \6\ The Role of Volunteering in Philanthropy, Fidelity Charitable,
    2020.
    ---------------------------------------------------------------------------
    Governance and Trust
    Public trust is the currency upon which nonprofits conduct their work.
    The extent to which the public believes nonprofits lead ethically and
    transparently impacts whether individuals will invest in or utilize
    services from nonprofits. While trust in a wide range of institutions
    hovers near historic lows, it is encouraging to see that 84 percent of
    recent survey respondents said they were confident in the ability of
    nonprofits to strengthen American society. The greater role nonprofit
    organizations play in people's lives, the more trusted they become.

        While trust is a key currency for any individual nonprofit
    organization, it is also important to the health of the nonprofit
    sector as a whole. It is for this reason that Independent Sector
    strongly supports appropriate oversight of the nonprofit sector and
    condemns those would abuse our sector for private gain. In addition to
    appropriate legal requirements and enforcement, Independent Sector is
    committed to a robust practice of self-regulation within the nonprofit
    sector. We were proud to work with this committee in the mid-2000s to
    establish the Panel on the Nonprofit Sector, the work of which lives on
    in The Principles for Good Governance and Ethical Practice--33
    principles of sound practice for charitable organizations and
    foundations related to legal compliance and public disclosure,
    effective governance, financial oversight, and responsible fundraising.
    Policy and Advocacy
        Nonprofits are a critical conduit of information between
    policymakers and the communities they serve, and Independent Sector
    believes deeply that policy education and appropriate advocacy is
    critical to a healthy nonprofit sector. The health of our sector's
    advocacy efforts can be partially demonstrated by concrete--if
    incomplete--victories in Federal policy in recent years, including
    access to Paycheck Protection Program loans, payroll tax credits for
    COVID-19-related sick leave and employee retention, and the creation of
    a nonitemizer charitable deduction for the first time in decades.
    However, our understanding of how many nonprofits do this work and the
    barriers they experience is badly outdated. Independent Sector is
    commissioning a comprehensive survey of nonprofits this year to answer
    these questions, the first of its kind in 22 years.
                              urgent policy needs
        To ensure that the nonprofit sector can continue to foster
    individual and collective flourishing and provide essential services to
    communities in need, Independent Sector respectfully asks for
    consideration of the following legislative proposals under the
    committee's jurisdiction:

    Restore the Nonitemizer Deduction and Significantly Increase or
            Eliminate the Cap
        The tax code reflects our Nation's values, and has provided a tax
    deduction for charitable contributions for over 100 years. In 2020, the
    nonitemizer deduction--created in the CARES Act and subsequently
    extended through 2021--provided a charitable deduction for taxpayers
    who do not itemize up to $300 for single filers and eventually expanded
    to $600 for joint filers. This new incentive was a powerful statement
    that every American has a role to play in lifting up our communities.
    While the charitable impulse comes from the heart, tax incentives
    clearly make a difference. On December 31, 2020, donations of exactly
    $300--then the cap for both individuals and households--increased by 28
    percent.\7\ The charitable sector was deeply disappointed that
    congressional inaction allowed the nonitemizer deduction to expire at
    the end of last year.
    ---------------------------------------------------------------------------
        \7\ Fundraising Effectiveness Project, 2020 Fourth Quarter Report.

        Rather than being just for the wealthy, charitable giving should be
    an activity that brings a community together, strengthening social
    bonds and a sense of belonging, even in our differences. For example,
    the Idaho Nonprofit Center coordinates an annual initiative--Idaho
    Gives--that generates nearly $4 million in donations to roughly 600
    Idaho charities. The event has an average donation of $250 and the
    Idaho Food bank notes that each charitable dollar provides enough food
    ---------------------------------------------------------------------------
    for five meals to those in need.

        I urge you--in the strongest possible terms--to restore the
    nonitemizer charitable deduction quickly, and to significantly increase
    or eliminate the cap in order to strengthen our social bonds and to
    help generate the scale of giving America needs at this moment.
    Independent Sector is grateful to the sponsors and cosponsors of the
    Universal Charitable Giving Pandemic Response and Recovery Act (S. 618,
    H.R. 1704), including members of this committee--Senators Lankford,
    Cortez Masto, Tim Scott, Stabenow, and Hassan. We have been proud to
    work for the enactment of this critical--if temporary--response to the
    myriad challenges faced by our Nation.

        On a more permanent basis, there are a number of different ways to
    create a powerful incentive for every American to give to charity.
    Independent Sector commissioned research--in partnership with Dr. Osili
    and some of her colleagues at the Indiana University Lilly Family
    School of Philanthropy--about what those options could mean in terms of
    dollars given to charity as well as the number of donors.\8\ The number
    of donors is sometimes overlooked, but it means a great deal in policy
    design for at least three reasons:
    ---------------------------------------------------------------------------
        \8\ Charitable giving and tax incentives: Estimating changes in
    charitable dollars and number of donors for five policy proposals,
    Indiana University Lilly Family School of Philanthropy, 2019.

            It is hugely important for the health of our civil society
    that nonprofits are funded by the broadest possible segment of the
    population.\9\ A charitable sector that is funded only by the wealthy
    will look very different and will serve America very differently, with
    ramifications for governance, trust, and the types of organizations and
    activities that receive funding.
    ---------------------------------------------------------------------------
        \9\ Ashely, Shena. ``Why the Decline in Individual Donors Should
    Matter to Institutional Philanthropy--and What to Do about It.''
    Nonprofit Quarterly. December 3, 2019.
    ---------------------------------------------------------------------------
            Charitable giving is a lifelong habit, and today's small-
    dollar donors may one day become major philanthropic partners. If the
    charitable deduction is only available for a tiny subset of taxpayers,
    we will fail to build the next generation of givers.
            Increasing the number of donors could have a profound impact
    on the nonprofit sector by bolstering the volunteer force. Households
    that made a donation to any charity during the course of a year were at
    least three times more likely to volunteer at a nonprofit in their
    community.\10\
    ---------------------------------------------------------------------------
        \10\ Bergdoll, Jonathan, Indiana University Lilly Family School of
    Philanthropy. Unpublished analysis of 2019 data from the Panel Study of
    Income Dynamics, public use dataset. Produced and distributed by the
    Institute for Social Research, University of Michigan, Ann Arbor, MI
    2021. Dietz, Nathan, University of Maryland Do Good Institute.
    Unpublished analysis of U.S. Census Current Population Survey Volunteer
    Supplement, September 2015.

        It is also important to keep in mind the unique nature of the
    charitable deduction. Unlike incentives to save for retirement or
    purchase a home, for example, the charitable deduction encourages
    behavior for which a taxpayer receives no direct tangible benefit. The
    charitable deduction does not subsidize personal consumption or
    underwrite the accumulation of personal wealth. It simply and
    effectively encourages taxpayers to give away a portion of their income
    ---------------------------------------------------------------------------
    to benefit others.

        Finally, restoring and expanding the nonitemizer deduction is
    extremely popular. In December, Independent Sector released polling
    showing that 88 percent of American voters want to see a permanent
    nonitemizer deduction, while 74 percent support raising the cap to the
    level envisioned in S. 618, with greater than 70 percent support across
    every income level and all political identifications.\11\
    ---------------------------------------------------------------------------
        \11\ Selected Nonprofit Policy Issues: Public Polling, Independent
    Sector, December 2021.
    ---------------------------------------------------------------------------
    Targeted Action to Further Boost Charitable Giving
        In addition to a broad-based nonitemizer deduction, there are
    further policy levers that this committee can use to unlock additional
    charitable giving. Independent Sector was proud to work with Congress
    and our members for over a decade in support of the IRA charitable
    rollover provision, which was eventually made permanent in the PATH Act
    as part of Public Law 114-113.

        A recent bipartisan proposal, the Legacy IRA Act (S. 243), would
    broaden access to this giving vehicle by enabling seniors to make tax-
    free contributions from their individual retirement accounts (IRA) to
    charities through life-income plans. With many Americans unable to
    afford to give away their retirement income during their lifetimes,
    this would give prospective donors one more critical way to invest in
    the common good in a way that works for them. Independent Sector was
    pleased to support a modified version of the Legacy IRA Act that was
    included in the Securing a Strong Retirement Act (H.R. 2954), and we
    urge the committee to include S. 243 in any retirement legislation that
    you consider.

        Additionally, I urge Congress to restore two other disaster relief
    provisions that expired at the end of 2021: the ability for individuals
    who itemize on their taxes to deduct up to 100 percent of their
    adjusted gross income for charitable contributions, and the ability of
    corporations to deduct up to 25 percent of taxable income. With
    continued widespread economic disruption, some potential donors with
    highly variable income could be hamstrung by the lower limits now in
    effect and reduce their giving accordingly.
    Restore the Employee Retention Tax Credit and Adapt it to Better Suit
            Nonprofit
            Organizations

        Congress created an Employee Retention Tax Credit (ERTC) in the
    CARES Act to respond to the pandemic, subsequently expanding and
    extending it through 2021. In a long overdue recognition of nonprofit
    employers, the ERTC functions as a credit against payroll tax
    liability--unlike some prior disaster relief income tax credits that
    offered our sector no benefit. Independent Sector is deeply grateful to
    this committee for that recognition. As a result, the ERTC has been a
    critical lifeline, allowing nonprofit organizations to continue serving
    their community in the face of immense financial challenges throughout
    the pandemic. Its early and retroactive termination in the middle of
    the fourth quarter of 2021 was extremely disruptive to charitable
    missions and operations throughout our sector, given that organizations
    had planned for the expiration of the credit at the end of 2021. While
    the lost jobs caused by its early termination reflect families that
    lost a paycheck, they also point to an issue of even greater urgency--
    unmet community needs.

        That unmet need is particularly urgent as nonprofit organizations
    struggle to recruit and retain staff. Alarmingly, 42 percent of
    nonprofit organizations responding to a recent survey had job opening
    rates of higher than 20 percent, as they grapple with challenges
    including salary competition and inability to find child care.\12\ I
    urge you to restore the Employee Retention Tax Credit, to adjust the
    ``gross receipts'' test to more accurately reflect the resources
    available to sustain nonprofit operations, and to expand eligible
    payroll expenses to include child care and tuition assistance.
    ---------------------------------------------------------------------------
        \12\ The Scope and Impact of Nonprofit Workforce Shortages,
    National Council of Nonprofits, December 2021.
    ---------------------------------------------------------------------------
    Bolster the Volunteer Force by Increasing the Charitable Mileage Rate
        Independent Sector strongly supported the investment of an
    additional $1 billion last year in national service through AmeriCorps,
    but it is concerning that no similar attention has been paid to the
    non-stipend volunteer force. In addition to data indicating that
    volunteering has lagged in the past 2 years, recent press reports have
    highlighted recent volunteer shortages at food banks, affordable
    housing organizations, meal delivery operations, and other key
    charitable service providers. Congress cannot compel Americans to
    volunteer, but it can encourage this vital practice in one instance by
    treating volunteer drivers more fairly. I urge you to increase the
    Charitable Mileage Rate for nonprofit volunteer drivers from its
    painfully low statutory rate of 14 cents per mile to the same rate for
    businesses (58.5 cents per mile) for 2022, and to eliminate the tax on
    mileage reimbursements up to the business rate.
    Provide a Seat at the Table for the Nonprofit Sector
        While the other solutions I have called for today fall squarely
    within this committee's focus on tax issues, there is a further set of
    policy solutions that are needed to strengthen the partnership between
    the nonprofit sector and the Federal Government as a whole. These
    solutions--which we refer to as the Seat at the Table Initiative--would
    create mechanisms that leverage the mission, knowledge, and impact of
    nonprofits to help government and the nonprofit sector work together
    more effectively in pursuit of shared goals.

        Specifically, we call for the creation of a White House Office on
    Nonprofit Sector Partnership, as well as an Interagency Council, two
    structures that will allow policymakers access to data, reporting, and
    front-line, community-specific expertise from nonprofits so they can
    better assist constituents. These bodies, along with a proposed Federal
    Advisory Board made up of nonprofit leaders, would also ensure
    nonprofits nationwide are equipped to produce better policies and
    better results for the American people. Additionally, the initiative
    contains other policy measures that would support the partnership
    between government and the nonprofit sector, including: releasing
    quarterly nonprofit economic data, reducing paperwork for nonprofits to
    register and fundraise in multiple States, increasing access to
    national service, as well as assessing grant and contracting processes.
                                   conclusion
        Once again, thank you for convening this hearing and for the honor
    of representing Independent Sector's members before the committee.
    These are trying and tumultuous times for legislators, the nonprofit
    sector, and the Nation. May they serve as a reminder that our sector's
    work is never over and always deeply urgent. Congress--much like its
    partners in the nonprofit sector--has responded to national crises over
    the past few years in unique ways. Now is not the time to walk away
    from that work, but to build upon it. Expanding the charitable
    deduction so that it is available to every American--along with other
    targeted investments in the nonprofit sector--will broaden
    participation in civil society and unleash the power of nonprofit
    organizations to ensure that all people living in the United States
    thrive.

                                     ______

             Questions Submitted for the Record to Daniel Cardinali
                      Question Submitted by Hon. Ron Wyden
        Question. During the hearing, we discussed challenges facing the
    nonprofit sector, including the changes to the tax law in 2017, which
    resulted in a decreased tax incentive to give to charity, and a
    reduction in the number of taxpayers eligible to claim the charitable
    deduction. In 2019, just 11 percent of taxpayers claimed itemized
    deductions, with fewer actually claiming the charitable deduction. In
    your testimony, you suggested that the number of donors declined and
    that donations are distributed unevenly across the nonprofit sector.

        Are there certain kinds of organizations that have been
    particularly affected?

        Answer. Thank you for your leadership in convening this hearing.
    Without swift action, charities of every type will continue to be
    negatively affected by the expiration of the nonitemizer deduction and
    communities will be deprived of critical resources. It is hugely
    important for the health of our civil society that nonprofits are
    funded by the broadest possible segment of the population. A charitable
    sector that is funded only by the wealthy will serve America very
    differently, with ramifications for governance, trust, and the types of
    organizations and activities that receive funding.

        I believe that a charitable deduction available only to itemizers
    will punish organizations whose donors tend to come from States with
    lower itemization rates. This construct would also likely punish
    organizations based in rural and low-income areas, as the donors in
    their area may tend to have fewer deductions and be less likely to
    itemize.

        When considering which kinds of organizations are affected, I would
    direct the committee to the most recent Study of Charitable Giving by
    Affluent Households, published by the Lilly Family School of
    Philanthropy at Indiana University in 2021.\1\ I defer to Dr. Osili's
    analysis of this report, but would note that section 5 of the report
    clearly illustrates affluent households giving to a wide range of
    nonprofit causes and organization types with basic needs and religion
    topping the list. According to data on page 36, eight different
    categories received support from more than 25 percent of affluent
    households. Generous donors are generous.
    ---------------------------------------------------------------------------
        \1\ Accessed at https://scholarworks.iupui.edu/bitstream/handle/
    1805/26654/bank-america-sept21.pdf.

        Furthermore, while I remain gravely concerned about the
    implications of a shrinking donor pool for American civil society, any
    analysis that focuses solely on giving by subsector or organization
    type is necessarily incomplete. Organizations deemed to be higher
    education institutions in any particular analysis are also likely
    making profound contributions to their community's workforce
    development or its health-care access. Nonprofits that may be recorded
    as arts organizations may be simultaneously making contributions of
    spiritual inspiration, youth development, and medical education to
    their communities, to name a few. Independent Sector appreciates your
    support for the full fabric of the charitable sector, and we look
    ---------------------------------------------------------------------------
    forward to working with you.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. Your written statement mentions Independent Sector's 2021
    report, Health of the U.S. Nonprofit Sector, which contains helpful
    data, analysis, and recommendations around the nonprofit sector.

        Can you discuss the overall health of the nonprofit sector since
    March 2020?

        Answer. Thank you for your leadership in convening this hearing.
    Our Health of the U.S. Nonprofit Sector report focuses on health
    indicators in four categories: Financial Resources, Human Capital,
    Governance and Trust, and Public Policy and Advocacy. As you note,
    there is additional information about these four lenses in my written
    testimony and the full report is available on Independent Sector's
    website.\2\
    ---------------------------------------------------------------------------
        \2\ https://independentsector.org/nonprofithealth/.

        In summary, losses of earned revenue and unpredictable fundraising
    have combined with increased community demand and the cost of disrupted
    operations to strain the nonprofit sector's financial resources since
    March 2020. Our sector faces severe human capital challenges, having
    lost 1.6 million jobs during the worst of the pandemic and recovering
    much more slowly than the economy as a whole. Trust in the nonprofit
    sector increased in 2020 as the public observed nonprofits serving on
    the front lines of the global pandemic and economic crisis, but this
    appears to have been a temporary increase. I look forward to sharing
    2022 figures when they are released later this month. The health of our
    sector's advocacy efforts can be partially demonstrated by a number of
    concrete--if incomplete--victories in Federal policy in recent years,
    although we seek a fuller assessment as part of comprehensive advocacy
    ---------------------------------------------------------------------------
    research that Independent Sector is commissioning this year.

        Question. In your statement, you mentioned the Legacy IRA Act,
    highlighting the ability for individuals to give using their retirement
    accounts. Considering the Finance Committee is working on a
    comprehensive retirement savings package, you have raised this point at
    an opportune time. I know your member organizations benefit from every
    type of giving, but my sense is that this type of giving may be
    overlooked.

        Can you explain how important giving through retirement accounts is
    to your members?

        Do you have relevant data that you could share with the Finance
    Committee?

        Answer. Giving through retirement accounts is very important for
    Independent Sector's members and nonprofit organizations nationwide
    since the number of retirees in the country is rapidly growing. It is
    expected that 10,000 baby boomers will turn 65 every day through 2030,
    and those over 65 now represent 15 percent of the total population.\3\
    Coincidently, this is the average age of a donor in the United States
    as of 2021.\4\
    ---------------------------------------------------------------------------
        \3\ How Women and Men Give Around Retirement. Pg. 3. The Women's
    Philanthropy Institute. Indiana University Lilly Family School of
    Philanthropy, https://scholarworks.iupui.edu/bitstream/handle/1805/
    16758/wpi-retirement-july18.pdf.
        \4\ 2022 Report on Qualified Charitable Distributions from IRAs.
    Pg. 15. FreeWill, https://www.freewill.com/qcd-report-2022.

        Since 2006 when charitable giving through Individual Retirement
    Accounts (IRAs) or Qualified Charitable Distributions (QCDs) was
    established and ultimately made permanent through the Protecting
    Americans from Tax Hikes (PATH) Act, it has remained one of the crucial
    fundraising avenues for nonprofit organizations. Among the many planned
    gift options retirees have, the QCD at age 70\1/2\ incentivizes greater
    charitable giving while it mitigates or eliminates the income tax on
    the withdrawal. Americans donated an estimated $471.44 billion in 2020.
    Out of that record number of donations, $41.19 billion were donations
    ---------------------------------------------------------------------------
    by bequest according to the Giving USA 2021 report.

        Over the last few years, nonprofits have seen a surge in the number
    of QCD gifts coming into their organizations. According to the 2022
    Report on Qualified Charitable Distributions from IRAs, 71 percent of
    organizations that received QCDs in 2021 said they fundraised more than
    $10,000 through these gifts. Nearly one-third said that they received
    more than $50,000 in total from QCDs.\5\
    ---------------------------------------------------------------------------
        \5\ 2022 Report on Qualified Charitable Distributions from IRAs.
    Pg. 33. FreeWill, https://www.freewill.com/qcd-report-2022.

                                     ______

                   Questions Submitted by Hon. Maria Cantwell
        Question. Nonprofits make up the fourth-biggest industry in
    Washington State, with more than 30,000 organizations and 238,000
    nonprofit employees. Like too many industries, nonprofits across my
    State were decimated when the pandemic hit and had to cut staff. And 2
    years later they are still struggling. In Washington nonprofit
    employment is still down 6 percent below pre-pandemic levels, after
    dropping 9 percent in early 2020. These are organizations that have
    been on the frontline throughout the pandemic helping people find
    access to housing, food, child care, and more, and they need our
    support.

        One of the most effective measures we took in the CARES Act was to
    provide a payroll tax credit of up to $5,000 per employee for
    businesses that were hard hit by the pandemic, to help keep people
    employed. But unfortunately the Bipartisan Infrastructure Law repealed
    the ERTC for the fourth quarter of 2021 as a pay-for, leaving
    nonprofits without one of the key tools they had to retain staff. I am
    a big believer in payroll tax credits as an incentive to sustain a
    workforce. It's why I worked to create a similar program for our
    aerospace workforce in the American Rescue Plan.

        What has been the impact of the repeal of the Employee Retention
    Tax Credit on nonprofit employment? Are you already seeing nonprofits
    having to lay off staff or leave open positions?

        If we could extend the ERTC through the end of this year, what
    impact would that have to get nonprofits back to their pre-pandemic
    levels?

        Answer. I share your support for the Employee Retention Tax Credit
    (ERTC) and your concern about nonprofit job losses. In a long-overdue
    recognition of nonprofit employers, the ERTC functions as a credit
    against payroll tax liability--unlike some prior disaster relief income
    tax credits that offered our sector no benefit. Independent Sector is
    deeply grateful for that recognition. As a result, the ERTC was a
    critical lifeline, allowing nonprofit organizations to continue serving
    their community in the face of immense financial challenges throughout
    the pandemic. Its early and retroactive termination in the middle of
    the fourth quarter of 2021 was extremely disruptive to charitable
    missions and operations throughout our sector, given that organizations
    had planned for the expiration of the credit at the end of 2021. It is
    difficult to predict whether restoring ERTC would provide enough
    support to help recover the more than 450,000 jobs that were still
    missing from the nonprofit sector at most recent estimate. While the
    lost jobs caused by early termination reflect families that lost a
    paycheck, they also point to an issue of even greater urgency--unmet
    community needs.

        That unmet need is particularly urgent as nonprofit organizations
    struggle to recruit and retain staff. Alarmingly, 42 percent of
    nonprofit organizations responding to a recent survey had job opening
    rates of higher than 20 percent, as they grapple with challenges
    including salary competition and inability to find child care.\6\
    ---------------------------------------------------------------------------
        \6\ The Scope and Impact of Nonprofit Workforce Shortages, National
    Council of Nonprofits, December 2021.

        Question. There are over 1.3 million charitable nonprofits in the
    United States, employing 12.3 million people. But of course their
    impact goes far beyond their economic footprint--they are there again
    and again to step in to help those in need when they have nowhere else
    to turn. And nonprofits are also the recipients and implementors of so
    much of what we fund here in the Federal Government, from homeless
    services to environmental restoration. But despite the scale and
    importance of the nonprofit industry, there is no unified approach from
    the Federal Government to addressing the needs and support charitable
    ---------------------------------------------------------------------------
    nonprofits.

        What steps could the executive branch take to better coordinate
    policy across agencies to support the needs of charitable nonprofits?

        Would the creation of a Federal task force or dedicated White House
    office be useful to better support nonprofits?

        Answer. Despite its scale and unique understanding of community
    needs, you are correct that the nonprofit sector is often on the
    ``outside looking in'' when Federal policies are decided, and there is
    absolutely no unified approach. There is no equivalent to the Small
    Business Administration for nonprofits, the Nation's third-largest
    employment sector. Nonprofits do play a key role as implementers of
    Federal policy, but--with the right systems in place--their deep
    community trust and on-the-ground expertise could make them true
    partners to the Federal Government. Independent Sector has worked with
    our members and partners throughout the nonprofit sector to develop an
    initiative comprised of structures and policies that would truly give
    nonprofits a proverbial seat at the table. We expect similar bipartisan
    legislation to be introduced in the House of Representatives very soon.

        A White House Office on Nonprofit Sector Partnership would ensure
    policies are designed with an understanding of the sector's capacity to
    realize critical priorities in a way that maximizes the benefit to
    communities. Coordinating policies across Federal agencies through an
    interagency council would streamline information sharing for both
    agency staff and nonprofit organizations, allowing nonprofits to spend
    more time on their missions and helping Federal agencies work with our
    sector more smoothly. This is particularly urgent for organizations
    that participate in government contracting, with a recent survey
    finding that government funding covers only about 70 cents on the
    dollar for these organizations' direct program expenses.\7\ Finally, we
    believe that a Federal advisory board on the nonprofit sector would
    allow policymakers access to data, reporting, and frontline, community-
    specific expertise from nonprofits so they can better assist
    constituents and design more effective policies.
    ---------------------------------------------------------------------------
        \7\ A National Imperative, Alliance for Strong Families and
    Communities (since changed name to Social Current), 2017.

        Importantly, this initiative calls for other key policies as well.
    Streamlining multi-State fundraising registration, providing regular
    employment and workforce data about the nonprofit sector, and
    broadening access to national service programs would all help give the
    ---------------------------------------------------------------------------
    nonprofit sector a seat at the table.

        Question. As you're aware, charitable organizations depend on
    volunteers to help deliver vital programs and services in local
    communities. However, the number of volunteers in the nonprofit sector
    have not returned to pre-pandemic levels.

        Prior to the pandemic, the annual volunteerism rate in Washington
    State was over 35 percent, contributing 202 million hours of service
    valued at nearly $5 billion. In November 2020, the University of
    Washington reported that volunteerism rates among Washington State
    nonprofits had decreased by 30-50 percent, harming their ability to
    operate at full capacity just when their services were needed most.

        Nonprofits have been essential to helping or local communities
    during the pandemic, even as they faced health risks, labor shortages,
    and operational challenges themselves. I think that it is important
    that we are able to support charitable nonprofits and address this
    volunteerism shortage.

        There have been some suggestions on how to boost volunteerism like
    increasing the charity mileage rate to bring it in line with the
    business mileage rate. What steps do you think Congress should take to
    incentivize more people to volunteer?

        Answer. Thank you for highlighting the roughly 70 million
    volunteers who step up to serve the nonprofit sector and their
    communities in various ways. The challenges you cite in your State are
    echoed in national survey data and press reports, as my testimony
    mentions. Independent Sector strongly supported the investment of an
    additional $1 billion last year in national service through AmeriCorps,
    but it is concerning that no similar attention has been paid to the
    non-stipend volunteer force.

        Increasing the charitable mileage rate to the business rate, as you
    suggest, would be a critical first step and would send a strong message
    about the importance of volunteering at a time when many Americans are
    stretching to make ends meet. We support recently introduced
    legislation, the Volunteer Driver Tax Appreciation Act (H.R. 7432),
    which would increase the mileage rate for volunteers who are
    transporting passengers or property on behalf of a charity.

        Additionally, Congress should allocate at least $250 million in
    Federal funding to: (1) support the creation and launch of a nationally
    scaled digital platform to connect, mobilize, and support volunteer
    networks across the Nation, particularly those in long-underserved
    communities; and (2) to build the internal capacity of nonprofit
    organizations to effectively develop and engage volunteers. In the
    longer term, Congress can design additional solutions to boost
    volunteerism if it directs the Bureau of Labor Statistics and
    AmeriCorps to improve data collection and analysis of volunteerism.

                                     ______

                   Question Submitted by Hon. Debbie Stabenow
        Question. Charitable giving has remained relatively stable compared
    to GDP over the last several decades, but studies have suggested that
    the proportion of individual donors has been declining. The nonprofit
    sector has provided enormous support to communities across the country,
    while many families, who may normally donate to their local nonprofits,
    are facing their own struggles and economic hardships during this
    unprecedented crisis.

        Charitable IRA rollovers provide an important option for seniors to
    donate. In your testimony, you advocated for the Legacy IRA Act (S.
    243), introduced by Senator Cramer and me, which would expand
    charitable IRA rollovers.

        What would the expansion of charitable rollovers, specifically
    enactment of the Legacy IRA Act, mean for both seniors who want to
    donate and the nonprofits that receive those donations?

        Answer. We are grateful for your leadership on this issue. If
    enacted, the Legacy IRA Act (S. 243) would broaden access to this
    giving vehicle by enabling seniors to make tax-free contributions from
    their individual retirement accounts (IRA) to charities through life-
    income plans. With many Americans unable to afford to give away their
    retirement income during their lifetimes, this would give prospective
    donors one more critical way to invest in the common good in a way that
    works for them. After the donor passes away, the remaining amount is
    used by the charity for their mission. Independent Sector was pleased
    to support a modified version of the Legacy IRA Act that was included
    in the Securing a Strong Retirement Act (H.R. 2954), and we urge the
    Senate Finance Committee to include S. 243 in any retirement
    legislation.

        The Legacy IRA Act would mean donors could have a greater impact
    and nonprofits would have more funds to continue their crucial work.
    Nonprofits are estimated to see overall giving increase by $1 billion
    if this bill becomes law, according to the 2022 Report on Qualified
    Charitable Distributions from IRAs.\8\
    ---------------------------------------------------------------------------
        \8\ 2022 Report on Qualified Charitable Distributions from IRAs.
    Pg. 30. FreeWill, https://www.freewill.com/qcd-report-2022.

                                     ______

                 Questions Submitted by Hon. Sheldon Whitehouse
        Question. The deduction for charitable donations is meant to
    encourage contributions that benefit the public. With donor-advised
    funds, the donor gets the deduction now, but the charitable benefit may
    not happen for years.

        Are there any reforms to donor-advised funds that should be
    considered?

        Answer. Donor-advised funds are important charitable giving
    vehicles worthy of serious conversations within the sector and with
    policymakers about whether there is opportunity to improve their
    operation and oversight. Upon the introduction of the Accelerating
    Charitable Efforts Act (S. 1981), Independent Sector brought the
    legislation and other associated policies to our public policy
    committee, and hosted a series of webinars to educate, present multiple
    perspectives, and hear reactions directly from the charitable sector.
    We will use the information we heard from experts, researchers, our
    network, and colleague organizations to evaluate any proposals using
    three key perspectives. We believe that any legislation in this area
    should (1) protect public trust in philanthropy and the broader
    nonprofit sector; (2) improve equitable practices in philanthropy; and
    (3) preserve the amount of charitable resources flowing into the
    sector.

        President Biden's Fiscal Year 2023 budget request includes a
    proposal limiting the ability of a private foundation distribution to a
    donor-advised fund to be considered a qualifying distribution for the
    purposes of its annual five percent payout requirement. Independent
    Sector believes that public trust is a critical asset for our sector,
    and it is important that nonprofits uphold the spirit of the laws that
    govern them--including the 5-percent payout rule for private
    foundations--to help preserve that trust. We appreciate the President's
    budget request recognizing that policy change is needed to address this
    issue. We look forward to working with policymakers, alongside other
    philanthropic and charitable organizations, to determine if this
    specific proposal is the best solution for philanthropy, grantees, and
    communities.

        Question. We have heard that reforms which require tracking when
    donations come in and when they are distributed from donor-advised
    funds can be an administrative burden.

        Do you have ideas for ameliorating any administrative burden that
    may exist?

        Answer. We appreciate your focus on reducing administrative burden
    for nonprofit organizations in this context and others. Although I am
    not an expert in this area, it is my understanding that charitable
    nonprofits that sponsor a donor-advised fund do generally have policies
    on inactive funds, which necessitate some tracking of donations. Any
    new reporting or tracking requirements that impose a cumbersome
    administrative burden would take away from the resources of the
    organization needed to support their charitable mission. Independent
    Sector would be glad to work with you and other organizations in our
    sector to reduce the administrative burden of any policy changes.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
        Question. In December 22, 2020, I released the results of an
    investigation conducted by my staff into the relationship between World
    Vision, a 501(c)(3) non-profit organization, and the Islamic Relief
    Agency, which had been sanctioned by the U.S. Government. My
    investigation concluded in part, ``A more robust and fundamentally
    sound system of screening and vetting is needed to restore the public's
    trust that contributions to World Vision are not funding illicit
    organizations.'' The full results of that investigation are available
    on my webpage here: https://www.
    grassley.senate.gov/news/news-releases/grassley-releases-results-
    investigation-world-vision-s-interactions-isra.

        Do you believe that charities have implemented adequate safeguards
    to ensure that grants from the U.S. Government and donations from
    Americans are not even inadvertently funneled to the benefit of
    individuals or groups that have been sanctioned by the U.S. Government?
    Are there additional steps charities can take to ensure they are in
    compliance with applicable rules and regulations, or is there any
    action Congress should take to promote that compliance?

        Answer. Following leadership from you and Senator Baucus,
    Independent Sector convened a panel to examine good governance and
    ethical practices for the nonprofit sector, which resulted in the
    publication of the 2007 report Principles for Good Governance and
    Ethical Practice, A Guide for Charities and Foundations. This report
    was updated in 2016 with additional recommendations. Good governance
    through self-regulation is critical to the health of American civil
    society, but it is not sufficient on its own. Although the nonprofit
    sector can accomplish a great deal through shared standards and self-
    regulation, nonprofits also need State and Federal regulators to have
    enough resources to enforce laws that guard against fraud and abuse,
    because scandal often negatively impacts public trust in the entire
    sector.

        Independent Sector supports strong enforcement against those that
    violate the laws governing our sector, and would be pleased to work
    with you and the Senate Finance Committee to examine appropriate
    safeguards and compliance policies.

        Question. In an article published in 2020 in the Maryland Law
    Review, Professor Johnny Rex Buckles concludes in part, ``Federal tax
    law permits foreign actors to influence U.S. politics and policies
    through their interactions with American charities.''\9\ He goes on to
    note in his conclusion, ``Even the existing restrictions on lobbying,
    and the prohibition against political campaign intervention, safeguard
    against only the most obvious exploitation of charities by politically
    motivated foreign actions.''\10\
    ---------------------------------------------------------------------------
        \9\ Johnny Rex Buckles, ``Curbing (or Not) Foreign Influence on
    U.S. Politics and Policies Through the Federal Taxation of Charities,''
    Maryland Law Review, Vol. 79:590 (2020).
        \10\ Id.

        In a theoretical case study, the article presents an example where
    a Russian oil baron donates to a U.S. charity that educates the
    American public on the dangers of fossil fuels with the intent of
    promoting increased regulation of U.S. fossil fuel interests that would
    ---------------------------------------------------------------------------
    serve to confer a comparative advantage on their Russian competitor.

        This example may in fact not be very theoretical. In an opinion
    piece published in The Hill in March of 2022, Institute for Policy
    Innovation resident scholar Merrill Matthews wrote, ``U.S. policymakers
    are finally realizing that Russia may have been covertly funding U.S.
    environmental organizations to shape public opinion and policies--
    especially energy and anti-fossil fuel policies--to Russia's liking and
    benefit. Such Russian skullduggery has long been an open secret in
    Europe.''\11\
    ---------------------------------------------------------------------------
        \11\ Matthews, Merrill, ``Russia used `soft power' to influence EU
    policies and anti-fossil fuel efforts,'' The Hill, March 22, 2022,
    available at https://thehill.com/opinion/energy-environment/599113-
    russia-used-soft-power-to-influence-eu-policies-and-anti-fossil.

        Do you have concerns that foreign actions are able to exploit U.S.
    tax-exempt organizations to promote their own priorities and extend
    ---------------------------------------------------------------------------
    influence over U.S. policy?

        Are there reliable measures of how much foreign money is poured
    into U.S. non-profit entities and the source of that funding?

        Do you have an estimate of funding for U.S. non-profits that
    originated from sources aligned with Russia, or Russian policy
    priorities?

        Answer. Foreign influence in U.S. politics and policy presents
    unique concerns and challenges and the nonprofit sector must be mindful
    and vigilant to prevent illegal activity. The Foreign Agents
    Registration Act (FARA) and Department of Justice enforcement are vital
    to protecting against illicit activity. With that said, we do believe
    that FARA is badly outdated and that portions of it are overly broad
    and vague. At a recent hearing before the U.S. House of Representatives
    Committee on the Judiciary, Nick Robinson of the International Center
    for Not-for-Profit Law testified that, ``FARA's notoriously sweeping
    provisions have increasingly interfered with the operations of
    nonprofits, businesses, media, religious institutions, universities,
    and others with limited or no connection to foreign governments in a
    manner that Congress never intended. . . .''\12\
    ---------------------------------------------------------------------------
        \12\ Enhancing the Foreign Agents Registration Act of 1938, House
    Committee on the Judiciary, April 5, 2022.

        We do not have specific detail about Russian spending or Russian
    policy priorities in the United States. As noted above, Independent
    Sector has published detailed recommendations for Good Governance and
    Ethical Practice for nonprofits to follow, including recommendations
    for transparency in their activities, to ensure nonprofits are acting
    in accordance with the law and ethical guidelines. Independent Sector
    is willing to work with you and the Congress to review these practices
    and continue to ensure nonprofits act ethically and are not used
    ---------------------------------------------------------------------------
    inappropriately.

                                     ______

                    Prepared Statement of Hon. Mike Crapo,
                           a U.S. Senator From Idaho
        Senators from all over the United States sit on this committee, and
    one thing we all have in common is an appreciation for the important
    work the nonprofit sector performs in each of our States. If the past 2
    years have taught us anything, it is that the nonprofit sector is vital
    to our communities across the country.

        In Idaho, charitable organizations stepped up to serve Idahoans
    when they needed it the most during the darkest days of the pandemic.
    The nonprofit sector adapted to the COVID-19 situation incredibly well,
    often fulfilling their missions with fewer resources and volunteers or
    even canceled events, all while ensuring the communities they serve
    were being helped.

        But it is not just COVID-related responses that are worth
    mentioning. Whether it is responding to a natural disaster, food
    insecurity, or providing mental health services, nonprofits across the
    country have done a wonderful job. They deserve our thanks, our praise,
    and our commitment to continued support. According to a 2021 report by
    the Giving USA Foundation, charitable giving in the U.S. exceeded $470
    billion in 2020--a 5-percent increase over 2019.

        The vast majority of giving comes from individuals, but
    contributions and impacts from corporations, foundations, and even
    estates cannot be overlooked. While data on charitable giving are
    encouraging, more can be done to encourage giving moving forward.
    Charitable giving and accompanying tax incentives are inextricably
    linked. Fortunately, the Senate has a track record of bipartisan
    cooperation on this issue.

        On the Finance Committee, Senators Lankford, Scott, and Cortez
    Masto have been leaders in crafting bipartisan legislation to help
    increase charitable giving. I look forward to hearing about how we can
    continue to work together on bipartisan tax policies to responsibly
    encourage giving. As the Senate committee charged with considering
    changes to the tax code, we also have an obligation to look ahead and
    pay attention to shifts in the charitable giving landscape.

        For example, the increasing prominence of crowdfunding and the rise
    of digital assets present challenges and opportunities for the
    nonprofit sector. I am also interested in hearing about educational
    efforts to encourage more giving. It is essential that we think through
    these issues and ensure we are being proactive about new developments
    and trends on the horizon.

        To our four witnesses, thank you for being here. Each of you has a
    unique background and perspective. I appreciate your willingness to
    share your expertise with us this morning, and I look forward to a
    productive exchange.

                                     ______

                       Submitted by Hon. James Lankford,
                          a U.S. Senator From Oklahoma
                         Oklahoma Center for Nonprofits

                           Chesapeake Community Plaza

                       720 West Wilshire Blvd., Suite 115

                            Oklahoma City, OK 73116

                                1 (800) 338-1798

                                 www.okcnp.org

                                 info@okcnp.org

                                 March 16, 2022

    The Honorable James Lankford
    United States Senate
    Washington, DC 20510

    RE: Senate Finance Committee Hearing ``Examining Charitable Giving and
            Trends in the Nonprofit Sector''

    Dear Senator Lankford,

    On behalf of the Oklahoma Center for Nonprofits and the 11,207
    charitable nonprofits in our state, I write in advance of the upcoming
    hearing, ``Examining Charitable Giving and Trends in the Nonprofit
    Sector,'' to express strong support for your legislation, the Universal
    Giving Pandemic Response and Recovery Act, S. 618, to improve this
    important charitable giving incentive. I also would like express our
    appreciation for your past support for pandemic relief, as well as
    update you on the ongoing challenges that nonprofits are facing, and
    explain the need for additional targeted relief within the jurisdiction
    of the Senate Finance Committee.

    In the face of the ongoing public health and economic crises, too many
    Oklahoma nonprofits are still struggling to meet increased demands for
    services, confronting a combination of decreased revenue, expenses that
    are higher than pre-pandemic, and nonprofit workforce and volunteer
    staffing shortages. See the results of the National COVID-19 Community
    Impact Survey \1\ administered by the Federal Reserve System. The
    relief provided by Congress made the difference for many organizations
    by replacing revenues lost due to declines in individual and corporate
    giving, fees for service, and canceled fundraising events. The largest
    of these by far was forgivable loans under the Paycheck Protection
    Program. Nearly 3,500 Oklahoma nonprofits received about $430 million
    in forgiven PPP loans in 2020 and 2021, according to Small Business
    data.\2\ Those funds saved more than 70,000 nonprofit jobs, the SBA
    reports, which enabled these organizations to serve our communities.
    However, the PPP program and most other pandemic relief programs have
    expired, yet the need for, and burdens on, charitable organizations
    remain great.
    ---------------------------------------------------------------------------
        \1\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.
        \2\ https://www.pandemicoversight.gov/data-interactive-tools/
    interactive-dashboards/paycheck-protection-program.

    With the above context, I now address three areas of challenges that
    nonprofits are facing and propose tax policy solutions for your
    consideration: the lack of resources, the lack of staff, and the lack
    of volunteers--all of which are essential to advancing nonprofit
    missions.

    Charitable Giving Has Not Kept Up

    Charitable giving nationwide has not kept up with need and rising
    expenses. The 2021 Giving USA report \3\ found that individual giving
    decreased by nearly 0.8 percent in 2020 compared with 2019, when one
    major donor's contributions are removed from the data. A separate
    analysis, the Nonprofit Trends and Impacts 2021 \4\ from the Urban
    Institute, found that small nonprofits were under particular stress.
    ``Forty-two percent of organizations with budgets under $500,000
    experienced decreased donations in 2020, compared with 29 percent of
    organizations with budgets of $500,000 or more.'' Nonprofits that said
    donations were essential to their revenue stream were also more likely
    to experience decreased donations in 2020.
    ---------------------------------------------------------------------------
        \3\ https://store.givingusa.org/pages/annual-subscription.
        \4\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full
    _report.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    In the aftermath of virtually every natural disaster since Hurricane
    Katrina, Congress has recognized the value of nonprofit relief and
    recovery efforts by enacting charitable giving incentives that
    encourage some individuals and corporations to help cover some of the
    costs of these community-based services. The COVID-19 pandemic and
    resulting economic crisis have certainly qualified as natural disasters
    and Congress--a bipartisan body--swiftly enacted giving incentives for
    those who itemize and corporations. Recognizing the catastrophic impact
    of health and economic crises, Congress went further by enacting, and
    then expanding and extending, the universal charitable or nonitemizer
    deduction to ensure that all taxpayers, including those who claim the
    standard deduction received a tax benefit for giving back to their
    communities by supporting the work of charitable nonprofits.

    As a sponsor of the Universal Giving Pandemic Response and Recovery
    Act, S. 618, you better than most recognize the benefits of the
    nonitemizer charitable giving incentive. The Oklahoma Nonprofit Center
    fully endorses this important legislation because it will further
    promote giving by all American taxpayers--regardless of their income--
    to give to the work of charitable nonprofits, thereby ensuring that our
    country retains a strong and independent civil society. It will also
    provide needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those critically impacted by the ongoing
    pandemic. We stand with in your commitment to S. 618 and encourage your
    colleagues to join you in supporting this bill to strengthen our
    communities.

    During the Finance Committee hearing on Thursday, we also ask that you
    speak up in support of extending the two additional disaster-relief
    giving incentives that expired on December 31, 2021--the provision
    permitting individuals who itemize to deduct charitable donations up to
    100% of their adjusted gross income and the measure allowing
    corporations to deduct charitable donations up to 25% of taxable
    income.

    Nonprofit Workforce Shortages Crisis

    One of the greatest challenges that nonprofits of every type of mission
    are experiencing is the inability to hire and retain qualified workers.
    The Federal Reserve survey, referenced above, found that 40% of
    responding organizations reported that staffing levels are down. As of
    December 2021, the nonprofit sector was still more than 450,000
    employees short of pre-pandemic levels, according to the report COVID-
    19 Jobs Update, December 2021 \5\ from the Center for Civil Society
    Studies at Johns Hopkins University. The report found, ``as of the end
    of 2021, nonprofits have recovered approximately 72.1% of the jobs
    estimated to have been lost as of May 2020.''
    ---------------------------------------------------------------------------
        \5\ https://ccss.jhu.edu/december-2021-jobs/.

    This past fall, the National Council of Nonprofits conducted a survey
    of the difficulties nonprofits across the country were confronting in
    retaining staff and filling vacancies. Three out of five (60%) survey
    respondents reported vacancies of between 10% and 30%, according to the
    NCN report, The Scope and Impact of Nonprofit Workforce Shortages,\6\
    published in December. Another 16% reported vacancies greater than 30%.
    Nationwide, nonprofits explained the causes of the vacancies as salary
    competition, typically with employers outside the nonprofit sector
    (79%) and the inability of potential employees to find child care
    (23%).
    ---------------------------------------------------------------------------
        \6\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    The Oklahoma Center for Nonprofits and dozens of Oklahoma nonprofits
    joined more than 1,500 organizations from all 50 states in signing onto
    the recent letter to Congress and the Administration seeking Pandemic
    and Workforce Shortage Relief for Charitable Nonprofits.\7\ Among other
    things, that letter calls on Congress to address critical staffing
    shortages at nonprofits by retroactively restoring the Employee
    Retention Tax Credit, as proposed in the bipartisan ERTC Reinstatement
    Act (S. 3625), and extend this refundable payroll tax credit through
    2022. To address the impact of the unique impact of nonprofit workforce
    shortages on individuals and communities, we ask that you modify
    nonprofit eligibility under the ERTC beyond the current ``gross
    receipts'' test to ensure more nonprofits qualify. We also request that
    Congress revise the definition of eligible payroll expenses under the
    ERTC to include child care and education subsidies to reflect the
    increased costs charitable organizations experienced as they struggle
    to maintain or expand services. We believe this improvement is
    justified because, unlike for-profit employers, tax-exempt nonprofits
    are not currently able to receive income-tax relief for providing those
    employee benefits. Our proposal provides a level of tax fairness and
    parity that does not currently exist.
    ---------------------------------------------------------------------------
        \7\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20
    Advocacy%20Updates%20%20February%2022%202022&utm_medium=email.
    ---------------------------------------------------------------------------

    Volunteers Have Not Returned

    A unique aspect of charitable organizations is that they can expand
    their impact by leveraging the commitment of armies of volunteers who
    are dedicated to the work of nonprofits in their communities. Pre-
    pandemic estimates by AmeriCorps \8\ indicate that the volunteerism
    rate in Oklahoma was 32.0%, contributing 94.5 million hours of service.
    Nationally and in Oklahoma, nonprofits reported throughout the pandemic
    that volunteerism dropped precipitously. Now, however, as many
    businesses return to public operations, many nonprofits still have not
    seen their volunteers return to pre-pandemic levels. Volunteering is
    still depressed--parents have additional family demands, older
    Oklahomans and others from vulnerable populations have safety concerns
    with returning to in-person volunteering, and in general people are
    stressed and have reduced time and energy to volunteer.
    ---------------------------------------------------------------------------
        \8\ https://americorps.gov/sites/default/files/document/
    Volunteering_in_America_States_508.
    pdf.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    As discussed in the recent nonprofit letter on policy priorities,\9\
    Congress can incentivize volunteerism by eliminating unfair tax
    policies. Specifically, we seek an increase in the Volunteer Mileage
    Rate for nonprofit volunteer drivers to the government rate (58.5
    cents/mile) for 2022 and the elimination of the tax on mileage
    reimbursements up to the business rate. The rapid increase in gas
    prices mean that many nonprofits will need to reimburse their
    volunteers for driving on the charity's behalf. Yet, those drivers will
    be forced to pay income tax on any reimbursement rate greater than the
    volunteer mileage statutory rate of 14 cents per mile. This existing
    tax policy, enforced at both the federal and state levels, imposes a
    disincentive on all but the most well-off volunteers. It is unfair,
    harmful to the missions of charitable organizations, and must be
    changed.
    ---------------------------------------------------------------------------
        \9\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20
    Advocacy%20Updates%20%20February%2022%202022&utm_medium=email.
    ---------------------------------------------------------------------------

    American Rescue Plan Act Resources

    Before closing, I want to raise an important issue that, while not
    within the Finance Committee's jurisdiction, is of critical concern to
    the charitable nonprofits in our state. The American Rescue Plan Act
    allocated $3.2 billion to governments in Oklahoma through the
    Coronavirus State and Local Fiscal Recovery Fund. The federal
    government is showing tremendous trust that governments closest to the
    people and their problems are best positioned to decide the best ways
    to spend their allocated resources to meet local needs. While available
    for many purposes, the statute and Treasury Department regulations make
    abundantly clear that governments at all levels may use these funds in
    partnership with charitable nonprofits to address many challenges in
    our communities. The Oklahoma Center for Nonprofits is actively engaged
    in working with state and local officials to ensure the money is
    properly invested. We ask that you and your Senate colleagues allow
    these ARPA funds to go to the state and local governments as scheduled
    so that we may achieve greater impact.

    Conclusion

    As you consider the issues raised during the Finance Committee hearing,
    we ask that you reflect in the important, sustaining work that Oklahoma
    nonprofits performed throughout the pandemic and recognize that our
    challenges are far from over. Most for-profit businesses and government
    offices have or soon will reopen to something amounting to normal
    business. Most charitable organizations--particularly those addressing
    the immediate needs of our residents--never closed their doors. Yet, at
    this stage in the pandemic when demand for nonprofit services remains
    high, Oklahoma's nonprofits remain short of resources to meet normal as
    well as pandemic-related expenses. But we don't just lack adequate
    resources; our nonprofits lack the staff and volunteers to meet the
    very high needs, which is resulting in waiting lists, denial of
    services, and outright closures of local nonprofits. In light of these
    compelling challenges, we ask that you champion tax-policy solutions,
    at the hearing and in the Senate, that will restore and enhance the
    charitable giving incentives and the Employee Retention Tax Credit, and
    remove tax disincentives for volunteers to support the missions of
    nonprofits in their communities.

    Respectfully,

    Marnie Taylor
    President and CEO

                                     ______

                         National Council of Nonprofits

                       1001 G Street, NW, Suite 700 East

                              Washington, DC 20001

                                  202-962-0322

                            councilofnonprofits.org

                                 March 16, 2022

    The Honorable James Lankford
    United States Senate
    Washington, DC 20510

    RE: Support for the Universal Giving Pandemic Response and Recovery
    Act, S. 618

    Dear Senator Lankford:

    In testimony submitted today to the Senate Finance Committee in advance
    of the hearing, ``Charitable Giving and Trends in the Nonprofit Sector,
    ''the National Council of Nonprofits enthusiastically endorsed the
    Universal Giving Pandemic Response and Recovery Act (S. 618) that you
    have sponsored and championed for the past two-and-one-half years. Sec
    the full statement. We are honored to join the more than 1,500
    organizations that signed the Nonprofit Community Letter on the
    Pandemic and Workforce Shortage Relief for Charitable Nonprofits,
    updated March 14th, that also endorsed your legislation.

    In preparing for Thursday's Finance Committee hearing, several state
    associations of nonprofits sent letters to their Senators on the
    Committee. Below are the statements endorsing S. 618 submitted as of
    early this afternoon We anticipate that more are coming.

    Colorado Nonprofit Association

    ``Colorado Nonprofit Association unequivocally supports renewal of the
    universal charitable deduction at least through 2022 and expansion
    through Universal Giving Pandemic Response and Recovery Act (S. 618).
    Passing this act will promote further giving by all American taxpayers
    of all incomes and generate needed resources for charitable and faith-
    based organizations to continue serving communities impacted by the
    pandemic.''

    Delaware Alliance for Nonprofit Advancement

    ``Indeed, we fully endorse the Universal Giving Pandemic Response and
    Recovery Act, S. 618, because it will further promote giving by all
    American taxpayers--regardless of their income--and generate needed
    resources for charitable and faith-based organizations to continue
    providing vital services to families, workers, and communities,
    especially those critically impacted by the ongoing pandemic.''

    Idaho Nonprofit Center

    ``We want to be clear that the Idaho Nonprofit Center strongly supports
    renewal of the universal charitable (non-itemizer) deduction at least
    through 2022. Indeed, we fully endorse the Universal Giving Pandemic
    Response and Recovery Act, S. 618, because it will further promote
    giving by all American taxpayers--regardless of their income--and
    generate needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those critically impacted by the ongoing
    pandemic.''

    Maryland Nonprofits

    ``We want to be clear that Maryland Nonprofits strongly supports
    extension of the universal charitable (non-itemizer) deduction at least
    through 2022. Indeed, we fully endorse the Universal Giving Pandemic
    Response and Recovery Act, S. 618, because it will further promote
    giving by all American taxpayers--regardless of their income--and
    generate needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those critically impacted by the ongoing
    pandemic.''

    Michigan Nonprofit Association

    ``As a cosponsor of the Universal Giving Pandemic Response and Recovery
    Act, S. 618, you know well the benefits of the nonitemizer charitable
    giving incentive. Like you, the Michigan Nonprofit Association fully
    endorses this important piece of legislation because it will further
    promote giving by all American taxpayers--regardless of their income--
    to give to the work of charitable nonprofits, thereby ensuring that our
    country retains a strong and independent civil society. It will also
    provide needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those critically impacted by the ongoing
    pandemic. We ask that you make a strong statement in support of S. 618
    during Thursday's hearing and encourage your colleagues to join you in
    supporting this bill to strengthen our communities.''

    Montana Nonprofit Association

    ``Montana Nonprofit Association strongly supports renewal of the
    universal charitable (non-itemizer) deduction at least through 2022. We
    fully endorse the Universal Giving Pandemic Response and Recovery Act,
    S. 618, because it will further promote giving by all American
    taxpayers--regardless of their income--and generate needed resources
    for charitable and faith-based organizations to continue providing
    vital services to families, workers, and communities, especially those
    critically impacted by the ongoing pandemic.''

    North Carolina Center for Nonprofits

    The North Carolina Center for Nonprofits strongly supports renewal of
    the universal charitable (non-itemizer) deduction at least through
    2022. Indeed, the Center fully endorses the Universal Giving Pandemic
    Response and Recovery Act (S. 618) because it will further promote
    giving by all American taxpayers--regardless of their income--and
    generate needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those who continue to be affected by the
    ongoing pandemic.''

    New Hampshire Center for Nonprofits

    ''We are grateful for your co-sponsorship of the Universal Giving
    Pandemic Response and Recovery Act, S. 618. The NH Center for
    Nonprofits fully endorses this important piece of legislation because
    it will further promote giving by all taxpayers, regardless of their
    income, to donate to charitable nonprofits. We ask that you consider
    speaking in support of S. 618 during Thursday's hearing and encourage
    your colleagues to join you in supporting this bill.''

    New Jersey: Center for Nonprofits

    The Center for Non-Profits strongly supports renewal of the universal
    charitable (non-itemizer) deduction at least through 2022. We fully
    endorse the bipartisan Universal Giving Pandemic Response and Recovery
    Act, S. 618, because it will further promote giving by all American
    taxpayers--regardless of their income--and generate needed resources
    for charitable and faith-based organizations to continue providing
    vital services to families, workers, and communities, especially those
    critically affected by the ongoing pandemic.

    Oklahoma Center for Nonprofits

    ``As a sponsor of the Universal Giving Pandemic Response and Recovery
    Act, S. 618, you better than most recognize the benefits of the
    nonitemizer charitable giving incentive. The Oklahoma Nonprofit Center
    fully endorses this important legislation because it will further
    promote giving by all American taxpayers--regardless of their income--
    to give to the work of charitable nonprofits, thereby ensuring that our
    country retains a strong and independent civil society. It will also
    provide needed resources for charitable and faith-based organizations
    to continue providing vital services to families, workers, and
    communities, especially those critically impacted by the ongoing
    pandemic. We stand with in your commitment to S. 618 and encourage your
    colleagues to join you in supporting this bill to strengthen our
    communities.''

    Oregon: Nonprofit Association of Oregon

    ``We want to be clear that the Nonprofit Association of Oregon strongly
    supports renewal of the universal charitable (non-itemizer) deduction
    at least through 2022. Indeed, we fully endorse the Universal Giving
    Pandemic Response and Recovery Act, S. 618, because it will further
    promote giving by all American taxpayers--regardless of their income--
    and generate needed resources for charitable and faith-based
    organizations to continue providing vital services to families,
    workers, and communities, especially those critically impacted by the
    ongoing pandemic.''

    Pennsylvania Association of Nonprofit Organizations

    ``The Pennsylvania Association of Nonprofit Organizations strongly
    supports renewal of the universal charitable (non-itemizer) deduction
    at least through 2022. Indeed, we fully endorse the Universal Giving
    Pandemic Response and Recovery Act, S. 618, because it will further
    promote giving by all American taxpayers--regardless of their income--
    and generate needed resources for charitable and faith-based
    organizations to continue providing vital services to families,
    workers, and communities, especially those critically impacted by the
    ongoing pandemic. This measure is critical as individual giving makes
    up 78% total charitable giving in the United States.''

    South Carolina: Together SC

    ``As a cosponsor of the Universal Giving Pandemic Response and Recovery
    Act, S. 618, you know well the benefits of the nonitemizer charitable
    giving incentive. Like you, Together SC fully endorses this important
    piece of legislation because it will further promote giving by all
    American taxpayers--regardless of their income--to give to the work of
    charitable nonprofits, thereby ensuring that our country retains a
    strong and independent civil society. It will also provide needed
    resources for charitable and faith-based organizations to continue
    providing vital services to families, workers, and communities,
    especially those critically impacted by the ongoing pandemic. We ask
    that you make a strong statement in support of S. 618 during Thursday's
    hearing and encourage your colleagues to join you in supporting this
    bill to strengthen our communities.''

    Virginia: Center for Nonprofit Excellence (CNE) and NetworkPeninsula

    ``Indeed, we fully endorse the Universal Giving Pandemic Response and
    Recovery Act, S. 618, because it will further promote giving by all
    American taxpayers--regardless of their income--and generate needed
    resources for charitable and faith-based organizations to continue
    providing vital services to families, workers, and communities,
    especially those critically impacted by the ongoing pandemic.''

    Washington Nonprofits

    Letter to Senator Cantwell urging Congress to ``Renew of the universal
    charitable (non-itemizer) deduction for 2022 and significantly increase
    the cap on the deduction, as proposed in the bipartisan Universal
    Giving Pandemic Response and Recovery Act.''

    Senator Lankford, we thank you for our leadership and determination in
    advancing the work of charitable organizations by promoting greater
    charitable giving tax incentives. We will continue to work closely with
    our colleagues at the Oklahoma Center for Nonprofits to promote this
    important legislation.

                Regards,

                Tim Delaney
                President and CEO

                                     ______

                          National Philanthropic Trust
    The Honorable James Lankford
    United States Senator
    316 Hart Senate Office Building
    Washington, DC 20510

    Dear Senator Lankford,

    On behalf of National Philanthropic Trust (NPT), thank you for the
    leadership you have shown, along with Senator Chris Coons, advocating
    for S. 618, the Universal Giving Pandemic Response and Recovery Act.
    The legislation expands and extends the current deduction for
    charitable giving at a critical time for nonprofits. As you know,
    charities are on the front lines battling the effects of the COVID-19
    pandemic, and S. 618 would increase charitable donations and make sure
    nonprofits have the resources they need to aid local communities
    recover from the pandemic.

    NPT is a public charity and the largest national, independent provider
    of donor-
    advised funds (DAFs). Since our founding in 1996, our donors have made
    more than 492,000 grants totaling $17.5 billion to charities across the
    United States, including Oklahoma. NPT's donors have responded to the
    turbulent past two years by substantially increasing their dollars to
    the nonprofit sector. In the 2021 fiscal year, NPT's donors more than
    doubled their giving by dollar value, committing $6.4 billion to
    nonprofit organizations.

    In Oklahoma, over the last five years, NPT made charitable grants to
    298 charities in the state across 47 cities--totaling more than $23
    million (please see the attached map highlighting NPT's grants in the
    state). Our charitable grants in Oklahoma ranged from Edmond to Owasso
    to Tulsa to Oklahoma City to Broken Arrow. In fact, NPT's grants in
    Oklahoma increased 70 percent during the pandemic--underscoring the
    responsiveness of our donors to the needs of Oklahomans and local
    communities. Nonprofit organizations that received NPT grants include
    City Rescue Mission in Oklahoma City, Folds of Honor Foundation in
    Owasso, and the Oklahoma School of Science and Mathematics Foundation,
    to name a few.

    As a DAF sponsor, we are particularly supportive that S. 618 would
    allow gifts to DAFs in the universal charitable deduction provision. We
    not only believe this is good tax policy, but it will also help enhance
    charitable giving and grantmaking to local nonprofits.

    Thank you, Senator Lankford, for your commitment to the charitable
    sector and for your leadership advancing S. 618. We stand ready to work
    with you and the Senate Finance Committee to advance this important
    piece of legislation.

    Sincerely,

    Eileen R. Heisman
    President and CEO

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            Philanthropy Roundtable

                     1120 20th Street, NW, Suite 550 South

                              Washington, DC 20036

                        main@PhilanthropyRoundtable.org

                                  202-822-8333

    The Philanthropy Roundtable supports S. 618, the Universal Giving
    Pandemic Response and Recovery Act. We applaud the bipartisan
    leadership of Senators Lankford and Coons, along with the cosponsors,
    for introducing this measure.

    In a time of pandemic recovery, international crisis and economic
    struggles at home and abroad, Americans are stepping forward to help
    those in need. This bill is crucial to ensuring our nation's generous
    spirit continues to grow and thrive by allowing a deduction for
    charitable contributions for taxpayers who do not otherwise itemize
    their tax deductions.

    The bill in its entirety is a positive for those who care about our
    vibrant charitable landscape, the donors that support it and all of us
    who benefit from the important work of charities today. We have seen
    the vital impact of prior universal charitable deduction measures.
    Included in the 2020 Coronavirus Aid, Relief, and Economic Security
    (CARES) Act, a version of this temporary tax benefit applied to tax-
    year 2020. Then the Taxpayer Certainty and Disaster Tax Relief Act of
    2020 generally extended it through the end of 2021. Thanks to these
    measures, charitable giving reached a record high of $471.44 billion in
    2020, according to Giving USA's 2021 report. Other data show
    significant increases in smaller gifts. The Fundraising Effectiveness
    Project found that gifts under $250 grew by 15.3% in 2020 compared to
    2019 and noted a 28% increase in $300 gifts on December 31st, the exact
    amount allowed for a deduction under the prior measure.

    As earlier temporary universal charitable deduction measures expire, S.
    618 offers even more encouragement for charitable giving. By allowing
    donor-advised fund (DAF) gifts to be eligible for a deduction, the bill
    appropriately acknowledges the key role that DAFs play in this
    landscape.

    According to data from the National Philanthropic Trust for the 2020
    fiscal year, DAF donors stepped up in a year of pandemic, social and
    economic crises. Grants out of DAFs rose to $34.67 billion from $27.29
    billion, an astounding 27% in 2020 compared to the prior fiscal year.
    Contributions into DAFs rose as well, by 20.6%.

    These numbers illustrate America's rainy-day fund in action as donors
    increased the amounts distributed out of DAFs to charities at a higher
    rate than they increased their giving into DAFs--all of which is
    irrevocably dedicated to charitable giving.

    While DAF donors meaningfully increased their already high payout rates
    during 2020 to nearly 24%, we are already facing new economic
    challenges. Our communities have needs now and will face new,
    unpredictable problems in the future. Allowing donors to continue
    growing charitable assets while also paying out at strong rates is one
    of the most powerful features of DAFs as a giving vehicle.

    With the growing popularity of DAFs as a tool for giving, the
    associated tax benefits should not be limited to those that itemize
    their tax deductions. All generous Americans should be allowed to
    deduct their charitable giving through DAFs.

    Now, more than ever, S. 618 is vital to foster the generosity of
    Americans and to support our charitable sector as it works to address
    the significant challenges before us. We applaud Sen. Lankford, Sen.
    Coons, and the bipartisan group of senators who support this important
    legislation for their leadership and thank them for their support of
    the charitable sector.

                                     ______

                             Philanthropy Southwest

                        1910 Pacific Avenue, Suite 13500

                                Dallas, TX 75201

                                  214-740-1787

                               FAX: 214-740-1790

                         www.philanthropysouthwest.org

    Dear Chairman Wyden, Ranking Member Crapo, Senator Lankford, and
    Members of the Committee, Philanthropy Southwest welcomes the
    opportunity to provide input to the Committee on Examining Charitable
    Giving Trends for the Nonprofit Sector. Founded in 1949, Philanthropy
    Southwest, the first association of grantmakers in the nation, believes
    in a thriving Southwestern U.S. through the power of philanthropy. We
    are a vibrant network comprised of hundreds of grantmaking
    organizations and thousands of foundation trustees and staff in the
    U.S. Southwestern region.

    Philanthropy Southwest understands the importance of protecting and
    enhancing the charitable deduction to ensure that charities across our
    nation continue to receive the funds necessary to serve their
    communities and fulfill their philanthropic missions. Inspired by the
    words of former President John F. Kennedy, ``Philanthropy, charity,
    giving voluntary and freely . . . is truly a jewel of an American
    tradition.''

    Altruism is good for all, and the charitable deduction is not only good
    tax policy, but it also encourages all Americans, regardless of income,
    to give. According to recent Giving USA data, U.S. nonprofits and
    foundations have stepped up like never before in response to the COVID-
    19 pandemic giving to charitable organizations supporting their
    neighbors in need. This increased level of giving is attributed to a
    robust charitable deduction for itemizing and nonitemizing taxpayers.
    For example, the Fundraising Effectiveness Project report found that
    there has been an outsized increase in small gifts of $250 or less, and
    there was a reported 28% increase of $300 gifts on December 31, 2020,
    the maximum amount a donor can take using a universal charitable
    deduction. This increase shows the impact of the universal charitable
    deduction on smaller gifts.

    With the current charitable deduction being only available for
    itemizing taxpayers, it forecloses the opportunity for more charitable
    giving. The 2020 COVID relief legislation provided a temporary benefit
    for nonitemizers to deduct their charitable contributions through 2021,
    thus reducing the economic costs to the donor. The renewal of this
    temporary universal charitable deduction could result in nearly 9 and
    10 taxpayers being able to deduct their charitable giving even if they
    do not itemize, democratizing the incentive for charitable giving.

    Philanthropy Southwest supports the reenactment of a universal
    charitable deduction for non- itemizing taxpayers. The Universal Giving
    Pandemic Response and Recovery Act (S. 618, H.R. 1704), which renews
    the universal charitable deduction and increases the cap to one-third
    of the standard deduction, would provide donors and charities alike
    with the certainty they need to continue giving freely to the vital
    organizations in their communities and across the globe.

    On April 5th-7th, the philanthropic sector will convene virtually in
    support of philanthropy for Foundations on the Hill, an annual
    convening for the sector. This premier gathering presents an
    opportunity to speak to Congress about critically important legislation
    for the charitable sector and inform congressional leaders about the
    unique and important role that charitable giving plays in America. Our
    U.S. Southwest delegation of foundation leaders will be informing
    congressional offices about the importance of reenacting the universal
    charitable deduction and looks forward to partnering with government
    around efforts to preserve and protect charitable giving for all.

                                     ______

                                 Faith & Giving

                                 March 17, 2022

    The Honorable James Lankford
    U.S. Senate
    316 Hart Senate Office Building
    Washington, DC 20510

    Dear Senator Lankford:

    The undersigned faith-based organizations write to thank you for your
    long-term leadership to add a universal charitable deduction (UCD) for
    non-itemizers to the tax code and for your work to enact the Universal
    Giving Pandemic Response and Recovery Act (S. 618). We are deeply
    grateful to you and the bill's other lead sponsors--Senators Coons,
    Lee, Shaheen, Tim Scott, Klobuchar, Collins, and Cortez Masto--as well
    as to the other cosponsors who sit on the Finance Committee, Senators
    Stabenow, Hassan, and Brown.

    Thank you as well for your vital roles in enacting a temporary UCD in
    the March 2020 CARES Act--and later extending it through 2021 and
    doubling it for joint filers. Your diligent leadership ensured this
    vital lifeline for the work of faith-based and other charities was
    available to millions of generous Americans of all faiths.

    The charitable deduction works. As one vivid example, the charitable
    deduction's benefits and incentives may be the only reasonable
    explanation why approximately 10 percent of annual giving occurs during
    just the last three days (0.8 percent) of each year.\1\
    ---------------------------------------------------------------------------
        \1\ Digital Giving Index, Network for Good, https://
    beta.networkforgood.com/wp-content/uploads/digitalgivingindex_2015-
    1.png (covering 2015 giving).

    Similarly, after Congress enacted the $300 UCD in 2020, the Fundraising
    Effectiveness Project (FEP) reported that year-to-year annual donations
    of less than $250 increased from the previous year's levels by 15.3
    percent.\2\ Flipping the normal pattern for giving during a crisis,
    this was nearly 1.5 times greater than the increase (10.4 percent) that
    year in large donations ($1,000 or more). As FEP Chair Jon Biedermann
    stated, ``One factor that may have helped the increase in smaller gifts
    was the universal charitable deduction.''\3\
    ---------------------------------------------------------------------------
        \2\ ``Fundraising Effectiveness Project: Giving Increases
    Significantly in 2020, Even as Donor Retention Rates Shrink,''
    Association of Fundraising Professionals (AFP), March 15, 2021, https:/
    /afpglobal.org/fundraising-effectiveness-project-giving-increases-
    significantly-2020-even-donor-retention-rates.
        \3\ Id.

    Further, as compared with 2019, there was a 28 percent increase in $300
    donations on the final day of 2020.\4\ This is the exact amount of the
    universal charitable deduction for 2020.
    ---------------------------------------------------------------------------
        \4\ Id.

    For these and many other reasons, we believe Chairman Wyden is spot on
    when he explains, ``The charitable deduction is a lifeline, not a
    loophole.''\5\
    ---------------------------------------------------------------------------
        \5\ ``The charitable deduction is a lifeline, not a loophole,''
    Blog Post, U.S. Senator Ron Wyden, April 18, 2016, https://
    www.wyden.senate.gov/news/blog/post/ron-the-charitable-deduction-is-a-
    lifeline-not-a-loophole.

    Congregations and other faith-based organizations around the country
    got the word out in 2020 and 2021 about the temporary UCD. They wanted
    to ensure non-iteming givers received the UCD's benefit. But ministry
    leaders also know the deduction helps increase giving by generous
    individuals. Giving by individuals is the financial lifeblood of many
    ---------------------------------------------------------------------------
    faith-based charities.

    Today, religious giving is subject to multiple negative pressures
    Congress can help counter by restoring an expanded and extended UCD.
    One such pressure is the percentage of American households giving to
    charity, which has declined precipitously over the past two decades.\6\
    ---------------------------------------------------------------------------
        \6\ ``Latest Data Shows New Low in Share of Americans Who Donated
    to Charity,'' Lilly Family School of Philanthropy, Indiana University,
    July 27, 2021, https://philanthropy.iupui.edu/news-events/news-item/
    latest-data-shows-new-low-in-share-of-americans-who-donated-to-
    charity.html?
    id=363.

    Further, Giving USA data for 2018 through 2020 (the most recent
    published data) show annual religious giving has failed to keep pace
    with inflation. While inflation increased by 5.5 percent in 2018
    through 2020,\7\ religious giving increased by less than 3 percent.\8\
    ---------------------------------------------------------------------------
        \7\ See ``Inflation, consumer prices for the United States,''
    Federal Reserve Economic Data (FRED), St. Louis Fed, https://
    fred.stlouisfed.org/series/FPCPITOTLZGUSA.
        \8\ See ``Giving USA 2018,'' Press Release, Giving USA Foundation,
    June 12, 2018 (reporting religious giving of $127.4 billion in 2017),
    https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-
    charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/;
    ``Giving USA: Giving Grew in a Tumultuous Year but Not for All,''
    Chronicle of Philanthropy, June 15, 2021, https://www.philanthropy.com/
    article/giving-grew-in-a-tumultuous-year-but-not-for-all-whats-ahead-
    in-2021 (reporting religious giving of $131.1 billion in 2020, a
    decrease of 0.2 percent in inflation-adjusted dollars over 2019).

    Adding to the financial impact of these negative trends, congregations
    and organizations of every faith across America have remained on the
    front lines caring for the needs of individuals and communities hurt by
    the pandemic. Through virtual and (where and when possible) in-person
    connections, congregations and other faith-based charities are serving
    the escalating physical, emotional/relational, and spiritual needs of
    ---------------------------------------------------------------------------
    the most vulnerable members of our communities.

    Unfortunately, the charities caring for our nation's most vulnerable
    often are the most vulnerable themselves to economic downturns and
    crises. Many fail to fully recover or even survive.

    Restoring an expanded and extended UCD as soon as possible in 2022 will
    help these smaller congregations and faith-based ministries weather the
    pandemic's impact while also combating negative long-term trends for
    religious giving. Moreover, granting lower- and middle-income taxpayers
    the same sort of generous tax incentive granted to higher-income
    taxpayers will help increase and democratize giving to all of America's
    diverse ministries and other charities.

    Thank you again for your and your Senate colleagues' dedicated
    leadership to enact an expanded and extended universal charitable
    deduction for non-itemizers. Please do not hesitate to contact me
    (bwalsh@faithandgiving.org) with questions or to help connect with
    other signers.

                Respectfully yours,

                Brian W. Walsh, Executive Director

                          National Faith-Based Signers

    Accord Network
    Agudath Israel of America
    The American Association of Christian Schools
    American Leprosy Missions
    Association of Christian Schools International (ACSI)
    Bread for the World
    Catholic Charities USA
    CCCU--Council for Christian Colleges and Universities
    Center for Public Justice
    Children's AIDS Fund International
    Christian Alliance for Orphans
    Christian Connections for International Health
    Citygate Network
    Compassion First
    Cross International
    Dignity Freedom Network
    Disabled Children's Fund
    ECFA (Evangelical Council for Financial Accountability)
    Ethics and Religious Liberty Commission
    Faith & Giving
    Jewish Federations of North America
    Kumveka
    Langham Partnership USA
    Lifewater International
    Living Water International
    Lutheran Services in America
    Mennonite Central Committee
    National Christian Foundation
    Operation One
    PastorServe
    Plant With Purpose
    Sojourners
    Union of Orthodox Jewish Congregations of America
    Volunteers of America
    World Hope International
    World Relief
    World Vision US

                 Regional, State, and Local Faith-Based Signers

    Baltimore Jewish Council (Maryland)
    Church Hill Activities and Tutoring (CHAT) (Richmond, Virginia)
    CitiHope International (Delhi, New York)
    Great Falls Rescue Mission (Montana)
    Jewish Family and Children's Services, San Francisco Bay Area
    (California)
    The Jewish Federation in the Heart of New Jersey (South River)
    Jewish Federation of Greater Toledo (Ohio)
    Jewish Federation of Southern New Jersey (Cherry Hill)
    Jewish Federations of New Jersey (Scotch Plains)
    MAP International (Brunswick, Georgia)
    Morningstar Mission Ministries (Joliet, Illinois)
    Mount Olive Baptist Church (Washington, DC)
    Shirley's House of Hope (Marshfield, Wisconsin)
    Third Lens Ministries (Atlanta, Georgia)
    Youngstown Area Jewish Federation (Ohio)

                                     ______

                    The Jewish Federations of North America

                         The Max M. Fisher Headquarters

                            25 Broadway, Suite 1700

                               New York, NY 10004

                                 p 212-284-6548

                                 f 212-271-6741

                       https://www.jewishfederations.org/

    March 15, 2022

    The Honorable James Lankford
    U.S. Senate
    Washington, DC 20510

    Dear Senator Lankford:

    The Jewish Federations of North America (JFNA) would like to express
    its gratitude to you and Senator Chris Coons for championing the
    bipartisan Universal Giving Pandemic Response and Recovery Act (S.
    618). As the nonprofit sector works to recover from the crippling
    effects of the COVID pandemic, it is critically important to ensure
    that Americans who donate to charities and religious organizations
    receive an above-the-line tax deduction at a level higher than the $300
    deduction first enacted in 2020 as part of the CARES Act.

    JFNA represents 146 Jewish Federations and over 300 Network communities
    nationally, including the Jewish Federation of Tulsa and the Jewish
    Federation of Greater Oklahoma City. Jewish Federations collectively
    raise and distribute more than $3 billion annually, and in Oklahoma we
    support the social welfare, social services, and educational needs of
    those throughout the state and beyond. In Tulsa, the Jewish Federation
    is the umbrella organization for The Sherwin Miller Museum of Jewish
    Art and the Charles Schusterman Jewish Community Center. In Oklahoma
    City, we collaborate with the Edmond Public Schools, the Oklahoma
    Center for Community and Justice, and United Way of Central Oklahoma.

    A significant amount of charitable giving and grantmaking at our Jewish
    Federations are advanced through donor-advised funds, which is why we
    strongly support the provision in S. 618 that enhances the non-itemizer
    provision by including gifts to donor-advised funds. We believe this
    would allow for more charitable grantmaking and assist communities and
    nonprofits during times of crisis.

    Thank you for your leadership on this issue and your steadfast support
    of the nonprofit sector. We encourage the Senate Finance Committee to
    support S. 618 and work to pass it soon. Charities in Oklahoma and
    throughout the country are depending on it.

    Sincerely,

    Edward J. Beckwith                  David Rosen
    Co-Chair                            Co-Chair
    Tax Policy Committee                Tax Policy Committee

                                     ______

                    Prepared Statement of Susannah Morgan,
                             CEO, Oregon Food Bank
        Chairman Wyden, Ranking Member Crapo, members of the committee,
    thank you for the opportunity to share my on-the-ground perspective
    regarding charitable giving in the nonprofit sector.

        My name is Susannah Morgan, and I am the chief executive officer of
    Oregon Food Bank. Our network is among the largest in the country, with
    a central warehouse that provides resources to 21 regional food banks--
    which then support over 1,400 pantries, free food markets and meal
    sites across Oregon and Southwest Washington.

        Our mission is to end hunger and its root causes. To build
    communities that never know hunger, we need living-wage jobs,
    affordable housing and childcare, and protection from discrimination.
    When we hit tough times, we need strong government safety nets, like
    SNAP, to ensure everyone has access to food. Food banks should be the
    last resort when other systems have failed--and food alone will never
    solve hunger.

        I have worked in anti-hunger efforts for 26 years across several
    States, and the past 2 years have been the most challenging in my
    career. More than 865,000 people sought emergency food assistance
    through the Oregon Food Bank Network in 2019--nearly 1 in 5 of our
    neighbors. In 2020, this number rose like a tsunami to a jaw-dropping
    height of 1.7 million people, and remained painfully high at over a
    million in 2021.

        Even with the outpouring of community support, we couldn't have
    kept food flowing without significant State and Federal action. As we
    began to run out of food due to the enormous increase in demand,
    Governor Kate Brown came through with $1 million a week for food
    purchases until USDA commodities arrived through the CARES Act.
    Congressional aid reached communities directly through enhanced
    unemployment and SNAP benefits, relief payments to families, and more.
    The Child Tax Credit alone drove down child poverty by an incredible 41
    percent \1\ and reduced food insecurity by 26 percent.\2\ Combined,
    these actions helped us to meet the crisis head-on and ensure that
    hunger did not spiral out of control.
    ---------------------------------------------------------------------------
        \1\ https://www.povertycenter.columbia.edu/news-internal/monthly-
    poverty-january-2022.
        \2\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/
    2788110.

        Charitable giving incentives were an important piece of this
    equation as well. Let me share one extraordinary week I had, tied to
    decisions made by this committee: on a Monday early in the pandemic, my
    colleague in The Dalles, OR called me over the moon because she had
    just located the perfect building for a new regional food bank.
    Purchase price was $750,000. On Wednesday, a local philanthropist
    expressed interest in making a $1 million donation, thanks in part to
    tax law changes that allowed 100 percent deduction of her Adjusted
    Gross Income. On Friday, she committed to fund the purchase of the
    ---------------------------------------------------------------------------
    building, in what is surely the shortest capital campaign ever.

        The work of this committee clearly influences expressions of love
    and generosity in our communities. Yet, from where I sit, it is
    incredibly important that you consider how future tax policy changes
    may impact Federal revenue. Even at our scale in Oregon, for every meal
    we provide, SNAP provides 10. Charity organizations simply cannot
    replace Federal funding for the programs and resources our families
    need to thrive.

        So I humbly ask that you act to strengthen Federal revenue and
    advance policies that prevent hunger from happening. The best thing
    Congress can do to reduce hunger is invest in proven solutions that
    support families directly. Reinstate the Child Tax Credit. Modernize
    SNAP to reflect the true cost of healthy food. Invest in housing and
    child care. Raise revenue by requiring the wealthiest corporations,
    individuals and estates to pay what they owe.

        It is important that any new incentives are designed to encourage
    charitable giving that helps our communities now. Hunger is a crisis
    today and charitable support is needed now--not tucked away for some
    hypothetical future. Sustain the 100 percent Adjusted Gross Income
    deduction. Increase the amount private foundations must grant annually.
    Ensure donor-advised funds held by large commercial wealth firms have
    minimum annual distributions of 7 to 10 percent and spend-down
    timelines, while making exceptions for community foundations.

        As we speak, our communities face uncertainty around the impact of
    global events, the cost of living, and whether a new variant might
    emerge. Hunger remains an epidemic. This isn't over. We need Congress
    to continue supporting our neighbors through proven policies. I believe
    that, together, we can still emerge stronger than ever.

        It has been an honor to be with you today. Thank you for your time
    and attention.

                                     ______

             Questions Submitted for the Record to Susannah Morgan
                      Question Submitted by Hon. Ron Wyden
        Question. Over the past 2 years, Congress has implemented a number
    of novel policies to make sure charities have the resources they need
    to continue serving our communities in the midst of the pandemic. These
    include the non-itemizer charitable deduction, and expanding the
    Employee Retention Tax Credit and Paid Leave Credit for tax-exempt
    organizations. Other non-tax programs have also impacted nonprofits,
    like PPP and various grant programs. In your testimony, you emphasized
    the importance of these policies as well as direct support to
    households through the enhanced child tax credit.

        Could you provide more detail about how the Oregon Food Bank and
    the communities it serves benefitted from these tax policies? What
    lessons can we learn from your experience?

        Answer. The rate of hunger surged during the pandemic--and it could
    have been even worse.

        More than 865,000 people sought emergency food assistance through
    the Oregon Food Bank Network in 2019--nearly one in five of our
    neighbors. In 2020, this number rose like a tsunami to a jaw-dropping
    height of 1.7 million people, and remained painfully high at over a
    million in 2021.

        Government help was critical to keep emergency food flowing in
    2020. In the first few weeks of the pandemic, despite an outpouring of
    community support, Oregon Food Bank could not keep up with the enormous
    demand for food assistance. We began to run out of food. Then Governor
    Kate Brown came through with $1 million per week for food purchases.
    Then USDA commodities arrived through the CARES Act.

        We believe that it was primarily Federal intervention that drove
    down the hunger curve in 2021. This intervention took the form of
    enhanced unemployment and SNAP benefits, relief payments to families,
    and more. The Child Tax Credit alone drove down child poverty by an
    incredible 41 percent and reduced food insecurity by 26 percent.

        Right now, Congress should reinstate the Child Tax Credit--which
    was a great idea with proven results in reducing hunger and poverty.

        In the next crisis, Congress should again provide immediate
    assistance--to nonprofits like us and to families directly. Congress
    should once again increase unemployment benefits, which was in many
    cases life changing. Congress should once again provide direct payments
    to families.

        Before the next crisis happens, Congress should work with states to
    ensure that systems like Unemployment Insurance, SNAP, and Pandemic EBT
    are able to administer benefits quickly. One of the reasons food banks
    saw such alarming increases in requests for food in the early days of
    the pandemic was because people who were newly eligible for programs
    like UI faced weeks--and sometimes even months--of waiting for benefits
    to be administered. That was unacceptable in 2020, and it would be
    unthinkable if we let this happen again.

        We recommend more immediate action to prevent a housing crisis,
    such as an eviction moratorium. We recommend targeting cash assistance
    at families at or below median income with no strings.

        Also, as I said in my testimony, it is important that any new
    incentives are designed to encourage charitable giving that helps our
    communities now. Hunger is a crisis today and charitable support is
    needed now--not tucked away for some hypothetical future. Sustain the
    100-percent Adjusted Gross Income deduction. Increase the amount
    private foundations must grant annually. Ensure donor-advised funds
    held by large commercial wealth firms have minimum annual distributions
    of 7 to 10 percent and spend-down timelines, while making exceptions
    for community foundations.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. I appreciate you sharing your ``on-the-ground''
    experiences with us. I was struck by your opening statement, in which
    you seemed to indicate an overall story of success despite the
    challenges your organization faced.

        What has been the greatest challenge your organization has faced
    since the pandemic began?

        Answer. Oregon Food Bank's greatest challenge during the pandemic
    has been adaptation.

        In the first few weeks of the pandemic, requests for food
    assistance nearly doubled. We were drawing down our inventory. We moved
    most of our workforce--except for the warehouse crew and drivers--to
    remote work. We suspended our massive volunteer program. We watched as
    food pantries and meals sites across the State lost the core of their
    volunteers--people 60+--as they went into quarantine. We instituted
    masking and deep cleaning.

        I have never in my life been so consistently afraid. Our community
    needed us so much--and for those first few weeks, I was so scared we
    would fail . . . that we would run out of food, or have an outbreak and
    have to close our warehouse or abandon truck routes, or that food
    assistance sites would close due to lack of hands.

        And yet, we succeeded. We, collectively. Congress came through with
    the CARES Act, which provided direct support to families and
    unemployment benefits and SNAP and thus drove down demand. The CARES
    Act also provided us with a reliable source of USDA commodities. Our
    community came through with unprecedented generosity, which allowed us
    to hire more staff, pay hazard pay, buy laptops for remote work and
    generally afford all this adaptation. And our community came through
    with new volunteers--younger people who were out of work or working
    flexible hours from home--to take the place of volunteers who had
    quarantined.

        Question. From your perspective, what is the number one issue you
    believe this committee should tackle to help support organizations like
    yours?

        Answer. Reinstate the monthly Advance Child Tax Credit and ensure
    all members of our community can access it. When it went into effect
    last July, it cut the number of people struggling to afford food by a
    quarter. When it expired in January, 3.7 million more kids in America
    went back into poverty. If you want to ensure fewer people in America
    need to access emergency food, bring back the Advance Child Tax Credit.

                                     ______

                   Question Submitted by Hon. Maria Cantwell
        Question. As you're aware, charitable organizations depend on
    volunteers to help deliver vital programs and services in local
    communities. However, the number of volunteers in the nonprofit sector
    have not returned to pre-pandemic levels.

        Prior to the pandemic, the annual volunteerism rate in Washington
    State was over 35 percent, contributing 202 million hours of service
    valued at nearly $5 billion. In November 2020, the University of
    Washington reported that volunteerism rates among Washington State
    nonprofits had decreased by 30-50 percent, harming their ability to
    operate at full capacity just when their services were needed most.

        Nonprofits have been essential to helping or local communities
    during the pandemic, even as they faced health risks, labor shortages,
    and operational challenges themselves. I think that it is important
    that we are able to support charitable nonprofits and address this
    volunteerism shortage.

        Has the Oregon Food Bank experienced a decline in volunteers since
    the start of the pandemic? How has that impacted your operations and
    ability to serve Oregonians in need?

        Answer. Oregon Food Bank suspended our volunteer program entirely
    for the first 2 months of the pandemic. In June 2020, we restarted
    volunteer shifts at a much smaller scale: down to 10-15 people instead
    of 100--to ensure social distancing.

        Oregon Food Bank relies on volunteers to sort donated food and to
    repack bulk purchased food. So during the pandemic, we also completely
    stopped accepting food from food drives, because we did not have
    volunteer labor to sort it. We started purchasing food, such as
    macaroni, in retail pack sizes instead of bulk--spending more money
    because we did not have the volunteer labor to repack it. We paid to
    have apples put into five pound bags instead of asking volunteers to
    bag apples.

        As of early April 2022, we have not yet relaunched our full
    volunteer program. So 2 years later, we are still spending tens of
    thousands more dollars annually than we would if we had our prior
    levels of volunteer assistance.

                                     ______

                     Questions Submitted by Hon. John Thune
        Question. When the Tax Cuts and Jobs Act was enacted in 2017, some
    observers predicted that overall charitable donations would decline as
    a result of a larger standard deduction.

        Has that been the Oregon Food Bank's experience? Have overall
    charitable contributions and grants to the Oregon Food Bank increased
    or decreased over the last 5 years? For each of those years, did
    overall charitable contributions and grants increase or decrease
    compared to the prior year?

        Answer. Total contributions to Oregon Food Bank declined in FY17-18
    and FY18-19, and then increased dramatically during the pandemic. With
    hunger at historically high rates, everyone knew someone who was facing
    hunger, and our community reached deep and gave with extraordinary
    generosity.

        Here is actual data on Oregon Food Bank's contributions:

                                                                          Approximate Number of Donors

                FY15-16                                                                                      37,500

                FY16-17                                                                                      41,500

                FY17-18                                                                                      41,000

                FY18-19                                                                                      3,0000

                FY19-20                                                                                      49,000

                FY20-21                                                                                      65,000

        It is also worth noting that the types of giving also shifted. As
    seen in the data below, we received a much higher rate of IRA and Donor
    Advised funds after the 2017 Tax Cuts and Jobs Act. Both types of
    giving are known to be avenues that wealthier, disproportionately white
    donors utilize--so while the worst year for OFB came directly after the
    tax adjustment in FY17/18, certain donors were able to tap into assets
    and continue to receive tax breaks more easily than others.

                                                        IRA Rollover Gifts              Donor Advised Fund Gifts

        FY15-16                                                                1                                311

        FY16-17                                                                0                                376

        FY17-18                                                               12                                489

        FY18-19                                                              269                                633

        FY19-20                                                              805                              1,455

        FY20-21                                                              973                              1,904

        We would also like to State that no single organization can
    represent the complex experience of the entire nonprofit sector,
    including as it relates to charitable giving. For example, I understand
    that after the election of Donald Trump in 2016, the ACLU was
    overwhelmed with new supporters. That was not Oregon Food Bank's
    experience. During times of economic crisis, our communities understand
    the struggles of their neighbors and tend to give to social services
    nonprofits--like Oregon Food Bank. Any number of influencing factors--
    economic, political, tax policies, etc.--may change a single nonprofit
    organization's experience.

        Question. Americans are the most generous people on earth, and
    overall charitable donations continue to grow, but some have suggested
    that these donations are not going to working charities like yours as
    efficiently as possible.

        As a representative of a working charity, what is your perspective
    on this topic and how does the Oregon Food Bank work to ensure that you
    efficiently utilize your donations?

        Answer. The vast majority of Oregon Food Bank's revenue comes from
    donations from individuals or families. Philanthropic contributions
    are, in our view, an expression of love--love for our fellow human
    beings and love for our communities.

        We have absolutely no concerns about the efficiency of charitable
    donations. People write us a check or make an online donation or wire
    money from their stockbroker. It is generally an easy process and easy
    (if labor intensive) to track. We thank each and every donor.

        We do want to ensure that everyone in America has the opportunity
    to show love through philanthropy. We are concerned that, while the
    total charitable giving has increased, the total number of households
    who give has declined. While several factors are at play, one of these
    is income inequality and the growing wealth gap.

        Finally, we ensure that contributions to Oregon Food Bank are used
    efficiently--and more importantly effectively--by maintaining an active
    Board of Directors that is representative of our community and that
    takes its fiduciary responsibilities seriously.

                                     ______

    Prepared Statement of Una Osili, Ph.D., Efroymson Chair in Philanthropy
       and Economics, and Associate Dean for Research and International
       Programs, Lilly Family School of Philanthropy, Indiana University
        My name is Una Osili, and I am the associate dean for research and
    international programs at the Indiana University Lilly Family School of
    Philanthropy and the Efroymson chair in philanthropy and economics. I
    want to thank the distinguished members of the committee for this
    opportunity to speak today about how the pandemic has influenced
    charitable giving, how technology has changed the ways people give, and
    how policymakers can facilitate cross-border giving.

        Philanthropy has long been a cornerstone of our nation. Many early
    Native American giving traditions were rooted in cultural beliefs of
    mutual responsibility and reciprocity. The Massachusetts Bay Colony led
    one of the first successful fundraising drives in 1641.

        America's longstanding tradition of generosity has persisted over
    time. The philanthropic sector is a vital part of the provision of
    public goods, disaster relief, and risk capital for innovation, as well
    as a contributor to the health and vitality of civil society.
                       giving during the covid-19 crisis
        In the past 2 years, giving, both informally and formally, has
    played a visible role in responding to the pandemic in the U.S. and
    abroad. Furthermore, during the COVID-19 era, philanthropy has been
    unprecedented in size, scale, and scope. During this crisis, religious
    congregations, grassroots organizations, community foundations, and
    nonprofits in areas such as health and food insecurity have
    demonstrated resilience and creativity in meeting urgent needs.

        It is important to emphasize that charitable giving grew during the
    first year of a global pandemic, with 2020 being the highest year of
    charitable giving on record at $471.44 billion.\1\ Total philanthropic
    giving in 2020 rose 5.1 percent over 2019. When we consider inflation,
    the total amount still increased, with a total increase of 3.8 percent.
    ---------------------------------------------------------------------------
        \1\ Giving USA Foundation. (2021). Giving USA: The Annual Report on
    Philanthropy for the year 2020. Chicago: Giving USA Foundation.
    Researched and written by the Indiana University Lilly Family School of
    Philanthropy.

        Sixty-nine percent of this total--approximately $324.10 billion--
    was contributed by living individuals. Foundations, charitable
    ---------------------------------------------------------------------------
    bequests, and corporations account for the remaining 31 percent.

        Research has long established that charitable giving is linked with
    key economic and financial factors.

        When we examine the subsectors of charitable giving during the
    pandemic era, two categories of charitable giving saw significant
    growth in giving in 2020. Public-society benefit organizations showed
    the largest increase at 15.7 percent, and these organizations include
    national donor-advised funds, United Ways, and civil rights
    organizations, among a wide range of nonprofits. Giving to
    environmental and animal organizations went up by 11.6 percent.

        Giving to education also increased by 9 percent, driven by a robust
    end-of-year stock market. Human services organizations experienced
    increases in giving, growing by an estimated 9.7 percent, or 8.4
    percent adjusted for inflation.

        However, not all subsectors experienced growth. Giving to arts,
    culture, and humanities declined 7.5 percent, or 8.6 percent, adjusted
    for inflation.
             how are americans giving, and to whom are they giving?
        Initial evidence also suggests that the global COVID-19 pandemic is
    altering how and why people give.\2\ The events of 2020 have
    accelerated innovation in the ways individuals are participating in
    philanthropy today and expanded more traditional methods, such as in-
    kind giving and mutual aid. At the local level, community-based
    emergency funds have coordinated efforts to avoid duplication and
    address unprecedented health and economic needs. Informal acts of
    generosity were also widespread. For example, masks were sewn and
    gifted to health-care workers,\3\ and local restaurants distributed
    meals.
    ---------------------------------------------------------------------------
        \2\ Wyke, M. (January 22, 2021). ``The New Face of Charitable
    Giving During the Pandemic,'' The Wall Street Journal. Retrieved from
    https://www.wsj.com/articles/the-new-face-of-charitable-giving-during-
    the-pandemic-11611334800.
        \3\ Enrich, D., Abrams, R., and Kurutz, S. (March 25, 2020). ``A
    Sewing Army, Making Masks for America,'' New York Times. Retrieved from
    https://www.nytimes.com/2020/03/25/business/coronavirus-masks-
    sewers.html.

        At the same time, American households have grown in their reliance
    on technology for connecting with others during the global pandemic;
    nonprofits have adapted to virtual events, online fundraising, and
    donor engagement. In 2020, online giving in the U.S. increased by
    approximately 21 percent compared to 2019.\4\ Online giving continued
    to grow in 2021, with an increase of 9 percent from 2020.\5\
    ---------------------------------------------------------------------------
        \4\ Blackbaud Institute. (2021). 2020 Charitable Giving Report.
    Retrieved from https://institute.blackbaud.com/.
        \5\ Blackbaud Institute. (2022). 2021 Charitable Giving Report.
    Retrieved from https://institute.blackbaud.com/.

        The use of technology interconnected donors and sectors on common
    platforms. Technology brought donors and many nonprofits together and
    often maximized contributions through collective giving and matching
    gifts. It also increased transparency by allowing donors and nonprofits
    to understand better how funds were being used and their effectiveness.
    At the same time, technology also presents new challenges for
    ---------------------------------------------------------------------------
    nonprofits who seek to engage donors and build trust and confidence.

        In addition to technology, crowdfunding, giving via cryptocurrency,
    and impact investing have altered fundraising approaches and enlarged
    volunteer opportunities and donor engagement. Crowdfunding--raising
    capital from a large and diverse pool of donors via online platforms--
    is a noteworthy example of innovation in giving mechanisms. Like other
    forms of online giving, it has expanded in recent years. During 2020-
    2021, the COVID-19 pandemic, the racial and social justice movement,
    and economic uncertainty accelerated the use of crowdfunding by
    individuals to address health and financial hardships and to raise
    funds for various racial and social justice causes.

        Based on a national survey conducted in 2020, a new study examines
    closely who crowdfunding donors are, how they are different from more
    traditional charitable donors, and the activities they support and
    their motivations.\6\ The study found that about one-third of Americans
    typically donate to crowdfunding projects. Motivations for crowdfunding
    donors are similar to those factors for traditional charitable donors.
    However, the study also showed that crowdfunding donors tend to be
    younger and more diverse than traditional donors.
    ---------------------------------------------------------------------------
        \6\ Indiana University Lilly Family School of Philanthropy. (2021).
    Charitable Crowdfunding: Who Gives, to What, and Why?. Retrieved from
    https://scholarworks.iupui.edu/bitstream/handle/1805/25515/
    crowdfunding210331-1.pdf.

        To assess the impact of individual giving during the pandemic, the
    Lilly Family School of Philanthropy also conducted and examined two
    comprehensive national surveys on household giving priorities and
    motivations.\7\
    ---------------------------------------------------------------------------
        \7\ Indiana University Lilly Family School of Philanthropy. (2021).
    Understanding Philanthropy in Times of Crisis: The Role of Philanthropy
    in COVID-19. Retrieved from https://scholarworks.iupui.edu/bitstream/
    handle/1805/26934/philanthropy-crisis-nov21.pdf.

        Survey questions explored how COVID-19-related factors may affect
    charitable giving. These factors include social distancing and
    lockdowns, COVID-19 infections amongst friends and family, and
    financial uncertainties incurred. In addition, the surveys asked about
    motivational factors for giving to COVID-19-related causes. The surveys
    revealed that self-reported giving of all types among Americans went up
    by 4-6 percentage points from May to September 2020.\7\ Informal giving
    ---------------------------------------------------------------------------
    and volunteering also remained strong during this period.

        Taken together, the data also suggests that the philanthropic
    sector is facing a greater demand for services and increased giving
    from existing and new donors. Nonprofit organizations are adapting new
    modes of service delivery, staffing shortages, and virtual modes of
    engagement.

        According to additional survey evidence from 2021, the share of
    households who gave directly to charitable organizations, individuals,
    or businesses for COVID-19 relief increased by 9.3 percentage points
    from May 2020 to May 2021.\8\
    ---------------------------------------------------------------------------
        \8\ Indiana University Lilly Family School of Philanthropy. (2021).
    COVID-19, Generosity, and Gender: How Giving Changed During the First
    Year of a Global Pandemic. Retrieved from https://
    scholarworks.iupui.edu/bitstream/handle/1805/27002/covid19-nov21-
    report.pdf.

        In response to the pandemic, overall charitable giving to
    organizations focused on basic needs and health saw strong growth from
    May 2020 to May 2021. While giving to organizations focused on religion
    and all other purposes also increased during this time, U.S. households
    ---------------------------------------------------------------------------
    are giving less to these organizations than before the pandemic began.

        Donations to racial and social justice causes increased in 2020.
    This increase included donations to Historically Black Colleges and
    Universities, as well as grassroots organizations, with 15.7 percent of
    Americans contributing to these causes in 2020.\9\
    ---------------------------------------------------------------------------
        \9\ Indiana University Lilly Family School of Philanthropy. (2021).
    Everyday Donors of Color: Diverse Philanthropy During Times of Change.
    Retrieved from https://scholarworks.iupui.edu/bitstream/handle/1805/
    26496/donors-color-report.pdf.
    ---------------------------------------------------------------------------
                              cross-border giving
        Philanthropy plays a vital and increasingly visible role in the
    global economy. Charitable contributions can be targeted to meet real-
    time challenges, provide risk capital for innovation, and support
    recovery in communities.

        The outpouring of cross-border generosity in response to the
    devastation from the COVID-19 pandemic has been tremendous.\10\ Not
    only have private donors increased their giving, but they used new
    tools and vehicles for giving, including impact investments,
    cryptocurrency, collective giving, and pooled funds.
    ---------------------------------------------------------------------------
        \10\ In addition to intergovernmental funds, we have seen an
    outpouring of generosity by Africans in response to the crisis. For
    details by country, see https://globalindices.iupui.edu/tracker/
    country-reports/index.html.

        Despite this progress, addressing the urgent humanitarian issues in
    many regions, including the refugee crisis in Ukraine, requires an
    acceleration of efforts to harness private sector resources from
    ---------------------------------------------------------------------------
    individual donors, foundations, and corporations.

        The most recent Global Philanthropy Environment Index (GPEI),
    released in March 2022, reveals significant obstacles to expanding
    philanthropic flows.\11\ The Index, which measures philanthropic
    environments worldwide using data collected by country-based experts,
    examines the incentives and barriers that could affect individuals' and
    organizations' charitable efforts.
    ---------------------------------------------------------------------------
        \11\ Indiana University Lilly Family School of Philanthropy.
    (2022). The 2022 Global Philanthropy Environment Index. Retrieved from
    https://globalindices.iupui.edu.

        Findings from the 2022 GPEI suggest that the global philanthropic
    environment was slightly more favorable in 2018-2020 than in 2014-2017.
    Three-fifths of the 91 countries and economies studied reported a
    favorable environment for philanthropy. Yet, among the 79 countries and
    economies studied in both 2018 and 2022 GPEI, this improvement was
    inconsistent, with about 30 economies reporting a shrinking space for
    philanthropy due to their political environments. When examining the
    enabling environment for cross-border philanthropic flows, over 30
    percent of the 91 countries and economies studied in the 2022 GPEI
    reported a restrictive space for cross-border philanthropic flows.
    Among the 79 countries and economies included in both 2018 and 2022
    GPEI, more than one-third reported a shrinking space for cross-border
    philanthropy. Some countries have imposed high costs and burdensome
    administrative requirements on philanthropic inflows and outflows with
    implications for donors and nonprofits working across borders.
                               final observations
        The generous response by U.S. donors during the global pandemic,
    racial and social justice movement, and humanitarian crisis provides
    essential context for our ongoing understanding of the rapidly changing
    philanthropic landscape.

        While total charitable giving has been increasing during the
    pandemic, we have to be concerned about post-pandemic giving patterns
    by Americans of all income backgrounds.

        Despite the economic shocks and social upheaval induced by the
    COVID-19 pandemic, recent data show that affluent households remained
    very generous in their support of charitable organizations, with 88
    percent giving to charity in 2020--consistent with the 90 percent rate
    we saw in 2017.\12\ And, the average amount given increased
    substantially, by 48 percent, from just over $29,000 in 2017 to just
    over $43,000 in 2020.
    ---------------------------------------------------------------------------
        \12\ Indiana University Lilly Family School of Philanthropy.
    (2021). 2021 Bank of America Study of Philanthropy: Charitable Giving
    by Affluent Households. Retrieved from https://scholarworks.iupui.edu/
    bitstream/handle/1805/26654/bank-america-sept21.pdf.

        In contrast, however, recent data from the Philanthropy Panel Study
    (PPS) show the fraction of low- and middle-American households that
    contribute to charity decreased between 2000 to 2018.\13\
    ---------------------------------------------------------------------------
        \13\ Indiana University Lilly Family School of Philanthropy.
    (2021). The Giving Environment: Understanding Pre-Pandemic Trends in
    Charitable Giving. Retrieved from https://scholarworks.iupui.edu/
    bitstream/handle/1805/26290/giving-environment210727.pdf.

        While two-thirds of Americans gave to charitable causes in 2000,
    only 49.6 percent of Americans gave in 2018, nearly a seventeen-
    ---------------------------------------------------------------------------
    percentage point decline.\13\

        The Philanthropy Panel Study (PPS) is the largest and most
    comprehensive study of American philanthropy. It tracks the share of
    American households who donated to charity for a nationally
    representative sample in a given year. For middle and low-income
    Americans, the declines in the overall giving rate occurred among
    nearly all socio-demographic groups.

        Most of the decrease in giving participation occurred during the
    Great Recession.\14\ The Great Recession of 2008 (December 2007 to June
    2009) substantially affected whether people donated to charity and how
    much they contributed, but the trends did not slow or reverse once the
    economy had recovered from the Great Recession.
    ---------------------------------------------------------------------------
        \14\ Osili, U., Clark, C.J., and Han, X. (2019). ``Heterogeneity
    and giving: Evidence from U.S. households before and after the Great
    Recession of 2008.'' American Behavioral Scientist, 63(14), 1841-1862.

        In the PPS data, one-third of the decrease in charitable giving
    participation from 2000-2016 can be directly attributed to shifts in
    income, wealth, and homeownership.\13\ This suggests that factors such
    as decreases in interpersonal trust, empathy, among other factors, may
    ---------------------------------------------------------------------------
    also play a role.

        As we look ahead, we have an opportunity to address issues of
    equity and efficiency among donors and nonprofits since giving is
    becoming increasingly concentrated among high-income households.

        A growing body of work has examined the effects of extending the
    charitable deduction to non-itemizers. Results indicate that a non-
    itemizer charitable deduction could increase charitable donations and
    induce an expansion in the number of donor households.\15\
    ---------------------------------------------------------------------------
        \15\ Rooney, P., Zarins, S., Bergdoll, J., and Osili, U. (2020)
    ``The Impact of Five Different Tax Policy Changes on Household Giving
    in the United States.'' Nonprofit Policy Forum, 11(4), 1-18.

        There are many issues to consider when examining the impact of tax
    policies. Nonprofit leaders and advocates, as well as policymakers will
    need to consider the effect of each policy on charitable giving
    dollars, the number of households that donate, and Treasury revenue,
    ---------------------------------------------------------------------------
    but they should also consider issues of donor equity and efficiency.

        To meet complex challenges triggered by COVID-19, the racial and
    social justice movement, and a global humanitarian crisis, expanding
    tax incentives for lower- and middle-income Americans can help bolster
    the role of the philanthropic sector.

        Making timely decisions about policies that support and enhance the
    long tradition of American generosity can help strengthen the role of
    the philanthropy now and in the future.

        Thank you, again, for the opportunity to testify, and I am happy to
    answer any questions you may have.

                                     ______

             Questions Submitted for the Record to Una Osili, Ph.D.
                      Question Submitted by Hon. Ron Wyden
        Question. We have all been watching the crisis unfold as a result
    of the Russian invasion of Ukraine, and we are just beginning to see
    the effects of the humanitarian toll that will certainly follow.

        Many Americans may want to help by giving to international aid
    organizations. One area of focus in your research is international
    philanthropy.

        What guidance do you have for Congress and taxpayers about best
    practices in making donations to international aid organizations?

        Answer. During armed conflicts and the subsequent humanitarian
    crises, the role of philanthropy and civil society increases both
    locally and internationally. As of May 26, 2022, Candid has tracked 816
    grants valued at USD 1.1 billion and 163 pledges worth USD 683.4
    million provided in response to the crisis in Ukraine (Candid,
    2022).\1\
    ---------------------------------------------------------------------------
        \1\ https://topics.candid.org/issue-pages/ukraine/.

        American taxpayers--who have a desire to donate--have several
    ---------------------------------------------------------------------------
    opportunities to give, including:

            Make donations and grants to registered non-U.S. nonprofit
    organizations working in Ukraine and affected areas internationally if
    such organizations meet the requirements of the Internal Revenue
    Service, including equivalency determination or expenditure
    responsibility;
            Work with intermediaries and pooled funds headquartered in the
    United States; such as the Ukraine Humanitarian Fund organized by
    GoFundMe in collaboration with the U.S. Department of State's Office of
    Global Partnerships; and the Ukraine Crisis Relief Fund organized by
    GlobalGiving; or
            Fund U.S.-based philanthropic organizations working in the
    region, such as the Red Cross or donate to international organizations,
    such as UNHCR, UNICEF, or WHO (Council on Foundations, 2022).\2\
    ---------------------------------------------------------------------------
        \2\ https://cof.org/content/guidance-making-grants-support-ukraine.

        Overall, donors should make donations to international aid
    organizations by giving to nonprofit organizations or causes that are
    closest to their heart. Many resources are available to find
    ---------------------------------------------------------------------------
    trustworthy nonprofit organizations:

            Charity Navigator \3\ has published a list of highly rated
    nonprofit organizations involved in humanitarian relief.
    ---------------------------------------------------------------------------
        \3\ https://www.charitynavigator.org/
    index.cfm?bay=content.view&cpid=9366.
    ---------------------------------------------------------------------------
            GlobalGiving,\4\ along with other crowdfunding platforms, have
    hosted numerous projects focusing on Ukraine; and
    ---------------------------------------------------------------------------
        \4\ https://www.globalgiving.org/search/
    ?size=25&nextPage=1&sortField=sortorder&selected
    Locations=00ukrain&loadAllResults=true.
    ---------------------------------------------------------------------------
            List of response funds and organizations responding directly
    to the crisis are available at the Council on Foundation's website.\5\
    ---------------------------------------------------------------------------
        \5\ https://cof.org/news/philanthropys-response-russian-invasion-
    ukraine.
    ---------------------------------------------------------------------------
            Local initiatives, such as the Fund for Ukrainian Civil
    Society \6\ (led by Ednannia, one of the largest Ukrainian NGO
    established the emergency fund for civil society organizations all over
    Ukraine), provide ways to give directly to organizations working in
    Ukraine.
    ---------------------------------------------------------------------------
        \6\ https://sos.ednannia.ua/?utm--
    medium=email&_hsmi=205839157&_hsenc=p2ANqtz-_TVa2
    LKo6DsXEuyjV3EMo00WBiGoOXHw8phUrpeV3EnjGoD-
    FnJFHsNatoCk9GpaEV40sqjbL9OGLy
    wMardsc3trNVxw&utm_content=205839157&utm_source=hs_email.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. In your written statement, you mentioned the need to
    think about changes in how individuals give, highlighting new forms of
    giving such as crowdfunding.

        Could you elaborate on how you see these new forms of giving
    affecting the nonprofit sector?

        Answer. According to the results of Charitable Crowdfunding: Who
    Gives, to What and Why--a study conducted in 2021 by the Indiana
    University Lilly Family School of Philanthropy, crowdfunding and other
    forms of online fundraising, such as via social media and nonprofit
    organizations' websites, have the potential to extend opportunities for
    a wider audience. The reduction in barriers to giving makes it easy for
    donors to reach organizations and individuals they want to give to.
    Based on existing data, crowdfunding may tend to complement donors'
    giving rather than replace it.

            Unlike nonprofit organizations which build networks of
            supporters and leverage them on social media to raise funds,
            individual crowdfunding donors have yet to fully harness the
            power of social media to advocate for their projects. They
            seldom, if ever, ask friends, family, and acquaintances via
            social media to contribute to the causes they are supporting on
            crowdfunding platforms. This behavior seems different from
            fundraising on social media platforms where networks are
            paramount to successful fundraising campaigns. More research is
            needed to better understand the reluctance of crowdfunding
            donors to fully engage their friends and acquaintances in this
            type of fundraising. (Indiana University Lilly Family School of
            Philanthropy, 2021) \7\
    ---------------------------------------------------------------------------
        \7\ https://scholarworks.iupui.edu/bitstream/handle/1805/25515/
    crowdfunding210331-1.pdf.

            As individuals gravitate more to online giving and researchers
            continue to study this growth, creating clearer distinctions
            between charitable fundraising via crowdfunding and via social
            media will allow for better understanding not only of how the
            giving vehicles differ but also how donors using each vehicle
            are similar or different. (Indiana University Lilly Family
            School of Philanthropy, 2021) \8\
    ---------------------------------------------------------------------------
        \8\ https://scholarworks.iupui.edu/bitstream/handle/1805/25515/
    crowdfunding210331-1.pdf.

    ---------------------------------------------------------------------------
        Question. How does tax policy play into these changes, if at all?

        Answer. The issue around tax-deductibility and crowdfunding raises
    interesting questions about donor motivations for giving on these
    platforms. A contribution to a charitable organization with 501(c)(3)
    status can be deducted on taxes according to the tax laws. As this
    study finds, many crowdfunding donors give to individuals or to
    community campaigns, which may not be tax-deductible. Crowdfunding
    donors may be less motivated by tax-deductibility than typical
    charitable donors. Moreover, income and wealth are not closely linked
    to giving via crowdfunding platforms compared to typical charitable
    donors.

                                     ______

                 Questions Submitted by Hon. Sheldon Whitehouse
        Question. The deduction for charitable donations is meant to
    encourage contributions that benefit the public. With donor-advised
    funds, the donor gets the deduction now, but the charitable benefit may
    not happen for years.

        Are there any reforms to donor-advised funds that should be
    considered?

        Answer. Overall, donor-advised funds (DAF) are considered among the
    fastest-growing charitable giving vehicles, but there has been little
    quantitative research on where DAF grant dollars go. The Giving USA
    Special Report, Donor-Advised Funds: New Insights, a publication of
    Giving USA Foundation, researched and written by the Indiana University
    Lilly Family School of Philanthropy shows that DAF grant dollars
    doubled from 2014 to 2018, while grant patterns remained stable.
    Education, religious, and public-society benefit organizations--which
    include United Ways and many organizations focusing on community
    development and civil rights--attracted the most DAF grant dollars
    between 2014 and 2018. The report also includes preliminary findings
    from a subset of DAF-sponsoring organizations with data from 2019 and
    2020. According to the data, DAF grant dollar amounts grew by 39
    percent and the number of distinct grantees grew 11 percent between
    2019 and 2020. DAF giving to human services grew 138 percent, while
    giving to public-society benefit organizations nearly doubled. DAF
    grants to Historically Black Colleges and Universities (HBCUs) and
    other racial justice organizations more than quadrupled. (Giving USA
    Foundation and Indiana University Lilly Family School of Philanthropy,
    2021) \9\
    ---------------------------------------------------------------------------
        \9\ https://store.givingusa.org/pages/giving-usa-special-report-
    donor-advised-funds-new-insights.

        With the rise of commercial DAFs since the 1990s, DAFs have
    generally recorded average higher payout rates than private
    foundations, which operate under a similar model of tax deduction
    immediately, charitable granting later. While some research has found
    that there are a minority of DAF accounts that sit idle, it has not
    been determined if these accounts are of significant size.
    Additionally, many of the larger organizations in the DAF sector, such
    as Fidelity Charitable, and community foundations have internal
    policies designed to combat this, removing a donor's control from their
    funds if they sit idle for a number of years. Based on data from 13,000
    DAF accounts collected from community foundations and religiously
    affiliated DAF sponsor organizations across the U.S., about half (52
    percent) of DAF accounts have 4-year average payout rates between 5
    percent and 49 percent (Vance-McMullen and Heist, 2022).\10\ Around 71
    percent of these DAF accounts made a grant in a typical year. A
    majority (86 percent) made at least one grant over the 4-year period.
    ---------------------------------------------------------------------------
        \10\ https://static1.squarespace.com/static/
    6011def87418a462fcb03978/t/6242d5b62b2ff70cccde
    478c/1648547257883/DAFRC+Patterns+and+Trends+Report.pdf.

        Currently, the legal framework that supports DAFs does not require
    a specific payout rate. Based on existing data, DAFs have reported
    higher average payout rates compared to private foundations. However,
    as DAFs grow in size and visibility, there may be a need for additional
    data and research on how best to strengthen the overall donor-advised
    ---------------------------------------------------------------------------
    funds landscape in order to benefit the charitable sector.

        Question. We have heard that reforms which require tracking when
    donations come in and when they are distributed from donor-advised
    funds can be an administrative burden.

        Do you have ideas for ameliorating any administrative burden that
    may exist?

        Answer. It is worth noting that DAFs vary in their size and
    capacity across various types (community foundations, single-issue
    charity, and commercial DAF sponsors). Technology may have a role to
    play in reducing the administrative burden. However, detailed tracking
    and reporting on grants and distributions may require additional staff
    and organizational capacity for small organizations. In contrast, an
    investment in the administration and tracking of either significant
    transfers or of transfers from larger organizations may be beneficial
    for the charitable sector while still allowing for adequate overview.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
        Question. As part of the CARES Act, Congress sought to boost
    charitable giving during the pandemic by relaxing limits on the
    individual and corporate itemizer deduction. These provisions
    temporarily allowed individuals to deduct up to 100 percent of AGI and
    corporations to deduct up to 25 percent of taxable income.

        Do you have any data or information you could share on the
    effectiveness of these provisions? What should Congress consider in
    deciding whether to extend either provision?

        Answer. In response to historic levels of unemployment and an
    economic downturn during the early months of the COVID-19 pandemic,
    Congress passed the Coronavirus Aid, Relief, and Economic Security
    (CARES) Act in March 2020. While significant portions of the act
    targeted disaster relief, unemployment assistance, and taxpayer
    support, the law also included provisions that affect the nonprofit
    sector. The CARES Act was initially in place for tax year 2020, but it
    was extended in December 2020 under the Consolidated Appropriations Act
    (2021).

        Key components of the CARES Act that affect charitable giving
    include (Internal Revenue Service, 2021):\11\
    ---------------------------------------------------------------------------
        \11\ https://www.irs.gov/newsroom/expanded-tax-benefits-help-
    individuals-and-businesses-give-to-charity-during-2021-deductions-up-
    to-600-available-for-cash-donations-by-non-itemizers.

        1.  An above-the-line (non-itemizer) charitable deduction up to USD
    300 for all taxpayers in 2020 and USD 300 for single filers and USD 600
    for married couples filing jointly in 2021.
        2.  Suspension of the adjusted gross income limit on cash
    contributions (with some limitations).
        3.  An increased limit on corporate deductions for cash
    contributions (25 percent, up from 10 percent); and
        4.  Additional incentives for businesses that donate food
    inventory.

        The above-the-line charitable deduction has the potential to
    incentivize additional charitable giving while providing tax relief to
    more households. However, researchers have raised concerns that small
    incentive--while reducing non-itemizers' tax burden--will not
    significantly increase overall giving (Steuerle et al, 2021).\12\ The
    Congressional Research Service estimates that the USD 300/USD 600 non-
    itemizer deduction will cost the Treasury USD 2.865 billion (Sherlock
    et al., 2021).\13\ The Tax Policy Center estimates that the deduction
    could cost the Treasury USD 1.5 billion (2020-2030) while providing
    taxpayers as little as USD 100 million in relief and charities with a
    nonsignificant benefit (Steuerle et al, 2021).\14\ These estimates
    differ based on whether they were calculated before or after the
    passage of the extension and which tax years are included. Gravelle
    (2021) \15\ summarizes these analyses.
    ---------------------------------------------------------------------------
        \12\ https://www.urban.org/sites/default/files/publication/103824/
    designing-an-effective-and-more-universal-charitable-deduction.pdf.
        \13\ https://crsreports.congress.gov/product/pdf/R/R46649.
        \14\ https://www.urban.org/sites/default/files/publication/103824/
    designing-an-effective-and-more-universal-charitable-deduction.pdf.
        \15\ https://crsreports.congress.gov/product/pdf/IN/IN11420#:%7E:
    text=The%20CARES%20Act%20and%20the,who%20take%20the%20standard%20deducti
    on.

        Regardless of the tax treatment of charitable giving, Americans
    have responded to the increased need resulting from the COVID-19
    pandemic. Giving USA: The Annual Report on Philanthropy estimated that
    in 2020, USD 471 billion were donated to U.S. charities with USD 324
    billion of that total (69 percent) donated by individuals (Giving USA
    Foundation, 2021).\16\ This total includes an adjustment for giving to
    COVID-19 relief and racial justice giving in 2020 of USD 4.1 billion.
    ---------------------------------------------------------------------------
        \16\ https://philanthropy.iupui.edu/news-events/news-item/giving-
    usa-2021:-in-a-year-of-unprecedented-events-and-challenges,-charitable-
    giving-reached-a-record-$471.44-billion-in-2020.html?id=361.

        Candid and the Center for Disaster Philanthropy published a report,
    Philanthropy and COVID-19: Measuring One Year of Giving, which reported
    that giving (including pledges) totaled over USD 15 billion during the
    first year of the pandemic (Candid and Center for Disaster
    Philanthropy, 2021).\17\ and as of May 26, 2022, Candid's summary of
    grants and pledges made to support COVID-19 relief is over USD 28
    billion (Candid, 2022).\18\
    ---------------------------------------------------------------------------
        \17\ https://www.issuelab.org/resources/38039/38039.pdf.
        \18\ https://candid.org/explore-issues/coronavirus.

        Question. In December 22, 2020, I released the results of an
    investigation conducted by my staff into the relationship between World
    Vision, a 501(c)(3) non-profit organization, and the Islamic Relief
    Agency, which had been sanctioned by the U.S. Government. My
    investigation concluded in part, ``A more robust and fundamentally
    sound system of screening and vetting is needed to restore the public's
    trust that contributions to World Vision are not funding illicit
    organizations.'' The full results of that investigation are available
    on my webpage here: https://www.grassley.
    senate.gov/news/news-releases/grassley-releases-results-investigation-
    ---------------------------------------------------------------------------
    world-vision-s-interactions-isra.

        Do you believe that charities have implemented adequate safeguards
    to ensure that grants from the U.S. Government and donations from
    Americans are not even inadvertently funneled to the benefit of
    individuals or groups that have been sanctioned by the U.S. Government?
    Are there additional steps charities can take to ensure they are in
    compliance with applicable rules and regulations, or is there any
    action Congress should take to promote that compliance?

        Answer. There are many regulations and safeguards that have been
    implemented to combat terrorist financing in the nonprofit sector. The
    Financial Action Task Force (FATF) (2015) \19\ as well as the U.S.
    Department of the Treasury (2010) \20\ provides guidelines and best
    practices to ensure that nonprofit organizations are in compliance with
    counterterrorism and anti-money laundering regulations. Some of these
    guidelines and best practices are mentioned below:
    ---------------------------------------------------------------------------
        \19\ https://www.fatf-gafi.org/media/fatf/documents/reports/BPP-
    combating-abuse-non-profit-organisations.pdf.
        \20\ https://home.treasury.gov/.

            Congress should raise awareness about terrorist financing by
    regularly consulting with charities and publishing guidance for the
    nonprofit sector. Please see an example developed by the Australian
    Government: Safeguarding Your Organization against Terrorism
    Financing.\21\
    ---------------------------------------------------------------------------
        \21\ https://www.homeaffairs.gov.au/criminal-justice/files/
    safeguarding-your-organisation-against-terrorism-financing.pdf.
    ---------------------------------------------------------------------------
            Congress should also promote and advocate for the use of an
    effective, risk-based approach by the nonprofit sector. Please see an
    example developed by the U.S. Department of the Treasury's Office of
    Foreign Assets Control: Risk Matrix for the Charitable Sector.\22\
    ---------------------------------------------------------------------------
        \22\ https://home.treasury.gov/.
    ---------------------------------------------------------------------------
            To implement risk-based approaches, charities need to better
    understand the various risk that may emerge during cross-border
    donations. Thus, Congress should promote and support education and
    training that are offered to charities in these topics, as well as in
    good governance and financial responsibility.
            Simultaneously, Congress should safeguard that the legislation
    does not create burdensome reporting requirements and does not take
    overly broad interpretation of the FATF recommendations by focusing on
    those charities or sub-groups of charities that are at greatest risk
    after due-diligently reviewing the nonprofit sector in the U.S.
            Finally, charities themselves can also decrease this global
    threat and ensure that their grants are well used by self-regulating
    themselves to enhance transparency and accountability in their
    operations and safeguard their own organizations against terrorist
    financing. Establishing an independent monitoring organization could
    help charities make adequate risk management and responsible decisions,
    could award accreditation to member charities who meet the requirements
    and could also monitor the sector and raise awareness on recent
    threats.

        Overall, as the nonprofit sector is diverse, it is important to
    focus on mitigating risks through:

            Ongoing outreach to the sector;
            Proportionate, risk-based supervision or monitoring;
            Effective investigation and information gathering; and
            Effective mechanisms for international cooperation.(FATF,
    2015) \23\
    ---------------------------------------------------------------------------
        \23\ https://www.fatf-gafi.org/media/fatf/documents/reports/BPP-
    combating-abuse-non-profit-organisations.pdf.

        Question. In an article published in 2020 in the Maryland Law
    Review, Professor Johnny Rex Buckles concludes in part, ``Federal tax
    law permits foreign actors to influence U.S. politics and policies
    through their interactions with American charities.''\24\ He goes on to
    note in his conclusion, ``Even the existing restrictions on lobbying,
    and the prohibition against political campaign intervention, safeguard
    against only the most obvious exploitation of charities by politically
    motivated foreign actions.''\25\
    ---------------------------------------------------------------------------
        \24\ Johnny Rex Buckles, ``Curbing (or Not) Foreign Influence on
    U.S. Politics and Policies Through the Federal Taxation of Charities,''
    Maryland Law Review, Vol. 79:590, (2020).
        \25\ Id.

        In a theoretical case study, the article presents an example where
    a Russian oil baron donates to a U.S. charity that educates the
    American public on the dangers of fossil fuels with the intent of
    promoting increased regulation of U.S. fossil fuel interests that would
    ---------------------------------------------------------------------------
    serve to confer a comparative advantage on their Russian competitor.

        This example may in fact not be very theoretical. In an opinion
    piece published in The Hill in March of 2022, Institute for Policy
    Innovation resident scholar Merrill Matthews wrote, ``U.S. policymakers
    are finally realizing that Russia may have been covertly funding U.S.
    environmental organizations to shape public opinion and policies--
    especially energy and anti-fossil fuel policies--to Russia's liking and
    benefit. Such Russian skullduggery has long been an open secret in
    Europe.''\26\
    ---------------------------------------------------------------------------
        \26\ Matthews, Merrill, ``Russia used `soft power' to influence EU
    policies and anti-fossil fuel efforts,'' The Hill, March 22, 2022,
    available at https://thehill.com/opinion/energy-environment/599113-
    russia-used-soft-power-to-influence-eu-policies-and-anti-fossil.

        Do you have concerns that foreign actions are able to exploit U.S.
    tax-exempt organizations to promote their own priorities and extend
    ---------------------------------------------------------------------------
    influence over U.S. policy?

        Answer. Foreign actions including cross-border charitable donations
    may exploit U.S. tax-exempt organizations either for using the
    organization for money laundering or for promoting certain policies,
    even though there are several regulations that aim to decrease the
    possibility of any foreign influence over U.S. policy through nonprofit
    organizations (Buckles, 2020).\27\
    ---------------------------------------------------------------------------
        \27\ https://digitalcommons.law.umaryland.edu/cgi/
    viewcontent.cgi?article=3858&context=mlr.

        Countries where strict regulations on foreign-funded nonprofit
    organizations have been implemented, such as Russia, Israel and
    Hungary, show that control on foreign donations might be harmful for
    the overall nonprofit sector. In these three countries, regulations
    targeted primarily human rights and watchdog organizations, however,
    the laws often undermined the reputation of the entire sector too.
    Additionally, such regulations often violated national and
    international laws and agreements. As an example, the Hungarian Act
    LXXVI of 2017 on the Transparency of Organizations Supported from
    Abroad violated the freedom of association, the right to privacy and
    personal data protection and freedom of expression of the organization
    among others (Hungarian Helsinki Committee and Tarsasag a
    Szabadsagjogokert, 2017).\28\
    ---------------------------------------------------------------------------
        \28\ https://helsinki.hu/wp-content/uploads/What-is-the-Problem-
    with-the-Law-on-Foreign-Funded-NGOs.pdf.

        It is crucial to find a balance between national security,
    enhancing philanthropy, and promoting accountability simultaneously.
    Thus, if Congress decides to further regulate foreign-funded U.S. tax-
    ---------------------------------------------------------------------------
    exempt organizations:

            Congress could conduct public consultations (within the
    nonprofit sector and across the U.S. society) to develop accurate
    safeguards without creating burdensome requirements for tax-exempt
    organizations; and
            Congress could promote accountability and due diligence and
    support the implementation of professional guidelines or a universal
    ``bill of rights'' for
    foreign-funded tax-exempt organizations to avoid any harmful actions
    against U.S. policies and to strengthen these organizations' own
    legitimacy and credibility.
            Congress could tailor current and future regulations to
    distinguish different types of foreign support and their various
    beneficiaries. Foreign action can often be crucially important, just
    let's think of cross-border giving to natural disasters or foreign-
    funded organizations that support global causes internationally.

        Question. Are there reliable measures of how much foreign money is
    poured into U.S. non-profit entities and the source of that funding?

        Answer. While there are other sources available to the government
    for tracking such information, within the publicly available Form 990
    data, data on foreign funding to U.S. nonprofit organizations (cross-
    border philanthropic inflow) is limited. While the Form 990 requires a
    decent amount of information about grants or payments to foreign
    entities, there is not much in terms of donations to nonprofit
    organizations.

        Additionally, organizations have to file Schedule B of the Form
    990, but it is not publicly available data. In Schedule B, U.S.
    nonprofit organizations have to list every contributor who gave more
    than USD 5,000 to the organization. It would be a good starting point
    to audit foreign-funded--including Russian-funded--U.S. nonprofit
    organizations in the future.

        Question. Do you have an estimate of funding for U.S. non-profits
    that originated from sources aligned with Russia, or Russian policy
    priorities?

        Answer. Unfortunately, there is no publicly available information
    on this matter. Please see above.

                                     ______

                     Question Submitted by Hon. Rob Portman
        Question. In recent years, charitable giving through
    cryptocurrencies have skyrocketed, and we should only expect this to
    continue to grow as cryptocurrency becomes more and more prevalent.
    However, right now it is difficult to make a tax-deductible charitable
    donation with cryptocurrency. If you are making a donation worth over
    USD 5,000 in cryptocurrency, you have to get a qualified appraisal
    whereas with publicly traded stock an appraisal is not needed. Even for
    non-publicly traded stock gifts below USD 10,000 do not need a
    qualified appraisal. Given that cryptocurrency is traded on a public
    market, it seems that the value is readily ascertainable.

        Wouldn't it be helpful to allow taxpayers to make charitable crypto
    donations without requiring qualified appraisals? Do you consider the
    appraisal as necessary in a marketplace in which the value can easily
    be determined in online crypto exchanges?

        Answer. With the growth of the cryptocurrency market, we have seen
    an expansion in intermediary organizations that work with donors and
    registered nonprofit organizations to reduce the barriers to giving via
    cryptocurrency. One of these intermediaries is the Giving Block \29\
    that provides an ecosystem for nonprofit organizations to fundraise via
    cryptocurrencies. Intermediary organizations have expanded access to
    crypto currency donations for nonprofit organizations while providing
    channels for donors to give cryptocurrencies to the organizations and
    causes they support.
    ---------------------------------------------------------------------------
        \29\ https://thegivingblock.com/.

                                     ______

                     Questions Submitted by Hon. Todd Young
        Question. I would like to follow up on our discussion regarding the
    barriers to establishing more community foundations around the country.
    As we discussed during the hearing, Indiana has had tremendous success
    in establishing community foundations across the State, in large part
    due to the generosity and long-term vision of the Lilly Endowment.
    However, not all States are fortunate enough to have Indiana's
    extensive community foundation structure and support.

        Based on your scholarship and experience, are you aware of any
    Federal barriers that prevent or hinder the creation of community
    foundations across the country? If so, what are your recommendations
    for addressing those barriers?

        Answer. Community foundations have expanded in the U.S. and many
    parts of the world. Within the U.S., the National Standards for U.S.
    Community Foundations Accreditation Program \30\--which ``certifies
    U.S. community foundations that meet and exceed Federal and State law
    requirements in practice and by policy--has provided guidance over
    time.
    ---------------------------------------------------------------------------
        \30\ https://www.cfstandards.org/.

        While research has not focused on specific barriers that hinder the
    growth of community foundation, there is a recognition that funders can
    provide financial resources to assist with the creation of new
    community foundations and strengthening existing ones. Funders have
    also provided initial funding to encourage the development of community
    foundations for start-up and technical assistance, challenge grants to
    build endowment, and grants for specific programs and initiatives. Non-
    monetary resources can raise a community foundation's profile and help
    ---------------------------------------------------------------------------
    build trust with potential donors, grantees and the community at large.

        State and local governments can also play a role in strengthening
    community foundations through partnerships and collaboration. In some
    States, gifts to community foundations are eligible for tax credits.
    For example, in Kentucky, charitable donations to endowed charitable
    funds at Community Foundation are eligible for up to 20 percent in
    State tax credits. Only gifts to endowment funds at accredited
    community foundations qualify for this tax credit. Unlike tax
    deductions, tax credits are subtracted from a donor's tax bill, dollar
    for dollar. A gift of USD 5,000 has the potential to reduce the
    taxpayer burden in State taxes by USD 1,000.

        Question. During the hearing, I mentioned a collaboration between
    the Central Indiana Community Foundation and Indianapolis-based
    technology company, Selflessly, who partnered together to reduce
    obstacles to giving and help individuals and businesses better execute
    on their giving goals. I raised this example to demonstrate how
    Indiana's charitable giving sector is embracing innovation and
    technology.

        Another example is the launch of the Labs for Industry Futures and
    Transformation (LIFT) Network in the South Bend-Elkhart region of my
    State. This partnership leverages generous grant funding and local
    community foundations, networks, and organizations, including Notre
    Dame's iNDustry Labs, to link expertise, technologies, workforce
    development programs, and innovation-based facilities throughout the
    area.

        What are some other ways Indiana leads the country in innovation
    with respect to expanding or utilizing charitable giving?

        Answer. One area where Indiana has led the country in innovation is
    community foundations' growth. There are over 94 community foundations
    (legal entities, affiliates, and area funds), with at least one
    community foundation based in every county. Indiana's community
    foundations are tax-exempt charitable organizations. The Lilly
    Endowment, through its Giving Indiana Funds for Tomorrow \31\ (GIFT),
    has awarded USD 126.5 million to community foundations across Indiana.
    In the seventh phase of the initiative (GIFT VII), the Endowment looked
    to build upon the momentum and successes of GIFT's earlier stages and
    enhance Indiana's community foundations as trusted and valued
    institutions.
    ---------------------------------------------------------------------------
        \31\ https://lillyendowment.org/our-work/community-development/
    strengthening-indiana/giving-indiana-funds-for-tomorrow/.

        Question. As violence has raged on in Ukraine, hopefully with an
    end in sight, it has been heartwarming to hear stories about Hoosiers
    taking action. For example, an organization out of Noblesville, IN,
    called Mission to Ukraine, usually assists women in crisis and children
    with severe disabilities. However, during this conflict, Mission to
    Ukraine has pivoted to collecting and handing out food, water,
    medicine, and clothes to the most vulnerable on the ground in Ukraine.
    Many Americans who listened to this hearing may be wondering what they
    ---------------------------------------------------------------------------
    can do to help.

        What would be your recommendation to Americans who have a desire to
    assist humanitarian efforts in Ukraine?

        Answer. There are various ways to assist the humanitarian effort in
    Ukraine.

            Make donations and grants to registered non-U.S. nonprofit
    organizations working in Ukraine and affected areas internationally if
    such organizations meet the requirements of the Internal Revenue
    Service, including equivalency determination or expenditure
    responsibility;
            Work with intermediaries and pooled funds headquartered in the
    United States; such as the Ukraine Humanitarian Fund organized by
    GoFundMe in collaboration with the U.S. Department of State's Office of
    Global Partnerships; and the Ukraine Crisis Relief Fund organized by
    GlobalGiving; or
            Fund U.S.-based philanthropic organizations working in the
    region, such as the Red Cross or donate to international organizations,
    such as UNHCR, UNICEF, or WHO (Council on Foundations, 2022).\32\
    ---------------------------------------------------------------------------
        \32\ https://cof.org/content/guidance-making-grants-support-
    ukraine.

        Question. What trends or innovations have you observed with respect
    ---------------------------------------------------------------------------
    to Americans' charitable giving to Ukraine?

        Answer. According to Fidelity Charitable (2022),\33\ one in four
    Americans supported Ukraine through giving to nonprofit organizations,
    giving directly to affected individuals, or supporting local businesses
    or purchasing a product with proceeds to benefit Ukraine. The top three
    causes supported by Americans were medical support (60 percent),
    children's issues (58 percent) and short-term humanitarian aid, such as
    temporary housing, meals, and personal supplies (52 percent).
    ---------------------------------------------------------------------------
        \33\ https://www.fidelitycharitable.org/content/dam/fc-public/docs/
    insights/all-eyes-on-ukraine-how-americans-are-responding-to-the-
    crisis.pdf.

        There are many innovative ways how donors in the United States and
    across the globe have supported individuals and communities affected by
    ---------------------------------------------------------------------------
    the crisis such as:

            Booking Airbnbs: It became a popular way to instantly support
    Ukrainians and booking Airbnbs in Ukraine has grossed nearly USD 2
    million as of March 5, 2022 (NPR, 2022);\34\
    ---------------------------------------------------------------------------
        \34\ https://www.npr.org/2022/03/05/1084739721/airbnb-ukraine-
    direct-aid.
    ---------------------------------------------------------------------------
            Donating cryptocurrencies: Ukraine has also received a total
    of ``close to USD 100 million'' in crypto donations as of March 9, 2022
    (CoinDesk, 2022) \35\ and the government has spent USD 35 million of
    the donations on military supplies, USD 10 million on humanitarian
    support, and USD 6.5 million on general aid (Times, 2022);\36\ and
    ---------------------------------------------------------------------------
        \35\ https://www.coindesk.com/business/2022/03/09/ukraine-has-
    received-close-to-100-million-in-crypto-donations/.
        \36\ https://time.com/nextadvisor/investing/cryptocurrency/donate-
    crypto-to-ukraine/.
    ---------------------------------------------------------------------------
            Buying NFTs: The Ukrainian government has launched a webpage
    \37\ for selling an estimated 300 nonfungible tokens (NFTs) to collect
    donations for the support of Ukraine (Bloomberg, 2022).\38\
    ---------------------------------------------------------------------------
        \37\ http://104.21.42.112:6080/php/
    urlblock.php?args=AAAAewAAABCC7Q6VHrfEInQN7Vb9d
    S8TAAAAECLO04cn4v9fV2XBxh8qfAAAAABLAAAAS48dy3whJ4ZeEWR1tCQ553dScTycSanE
    o
    eHnNTgL0IXkvsXLeR1jthqvBbEMcxzp4VuO5CfaLoDLLlmmFXmMYaGKvbs3HfHxkn0kA==&u
    rl
    =https://metahistory.gallery%2fwarline.
        \38\ https://www.bloomberg.com/news/articles/2022-04-05/ukraine-
    readies-nft-sales-as-crypto-donations-top-60-million.
    ---------------------------------------------------------------------------
            Providing support through Facebook communities: Facebook and
    other social media groups has served as an effective channel to
    communicate urgent needs and connect donors and beneficiaries in a
    timely manner (Vinnikov, 2022).\39\
    ---------------------------------------------------------------------------
        \39\ https://globalindices.iupui.edu/doc/
    Vinnikov%20GPEI%20Presentation.pdf.

        Question. The recently published 2022 Global Philanthropy
    Environment Index Report from the Indiana University Lilly Family
    School of Philanthropy,\40\ which I understand you helped prepare,
    found that while philanthropic giving grew worldwide between 2018 and
    2020, cross-border giving decreased, even as countries became richer
    and their residents more prosperous. I understand these findings were a
    surprise given that one of the hypotheses was that cross-border giving
    would increase as economic conditions in a country improved.
    ---------------------------------------------------------------------------
        \40\ https://scholarworks.iupui.edu/handle/1805/28202.

        What is your theory as to why cross-border giving declined even
    ---------------------------------------------------------------------------
    while overall philanthropic giving grew worldwide?

        Answer. I would like to clarify that while the global environment
    for philanthropy slightly improved between 2018 and 2022, the
    environment for cross-border giving experienced a decrease. The global
    philanthropic environment--comparing the 79 countries and economies
    included in both the 2018 and 2022 Global Philanthropy Environment
    Index--showed a modest increase between 2014-2017 and 2018-2020.
    However, one third of the 79 countries and economies included in both
    2018 and 2022 GPEI reported a shrinking space for cross-border
    philanthropy. This can be attributed to the importance of political
    factors (and not just economic factors) in shaping philanthropy.

            Country experts reported continuous and burdensome regulatory
    requirements for sending or receiving cross-border donations in 2018-
    2020, often due to anti-money laundering and counter-terrorism
    disclosure requirements.

            As part of the global counter-terrorism efforts, the
            International Monetary Fund's Financial Action Task Force
            (FATF) Special Recommendation 8 on nonprofit organizations,
            originally published in 2012, is aimed at ensuring nonprofits
            are not misused by terrorist organizations for illegitimate
            purposes and suggests a group of measures to take action in
            this direction. . . . These restrictions have been reported in
            several countries to affect the capacity of the organizations
            in the philanthropic sector to receive funding, send donations,
            and introduce barriers to the flows of cash donations (Global
            Philanthropy Environment Index, 2018).\41\
    ---------------------------------------------------------------------------
        \41\ https://scholarworks.iupui.edu/handle/1805/15958.

        Since then, FATF advocated for the review the adequacy of measures
    implemented by countries across the globe in order to take
    proportionate actions to address the possible risks without targeting
    the nonprofit sector through excessively rigid regulations to meet the
    FATF guidelines. However, such guidelines are still in place in many
    countries, negatively affecting the ability of sending or receiving
    ---------------------------------------------------------------------------
    cross- border donations.

            Additionally, between 2018 and 2020 some countries suffered
    from heavily regulated cross-border philanthropic flows, because of
    practices that restricted philanthropic inflows and/or outflows with
    high costs and burdensome administrative requirements often to fight
    against ``foreign agents.''

        In terms of the amount of cross-border giving globally, in 2018, 47
    economies contributed USD 68 billion in cross-border philanthropic
    outflows and a combined USD 834 billion through four cross-border
    flows, including philanthropic outflows, official development
    assistance, remittances, and private capital investment (Indiana
    University Lilly Family School of Philanthropy, 2020).\42\
    ---------------------------------------------------------------------------
        \42\ https://globalindices.iupui.edu/tracker/index.html.

            According to the Global Philanthropy Tracker, the United
    States contributed a total of USD 212.1 billion across the four cross-
    border flows and the second largest flow was private philanthropy, at
    USD 47.6 billion (22.45 percent) in 2018. Private and voluntary
    organizations provided USD 35.3 billion in cross-border giving, private
    foundations contributed USD 6.3 billion, and corporate foundations
    accounted for USD 251 million. Religious organizations contributed USD
    5.71 billion to cross-border philanthropy (Indiana University Lilly
    Family School of Philanthropy, 2020).\43\
    ---------------------------------------------------------------------------
        \43\ https://globalindices.iupui.edu/tracker/index.html.

        According to the most recent Giving USA: The Annual Report on
    Philanthropy, giving to international causes has increased in the last
    ---------------------------------------------------------------------------
    couple of years, except for 2018 in the United States.

            In 2019, giving to international affairs was estimated to be
    USD 28.89 billion. Adjusted for inflation, giving to international
    affairs organizations declined 2.2 percent, after 2 strong years of
    growth (Giving USA Foundation, 2020).\44\
    ---------------------------------------------------------------------------
        \44\ https://givingusa.org/giving-usa-2020-charitable-giving-
    showed-solid-growth-climbing-to-449-64-billion-in-2019-one-of-the-
    highest-years-for-giving-on-record/.
    ---------------------------------------------------------------------------
            In 2020, giving to international affairs is estimated to be
    USD 25.89 billion in 2020. Adjusted for inflation, giving to
    international affairs organizations increased 7.8 percent (Giving USA
    Foundation, 2021).\45\
    ---------------------------------------------------------------------------
        \45\ https://philanthropynetwork.org/news/giving-usa-2021-year-
    unprecedented-events-and-challenges-charitable-giving-reached-record-
    47144.

        Question. Are there any actions Congress should take to help reduce
    ---------------------------------------------------------------------------
    barriers to cross-border giving?

        Answer. Policymakers may review and assess anti-money laundering/
    counterterrorism regulations and implement adequate measures that
    relate to the subset of the nonprofit sector that may be at risk of
    financing terrorism, while encouraging cross-border giving overall.

            A 2010 decision by the U.S. Supreme Court (Holder v.
            Humanitarian Aid) upheld the constitutionality of these
            policies, including the prohibition of gifts to organizations
            on a list of suspected terrorist groups maintained by the U.S.
            Department of State, even if the funds are earmarked for a
            group's charitable work. These rules have generally required
            donors to exercise greater diligence in making international
            gifts, or face penalties, and have been accused of reducing
            giving, especially to the Middle East. (Lenkowsky, 2022) \46\
    ---------------------------------------------------------------------------
        \46\ https://scholarworks.iupui.edu/bitstream/handle/1805/28202/
    2022GPEIUnitedStates.pdf.

        Policymakers may review regulations that surrounding cross-border
    donations to create more transparent and less burdensome reporting
    requirements and to provide tax incentives for international giving by
    having tax treaties with other countries. Such tax treaties are in
    force with Canada, Mexico, and Israel, where certain foreign
    ---------------------------------------------------------------------------
    philanthropic organizations are granted 501(c)(3) exempt status.

            Americans can give cross-border donations without prior
            government approval, but they can obtain a charitable tax
            deduction only for contributions to POs ``created and
            operated'' in the United States. However, they may be able to
            exclude such gifts from taxable income if they can show that
            the cross-border organization would qualify as a charity in the
            United States. (Lenkowsky, 2022) \47\
    ---------------------------------------------------------------------------
        \47\ https://scholarworks.iupui.edu/bitstream/handle/1805/28202/
    2022GPEIUnitedStates.pdf.

                                     ______

      Prepared Statement of C. Eugene Steuerle, Ph.D., Co-founder, Urban-
      Brookings Tax Policy Center; Center on Nonprofits and Philanthropy,
        Urban Institute; and ACT for Alexandria, a Community Foundation
        Mr. Chairman and members of the committee, it is an honor again to
    testify before you, this time on charitable contributions and taxes.
    The views I express in this testimony are my own and should not be
    attributed to the Urban-Brookings Tax Policy Center, its trustees, or
    its funders.

        According to estimates by the Urban-Brookings Tax Policy Center,
    Congress's temporary changes to the tax law in 2017 reduced the Federal
    Government's total individual income tax subsidies for charitable
    giving by about 30 percent--from an average subsidy of about 21 cents
    to 15 cents per dollar contributed (Steuerle et al. 2021).

        Charitable giving, in turn, almost assuredly decreased giving from
    what it otherwise might have been. Using a commonly used estimate on
    behavioral response, my colleagues at the Tax Policy Center calculated
    that giving declined about 4 percent to 7 percent (Rosenberg and
    Stallworth 2017). At the same time, giving overall increased somewhat
    near the end of the last decade (Indiana School of Philanthropy,
    various years; Faulk, et al. (2021) due to other factors, such as
    income growth, higher employment, and in response to the COVID crisis.

        Some research also indicates that the share of people giving to
    charity has declined (Jones 2020), although this trend may also be
    attributable to the higher concentration of cash income. That, too, may
    be among the concerns that motivates this hearing.

        While there are legitimate debates about some of these numbers and
    the extent to which households have changed their behavior, the decline
    in subsidies provided is a straightforward calculation.

        Let me be clear. That decline in charitable giving subsidies was an
    indirect byproduct of several features of that 2017 law--in particular,
    a substantial increase in the standard deduction. That increase
    benefited many low- and middle-income taxpayers--not just those who
    switched to a standard deduction now worth more than all their
    otherwise itemizable deductions, but those who were already using the
    standard deduction and never took a charitable deduction to begin with.

        Nonetheless, the current charitable tax incentive now benefits only
    about one-tenth of all households, mainly those with higher incomes. I
    doubt seriously that the public will long support a deduction so
    narrowly applied (Steuerle 2018). As Roger Colinvaux (2017) suggests, a
    nonparticipatory deduction undermines many of the altruistic,
    pluralistic, and other rationales for a deduction. Whether to confront
    those concerns or simply address the upcoming expiration of the 2017
    provisions, these pressures provide a real opportunity to consider ways
    to create an even more effective charitable incentive, and I
    congratulate the committee on conducting these hearings on that matter.
           possible ways to compare options at different cost levels
        As a policy researcher, I find it helpful to define a rubric to
    compare options. Here, I suggest an informative way to compare reform
    options, whether proposed by me or anyone else.

        First, for different levels of total subsidy, compare different
    types of options on a revenue-neutral or cost-neutral basis. For
    instance, you might make these comparisons at the current level of
    total subsidy and the cost equivalent of restoring the 30-percent
    cutback in total subsidies. The Joint Committee on Taxation and the
    Congressional Budget Office have within their substantial capacities
    the ability to provide such comparisons. Applying this technique,
    analogous to cost effectiveness analysis, both focuses on effectiveness
    and compels advocates to discuss with you whether the money involved in
    the charity tax changes they propose could be spent better. I think you
    will find from most economic analyses, not just my own, that the
    conclusions on which designs best promote charitable giving will not
    vary greatly, whatever the level of total subsidy or assumption on
    behavioral response.

        Second, consider maximizing gains for charitable beneficiaries for
    each dollar of subsidy as the prize on which Congress focuses its eyes.
    That is, estimate the impact on charitable beneficiaries side by side
    with the net impact on taxpayers and on government revenues. In a
    balanced income statement, the total change in income of charitable
    beneficiaries equals the revenue loss to government minus any increase
    in taxpayers' net income (their tax reduction less the additional
    giving they make). Traditional distributional tables mislead when
    revenue losses appear to represent gains for taxpayers; in the case of
    a charitable tax incentive, some of, all, or more than all those gains
    are distributed to charitable beneficiaries.
                   the power of signals both large and small
        Though much of what I present today relates to what we think we
    know about incentives, there is a higher level where we have some broad
    theoretical understanding, though limited empirical evidence, of likely
    consequences. I refer to the broader signal that Congress sends to the
    public about the role of charitable giving in our society.

        In 1835, Alexis de Tocqueville singled out United States citizens
    for their extraordinary level of civic activity and association. Though
    communal efforts remain high, and the United States today still stands
    out among developed nations for the share of income devoted to
    charitable giving, neither should be taken for granted. Indeed, some
    research indicates that participation in both associations, including
    religious gatherings, and charitable giving has been declining.
    Meanwhile, many online groups and media have become increasingly
    partisan, political, and in-group focused. Also, as our Nation has
    become several time richer per capita over recent decades, we have not
    been able to increase the share of income given to charity.

        As many current events remind us, we cannot blandly assume that the
    blessings with which we have been endowed will pass automatically to
    our children. The legacy we leave should be greater than our
    inheritance. And though only a small piece of a much bigger picture, a
    bipartisan effort to improve how tax law serves charitable
    beneficiaries can have ripple effects beyond the charitable sector,
    including setting an example for how bipartisan and effective
    legislation can be achieved.

        On a less lofty level, my testimony will attempt to demonstrate how
    the signals and nudges that Congress sends should be carefully
    considered on several fronts:

        Value Promotion. In addition to its direct incentive effect, a
    deduction for only a few taxpayers weakly promotes and markets the
    value our society places on charitable giving.

        Ceilings. Caps and ceilings on the amount of giving eligible for a
    deduction or credit don't simply limit incentives to give more; as
    signals, they can provide further disincentives, especially when people
    stop giving at what they perceive as the maximum that Congress thinks
    is worth encouraging.

        Floors. Floors can encourage giving. They allow incentives to be
    concentrated where they are most likely to change behavior--that is,
    for giving beyond what one would do in absence of a tax subsidy. A
    floor set at some measure of average or median giving as a share of
    income also sends a signal to people that they might want to give above
    that level to attain their ``fair share.''

        Administrability. Incentives that can't be monitored by IRS at some
    reasonable level invite corruption within the charitable sector, create
    inequity among taxpayers, and discourage giving.

        Saliency and Nudges. When and how signals are given, such as timing
    rewards close to the time that people pay taxes think of the
    connection, can increase charitable giving.

        Taking account of these various signals, I focus the remainder of
    my discussion on what we know more directly about the effectiveness of
    different types of incentives.
                the distribution of charitable giving subsidies

        Reducing the marginal incentives for people with higher incomes
    might unintentionally decrease charitable giving, just as increasing
    the standard deduction may have done for people with low and middle
    incomes. Today, higher-income people contribute a very high percentage
    of total national giving (Figure 1).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        .epsAn incentive that significantly caps subsidies for richer or
    more generous donors can easily reverberate to significantly reduce the
    money available for charitable beneficiaries. Remember that charitable
    giving, not just government transfers, provides society a way to
    redistribute income and ameliorate inequalities. If a donor would give
    $1 less because of a loss of a deduction worth $1 in reduced taxes, the
    donor's net income doesn't fall at all; some charitable beneficiary
    somewhere receives $1 less in charitable goods and services.

        There's also a longstanding issue of equal justice or horizontal
    equity that reinforces the incentive case for a charitable deduction
    even for those with higher levels of income. Think of this in the
    context of a simple tax system that assesses a tax rate of 20 percent
    on all income. If you make $100,000 a year and give away $30,000,
    should you be taxed like someone who makes $100,000 and gives away
    nothing or like someone with $70,000 of net income? Without a tax
    deduction, the net income of someone who gives away $30,000 is $50,000;
    with a deduction, it's $56,000. The nongiver still has $80,000 left in
    either case. If one wants to tax
    higher-income people more, increasing taxes on all of them may be
    fairer than simply going after charitable donors.
                      designing a more universal deduction
        In a recent brief, my colleagues Robert McClelland, Nikhiti Airi,
    Chenxi Lu, Aravind Boddupalli, and I (2019) examined how lawmakers
    could expand the existing deduction, at whatever revenue cost Congress
    entertains, to maximize benefits for people who rely on charities. Some
    parts of the following discussion come from that brief and a related
    paper. In this research we used a modest estimate of the behavioral
    response to incentives, one that does not take account of the potential
    long-run signaling power of an incentive. A higher estimate for the
    behavioral response, however, would tend to show the same relative
    advantages of different types of proposals.

        It's easy to design a subsidy that mainly benefits taxpayers but
    not charitable beneficiaries. For example, the $300 per tax unit
    nonitemizer charitable deduction in 2020 provided charitable recipients
    with as little as $100 million at a cost of $1.5 billion in forgone
    Federal revenue (Steuerle 2020). Since most donors already give more
    than $300 annually, the subsidy created an incentive for almost no one.
    And the IRS has almost no way to audit bogus claims, effectively making
    the $300 deduction available to any nonitemizer, whether they donate to
    charity or not. A somewhat similar $300 subsidy per individual taxpayer
    in 2021 had the same features.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        .epsTo better understand the effectiveness of the charitable
    deduction, we created a balance sheet that shows how income of
    government, taxpayers, and charitable recipients changes under various
    proposals (Figure 2). As noted above, additional contributions
    represent transfers that flow through charities to their beneficiaries,
    while the change in the taxpayers' net income equals their increase in
    contributions less their additional tax saving. We used a behavioral
    response commonly applied to this type of analysis. If you double that
    behavioral response, the increase in charitable contributions would be
    about double what you see in the chart, but the relative advantages of
    proposals, measured by increase in giving relative to the revenue cost
    to Treasury, stay about the same.

        We first studied an unrestricted deduction that would allow both
    itemizers and nonitemizers with a positive tax liability to deduct
    their contributions. While this would create a new tax break for many
    households, it would be very inefficient at helping the beneficiaries
    of charities since most of the subsidy would go for donations that
    would have occurred anyway.

        On net, an unrestricted charitable deduction would have lowered
    Federal revenue in 2019 by about $27 billion but increased
    contributions by only $9 billion.

        We also examined several alternative forms of a universal
    deduction. One version would allow a single deduction for itemizers and
    nonitemizers alike only for contributions in excess of 1 percent of the
    taxpayer's adjusted gross income (AGI), and another would subsidize
    contributions only in excess of 2 percent. A third would provide a
    separate deduction for nonitemizers for any giving up to one-third of
    the standard deduction--for example, up to a little more than $8,000 in
    2020 for most married couples.

        Compared with an unrestricted universal deduction, a 1-percent
    floor would reduce contributions by about a quarter but cost only one-
    third as much. Put another way, a universal deduction with no floor
    would cost $17 billion more than a universal deduction with a 1-percent
    floor, while generating only $2 billion extra for charitable
    recipients. The rest would be an additional windfall for taxpayers.

        Any floor also makes converting to a more universal deduction more
    progressive by eliminating some deductions from current itemizers with
    little effect on their incentive to give.

        The nonitemizer deduction of up to one-third of the standard
    deduction would have cost more than $20 billion in 2019 but increased
    contributions by less than $4 billion. This proposal runs into three
    sets of problems that limit its incentive effect: it provides subsidies
    for first dollars of giving that would be done anyway, it caps
    incentives for those moderately generous taxpayers who are often the
    backbone of the charitable sector, and, once again, it spends a lot on
    higher-income taxpayers who already itemize charitable contributions
    but switch to the standard deduction.
    The Switcher Problem
        Almost all attempts to expand the charitable tax deduction runs
    into what is called the ``switcher'' problem, whereby substantial tax
    benefits are provided to those who already itemize their deductions.

        Consider a married couple in 2021 who pays $10,000 in State and
    local taxes, contributes $20,000 to charities, and declares itemized
    deductions of $30,000. Now suppose that an unlimited charitable
    deduction had been allowed. The couple already could deduct any
    additional amount given to charity, so the incentive effect of the new
    regime is practically nil. The couple nonetheless would have received a
    windfall from the change in the law, as it could then have taken a
    standard deduction of $25,100 as well as a charitable deduction of
    $20,000, thereby getting an additional $15,100 in total deductions.
    Though current itemizers are not the intended target of additional
    subsidy dollars, they would still garner a large share--so large that a
    simple universal deduction would provide higher total tax subsidies for
    the richest 20 percent of households than for any other quintile
    (Steuerle et al. 2021).

        A nonitemizer deduction with a cap runs into the same issues.
    Suppose the cap for the married couple is $8,000. By switching to the
    standard deduction, a couple formerly itemizing with $8,000 of
    charitable giving within $26,100 of itemizable expenses could now
    garner $7,000 of additional deductions. In this example, the couple
    also moves from a world where they had an incentive to give some
    additional dollars to one where they had no incentive, at least for up
    to $1,000 of additional giving.

        By using a floor under which charitable contributions are not
    allowed, Congress can limit these types of gains for those already
    itemizing and improve the progressivity of an expanded deduction. A
    floor is also consistent with other provisions in the tax law that
    limit the deduction to expenses that are above normal.

        A universal deduction above 2 percent of AGI increases charitable
    giving while raising revenues for government.

        Is there a sweet spot where government can increase giving without
    any loss in revenues? My colleagues and I found that a floor of 1.9
    percent would just about break even for government under the law in
    place after 2017 but before COVID-19, while raising contributions by
    about $2.5 billion. If Congress were to restore subsidies to pre-2017
    levels, a revenue-neutral floor of less than 1 percent would
    efficiently promote giving.

        Proposals with floors also avoid providing the highest average
    additional subsidy to the 20 percent of taxpayers with the highest
    incomes who often already itemize.
                                administrability
        Unfortunately, the current charitable deduction has serious
    enforcement and tax administrative problems. It's not simply that tax
    administration is collapsing under the weight placed on it. An IRS that
    audits significantly less than 1 percent of taxpayers can hardly
    discover whether voluntarily reported transactions are valid. How can
    it possibly trace what cash I threw in the collection basket or donated
    to someone? This problem provides a real threat to creating a more
    universal deduction that would potentially add tens of millions of
    additional returns claiming hundreds of millions of individual
    contributions for which verification would be difficult if not
    impossible.
    Reporting on Charitable Contributions

        A more universal deduction with a floor under what charitable
    contributions can be deducted helps avoid adding to the IRS's
    administrability problems. And to be clear, at least for those owing
    positive tax liability, it is still a deduction universally available
    to anyone giving amounts closer to what the average giver contributes.

        But that still leaves the problem inherent even in current law.
    Over 30 years ago I went on an IMF mission to China and tried to
    explain how tax administration works in a market-based economy. One top
    Chinese administrator kept asking questions about how many people we
    punished. I tried to explain that what makes our tax system work--at
    least to the extent it does work--are accounting systems where private
    parties need and want accuracy; the IRS can latch onto those private
    accounting systems, rather than try to audit everyone, which it can't
    do anyway, or severely punish the noncompliant.

        These accounting systems take advantage of divergent interests
    within the private sector. Workers want to be paid the amount that
    businesses want to deduct. Banks want to deduct the same cost of
    interest that savers want to receive. Value-added taxes work because
    buyers want to get full credit for the tax already paid by the
    intermediate producer before them. Tariffs worked for millennia because
    buyers and sellers would gather to inspect bills of lading. In each
    case, tax administrators rely mainly upon systems of accounting in
    place because one party to the transaction wants to insure against
    overreporting, and the other party against underreporting.

        Unfortunately, we have no such system in place for charitable
    contributions, even though the taxpayer wants to take the maximum
    deduction possible and the charity wants to receive the maximum
    contribution. When there is both reporting and withholding to IRS,
    mainly for wages that can be computer matched, the net underreporting
    is estimated to be only 1 percent; when there is substantial
    information reporting to IRS on items like interest and dividends, the
    figure is more like 5 percent. Compliance rates fall off substantially
    from there, even when there is partial reporting to IRS (Figure 3).

        We really don't know how well charitable contributions are reported
    partly because the IRS doesn't study this matter to any great extent.
    But, even if the IRS tried, it has no way of judging the accuracy of
    many claims. If Congress tripled the size of the IRS, it could probably
    audit more people for confirmation, especially of individual
    contributions above $250, for which charities are supposed to provide
    acknowledgment to donors. But auditing is terribly expensive,
    burdensome to taxpayers, inadequate even in the best of cases, and
    fairly useless when no records are available. Bottom line, there is no
    way on this green earth that the IRS can check on and audit billions of
    charitable transactions under current, very outdated systems of
    accounting and reporting.

        Though I focus here mainly on limits for IRS enforcement, there are
    also burdens on taxpayers. Think of all taxpayers now having to keep
    track of the extra dollar of contribution implicit in each box of Girl
    Scout cookies purchased.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        .epsFortunately, there may be no more opportune time for Congress
    to create a system of electronic reporting for charitable deductions.

        In an era where recording of transactions extends even to
    cryptocurrency, I have little doubt that technology can easily meet the
    challenge of creating a much better and not-too-expensive system of
    reporting to the IRS. Third-party intermediaries, including tax
    preparers, payroll providers, and credit card companies, likely would
    create ways to do this easily. If people don't want to share their
    Social Security numbers, they could make their contributions through,
    say, tax preparers who already must know that Social Security number.
    Or people might limit that information by channeling their
    contributions through a single donor-advised fund, as some people do
    already to simplify their tax filing. Almost all transactions today are
    recorded electronically. I give to many charities, large and small, and
    nary a one doesn't generate electronic information for me.

        Even if Congress does not require electronic filing for everyone,
    it could limit the eligibility for a more universal deduction to
    contributions made through record-
    keepers. With so many taxpayers ineligible today for a charitable
    deduction, Congress would still be significantly expanding the number
    of people who get a deduction. No charity need be left out except on
    its own volition. And perhaps some subsidies for administrative costs
    could be made available to charities for a transition period.

        I don't deny that charities would need time and effort to adjust to
    a better information system, but bearing that cost might support an
    even more generous deduction than Congress could otherwise supply. A
    more generous deduction might, in turn, generate tens of billions of
    dollars of additional contributions annually and help create a more
    transparent sector with fewer temptations for donors and charities.
    Moreover, the charities with the least sophisticated accounting systems
    likely depend more on less wealthy donors. If so, most of their
    contributors don't get a deduction currently anyway.
    In-Kind Charitable Contributions
        Some attention must also be paid to the ability of IRS to monitor
    in-kind charitable contribution (Colinvaux 2019). More than 83 percent
    of noncash charitable donations in 2018, or over 11 million donated
    items valued at over $12 billion, were in the form of clothing or
    household items (Statistics of Income, IRS, for 2018). Imagine
    multiplying that number of items several fold with a more universal
    deduction.

        Issues here extend from outright cheating to questionable
    valuations to costs to Treasury in excess of what flows through to the
    charities. Most of us have probably gotten the blank slip to fill out
    ourselves when we donate some items. Also consider the case where
    someone uses a household good or piece of clothing a few times, donates
    it, and values it at half the original market price. Then a profit-
    making firm acting as an agent for a charity transfers the item to a
    thrift store. There the item sells for one-twentieth of its original
    value, and most of those proceeds are paid to the store and the profit-
    making agent. Such a set of transactions may be totally legal, even
    though the charity gets only a tiny fraction of what the donation cost
    the government.

        Another option often put on the table is to allow deductions for
    the sales price of complex assets. Again, I wonder whether this type of
    reform would reduce charitable giving very much; if so, the additional
    revenue pick-up could be put back into a better incentive for more
    administrable contributions.

        If we can't figure out better ways to deal with these and other
    types of in-kind contributions, then perhaps the more universal
    deduction should be confined to cash contributions.
                        saliency and behavioral science
        The behavioral public finance literature encourages us to think
    about psychology, not just economic incentives, when designing features
    of a tax system.
    Allowing Deductions at Time of Tax Filing (the April 15th Idea)
        For more than a quarter-century I have suggested that allowing
    deductions up until April 15th or the time of filing of a return would
    provide more bang per buck, or increased contributions relative to
    revenue cost, than almost any other reform.

        My thoughts came from some simple observations. First, the best
    time to advertise the value of a charitable deduction is when people
    fill out their tax returns and tax preparers help them look for
    additional ways to reduce taxes. Second, many people tend to
    underestimate their marginal tax rate or the size of the subsidy for
    giving. They may equate the subsidy rate with their average, not
    marginal, tax rate. At filing time, however, tax preparers and tax
    software companies can show people directly how much they would save
    for each $100 of contributions they make. They can also help taxpayers
    donate enough to avoid any significant penalty for underpayment of
    taxes due.

        A version of this alternative deadline for claiming charitable
    deductions was included in the America Gives More Act that passed the
    House of Representatives in July 2014.

        Since this additional advertising does almost nothing to change the
    size of the incentive (other than perhaps a minor timing change on when
    the contribution is made), the cost to the Treasury is modest, perhaps
    $15 or $30 (or the average marginal tax rate that applies to
    contributions) for every additional $100 contribution made.

        In April 2016, Alex Rees-Jones and Dmitry Tabuinsky, two scholars
    who work at the intersection of public economics and behavioral
    economics, prepared a brief on ``Tax Psychology and the Timing of
    Charitable-Giving Deadlines.'' They examined this type of reform in
    more detail and concluded that it would likely increase charitable
    giving when (1) individuals, who tend to be focused on the present more
    than the future, can claim an incentive payment very quickly after the
    donation; (2) tax rules are more salient and more likely to be examined
    by the taxpayer, as at tax filing time; and (3) taxpayers, who are
    generally tax averse, find immediate opportunities to turn that
    aversion into reducing taxes even as they are paying them.

        To deal with the enforcement issues I relayed above, however, this
    April 15th allowance might be allowed only for contributions
    accompanied by an improved reporting system, as is the case with IRA
    contributions that can also be made up to the time of tax filing.
    Otherwise, at least one Treasury official I talked to in the past
    feared that some taxpayers would take the deduction twice--for example,
    on April 15, 2022, for 2021 income taxes and again in 2023 for 2022
    taxes.
    Lottery Winnings
        People who come into sudden windfalls by winning lotteries are
    quickly get confronted with the tax consequences. If winners are
    charitably minded, they might make donate some of or all their
    winnings, then find themselves unable to take a full deduction for that
    donation.

        Suppose I spend $1 on a winning lottery ticket that has a 1 in 10
    million chance of winning $5 million. If I donate the ticket to a
    charity before the lottery drawing, I effectively have given away a
    ticket only worth 50 cents, and the income from the winnings would flow
    directly to the charity. Of course, charities might not even want to
    handle contributions of almost worthless lottery tickets. When I win
    and try to give the winnings away, however, I probably can't avoid
    paying tax on up to $2 million or so of the winnings (when the maximum
    deduction is set at 60 percent of AGI).

        Why not simplify this whole mess for lottery winners and grant them
    a limited period within which to donate the winnings, or some share of
    the winnings, to charity with no deduction limit? Why trap them into
    the arcane formalities of the tax laws? The most salient time for
    people to think about what to do with possible winnings is when they
    win, not when they buy the ticket.
    Matching Grants Versus Tax Reductions
        A third way to consider behavioral science is to consider matching
    grants in lieu of tax reductions. I recognize that I am bringing up
    many difficult issues here, including potential cross-jurisdictional
    authority across congressional committees and direct expenditures
    versus tax subsidies.

        Consider a taxpayer with an effective tax deduction of 40 cents for
    a dollar contributed. In effect, that taxpayer's net contribution is 60
    cents, and the government effectively provides a 2-for-3 or 67-percent
    match for the net contribution. The 67-percent figure sounds higher
    than the 40-percent figure, yet the $1 tax-deductible contribution is
    equivalent to the 60-cent contribution matched by a grant. I've already
    discussed how many taxpayers may underestimate the size of the
    incentive they face with today's deduction. Many further likely also
    underestimate the size of the government match.

        For at least some donors who give away the same gross amount either
    way and ignore incentives, the amount going to charity will be much
    higher with a matching grant. In the example above, the $1 eligible for
    a tax incentive yields only $1 to the charity and 40 cents back to the
    taxpayer; the matching grant yields $1.67 to the charity and nothing
    back to the taxpayer.

        As one example of this type of arrangement, for over 6 years the
    United Kingdom offered a UK Aid Match, run by the Foreign, Commonwealth
    and Development Office, to support public engagement in international
    development work. It matches generous donations from the public pound
    for pound. Total subsidies are capped, however, which severely limits
    the impact of the program and its net incentive effect.

        These three examples show ways we can use behavioral science to
    create a more effective design of charitable subsidies.
                                   conclusion
        In the early 1990s I wrote a book called The Tax Decade. The title
    alluded to the fact that almost every major tax, budget, and spending
    reform of that decade was led by efforts within the Senate Finance and
    Ways and Means committees. Almost all those reforms engaged in trade-
    offs that would offend someone. Today many members of Congress, as well
    as constituents, talk about the failure of those very same processes. I
    think that failure relates directly to our increasing inability as a
    people to accept that trade-offs are necessary to enact good policy--
    that money used one way inevitably can't be used another way. And we
    pull Congress in the same direction. Yet reforms that require trade-
    offs must be led by Congress and can't be expected from membership
    organizations that try to represent all their members.

        Based on that experience, I recommend turning to nonpartisan or
    bipartisan congressional or other staff to provide options based upon
    how well they improve charitable giving at whatever net subsidy dollars
    you specify. Along those lines, I suggest paying close attention to how
    the societal, not just individual, value of giving can be promoted; how
    for any given level of subsidy, caps significantly weaken and floors
    significantly strengthen the incentive provided; how to decrease rather
    than add to compliance problems for IRS while using the saving from
    improved compliance to provide a more generous charitable incentive;
    and how making incentives more salient can add to charitable giving.

        All these recommendations aim to create a more participatory
    charitable sector, along with maximum gains for charitable
    beneficiaries for whatever total subsidy level Congress provides.

    REFERENCES

    ``All Individual Returns With Noncash Charitable Contributions Reported
    on Form 8283, by Donation Type, Tax Year 2018.'' SOI Tax Stats--
    Individual Noncash Charitable Contributions, Internal Revenue Service,
    https://www.irs.gov/statistics/soi-tax-stats-individual-noncash-
    charitable-contributions.

    Colinvaux, Roger. 2017. ``The Importance of a Participatory Charitable
    Giving Incentive.'' Tax Notes 154 (605), https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=
    2924562.

    ------. 2019. ``Fixing Philanthropy: A Vision for Charitable Giving and
    Reform.'' Tax Notes 162 (1007), https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=3354717.

    Faulk, Lewis, Mirae Kim, Teresa Derrick-Mills, Elizabeth Boris, Laura
    Tomasko, Nora Hakizimana, Tianyu Chen, Minjung Kim, and Layla Nath.
    2021. ``Nonprofit Trends and Impacts, 2021.'' Washington, DC: The Urban
    Institute, October 15, 2021, https://www.urban.org/sites/default/files/
    publication/104889/nonprofit-trends-and-impacts-2021_3.pdf.

    Jones, Jeffrey M. 2020. ``Percentage of Americans Donating to Charity
    at New Low.'' Gallup, May 14th, https://news.gallup.com/poll/310880/
    percentage-americans-donating-charity-new-low.aspx.

    Indiana University Lilly Family School of Philanthropy. Giving USA.
    Chicago, IL: Giving USA Foundation, various years.

    McClelland, Rob, Eugene Steuerle, Chenxi Lu, and Aravind Boddupalli.
    2019. ``Tax Incentives for Charitable Contributions.,'' Washington, DC:
    Urban-Brookings Tax Policy Center, November 12, 2019, https://
    www.taxpolicycenter.org/publications/tax-incentives-charitable-
    contributions.

    Rees-Jones, Alex, and Dmitry Taubinsky. 2016. ``Tax Psychology and the
    Timing of Charitable-Giving Deadlines.'' Washington, DC: Urban
    Institute, https://www.urban.org/research/publication/tax-psychology-
    and-timing-charitable-giving-deadlines.

    Rosenberg, Joseph, and Phillip Stallworth. 2017. ``The House Bill Is
    Not Very Charitable to Nonprofits.'' Tax Vox (blog), Tax Policy Center,
    November 15th, https://www.taxpolicycenter.org/taxvox/house-tax-bill-
    not-very-charitable-nonprofits.

    Steuerle, Eugene. 2018. ``Challenges and Opportunities for Charities
    After the 2017 Tax Cuts and Jobs Act.'' Presentation to the ABA Tax
    Meetings Exempt Organization Section, Washington, DC, May 11th, https:/
    /www.taxpolicycenter.org/publications/challenges-opportunities-
    charities-after-2017-tax-cuts-and-jobs-act.

    ------. 2020. ``The CARES Act Charitable Deduction for Non-Itemizers
    Was a Lost Opportunity to Help Beneficiaries of Non-Profits.'' Tax Vox
    (blog), Tax Policy Center, May 19th, https://www.taxpolicycenter.org/
    taxvox/cares-act-charitable-deduction-non-itemizers-was-lost-
    opportunity-help-beneficiaries-non.

    Steuerle, C. Eugene, Robert McClelland, Nikhita Airi, Chenxi Lu, and
    Aravind Boddupalli. 2021. ``Designing an Effective and More Universal
    Charitable Deduction.'' Washington, DC: Urban-Brookings Tax Policy
    Center, https://www.
    urban.org/research/publication/designing-effective-and-more-universal-
    charitable-deduction.

                                     ______

        Questions Submitted for the Record to C. Eugene Steuerle, Ph.D.
                      Question Submitted by Hon. Ron Wyden
        Question. In the CARES Act, Congress created a non-itemizer
    charitable deduction of up to $300 in 2020, which was later extended
    and expanded for 2021. You proposed a number of thoughtful policy
    options in your testimony which would make charitable incentives more
    efficient. But some proposals to better target giving incentives may
    not be supported by the broader charitable sector.

        Where are the areas of disagreement? And are there practical ways
    to bridge those divides?

        Answer. 1. Enforcement and Administration. One area of disagreement
    is over enforcement and administration. I believe this is an optimal
    time to make a more extended deduction in exchange for a system of
    reporting to the IRS, though I realize some charities will object to
    the additional burden. I suppose that one could offer the more extended
    deduction only for those contributions that are reported to the IRS,
    thus taking nothing away from any charity that it doesn't already have.
    In that ``political'' sense, it would create no losers. Charities would
    then ``volunteer'' to report to trigger the expanded deduction for
    donors.

        In the long run, however, I think the charitable sector is already
    hurt by a deduction that is not well administered, while the American
    taxpayer loses out by the extent of cheating that this lack of
    administration likely invites. Creating a greatly expanded deduction
    could exacerbate both problems and damage the reputation of charities.
    If one creates an expanded deduction with some notion that some later
    Congress could tackle the issue, charities would be much more likely to
    view that later effort simply as an attack on them, rather than a
    modest new burden enacted to get an enhanced deduction.

        By the way, there are numerous ways in which taxpayers can limit
    access to their information about themselves. For instance, they could
    contribute through an intermediary such as a tax preparer or a donor
    advised fund that maintained anonymity and provided the matchable
    documents to IRS.

        2. A floor. Much of the study of economics is built around the
    notion of marginal incentives. Most all economists would agree that a
    floor (e.g., a deduction only for giving above, say, 1 or 2 percent of
    income) provides much more charitable giving per dollar of contribution
    made. A few charities, mistakenly in my view, believe a floor would
    leave out many of their donors. But this seems to be based on their
    receipt of some average contribution like $300 to that charity alone,
    when most donors give to multiple charities. Moreover, most very small
    givers have never been eligible for a charitable deduction, even under
    pre-2017 law.

        Suppose that Congress allowed a deduction for giving above 1
    percent of AGI (subject to a reporting requirement, which, in my view,
    is the only way it can be administrable). This is a universal deduction
    option for everyone who gives more than 1 percent of income. Note that
    2 percent is the average for all taxpayers and 3 percent is closer to
    the average for givers, those who give some positive amount).
    Additionally, the whole purpose of the standard deduction and the floor
    under medical expense deduction was to limit burdens not just to IRS
    but to taxpayers when amounts are small.

        3. Tradeoffs. Like other organizations, charities have difficulty
    dealing with tradeoffs. Their membership organizations want to be
    appreciative to each member of Congress for anything they can get.
    Also, they fear offering trade-offs and then only getting the raw end
    of the bargain in some deficit cutting exercise. To deal with their own
    constituencies and members, they often get trapped in supporting
    efforts that give away money to most charities without any to give up
    anything, even when such an incentive is a very bad deal for most
    charities relative to one that would increase charitable giving more
    for the same level of cost.

        I believe the only way to help the sector representatives get their
    members to face up to the trade-offs is to present equal cost options.
    By its very nature, a fixed budget for considering options shows the
    trade-offs involved. (To be clear, this can be done at multiple levels
    of fixed budgets; at each level, the trade-offs are then made
    apparent.) As I indicated in my testimony, those options should be
    accompanied by estimates of the amount of charitable giving generated
    from each option. Then the sector representatives can tell their
    members that, say, ``Here's option 1. It costs, say, $10 billion but
    generates only $2 billion in charitable giving and $8 billion of net
    taxpayer relief that doesn't go for charitable purposes. Option 2 also
    costs $10 billion but likely generates $10 billion in charitable
    giving.'' While there are more winners and losers in the second option,
    this comparison allows both the charities and Congress to keep eyes on
    the prize--the charitable beneficiaries we are trying to help.

        Mr. Chairman, a number of years ago you expressed admiration for my
    work in helping organize and design the study that led to the Tax
    Reform Act of 1986. One of the reasons that engagement worked
    politically was that the negotiations that followed were conducted
    under a set revenue goal. Advocates were then forced to argue for why
    their alternative was superior to others. I think the Senate Finance
    Committee, along with Ways and Means and Treasury, will soon be facing
    a period where tax, budget, Social Security, and Medicare reform will
    force many tougher comparisons and tradeoffs to be considered. I
    realize that the tax treatment of charitable contributions represents
    only a modest amount policy arena compared to some of these other
    issues. Setting up a good process now can set a precedent that might be
    quite helpful for the future.

                                     ______

                     Question Submitted by Hon. Mike Crapo
        Question. You have raised a lot of tax-specific points that are
    important for the Finance Committee to consider. In your written
    statement, you raised an interesting idea: that perhaps Congress should
    allow individuals to take deductions for charitable donations up until
    the time of the tax return filing deadline.

        Even if implemented correctly, what other challenges do you think
    could arise?

        Answer. I have heard two objections made to this provision. First,
    some people might be confused as to whether the donation at time of tax
    filing might again be available the following year. For instance, I
    take a deduction at tax filing time in 2021 on my 2020 return. I then
    must be sure not to take the deduction again in 2021. (The same issue
    arises with IRA contributions.) I think that potential problem is
    easily solved by a system of reporting. If not the more elaborate
    system required with a more universal deduction, then simply make this
    option available exactly at time of filing. Almost everyone uses tax
    software or an accountant who uses such software that could report
    accurately just when and how the deduction is made.

        The second objection I have heard is that contribution deductions
    at time of tax filing change the status quo for charities that
    emphasize end-of-year advertising. I don't find this very convincing in
    an age when charities send out requests year-round. First Tuesday or
    other ``days of giving'' offer yet another recent option that many
    charities latched onto. They didn't ask the First Tuesday organizers to
    shut down because people confuse it with end-of-year efforts.

        The main reason for offering a deduction at time of tax filing is
    that by making the size of the tax incentive transparent, it is highly
    likely to increase the perceived incentive to give. Taxpayers also like
    to get refunds rather than write checks to Treasury, and this option
    allows them to make avoid those extra payments. As a result, the bang
    per buck for this option is greater than almost any other that I have
    been able to conceive. If a taxpayer is in a 25-percent bracket, any
    extra giving yields something like a 4-to-1 ratio of extra giving
    relative to extra cost for the Treasury.

        Why doesn't such a ratio exist for the current deduction? That
    deduction provides incentives for every dollar of giving, not just
    additional dollars. For the most part, the deduction at time of filing
    doesn't really add any new incentives for the dollars of giving already
    being made; it simply makes apparent the incentives so as to entice
    additional giving.

        In my testimony, I have quoted some behavioral economists who
    provide related arguments on why this incentive might be fairly
    powerful.

        I invite you also to look at the small proposal I made with respect
    to lottery winnings. State governments might also be able to take
    advantage of this type of simplification to encourage winners of their
    big lotteries to donate to charity.

                                     ______

                 Questions Submitted by Hon. Sheldon Whitehouse
        Question. The deduction for charitable donations is meant to
    encourage contributions that benefit the public. With donor-advised
    funds, the donor gets the deduction now, but the charitable benefit may
    not happen for years.

        Are there any reforms to donor-advised funds that should be
    considered?

        Answer. To me the questions surrounding donor advised funds are
    ones that apply to charity more generally. To give a few examples:

        First, endowments and assets. Charities that grow their endowments
    and assets, whether defined as endowments at all, tuck away far more
    money that sits in donor advised funds. All asset buildup defers the
    spending of money for charitable beneficiaries, to some extent favoring
    future beneficiaries over current ones. I have asked charities whether
    they would prefer to have an endowment (or more assets, whether labeled
    ``endowment'' or not), and most of any size almost uniformly indicate,
    ``Yes.'' It's not clear to me, therefore, that ``spend now, not later''
    argument applies more to DAFs than other charitable assets.

        There's also a technical question whether DAF rules could prevent
    operating charities from effectively running DAFs. For instance, an
    operating charity might tuck away enough operating funds to offset any
    payout requirement.

        The DAF is a far more flexible instrument than many other assets
    and endowments within the charitable sector. For instance, the donation
    of a building to a charity determines the use of those funds for
    decades or even a century to come and typically locks in assets and
    their use far more than a DAF. DAFs also tend not to be locked into
    fulfilling some donor intent that may be a less efficient use of
    charitable money down the road.

        Second, political uses of charities. The use of charities for
    political purposes is indeed an issue but is hardly confined to donor-
    advised funds. Whatever rules need to apply here, including on
    disclosure, seems to me to be considered across the charitable sector.

        Third, self-dealing. One issue that tended to drive past rules for
    foundations was self-dealing or using the foundation for control of a
    business. If that is an issue, then I would try to think of rules here
    that identify the abuses. Also, here it seems sensible to require
    national DAFS to ensure that the fund investment they sponsor have as
    low of a fee structure as is available for equivalent investments in
    the market generally.

        Fourth, the wealthy. In a study of rules applying to foundations,
    Ben Soskis and I found that the motivation that led to the 1969 Act,
    sometimes by Democrats and sometimes by Republicans, centered around
    suspicion of the wealthy and what they were doing with the money.
    Treasury did focus its study leading to that Act in part on money was
    tucked away and not paid out over time. If that's the issue here, then
    perhaps some simplified payout rules such as apply to foundations
    should apply to very large DAFs. Keep in mind, however, that the very
    wealthy generally don't get a current contribution deduction anyway for
    giving away very much of their wealth (most of their income is accrued,
    not realized). They can avoid most rules by simply giving away less,
    or, as some wealthy donors already are doing, setting up a ``not-for-
    profit'' firm that generates little income because it gives away its
    money or subsidies activities at below cost.

        My experience as a cofounder of a community foundation is that DAFs
    are sometimes created to build up funds for specific purposes. Some are
    of modest size, and annual payouts may make little sense. Some are
    meant to provide permanent support to the community foundation, as when
    one designates a regular payout for that purpose but wants to maintain
    flexibility in case some other need becomes greater. Some are modest
    family efforts for the long-term purpose of teaching children and
    grandchildren to give. At the community foundation, we might have one
    fund for accumulating money to garner public support for a swimming
    pool or building, but, again, the donors may want to maintain
    flexibility in case that option doesn't work out. Another fund might
    gather money for racial equity work, with uncertain dates as to how and
    when that money will be distributed. Most DAF donors give away money to
    non-DAF charities; if combined, their ``effective payout'' is quite
    high even if the DAF pays out little in a given year.

        Finally, I note again that charities build up assets all the time.
    The main distinction with a DAF is that the right of decision-making
    for future rests with donors or someone they designate; at the same
    time, the money is often much more flexible and not locked up for some
    specific purpose.

        Question. We have heard that reforms which require tracking when
    donations come in and when they are distributed from donor-advised
    funds can be an administrative burden.

        Do you have ideas for ameliorating any administrative burden that
    may exist?

        Answer. If you go down this route, I suggest just using beginning-
    of-year asset value to determine some minimum payout, though, as noted
    above, even a minimum payout, other than perhaps for some foundation
    equivalent treatment very large DAFs not set aside for some specific
    future purpose, gives me concerns. If you're referring to some limited
    life rule, it could become much more complex in trying to date every
    dollar of income that comes in or goes out so that each dollar has the
    ``right'' limited life. Our community foundation relies upon some
    donors for year-after-year contributions of a certain percentage of DAF
    assets for the operations of the community foundation itself.

        The appeal of DAFs is their simplicity, which very likely increases
    charitable giving. I would try to avoid any rule that forces people to
    create multiple DAFs to get around the rules, weakens the
    attractiveness of this inducement to additional giving, and restores
    the power over endowments only to the big players rather than the
    democratization of endowment giving that DAFs have helped create.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
        Question. In your testimony you raised important policy
    considerations for developing a cost-effective universal charitable
    deduction. In the CARES Act, Congress established a temporary non-
    itemizer deduction for small dollar donations that expired at the end
    of 2021. This deduction is strictly limited to cash donations and
    contributions to certain organizations do not qualify.

        In the event Congress decides to extend this deduction, do you have
    a view on whether Congress should maintain or eliminate the current
    restrictions?

        Answer. Many types of in-kind deductions are extremely hard to
    administer and enforce. Even with a well-designed reporting system, a
    good case can be made for limiting a more universal deduction to cash.
    For some types of assets, it might be reasonable to allow the deduction
    when the charity sells the asset, though I think in-kind donations each
    have their own sets of enforcement issues and offer different type of
    regulatory or self- regulatory options that need to be considered.

        Question. In addition to enacting a non-itemizer deduction,
    Congress also sought to boost charitable giving during the pandemic by
    relaxing limits on the individual and corporate itemizer deduction.
    These provisions temporarily allowed individuals to deduct up to 100
    percent of AGI and corporations to deduct up to 25 percent of taxable
    income.

        Do you have any data or information you could share on the
    effectiveness of these provisions? What should Congress consider in
    deciding whether to extend either provision?

        Answer. I do not have empirical evidence on the effect of these
    higher deduction limits. In many cases, corporations can treat
    charitable contributions as expenses of doing business or creating
    goodwill, so I'm not sure how effective that higher corporate limit is,
    other than making it easier to ``market'' their charitable efforts
    (which may be a good thing). A higher individual deduction, on the
    other hand, does add to incentives, though historically we have found
    that temporary incentives often lead many donors to change the timing
    of their donations over years to maximize the incentive they receive.
    We have also found that people often take time to learn about
    incentives, so a more permanent increase tends also to have a higher
    annual effect than a temporary one. But, as I say, most of this is
    theoretical speculation about the latest limits, not empirical.

        Question. In your written testimony, you discuss issues pertaining
    to in-kind charitable contributions. Last year, Richard Rubin of The
    Wall Street Journal tweeted that at a tax conference a senior IRS
    staffer had expressed concerns that people were donating yachts and
    claiming deductions far greater than the fair market value. This is
    concerning to me as I led efforts in the 2000s to clamp down on such
    abuses by limiting the deduction for a vehicle or boat, including a
    yacht, to its sale value in most cases and strengthened rules governing
    appraisals where a fair market value deduction continued to be
    permitted.

        Do you have any suggestions for reforming our reliance on
    appraisals to correct this problem?

        Answer. Many in-kind contributions are extremely hard to value. I
    gave the example in my testimony of gifts of clothing that might
    legitimately get valued at a multiple of any money that eventually goes
    to charities. As for yachts, the incentive to take the higher of
    reasonable appraisal values may still exist.

        When I've talked to IRS officials, they tell me that they simply
    don't have the resources to tackle these issues. First, very few people
    get audited. Then, even if they are audited, the auditor may have no
    expertise with yachts or easements or other types of in-kind gifts.
    Next, the auditor would have to decide how much time and money would be
    required to pay different appraisers to come up with some alternative
    valuation. Further costs would be entailed for IRS if the taxpayer
    decided to fight the alternative appraisal. Finally, IRS must consider
    how many other important audits have been neglected as a result of
    expensive audits of in-kind contributions.

        IRS often gets limited support for its efforts here, as well. Since
    the losses from excess deductions usually are shifted to the Treasury
    and the public it represents, private assessors, charities and
    government recipients of gifts often have little or no incentive to
    restrict valuations to more appropriate levels.

        One solution for some in-kind gifts would be to allow a deduction
    only upon final sale; one might also consider some requirement as to
    what minimum portion of declared valuation must be turned over to
    charities. In some cases, charities might be held accountable for the
    assessment, with some strict penalties for noncompliance. The
    charitable sector might also be engaged to come up with strict
    standards.

        The time to bargain with the sector over these issues is while
    Congress is considering expanding the charitable deduction. It is
    entirely proper to ask something in return from the sector to ensure
    that the dollars provided by Congress most likely lead to increases in
    charitable goods and services, not just claimed deductions that do
    little for charitable beneficiaries.

        Question. On December 22, 2020, I released the results of an
    investigation conducted by my staff into the relationship between World
    Vision, a 501(c)(3) non-profit organization, and the Islamic Relief
    Agency, which had been sanctioned by the U.S. government. My
    investigation concluded in part, ``A more robust and fundamentally
    sound system of screening and vetting is needed to restore the public's
    trust that contributions to World Vision are not funding illicit
    organizations.'' The full results of that investigation are available
    on my webpage here: https://www.
    grassley.senate.gov/news/news-releases/grassley-releases-results-
    investigation-world-vision-s-interactions-isra.

        Do you believe that charities have implemented adequate safeguards
    to ensure that grants from the U.S. Government and donations from
    Americans are not even inadvertently funneled to the benefit of
    individuals or groups that have been sanctioned by the U.S. Government?
    Are there additional steps charities can take to ensure they are
    following applicable rules and regulations, or is there any action
    Congress should take to promote that compliance?

        Answer. I do not know the full story behind this particular
    incident. I do know from experience that many charities have to pay a
    higher hourly rate to their lawyers and accountants than to their own
    staff, so I worry about the net impact of expanded regulatory
    requirements. Groups like World Vision, Catholic Relief Services, and
    Lutheran World Relief also attempt to maximize the amount of money that
    reaches beneficiaries. These groups inevitably face problems everywhere
    in trying to help beneficiaries avoid having to pay bribes or be sucked
    up in some other misuse of funds in areas when the rule of law is not
    well established. Determining the legitimate needs of beneficiaries is
    also difficult at home and abroad. For instance, the food bank at my
    church has limited ability to monitor each beneficiary, just as State
    governments face problems in determining true eligibility for welfare.

        I don't know any perfect way to deal with these issues. At best,
    government can establish imperfect bright lines and continually try to
    reassess them. But very limited resources have been provided by both
    Congress to IRS and by State officials to their Attorneys General to
    monitor this and many other aspects of the charitable sector.

        Question. In an article published in 2020 in the Maryland Law
    Review, Professor Johnny Rex Buckles concludes in part, ``Federal tax
    law permits foreign actors to influence U.S. politics and policies
    through their interactions with American charities.''\1\ He goes on to
    note in his conclusion, ``Even the existing restrictions on lobbying,
    and the prohibition against political campaign intervention, safeguard
    against only the most obvious exploitation of charities by politically
    motivated foreign actions.''\2\
    ---------------------------------------------------------------------------
        \1\ Johnny Rex Buckles, ``Curbing (or Not) Foreign Influence on
    U.S. Politics and Policies Through the Federal Taxation of Charities,''
    Maryland Law Review, Vol. 79:590 (2020).
        \2\ Id.

        In a theoretical case study, the article presents an example where
    a Russian oil baron donates to a U.S. charity that educates the
    American public on the dangers of fossil fuels with the intent of
    promoting increased regulation of U.S. fossil fuel interests that would
    ---------------------------------------------------------------------------
    serve to confer a comparative advantage on their Russian competitor.

        This example may in fact not be very theoretical. In an opinion
    piece published in The Hill in March of 2022, Institute for Policy
    Innovation resident scholar Merrill Matthews wrote, ``U.S. policymakers
    are finally realizing that Russia may have been covertly funding U.S.
    environmental organizations to shape public opinion and policies--
    especially energy and anti-fossil fuel policies--to Russia's liking and
    benefit. Such Russian skullduggery has long been an open secret in
    Europe.''\3\
    ---------------------------------------------------------------------------
        \3\ Matthews, Merrill, ``Russia used `soft power' to influence EU
    policies and anti-fossil fuel efforts,'' The Hill, March 22, 2022,
    available at https://thehill.com/opinion/energy-environment/599113-
    russia-used-soft-power-to-influence-eu-policies-and-anti-fossil.

        Do you have concerns that foreign actions are able to exploit U.S.
    tax-exempt organizations to promote their own priorities and extend
    ---------------------------------------------------------------------------
    influence over U.S. policy?

        Answer. Yes, I certainly do. Though my concerns extend far beyond
    foreign actors and tax-exempt organizations. The ``noise'' that
    surrounds our policy discussions today is increasingly exploited to
    mislead and create division among us. I have no easy answers here,
    though higher levels of penalties to individual actors, not just
    organizations, might be considered.

        Question. Are there reliable measures of how much foreign money is
    poured into U.S. non-profit entities and the source of that funding?

        Answer. I do not know the answer to this question. I believe one
    could engage some statisticians and social scientists to help tease out
    whether a better answer could be obtained with some surveys. Better
    reporting might also make it possible to come closer to an answer.

        I might also note that IRS recently dropped the requirement that
    nonprofits (other than 501(c)(3)s) provide the Schedule B (major donor
    disclosure) to the IRS. That was one of the few tools available to
    track the financing of nonprofits.

        Question. Do you have an estimate of funding for U.S. non-profits
    that originated from sources aligned with Russia, or Russian policy
    priorities?

        Answer. No, I do not.

                                     ______

                     Question Submitted by Hon. Todd Young
        Question. During the hearing, I had the opportunity to discuss with
    Dr. Osili some of the barriers to establishing more community
    foundations around the country. Unfortunately, I did not have enough
    time to solicit your response to that question.

        Given your experience as founder and chair emeritus of ACT for
    Alexandria, what Federal barriers, if any, did you observe that may
    prevent or hinder the creation of more community foundations across the
    country? For any Federal barriers you identify, please provide your
    recommendations to address them.

        Answer. I cannot think of any major Federal barriers right now.
    Some of the efforts with respect to DAFs--in particular, limited life
    for DAF funds, if applied to community foundations--might easily have
    prevented the survival of the community foundation I helped found. I
    applaud the efforts of the broader foundation community to create,
    encourage, and continually improve standards of operation for community
    foundations.

                                     ______

                     Prepared Statement of Hon. Ron Wyden,
                           a U.S. Senator From Oregon
        The Finance Committee meets this morning to discuss ways to go
    about promoting charitable giving in America. Americans are generous
    people, and that's why charity is one of the key incentives embedded at
    the heart of our tax code and a top priority for Democrats and
    Republicans on this committee.

        I've always said that the charitable tax deduction is a lifeline,
    not a loophole. That's never been truer than it was in early 2020 when
    the pandemic arrived in the United States.

        Over the course of just a few weeks that March, the pandemic wiped
    out a quarter of a million jobs in my home State of Oregon. This is in
    a State with a workforce of just over 2 million people. In a flash,
    Oregon's unemployment rate jumped by 10 percentage points. As terrible
    as those figures are, other States had it even worse in terms of those
    early pandemic job losses. More than 22 million Americans lost their
    jobs or had their hours reduced to zero. The unemployment rate hit 14.8
    percent, the highest ever recorded.

        That economic devastation added to a hunger crisis that had been
    causing pain among families in America for far too long. According to
    the Children's Defense Fund, prior to the pandemic, more than 10
    million American children were growing up in households where there
    wasn't enough to eat. Black and Latino families were twice as likely to
    be short on food. Again, that was the situation before anybody had
    heard of COVID-19.

        The crisis exploded in 2020. Everybody remembers the images of cars
    stacked up for miles outside of food pantries. There was an added
    challenge of feeding vulnerable children, many of whom were unable to
    get the free lunches they rely on for nutrition at school.

        The committee is fortunate to be joined this morning by my Portland
    neighbor Susannah Morgan, the CEO of the Oregon Food Bank. She's going
    to share with us the story of how this crisis hit Oregon families, as
    well as how her wonderful organization was able to respond through the
    1,400 food pantries it supports across Oregon and into southwest
    Washington. Many times, prior to the pandemic, I'd seen the Food Bank's
    incredible work firsthand. And the Food Bank found an extra gear over
    the past 2 years to support families in need.

        The record shows that in 2020, in Oregon and across the country,
    Americans stepped up when their neighbors needed help. Charitable
    giving reached new highs. The Federal and State Governments also
    stepped up.

        There are some important lessons this committee ought to consider
    going forward, because there are still millions and millions of people
    across the country who need support. Organizations like the Oregon Food
    Bank are still seeing demand at higher levels than they did in 2019.

        Two quick examples. First, the CARES Act, which the Congress passed
    in March 2020, included a tax deduction for charitable donations of up
    to $300 for the vast majority of taxpayers, who don't itemize their tax
    returns. The 2017 tax law took some of the punch out of the existing
    charitable tax deduction by greatly reducing the number of taxpayers
    who itemize. The new $300 deduction helped correct that, and it helped
    promote giving in 2020. It was extended and expanded in 2021, but it
    expired on January 1st. There ought to be bipartisan interest in
    reviving it and expanding it to promote even more giving.

        Second, in addition to promoting donations, the Senate ought to
    look at ways of helping nonprofits operate, keep their doors open, and
    keep their workers on the job. The CARES Act also created an Employee
    Retention Tax Credit that helped save a lot of jobs nationwide, and it
    was also extended and expanded in 2021. The credit was designed with
    parity for nonprofits in mind, so that those nonprofits and their
    workers could benefit just like other employers.

        Last year, along with Senator Brown, Senator Klobuchar, and Senator
    Schatz, I also introduced a bill called the WORK Now Act, which would
    help nonprofits grow and hire. It would create a new grant program to
    help nonprofits retain staff and hire unemployed Americans--while also
    supporting their efforts to scale up the services they offer.

        My view is, organizations like the Oregon Food Bank are part of the
    backbone of the communities where they operate. In addition to
    promoting charitable giving, it is a no-brainer that the Congress ought
    to find smart ways to help those nonprofits do their essential work
    too.

                                     ______

                                 Communications

                                  ----------

                          American Alliance of Museums

                         2451 Crystal Drive, Suite 1005

                              Arlington, VA 22202

                                 T 202-289-1818

                                 F 202-289-6578

                            https://www.aam-us.org/

                           Statement of Laura L. Lott

    Chairman Wyden, Ranking Member Crapo, and members of the Committee,
    thank you for the opportunity to submit this statement. My name is
    Laura L. Lott and I am the President and CEO of the American Alliance
    of Museums (AAM). Thank you for holding this hearing. We urge Congress
    to enact a universal charitable deduction, expand the IRA Charitable
    Rollover, and restore and expand the Employee Retention Tax Credit
    (ERTC). We also request that Congress restore the 100% AGI cap on
    individual donations and the 25% income tax cap on corporate donations
    that expired at the end of 2021.

    Representing more than 35,000 museum professionals and volunteers,
    institutions--including aquariums, art museums, botanic gardens,
    children's museums, cultural museums, historic sites, history museums,
    maritime museums, military museums, natural history museums,
    planetariums, presidential libraries, railway museums, science and
    technology centers, and zoos--and corporate partners serving the museum
    field, AAM stands for the broad range of the museum community.

    Before detailing these priorities for the museum field, I want to
    express my appreciation for Congressional relief for nonprofit
    charitable organizations, including museums, which helped them cope
    with and respond to the devastating impact of the COVID-19 pandemic.
    Early in the pandemic, essentially all museums were closed to the
    public. 33 percent of directors felt their museums were at some risk of
    permanent closure without immediate support--a threatened loss of
    12,000 museums and 124,000 jobs. While federal relief funding and tax
    policy provisions have provided critical lifelines, a recent survey \1\
    shows attendance remains down 38 percent on average from pre-pandemic
    levels and 17 percent of directors still feel there is some risk of
    closing permanently without additional relief.
    ---------------------------------------------------------------------------
        \1\ https://www.aam-us.org/2022/02/08/museum-field-experiencing-
    compounding-financial-losses-new-survey-reveals/.

    Museums--the vast majority of which are 501(c)(3) nonprofit
    organizations--play a key role in education, job creation, tourism,
    economic development, historic preservation, environmental
    conservation, and advancing scientific literacy and global
    competitiveness. They are essential community infrastructure and are
    part of a vibrant and diverse charitable nonprofit sector. In unity
    with the broader nonprofit sector, we support the requests in this
    coalition letter \2\ and urgeCongress to strengthen charitable giving
    incentives to ensure that all nonprofits, including museums, have the
    resources to serve their communities.
    ---------------------------------------------------------------------------
        \2\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-workforce-shortage-relief-letter.pdf.

    ---------------------------------------------------------------------------
    Museums are essential community infrastructure for many reasons:

    Museums are economic engines and job creators. According to ``Museums
    as Economic Engines: A National Report,'' U.S. museums (pre-pandemic)
    support more than 726,000 jobs and contribute $50 billion to the U.S.
    economy per year. The economic activity of museums generates more than
    $12 billion in tax revenue, one-third of it going to state and local
    governments. For example, the total financial impact that museums have
    on the economy in the state of Oregon is $585 million, including
    supporting 9,740 jobs. For Idaho, it is a $228 million impact
    supporting 3,098 jobs. This impact is not limited to cities: more than
    25% of museums are in rural areas. The import of these data is not the
    numbers alone--but the larger point that museums give back tremendously
    to their communities in numerous ways--including economically.

    Museums are key education providers. Museums spend more than $2 billion
    yearly on education activities; the typical museum devotes 75% of its
    education budget to K-12 students, and museums receive approximately 55
    million visits each year from students in school groups. Museums also
    answered the call and significantly ramped up online educational
    programs and resources for students and families throughout the
    pandemic. Museums help teach the state and local curriculum in subjects
    ranging from art and science to history, civics, and government.
    Museums have long served as a vital resource to home-school learners.
    It is not surprising that in a public opinion survey, 97% of
    respondents agreed that museums were educational assets in their
    communities. The results were statistically identical regardless of
    political persuasion or community size.

    Museums will be essential to rebuilding communities as we emerge from
    the pandemic. During the COVID-19 pandemic, museums across the country
    have continued contributing to the ongoing education of our country's
    children by providing lesson plans, online learning opportunities, and
    drop-off learning kits to teachers and families. They are using their
    outdoor spaces to grow and donate produce to area food banks, as well
    as maintaining these spaces for individuals to safely relax, enjoy
    nature, and recover from the mental health impacts of social isolation.
    They provided access to childcare and meals to families of health care
    workers and first responders, have donated their PPE and scientific
    equipment to fight COVID-19, and are serving as vaccination centers.
    Despite the financial and psychological stress caused by the pandemic,
    museum professionals are filling the gaps to meet the needs of their
    communities and will be vital to their recovery. Museums are
    demonstrating the critical role they play in our country's
    infrastructure and deepening their social impact in their communities,
    addressing learning loss, and fostering intra-community trust and
    dialogue.

    Congress Should Enact a Universal Charitable Deduction

    Contributions to 501(c)(3) charities such as museums are tax-
    deductible, incentivizing those who itemize deductions to greater
    generosity. Only about ten percent of taxpayers now itemize, however,
    and multiple measures show that both the amount given and the number of
    donors were declining prior to the pandemic. Giving appears to have
    increased during the pandemic, especially smaller gifts, due to the
    temporary provision that allowed people to deduct up to $300 ($600 for
    couples) of charitable gifts even if they do not itemize.

    The deductibility of charitable gifts is of fundamental importance for
    museums. Charitable giving accounts for more than one-third of museums'
    operating funds. The CARES Act established a limited and temporary
    deduction for non-itemizers. Data from various sources shows that after
    declining in 2019, charitable giving increased following the temporary
    enactment of a ``universal charitable deduction'' that allowed everyone
    to deduct. A universal charitable deduction democratizes giving by
    incentivizing all taxpayers to contribute, regardless of income.

    We urge the renewal--and expansion--of the universal charitable
    deduction to make it permanent. Along with other members of the
    Charitable Giving Coalition,\3\ we urge members of the Committee to
    cosponsor the Universal Giving Pandemic Response and Recovery Act, S.
    618, which would renew the universal charitable deduction that expired
    at the end of 2021 and is a step in the right direction. The
    legislation would raise the $300/$600 cap to roughly $4,000 for
    individuals/$8,000 for couples, renew the availability of the deduction
    through the 2022 tax year, and make gifts to donor-advised funds
    eligible for the universal charitable deduction. We applaud the
    Committee's cosponsors of S. 618, including Senators Lankford, Cortez
    Masto, Scott, Stabenow, Hassan, and Brown.
    ---------------------------------------------------------------------------
        \3\ https://charitablegivingcoalition.org/universal-charitable-
    deduction/.
    ---------------------------------------------------------------------------

    Expand Existing IRA Charitable Rollover

    We support the bipartisan Legacy IRA Act, S. 243, sponsored by Senators
    Stabenow and Cramer. Currently, individuals aged 70.5 and above may
    contribute up to $100,000 from their IRA accounts to charity, counting
    it toward their required distribution, but not paying tax on it. The
    Legacy IRA Act would expand this provision by allowing gifts to planned
    giving accounts, raising the cap to $400,000, and lowering the age to
    65. Seniors typically make up more than 40% of the donor base for
    charities. This bill expands the existing IRA Charitable Rollover,
    which is the fastest growing area of philanthropy. Recent survey data
    from FreeWill's online giving platform found a 390% increase in total
    IRA Charitable Rollover gifts from 2019 to 2021. A modified version of
    the Legacy IRA Act was included in the Securing a Strong Retirement
    Act, H.R. 2954, and we urge the Senate Finance Committee to include S.
    243 in a future retirement package.

    Retain and Expand the Employee Retention Tax Credit

    The ERTC has been a critically important tool for nonprofits, including
    museums, to be able to rebuild and continue to deliver critical
    services to the communities that they serve, now and into the future.
    Moreover, many nonprofit employers had been counting on quarter four
    2021 access to the ERTC to support the decisions they have made to
    bring employees back on the payroll and increase operating capacity to
    serve their communities. Unfortunately, the Infrastructure Investment
    and Jobs Act (IIJA) eliminated ERTC for the fourth quarter of 2021,
    which hurt museums that were planning on this relief.

    We urge members of the Committee to cosponsor the bipartisan Employee
    Retention Tax Credit Reinstatement Act, S. 3625. It retains the ERTC
    for nonprofits, including museums, and small businesses in the fourth
    quarter of 2021, allowing organizations to keep critical staff on the
    payroll to continue meeting community needs. The Act was introduced in
    early February by Finance Committee Members Senators Hassan, Scott,
    Warner, Cardin, and non-Committee member Capito. We are grateful for
    their leadership.

    This action to retain the ERTC is supported by the broad cross-section
    of the nonprofit sector,\4\ the third largest employer in the U.S.
    economy (and the for-profit business community). Nonprofits, including
    museums, continue to serve communities across America during the
    pandemic. Now they need Congress to at a minimum retain this tax policy
    through at least the 4th quarter. Ideally, Congress ought to extend it
    throughout 2022 to help ensure a strong economic recovery from the
    pandemic. Congress can also take action by improving this critical form
    of promised COVID-19 relief by amending the definition of ``gross
    receipts'' under the law to better reflect revenue available to support
    nonprofits amid the ongoing COVID-19 pandemic.
    ---------------------------------------------------------------------------
        \4\ https://www.namanow.org/wp-content/uploads/Letter-Urging-
    Inclusion-of-ERTCRA-in-
    Omnibus-
    Final.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advocacy%20
    Updates%20%20March%207%202022&utm_medium=email.

    In closing, I encourage members of the Committee to visit the museums
    in their states to witness firsthand the positive impact they have on
    their communities and the importance of charitable giving to their
    public service missions. Thank you for taking time to hold a hearing on
    ---------------------------------------------------------------------------
    these critical issues and for the opportunity to submit this statement.

                                     ______

                           American Heart Association

                                National Center

                             7272 Greenville Avenue

                                Dallas, TX 75231

    On behalf of the American Heart Association (AHA) and its more than 40
    million volunteers and supporters, we thank you for the support shown
    to the charitable sector during the COVID-19 pandemic. AHA is the
    world's leading voluntary organization focused on heart and brain
    health and research, and we are proud to have funded more than $4.6
    billion in cardiovascular research since 1949. We appreciate the
    opportunity to share our recommendations on the incentives that can
    help support charitable giving and urge the Senate Committee on Finance
    to include the bipartisan Legacy IRA Act (S. 243) in future retirement
    legislation.

    Rapid Response of American Heart Association to COVID-19

    For the approximately 120 million people in the United States who have
    one or more cardiovascular diseases, this is a particularly worrisome
    time. Cardiovascular disease and hypertension are associated with more
    severe coronavirus cases and an increased fatality rate of two or three
    times higher than the general population. The situation is even more
    dire for communities of color, where reports indicate that minorities
    have been disproportionately affected by COVID-19 and have suffered
    higher rates of death. There is also mounting evidence that COVID-19
    may lead to heart failure, stroke, kidney failure, chronic lung
    disease, blood pressure abnormalities, neurological conditions, and
    other long-term health complications in people who have survived the
    virus.

    AHA recognizes the urgency of this issue and is part of the global
    response. AHA responded quickly to the pandemic in March 2020 by
    funding rapid response research awards to better understand COVID-19
    and its interaction with heart and brain systems. This initiative
    offered fast-tracked research grants for short-term projects to better
    understand the diagnosis, prevention, treatment, and clinical
    management. In December 2021, as COVID-19 variants continued to spread,
    AHA announced a $10 million research initiative to fund new studies on
    the long-term effects of the disease. These initiatives--and others
    like them--would not be possible without charitable giving.

    Need for Charitable Giving Will Continue Beyond Pandemic

    AHA urges Congress to reinstate and expand the temporary universal
    charitable giving deduction that expired at the end of 2021. This
    charitable deduction to non-itemizers at $300 for individual and $600
    for couples filing jointly along with the suspension of adjusted gross
    income (AGI) limitations for cash gifts and increase in limitation for
    corporate gifts were all valuable to incentivizing giving behaviors.
    Every day, charities are holding communities together with essential
    services amid the health and economic crisis, but they need support,
    including charitable giving from generous donors. Findings from a
    recent poll released by Independent Sector show 88% of Americans
    support making the universal charitable deduction permanent for all
    taxpayers.

    American Heart Association leads a coalition of approximately 60
    national charities which support the bipartisan Legacy IRA Act (S.
    243), co-sponsored by Senators Debbie Stabenow (D-MI) and Kevin Cramer
    (R-ND). The Legacy IRA Act will encourage more charitable giving by
    enabling seniors to make contributions from their individual retirement
    accounts (IRA) to charities through life-income plans. Seniors are a
    key demographic as they typically make up more than 40 percent of the
    donor base for charities. This is an expansion of the existing
    Charitable IRA Rollover provision, which is the fastest growing area of
    philanthropy. Data released this week from FreeWill's online giving
    platform shows the value of the current Charitable IRA Rollover as
    there was a 390 percent increase in total number of gifts from 2019 to
    2021. And yet, in a survey of 300+ nonprofit professionals, 23 percent
    said these gifts came from high net worth or upper middle-class
    individuals.

    The Legacy IRA Act would expand this giving incentive to more middle-
    income seniors. A modified version of the Legacy IRA Act was passed as
    part of the ``Securing a Strong Retirement Act'' (SECURE Act 2.0), and
    we urge the Senate Finance Committee to include S. 243 in its version
    of this retirement package.

    AHA joins with many others in the nonprofit community in urging
    Congress to reinstate and expand the temporary universal charitable
    deduction and pass the Legacy IRA Act along with reinstating the
    temporary suspension of AGI limitations and increasing the limits on
    corporate giving. We stand ready to be of help should you have
    additional questions about these requests. Please feel free to contact
    Emily Holubowich, Vice President of Federal Advocacy, at
    Emily.holubowich@heart.org.

                                     ______

                                 Leadership 18

                            701 North Fairfax Street

                              Alexandria, VA 22314

    March 2022

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chair                               Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    Washington, DC 20510                Washington, DC 20510

    The Honorable Richard Neal          The Honorable Kevin Brady
    Chair                               Ranking Member
    U.S. House of Representatives       U.S. House of Representatives
    Committee on Ways and Means         Committee on Ways and Means
    Washington, DC 20515                Washington, DC 20515

    Dear Chairmen Wyden and Neal and Ranking Members Crapo and Brady:

    Leadership 18 supports the bipartisan Legacy IRA Act (S. 243/H.R.
    2909), a bill to encourage charitable giving by enabling seniors to
    make tax-free contributions from their individual retirement accounts
    (IRA) to charities through life-income plans.

    To operate effectively and advance our tax-exempt purpose, we are
    dependent on private philanthropy, including gift planning. A few years
    ago, when the IRA Charitable Rollover provision was made permanent,
    many of our organizations saw a dramatic increase in charitable giving
    from traditional IRAs. Data from FreeWill's online QCD giving platform
    shows the value of the current Charitable IRA Rollover as there was a
    390% increase in total number of gifts from 2019 to 2021. And yet, in a
    survey of 300+ nonprofit professionals, 23% said their QCDs came from
    high net worth or upper middle-class individuals. The Legacy IRA Act
    would expand this giving incentive to more middle-income seniors.

    The undersigned CEOs support the Legacy IRA bill, which would allow
    seniors to make tax-free IRA rollovers to charities through life-income
    plans, such as charitable gift annuities. The senior's annual
    retirement income from the life-income plan is fully taxed. We believe
    this new giving option will be particularly attractive to middle income
    seniors, a critical demographic as seniors make up more than 40 percent
    of the donor base for most charities.

    Leadership 18 is an alliance of CEOs responsible for leading some of
    the country's largest and most well-respected charities, non-profits,
    and faith-based organizations. As a group, member organizations have
    served over 400 million people, with 42.7 million staff and volunteers,
    and represent more than $80 billion in total revenue. We are a
    community of leaders who share a profound commitment to ensuring that
    all individuals have the opportunity to contribute to a vibrant
    America, and with opportunity and effort, can live their lives to their
    fullest potential.

    Leadership 18 offers our support and is willing to work with you and
    other Members of Congress to enact the Legacy IRA bill on its own or
    attached to a larger legislative vehicle, such as the Securing a Strong
    Retirement Act. America is stronger when everyone has the opportunity
    to give, to get involved, and to strengthen their communities.

    Sincerely,

    Leadership 18

    Signers:

    Nancy A. Brown                      Sofia Chang
    Chief Executive Officer             Chief Executive Officer
    American Heart Association          Girl Scouts of the USA

    Gail McGovern                       Stephanie J. Hull
    President and CEO                   President and CEO
    American Red Cross                  Girls Inc.

    Artis Stevens                       Steven C. Preston
    President and CEO                   President and CEO
    Big Brothers Big                    Goodwill Industries
    Sisters of America                  International, Inc.

    Jim Clark                           Jonathan Reckford
    President and CEO                   Chief Executive Officer
    Boys and Girls Clubs                Habitat for Humanity
    of America                          International

    Sister Donna Markham                Eric D. Fingerhut
    President and CEO                   President and CEO
    Catholic Charities USA              The Jewish Federations
                                        of North America

    Charlotte Haberaecker               Mike King
    President and CEO                   President and CEO
    Lutheran Services in America        Volunteers of America

    Schroeder Stribling                 Suzanne McCormick
    President and CEO                   President and CEO
    Mental Health America               YMCA of the USA

    Ramsey Alwin                        Margaret Mitchell
    President and CEO                   Chief Executive Officer
    National Council on Aging           YWCA USA

    Commissioner Kenneth G. Hodder      Jody Levison-Johnson
    National Commander                  President and CEO
    The Salvation Army                  Social Current

                                     ______

                    Help Seniors Increase Charitable Giving

                        Legacy IRA Act of 2021 (S. 243)

    Background

    First passed by Congress more than 15 years ago and made permanent in
    2015, the Charitable IRA Rollover is a tax provision making it easier
    for seniors to use traditional IRA assets to make charitable donations.
    This provision allows individuals starting at age 70\1/2\ to make
    direct donations to qualified 501(c)(3) charities up to $100,000
    annually from their IRAs. The donations are not counted as income.

    Since then, nonprofits have reported a surge in this type of charitable
    giving. The IRA Charitable Rollover has generated millions of dollars
    to local and national charities in the past few years alone.

    The Legacy IRA Act: A Win-Win for Donors and Charities

    The Legacy IRA Act builds upon the IRA Charitable Rollover by allowing
    seniors to make tax-free IRA rollovers to charities through life-income
    plans, such as charitable gift annuities. The senior's annual
    retirement income from the life-income plan would be fully taxed. The
    bill allows seniors starting at age 65 to make a life-income plan gift
    up to $400,000 annually. Additionally, the bill raises the IRA
    Charitable Rollover annual cap to $130,000 and indexes this figure for
    inflation--an important step as the cap hasn't been increased since
    2006.

    The bipartisan Legacy IRA Act would give seniors more flexibility to
    make charitable donations from their traditional IRA accounts. An IRA
    rollover through a life-income plan would provide the senior with a
    secure income for life. After the donor passes away, the charity
    receives the remainder of the gift to be used towards their mission.
    This new giving incentive is anticipated to be particularly attractive
    to middle-income seniors. Growing charitable giving from seniors is
    critical for nonprofits as seniors are more than 40 percent of the
    donor base for most charities. Increasing charitable giving will allow
    nonprofits to continue to provide critical services in local
    communities such as health research and patient education, food
    assistance, domestic violence services, childcare, youth homeless
    shelters, and cultural and arts programming.

    Bill Status

    The bipartisan Legacy IRA Act was introduced by Senators Cramer (R-ND)
    and Stabenow (D-MI). This coalition strongly urges Congress to pass the
    legislation on its own or as part of a broader retirement package. It
    is expected to raise $1 billion annually for charities.

    In the House of Representatives, a modified version of the Legacy IRA
    Act (H.R. 2909) was introduced by Representatives Beyer (D-VA-08) and
    Kelly (R-PA-16). This proposal was included in the bipartisan Securing
    a Strong Retirement Act of 2021 (H.R. 2954), led by Ways and Means
    Committee Chairman Neal and Ranking Member Brady. The Securing a Strong
    Retirement Act of 2021 was unanimously approved by the committee in May
    2021. The Legacy IRA provision is estimated to cost $2.266 billion over
    ten years by the Joint Committee on Taxation.

    This coalition strongly supports the bipartisan Legacy IRA Act and
    urges Congress to pass the legislation on its own or as part of a
    broader retirement package.

    The Undersigned Coalition of National Nonprofits Supports the Bipartisan
                                 Legacy IRA Act
    Arab Community Center    Council on Foundations   National Association
     for Economic and                                  of College and
     Social Services                                   University Business
     (ACCESS)                                          Officers

    ALS Association          Covenant House           National Community
                              International            Action Partnership

    Alternate ROOTS          DANCE/USA                National Council of
                                                       Nonprofits

    Alzheimer's Association  The Evangelical          National Health
     and the Alzheimer's      Lutheran Good            Council
     Impact Movement          Samaritan Society

    American Alliance of     Girl Scouts of the USA   National Multiple
     Museums                                           Sclerosis Society

    American Cancer Society  Girls Inc.               The Nonprofit Alliance
     Cancer Action Network

    American Council for     Goodwill USA             OPERA America
     Gift Annuities

    American Heart           Habitat for Humanity     Performing Arts
     Association              International            Alliance

    American Lung            Hemophilia Federation    Providence St. Joseph
     Association              of America               Health

    American Red Cross       Immune Deficiency        The Salvation Army USA
                              Foundation

    Americans for the Arts   Independent Sector       ServiceSource, Inc.

    Asian Pacific Community  JDRF                     Social Current
     Fund

    Association of Art       Jewish Federations of    Theatre Communications
     Museum Directors         North America            Group

    Association of           League of American       UNICEF USA
     Fundraising              Orchestras
     Professionals

    Big Brothers Big         Lutheran Services in     United Philanthropy
     Sisters of America       America                  Forum

    Boys and Girls Clubs of  March of Dimes           Volunteers of America
     America

    Catholic Charities USA   Mental Health America    YMCA of the USA

    Council for Advancement  National Alliance on     YWCA USA
     and Support of           Mental Illness
     Education

    Council for Christian    National Association of
     Colleges and             Charitable Gift
     Universities             Planners

    We urge Members of Congress to support the Legacy IRA Act. For more
    information about the bill, please contact Emily Horowitz at American
    Heart Association at Emily.horowitz@heart.org.

                                     ______

                      Letter Submitted by Melanie Anthony

    March 17, 2022

    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

    I have worked in the Oklahoma nonprofit sector since 1997 addressing
    food insecurity, the unhoused, mental health and economic development.

    It is particularly important to keep the $300 deduction. I agree with
    Dr. Steuerle's statement that the peak of giving in 2020 did not meet
    the need of the charitable community.

    Giving is critical because, at some point, it is important that those
    who working in the nonprofit sector, specially social services, are
    paid living wages. Those front-line workers are often paid at a low
    wage. Those who chose to work in the nonprofit sector, helping those in
    crisis, should not themselves find themselves struggling to meet their
    family needs.

    Unless charitable giving increases to not only meet the needs of those
    in our various communities, especially those underserved and overlooked
    communities, we will continue to see an exodus of nonprofit employees.

    Historically, when nonprofit professionals would leave their nonprofit,
    it was really about climbing the nonprofit job ladder. It would usually
    include a title change, minimal increase in salary and maybe a better
    work environment. The nonprofit sector has always been forced to work
    with minimal budgets unlike our corporate counterparts--as if serving
    others, having personal fulfillment and growth pay the rent, buy
    groceries and school supplies. They do not.

    The nonprofit sector, particularly social services, are seeing workers
    get agitated, overwhelmed and burnout at rates not seen before.
    Nonprofit employees are leaving the sector in masses.

    Any opportunity to continue to offer incentives to give to charity to
    increase charitable giving would allow nonprofits to not only meet the
    needs of those in crisis in their communities, but also invest in those
    doing the hard, forward-facing, often traumatic work.
    Thank you,

    Melanie Anthony

                                     ______

                      Association of Art Museum Directors

                        120 East 56th Street, Suite 520

                               New York, NY 10022

               Statement of Christine Anagnos, Executive Director

    The Association of Art Museum Directors (AAMD) is composed of the
    directors of approximately 225 of the leading art museums in North
    America, including more than 200 in the United States. We are grateful
    for the opportunity to submit written testimony on charitable giving
    and trends in the nonprofit sector.

    All AAMD members in the U.S. operate on a not-for-profit basis. Nearly
    all are organized under Section 501(c)(3) and qualify as public
    charities, though many also have hybrid governance structures in
    partnership with state and local governments as well as public and
    private colleges and universities. They generally depend on charitable
    giving for about a third of their operating budgets. Gifts both large
    and small come from those who support museums' work, though as at most
    charities, small gifts far outnumber large ones. Moreover, about 80
    percent of museum collection objects arrived as charitable gifts.

    For that reason, AAMD supports federal incentives for charitable gifts
    of both cash and property and for donors of both large and small gifts.
    Chief among these incentives are the itemized charitable deduction; the
    deduction for non-itemizers, which was enacted as a temporary provision
    in 2020 and expired at the end of 2021; and the IRA Charitable
    Rollover, a relatively recent provision whose use is growing as more
    taxpayers become aware of it.

    As may be clear, these incentives can be utilized by specific groups of
    taxpayers: itemizers, non-itemizers, and seniors. AAMD believes it only
    fair that all taxpayers are incentivized to give, and for that reason
    we support the retention of the itemized deduction, the reinstatement
    and expansion of the non-itemizer deduction, as provided by S. 618,
    introduced by Senator Lankford and cosponsored by Finance Committee
    members Cortez Masto, Hassan, Scott, and Stabenow; and the expansion of
    the IRA charitable rollover as provided by S. 243, introduced by Sen.
    Stabenow and cosponsored by Finance Committee members Cornyn and
    Daines. Both of the aforementioned bills are bipartisan and are
    supported across the charitable sector. We share the concern of many in
    the charitable sector that confining the availability of tax incentives
    to a narrow slice of upper-income taxpayers could deeply harm the
    vitality of civil society.

    During the pandemic, art museums have profoundly changed how they
    interact with the public, finding new audiences online, often among
    people who were not visitors before. Whether filling time or looking
    for online educational programming for their children, people found
    what they were looking for in art museums. According to an extremely
    large-scale study conducted in the first months of the pandemic
    (culturetrack.com/covidstudy), 40 percent of art museums' online
    audience had not physically visited in the previous year. As a visitor
    cited in that study said:

    ``Right now, I am looking for things to do with my children that allow
    us to be together and to enjoy something I don't have to organize
    myself. I want them to learn and to experience the world.''

    Similarly, during the social and political unrest of the past two
    years, art museums have found themselves in new and expanded
    conversations about their role in the community, as well as about how
    and for whom they have used their collections. Practices built on
    previously unquestioned assumptions are changing. An ever-
    growing priority on audience and community needs has consequences for
    museums' physical plants as well curatorial and educational practices.
    To cite one example, the Portland (ME) Museum of Art changed its
    expansion plans, which had been necessitated by a growing collection
    and audiences: instead of simply adding gallery space, the new facility
    will include space for local nonprofits, with the aim of lacing the
    museum more fully into Portland's cultural and community life. To cite
    another, an exhibition currently at the Cleveland Museum of Art
    reexamines the art historical canon through new scholarship, focusing
    on six key works of Black art in the museum's collection, as well as an
    accompanying publication that delves into the materiality, making, and
    relevance of the works. Together, they seek to transform how art
    history is written, introduce visitors and readers to complex objects
    and theoretical frameworks, illuminate meanings and untold histories,
    and open new entry points into Black art.

    Because of charitable giving, art museums are accessible. One-third of
    AAMD member museums offer free admission to all, and two-thirds offer
    free admission for children under 12. Those with admission fees nearly
    always offer some form of free admission (for example, a weekly or
    monthly free day) and discounts for seniors and students. Many museums
    participate in Museums for All, an initiative that provides free or
    reduced admission to people who present an Electronic Benefits Transfer
    card. AAMD estimates the average cost of admission at AAMD museums to
    be about five dollars or less. At the same time, the cost to museums
    per visitor is about $54, based on 2019 figures. Charitable giving
    subsidizes the difference.

    While we do not have field-wide data on use of the non-itemizer
    deduction and IRA Rollover, anecdotes abound. For example:

    The Des Moines Art Center reports that its highest level of membership
    growth was in the $250 to $550 range, which grew by 14 percent in 2021.
    It also reports good use of the charitable rollover.

    The Cleveland Museum of Art reports that IRA Rollover gifts increased
    by 140 percent in 2021.

    The Walters Art Museum in Baltimore, MD found that messages about the
    tax deduction in 2020 and 2021 were effective in generating a number of
    gifts of $300 and $600 from museum supporters. As for the IRA
    Charitable Rollover, the museum saw a 498% increase in gifts from FY20
    to FY21 and the number of participants increased by 127 percent. Gifts
    ranged from as low as seven dollars up to $100,000, with an average
    gift in 2020 of $981.

    AAMD members share a commitment to serving the public, partnering with
    their community institutions, including health, human service, and
    education organizations, and applying the unique resources of the arts
    to serving a wide variety of purposes. Museums are anchors in their
    communities, often serving as the centerpiece of a neighborhood,
    providing jobs, attracting tourists as well as residents, and in a less
    literal sense, helping to form the community's identity--its sense of
    self.

    For all of these reasons, AAMD urges Congress to retain the itemized
    charitable deduction; to reinstate and expand the universal charitable
    deduction, preferably on a permanent basis; and to expand the IRA
    charitable rollover.

                                     ______

                    Association of Fundraising Professionals

                            4200 Wilson Blvd., #480

                              Arlington, VA 22203

                                 (703) 684-0410

                                 afpglobal.org

             Statement of Mike Geiger, MBA, CPA, President and CEO

    Chairman Wyden, Ranking Member Crapo and Members of the Senate
    Committee on Finance:

    The Association of Fundraising Professionals (AFP) appreciate your
    efforts to seek stakeholder and public feedback about charitable giving
    and trends in the nonprofit sector. AFP is pleased to present the
    following comments based not only on research--developed by ourselves
    as well as in collaboration with partners in the sector--but also on
    the comments and perspective of our more than 23,000 members in the
    United States.

    AFP represents both individual fundraisers and charities that raise
    more than $100 billion annually. Our members work for a wide variety of
    organizations, from multi-national institutions to small, grassroots
    organizations, addressing every mission conceivable, from religion and
    social services, to education, healthcare, and the arts. Every member
    agrees to abide by AFP's Code of Ethics, the only enforceable
    fundraising code in the world.

    Our members are on the ground, communicating with donors everyday and
    running capital campaigns, direct mail operations, major gifts meetings
    and email and social media initiatives. They see first-hand the impact
    of government policy on fundraising and charities and understand the
    importance of tax policy that incentivizes giving and volunteering.

    Giving Trends and Challenges

    Overall
    At first glance, one might look at charitable giving numbers overall
    and think that the state of giving in the United States is very strong.

    Giving USA 2021: The Annual Report on Philanthropy for the Year 2020,
    published by Giving USA Foundation, reported that overall giving to
    U.S. charities in 2020 reached an estimated $471.44 billion, the
    highest level ever recorded. Giving was led by individuals, who
    accounted for roughly 70% of overall giving. That giving grew to record
    levels in 2020, despite the pandemic, is a testament to the generosity
    of the American people.

    In addition, AFP's own Fundraising Effectiveness Project (FEP),
    administered by the AFP Foundation for Philanthropy in collaboration
    with GivingTuesday, found that giving increased by over 10.6% and the
    number of donors grew by 7.3% in 2020 compared to 2019. The FEP tracks
    data from almost 3,000 charities, ranging in budget size from $100,000-
    $10 million, tending to exclude larger organizations such as hospital
    and universities and making the data more representative of the typical
    charity experience in the U.S.

    However, these numbers, impressive as they are, overshadow an important
    trend that is slowly transforming our country's philanthropic
    tradition: Participation in charitable giving is declining. The Giving
    Environment: Understanding Pre-
    Pandemic Trends in Charitable Giving, published by the Indiana
    University Lilly Family School of Philanthropy at IUPUI in 2021, found
    that just 49.6% of U.S. households made a charitable contribution in
    2018. That figure is a decrease of almost 17 percentage points from
    2000, when 66.2% of American households gave charitable donations.

    Fewer Americans are giving to charity every year, but fortunately they
    are giving significantly more. Essentially, it is wealthy Americans--
    what fundraisers call major donors and now even mega-donors--who are
    driving the increase in charitable giving every year.

    The Fundraising Effectiveness Project's (FEP) preliminary 2021 data
    underscores this challenge. Gifts from small donors (less than $500)
    fell sharply and accounted for just 9.5% of all giving in 2021. The
    main drivers of giving, and the growth in giving seen in 2021, were
    again major donors.

    This is not to say that the average American is not generous.
    Crowdfunding campaigns--where charities, other kinds of organizations
    and even individuals ask for very small donations from a very large
    group of donors--continue to be successful, and Americans are generous
    in these and other informal ways of giving and volunteering.

    Nevertheless, this trend is a huge challenge for the charitable sector
    and for all of American society. Our charitable sector is a crucial
    partner with the governmental sector in meeting the needs of
    communities that are disadvantaged and straining to provide services.
    Our tradition of philanthropy is based on egalitarian principles where
    everyone contributes to the greater good. Philanthropy should not
    become the domain of only the wealthy. We need to encourage giving from
    all segments of our society, not just the wealthy, and tax policy is
    one means to do that.
    2021
    The Fundraising Effectiveness Project publishes quarterly data, and
    final figures from the fourth quarter of 2021 are still coming in.
    However, the FEP noted throughout 2021 that giving continued to grow--
    significantly in the first quarter (roughly 10%) and then flattening
    out in the second and third quarter. The FEP is estimating that giving
    for 2021 will have grown slightly overall, roughly by 2.7% compared to
    2020 numbers, once all data is accounted for from participating
    charities.

    However, it should be noted that giving, including the 2021 estimated
    increase by the FEP, is not uniform across the sector. Larger charities
    that are well-known tend to receive a majority of contributions. In
    2015, giving to the top 400 largest charities, as noted in The
    Chronicle of Philanthropy that year, exceeded $100 billion. In 2020,
    roughly $1 out of every $11 donated went to the 100 largest charities
    in the U.S., as detailed by The Chronicle of Philanthropy.

    During the pandemic, this trend was even more pronounced, as larger
    charities, especially those in pandemic relief, health care and social
    services, saw their giving rates increase rapidly, while smaller
    organizations, and especially arts and humanities groups, saw their
    giving shrink. 2021 data from the FEP saw this trend slowly begin to
    reverse as the world recovered from the pandemic, with smaller
    charities finally beginning to see gains in their giving rates.

    However, AFP member comments from our Fundraising Confidence Survey,
    January 2022 reveal that many charities, especially smaller
    organizations, have a long way to go in recovering from the pandemic.
    Fundraisers have been unable to meet with donors in-person, which is so
    important in developing relationships. Others report donor fatigue,
    whereby donors are overwhelmed by so many growing needs that originated
    from the pandemic and aren't as interested in giving for the moment.

    In addition, just as the pandemic was winding down and fundraisers were
    feeling more optimistic, charities and their donors are now faced with
    skyrocketing gas prices, rising inflation costs, geopolitical conflict
    and weak consumer confidence. These challenges are likely to impact
    low- to mid-level donors the most, exactly the group of donors who are
    participating less in philanthropy.

    Policy Changes to Encourage Giving

    This daunting set of challenges, coupled with the household decline in
    charitable giving participation, could severely hinder the ability of
    the sector to meet the needs of communities across America. But
    Congress can help charities overcome these challenges and at the same
    time encourage more Americans to participate in philanthropy. AFP
    recommends that Congress support two important charitable tax giving
    incentives. Each will incentivize different groups of donors to give to
    their favorite causes and allow charities to continue to meet the needs
    of our communities.
    Universal Charitable Deduction
    The universal charitable deduction allows donors to take a tax
    deduction, up to a certain level, for their charitable gifts whether or
    not they itemize their taxes. The deduction incentivizes all donors to
    give but can be especially attractive for donors who make smaller level
    gifts, as they are typically taxpayers who do not itemize their taxes.

    The universal charitable deduction has been enacted into law by
    Congress temporarily several times in the past only to expire and be
    reinstated by later Congresses. The latest version was created in 2020
    through both the CARES Act and the later Consolidated Appropriations
    Act, creating together a deduction of $300 for an individual taxpayers
    and $600 for married couples filing jointly. The deduction expired at
    the end of 2021.

    Research from the Fundraising Effectiveness Project has found that the
    incentive in the universal charitable deduction was quite powerful for
    gifts of $300, the limit of the deduction for individual taxpayers.

          There was a 7.5% jump in $300 gifts in 2020 compared to 2019
    (the latest year without the universal charitable deduction).
          There was a 7.5% jump in $300 gifts in 2021 compared to 2019.

    On December 31, the last day of the year when many charitable
    contributions are given so donors can take advantage of tax incentives,
    charities experienced a:

          33% jump in $300 gifts in 2020 compared to 2019.
          7% jump in $300 gifts in 2021 compared to 2019.

    The data for gifts of $600, the limit for the deduction for couples
    filing jointly, also demonstrates the power of the incentive, though
    it's important to note that the couple's deduction was enacted in
    December 2020. Nevertheless, the data shows the difference the
    deduction had:

          There was a 1.2% decrease in $600 gifts overall in 2020 compared
    to 2019 (again, the couple's deduction was not available until December
    2020).
          Nevertheless, on December 31, 2020, there was still a 12%
    increase in gifts of $600 compared to the same day in 2019.

    Then in 2021, when the couple's $600 deduction was available throughout
    the year:

          There was a 5.0% increase in $600 gifts overall in 2021 compared
    to 2019.
          There was a 5.1% increase of $600 gifts on December 31, 2021,
    compared to the same day in 2019.

    While there are many factors that contribute to increased donations,
    one contributing factor was clearly the availability of the charitable
    deduction to nonitemizers. The universal charitable deduction works,
    and this data only accounts for two specific levels of gifts, just to
    show the deduction's impact.

    Congress can help alleviate some of the difficulties the sector is
    facing by approving another universal charitable deduction.

    AFP encourages Senators to support and approve the Universal Giving
    Pandemic Response and Recovery Act led by a bipartisan, bicameral group
    of lawmakers, including Senators James Lankford (R-OK), Chris Coons (D-
    DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC), Amy
    Klobuchar (D-MN), Susan Collins (R-ME) and Catherine Cortez Masto (D-
    NV), as well as Reps. Chris Pappas (D-NH) and Jackie Walorski (R-IN).
    The legislation would raise the previous $300/$600 cap to roughly
    $4,000 for individuals/$8,000 for couples and make gifts to donor-
    advised funds eligible for the universal charitable deduction.

    We note that the deduction created through the Universal Giving
    Pandemic Response and Recovery Act is only effective until the end of
    2022. Given the impact of the deduction, we believe that it should be
    extended through, at least, the end of 2023.

    The universal charitable deduction will democratize giving by further
    incentivizing all American taxpayers--regardless of their income--to
    give to charity, thereby ensuring that our country retains a strong and
    independent civil society. It will also provide needed resources for
    charitable and faith-based organizations to continue providing vital
    services to families, workers, and communities, especially those
    critically impacted by the ongoing pandemic and now facing challenges
    related to rising inflation and weak consumer confidence. We urge
    Congress to pass and enact the universal charitable deduction swiftly.
    IRA Legacy Act
    In 2015, Congress passed the PATH Act, which included the IRA
    Charitable Rollover provision that allows individuals age 70\1/2\ to
    make direct tax-free gifts of up to $100,000 annually to charities from
    their IRA.

    The IRA charitable rollover provision is complementary legislation to
    the universal charitable deduction in that it is also a strong
    incentive for donors to give, but focuses on a different group of
    donors than the universal charitable deduction.

    Seniors typically make up more than 40% of the donor base for a
    charity, and with the historically strong performance of the economy
    and the stock market often have significant funds in their IRAs. While
    some donors might balk at giving thousands of dollars in cash to a
    charity, transferring funds from their IRAs, especially if their
    retirement is taken care of, is eminently more attractive and doable.

    The impact of the IRA Charitable Rollover is significant. Recent survey
    data from FreeWill's online giving platform found a 390% increase in
    total IRA Charitable Rollover gifts from 2019 to 2021. That increase is
    even more impressive given that required minimum distributions from
    IRAs were eliminated for 2020 as part of Congress' pandemic relief
    measures.

    Given the IRA charitable rollover's effectiveness and the need for
    greater participation in philanthropy, AFP supports an expansion of the
    rollover, and specifically the bipartisan Legacy IRA Act (S. 243),
    sponsored by Senators Debbie Stabenow (D-MI) and Kevin Cramer (R-ND).
    The legislation would allow taxpayers age 65 and over to direct up to
    $400,000 annually in IRA distributions to charities, charitable gift
    annuities and charitable remainder trusts. A modified version of the
    Legacy IRA Act has been included as part of a bipartisan retirement
    package, the Securing a Strong Retirement Act (H.R. 2954) that has been
    approved by the House Ways and Means Committee. We urge the Senate
    Finance Committee to include S. 243 in a future retirement package.

    Conclusion

    The charitable deduction--created more than 100 years ago--is a
    powerful symbol of the American tradition and system of philanthropy.
    It represents a gesture of confidence on the part of the people by way
    of their elected representatives, an acknowledgement of the
    effectiveness of nonprofit and community action and a commitment to the
    longstanding tradition of philanthropy in America. The deduction binds
    together the interests and concerns of all of us for the betterment of
    our society.

    The charitable deduction is the only deduction where the money a person
    spends or contributes doesn't benefit themselves directly. The mortgage
    deduction is for buying a house. Scholarship, education and health
    deductions relate to money spent to help a person's family. But the
    charitable deduction involves a selfless, generous motivation--giving
    to a cause that might never directly benefit the donor.

    The deduction's enhancement value is clear: a calculation of the
    deduction shows that for every $1 of potential tax revenue invested
    through the deduction, the public and communities across America
    receive approximately $2.5 in philanthropic services. That rate of
    return is extraordinary. We should be investing more in the deduction
    and encouraging additional philanthropy though provisions such as:

          The Universal Charitable Deduction through the Universal Giving
    Pandemic Response and Recovery Act; and
          An expansion of the Charitable IRA Rollover through the Legacy
    IRA Act.

    Thank you for your consideration and your work in keeping the American
    tradition of philanthropy strong and vibrant for decades to come.

    Respectfully,

    Mike Geiger, MBA, CPA
    President and CEO
    Mike.Geiger@afpglobal.org

                                     ______

                     Statement Submitted by Paula J. Beugen
    Chairman Wyden, Ranking Member Crapo and Committee Members, thank you
    for the opportunity to submit this statement. Your attentiveness and
    action to support the nonprofit sector is vital to assuring a thriving
    nonprofit sector throughout the United States. I applaud and am
    grateful for the United States Committee on Finance's March 17, 2022
    hearing entitled Examining Giving and Trends in the Nonprofit Sector.
    Appreciation is due to you as well as to the renowned leaders who
    testified in person at the hearing. Important and timely issues were
    raised for your consideration and further leadership. Take related
    action.

    While I am greatly concerned about and active on a number of issues
    pertaining to the future of the entire nonprofit sector in the United
    States, volunteerism is the main focus of this brief statement to the
    Committee on Finance (Committee). My nearly 47 years of experience in a
    range of capacities in the volunteerism part of the sector prepares me
    to bring a particular perspective to the Committee.

    A healthy nonprofit sector--including the millions of volunteers who
    are a key part of it--is essential to the well-being of our democracy.
    People who volunteer build relationships across communities and
    perspectives, gain greater understanding of issues confronting
    communities and become more informed voters. They learn and give a lot.
    They provide leadership and services that are not available through
    other means. They bring hope and often survival to many which is
    especially important during this daunting time in the life of our
    country.

    Given the role volunteers play in the lives of people, communities and
    democracy a much greater focus on volunteerism by Congress is
    essential. Volunteers selflessly give of their time, talent,
    creativity, innovation and problem-solving abilities. Yet, minimal
    investment is made in assuring that volunteers who serve without a
    stipend have the resources and supports required to maximize the impact
    of their efforts. This is a great loss to all involved. We must
    implement strategies that help defray out-of-pocket volunteer-related
    expenses and strengthen the ability of nonprofit organizations to
    partner with volunteers in order to advance their mission-
    accomplishment. Steps must be taken to strengthen the volunteer
    community and to make the opportunity to volunteer more accessible and
    equitable.

    To illustrate, I reflect on the issue of the charitable driving mileage
    rate. In an article I wrote, ``Towards a More Cohesive Volunteerism
    Public Affairs Strategy: A Story, Steps and Lessons from Minnesota,''
    published in e-volunteerism: The Electronic Journal of the Volunteer
    Community, Vol. IX, Issue 4, July 15th-October 14, 2009, some history
    around this issue was outlined. Noted in the article was that
    discussion of this topic was taking place back in 1981. According to
    the article, ``Efforts to advance this cause continued throughout the
    1980s and 1990s.''

    In 1984 the former Minnesota Association of Volunteer Directors
    distributed an informal survey that was redistributed to 526
    volunteers. Responses were anonymous. What was learned from this group
    was at that time 20 percent of volunteers who responded to the survey
    would find it difficult to volunteer without an ``adequate tax
    deduction for charitable driving,'' according to the article. The
    situation is exacerbated today. Many organizations and leaders
    subsequently advocated and continue to advocate to raise the rate. I
    have heard volunteers discussing that they no longer can afford to be a
    volunteer driver. Raise the charitable driving rate to match the
    allowable business rate and keep it in parity with the business rate
    into the future.

    The above issue is one of many volunteerism topics that need to be
    addressed. Let's work to eliminate the recent shortage of and decline
    in volunteerism. An independent, substantial sector of Americans who
    volunteer in high quality efforts is so crucial to the well-being,
    stability, hope and future of our nation. Invest in our precious
    resource--volunteers.

                                     ______

               BIPOC Executive Directors Coalition of Washington

                              c/o Byrd Barr Place

                                 722 18th Ave.

                               Seattle, WA 98122

                          info@bipocedcoalitionwa.org

                        https://bipocedcoalitionwa.org/

             Statement of Ananda Valenzuela, Co-Executive Director

    Thank you for the opportunity to share our insights, as co-founders of
    the BIPOC Executive Directors Coalition of Washington, a multicultural,
    cross-sector collaborative of 200+ Black, Indigenous, and People of
    Color (BIPOC) nonprofit leaders working in solidarity to promote
    wellness and restore resources in our communities.

    We would like to amplify the excellent testimony shared by Susannah
    Morgan, CEO of Oregon Food Bank, and bring your attention to this quote
    in particular: ``I would like to just drive home the fact that hunger
    is a symptom. Its cause is poverty, and poverty itself has a cause,
    which is systemic inequities. It's not an accident that our communities
    of color are more likely to be hungry. It's not an accident that single
    moms are more likely to be hungry. It's because we've designed systems
    to prevent prosperity and allowed those to happen. And so I would say
    that actions--like the ones that you have suggested that redistribute
    wealth and tear down barriers to prosperity--are exactly what we need
    our federal government to do.''

    Our coalition strongly agrees with the Oregon Food Bank that Congress
    must urgently take action on the following:

        1.  Reinstate the Child Tax Credit.

        2.  Modernize SNAP to reflect the true cost of healthy food.

        3.  Invest in housing and child care.

        4.  Raise revenue by requiring the wealthiest corporations,
    individuals and estates to pay what they owe.

        5.  Increase the amount private foundations must grant annually.

        6.  Ensure donor-advised funds have minimum annual distributions of
    at least 7% to 10% and spend-down timelines to ensure money is invested
    in communities and not sitting idly for decades.

    As a society, we have been working to address the impacts of inequities
    without redesigning the structures and systems that create and
    perpetuate them. For generations, we have needed to do more and spend
    more to support the health and well-being of our communities without
    the adequate resources to do so. Wealthy corporations, philanthropies,
    and individuals benefit from the very systems that give rise to
    inequities. This must change in order to advance racial justice.

    We look forward to continuing to be in dialogue with Congress about how
    best to address the systemic inequities barring us from meaningfully
    addressing the core challenges facing the nonprofit sector and BIPOC
    communities.

                                     ______

                    Business Coalition for Fair Competition

                        10340 Democracy Lane, Suite 300

                               Fairfax, VA 22030

                                 (703) 383-1330

                         www.governmentcompetition.org

    The Business Coalition for Fair Competition (BCFC) \1\ is a coalition
    of private sector firms, large and small, trade associations, think
    tanks, organizations, and individuals who support the competitive free
    enterprise system and seek relief from unfair government sponsored
    competition with private business.
    ---------------------------------------------------------------------------
        \1\ https://www.governmentcompetition.org/.

    BCFC is deeply concerned that some non-profit organizations operate
    activities in direct and unfair competition with for-profit, tax-paying
    private businesses. At a time when small business is struggling and job
    creation is not being maximized in the private sector, small business
    cannot afford to compete against non-profits that don't pay their fair
    ---------------------------------------------------------------------------
    share of taxes.

    Private enterprise constitutes the strength of the United States
    economic system and competitive private enterprises remain the most
    productive, efficient, and effective sources of goods and services.

    There are thousands of legitimate non-profits that do exemplary work
    filling a societal need. The tax treatment of these organizations is
    not an issue for BCFC. However, when the organizations encroach on
    private business activities, there are a number of undesirable
    consequences.

    Entities organized under various provisions in section 501(c) of the
    Internal Revenue Code are provided special tax ``exempt'' treatment
    were clearly intended to perform activities and provide services
    otherwise considered ``governmental'' in nature, not those that are
    commercially available. A 1954 report by this Committee noted:

            The exemption from taxation of money or property devoted to
            charitable and other purposes is based upon the theory that
            government is compensated for the loss of revenue by its relief
            from financial burden which would otherwise have to be met by
            appropriations from public funds and by the benefits resulting
            from promotion of the general welfare.

            Source: (Unfair Competition: The Profits of Non-profits, James
            T. Bennett, Thomas H. DiLorenzo, Hamilton Press, 1989, p. 26)

    The problem is, this policy has not been adequately codified by
    Congress or efficiently implemented by the IRS. The situation has
    become so pervasive that unfair government-sponsored competition has
    been a top issue at every White House Conference on Small Business.

    In 1980, the first White House Conference on Small Business made unfair
    competition one of its highest-ranked issues. It said, ``The Federal
    Government shall be required by statute to contract out to small
    business those supplies and services that the private sector can
    provide. The government should not compete with the private sector by
    accomplishing these efforts with its own or non-profit personnel and
    facilities.''

    In 1986, the second White House Conference made this one of its top
    three issues. It said, ``Government at all levels has failed to protect
    small business from damaging levels of unfair competition. At the
    federal, state and local levels, therefore, laws, regulations and
    policies should . . . prohibit direct, government created competition
    in which government organizations perform commercial services. . . .
    New laws at all levels, particularly at the federal level, should
    require strict government reliance on the private sector for
    performance of commercial-type functions. When cost comparisons are
    necessary to accomplish conversion to private sector performance, laws
    must include provisions for fair and equal cost comparisons. Funds
    controlled by a government entity must not be used to establish or
    conduct a commercial activity on U.S. property.''

    And the 1995 White House Conference again made this a priority issue
    when its plank read, ``Congress should enact legislation that would
    prohibit government agencies and tax-exempt and anti-trust exempt
    organizations from engaging in commercial activities in direct
    competition with small businesses.'' That was among the top 15 vote
    getters at the 1995 Conference and was number one among all the
    procurement-related issues in the final balloting.

    Non-profit organizations unfairly compete with private, for-profit
    businesses by engaging in commercial activities, but not paying taxes.

    Billions of dollars in economic activity occurs each year that is
    untaxed. This results in lost revenue to Federal, as well as state and
    local government agencies. And it creates an unlevel playing field for
    the private sector, particularly small business. When this occurs in
    universities, it unnecessarily drives up the cost of room, board,
    tuition and fees.

    The 2013 IRS Colleges and Universities Compliance Project studied the
    unrelated business income tax (UBIT) for which tax-exempt entities,
    such as most universities, are required to pay on any activities and
    revenue unrelated to their tax-exempt status. The April 25, 2013 IRS
    report \2\ ``found increases to unrelated business taxable income for
    90 percent of the colleges and universities examined, totaling about
    $90 million. There were over 180 changes to the amounts of unrelated
    business taxable income reported by colleges and universities on Form
    990-T; and disallowance of more than $170 million in losses and net
    operating losses that could amount to more than $60 million in assessed
    taxes.''
    ---------------------------------------------------------------------------
        \2\ https://www.irs.gov/pub/irs-tege/CUCP_FinalRpt_042513.pdf.

    Non-profit organizations are provided special tax status under section
    501(c) of the Internal Revenue Code. These groups are required to pay
    an ``unrelated business income tax'' or UBIT on its commercial or
    ---------------------------------------------------------------------------
    ``non-exempt'' activities. The IRS report showed this is not occurring.

    The Federal Government first exempted charitable organizations from tax
    in 1913. In 1950, in response to outrageous examples of unfair
    competition, Congress changed the tax law by creating the UBIT. Under
    UBIT, revenues from sources unrelated to the non-profit's tax-exempt
    purpose are subject to taxation.

    Attempts by government to address the problem of unfair competition
    have been few and far between, and those few measures that have been
    taken have been largely ineffective. The UBIT which was intended to
    level the playing field by taxing the revenues of non-profits has, for
    example, proven difficult if not impossible to enforce. The courts have
    not been able to give a rigorous and consistent definition of just what
    constitutes an ``unrelated'' business activity by a non-profit. And
    because the UBIT tax was to apply only to ``commercial activity which
    is not significantly related to the purposes for which the non-profit
    organization was established,'' enforcement and collection by the IRS
    has been less than successful. For their part, non-profits have taken
    an extremely expansive view of what constitutes a related purpose,
    making the under-reporting or non-reporting of revenues commonplace.

    Unfair non-profit competition impedes the development of small business
    by making it hard for them to enter markets and compete. This is
    significant because two-thirds of all new jobs are created by
    businesses with fewer than 20 employees. Because commercial enterprises
    run by non-profits are exempted from taxes and receive other subsidies,
    taxpaying businesses must bear an extra burden by paying higher taxes
    than they would otherwise to make up for exemptions enjoyed by their
    ``non-profit'' competitors. Unfair competition ends up crowding out of
    the market precisely those firms which are the principal source of new
    jobs--ultimately reducing the rate of economic growth.

    Unfair non-profit competition takes many forms. It is YMCAs competing
    with private health clubs; credit unions competing with community
    banks; rural electric and telephone cooperatives competing with
    investor-owned utilities; and universities venturing out of the
    classroom and into hotels, mapping services, and testing laboratories.
    A few examples follow:

          Credit unions' tax-exemption currently costs the U.S. Treasury
    $2 billion annually. By contrast, the more than 6,000 community banks
    that are the lifeblood of towns across the country contribute $4
    billion annually in taxes that support our nation and those
    communities;
          A bicycle rental business in Anchorage, Alaska faced competition
    from a non-profit entity approved by state gaming regulators--a free
    bike loan program for downtown Anchorage, known as the Earth Bike
    Program. The program lasted 2 years and forced other bike rental
    businesses out of business, and in one case, leave the state;
          A privately owned inn in Fredericksburg, Virginia hosts
    functions such as banquets and weddings. The University of Mary
    Washington's Alumni Center not only competes for similar events and
    opportunities, but it also is building a hotel less than a mile away
    that will further compete with the hotels, motels and other lodging
    destinations that are not tax-exempt. The only reason provided by lost
    clients for choosing the university was the lower price thanks to the
    tax differential. University hotels and conference centers are
    proliferating across the country; and
          A laundry and cleaner in San Antonio, Texas faces competition
    for its laundry services from a non-profit, Federal tax-exempt Bexar
    County (government) cooperative entity. The unfair business practice
    involves, in addition to competing with and eliminating the opportunity
    for private business services, the co-op going outside its members to
    provide laundry services to for-profit businesses and hospitals
    throughout South Texas. It is damaging to a long-time minority owned
    and operated for-profit business to have to compete in this arena with
    its taxing entity, Bexar County.

    Unfair university competition takes many forms. It is universities
    venturing out of the classroom and into activities unrelated to their
    core and exempt education mission, such as hotels, mapping services,
    bicycle repair, golf courses, gym and fitness centers, cultural
    resource assessments, testing laboratories and others. A few examples
    were highlighted in BCFC's 2013 \3\ and 2014 \4\ lists of the most
    egregious examples of unfair government competition as collected by
    media reports, include:
    ---------------------------------------------------------------------------
        \3\ http://archive.constantcontact.com/fs181/1102588223535/archive/
    1116149070767.html.
        \4\ http://campaign.r20.constantcontact.com/render?ca=2815dd0f-
    8806-4b37-8be2-c63f7bc3d6e0
    &c=8d26d950-49b1-11e4-96ee-d4ae5292c3f3&ch=8d2d9010-49b1-11e4-96ee-
    d4ae5292c3f3.

          The University of Mary Washington's Alumni Center \5\ in
    Fredericksburg, VA not only competed for similar events and
    opportunities as provided by a neighboring small business in the
    wedding, banquet, lodging and catering business, but it also was
    building a hotel less than a mile away that would further compete with
    the hotels, motels and other lodging destinations that are not tax-
    exempt. The only reason provided by lost clients for choosing the
    university was the lower price thanks to the tax differential.
    University hotels and conference centers are proliferating across the
    country;
    ---------------------------------------------------------------------------
        \5\ http://jepsonalumniexecutivecenter.umw.edu/events/weddings/.
    ---------------------------------------------------------------------------
          George Mason University in Fairfax, Virginia announced in
    December 2013 it would close its hotel, the Mason Inn, after losing $11
    million;\6\
    ---------------------------------------------------------------------------
        \6\ http://www.fairfaxtimes.com/article/20131206/NEWS/131209262/
    1064/mason-inn-to-close-in-june-reopen-as-residential-
    space&template=fairfaxTimes.
    ---------------------------------------------------------------------------
          Towson University, a Maryland state University in the Baltimore
    suburbs, purchased air time on Washington, DC radio stations
    advertising a nursery school program \7\ for children 2, 3, and 4 years
    of age and a summer camp programs for pre-teens;
    ---------------------------------------------------------------------------
        \7\ http://www.towson.edu/daycare/.
    ---------------------------------------------------------------------------
          ``Bluffing'' to win its first contract, St. Mary's University
    (MN) performed \8\ commercially available mapping services for the
    National Park Service and other clients;
    ---------------------------------------------------------------------------
        \8\ https://www.winonadailynews.com/news/local/article--c6c019aa-
    74e2-11e3-a03f-0019bb29
    63f4.html.
    ---------------------------------------------------------------------------
          The University of Houston operates the National Center for
    Airborne Laser Mapping (NCALM),\9\ mapping services utilizing aircraft
    equipped with Light Detection And Ranging (LIDAR), a technology
    commercialized by NASA in the 1990s. Towson also runs a mapping program
    \10\ that has purchased television ads touting a software system that
    is otherwise commercially available;
    ---------------------------------------------------------------------------
        \9\ https://ncalm.cive.uh.edu/.
        \10\ http://www.towson.edu/innovation/cgis/.
    ---------------------------------------------------------------------------
          Believing that bicycle repair is inherent to the success of
    higher education, Virginia Tech University opened its own shop and
    hired a mechanic to pedal \11\ services to students in Blacksburg, VA
    in competition with local small business;
    ---------------------------------------------------------------------------
        \11\ http://r20.rs6.net/
    tn.jsp?f=001n7O63zKQU6FBce6Ro9HNrwzqeIJiZCIEgKUh9cgTmdCWjC
    4MJQm3GgNCmoxlyhvlzXKS1r8fRHfs2Sk8_vklJncTqQXA4Igs1FixMkWNllVd5UyxKOTfwL
    Ian
    RC05lVLl1DLdtK72h9UEWYTIlV1Gzp74CjP3OpHpOtIaV6GRkQ-x9v7LaBNuK7Tyiis_eI-
    GgI-8r
    Le4fWZBFbpT-lRWj0et3m9C-
    vXBWaIAoDUqfOHJNSZfQ2i0S0fxcVhoSfO10MiGPD80YpezaRX
    bJ6x0d1AqUD1PGpPpI8vqGW1P_baqAltcBxXP2VDIHWkO49k&c=&ch=.
    ---------------------------------------------------------------------------
          James Madison University in Harrisonburg, VA operates \12\ a
    variety of charter bus and transit options to not only university
    students, but also to the general public including local school systems
    thereby in direct competition and duplication of the local market as
    would be provided by the small business operators; and
    ---------------------------------------------------------------------------
        \12\ https://www.jmu.edu/transportation/regional-transportation/
    charter-buses.shtml.
    ---------------------------------------------------------------------------
          Elon University in North Carolina started Live Oak
    Communications,\13\ a communications agency that provides public
    relations, advertising, special event marketing, viral marketing, media
    relations, website development, video creation and graphic design
    services for businesses and not-for-profit organizations in the North
    Carolina region.
    ---------------------------------------------------------------------------
        \13\ https://www.elon.edu/u/academics/communications/.

    The previously referenced 2013 IRS report listed the following
    activities as within its scope of UBIT research: Fitness, recreation
    centers and sports camps; advertising; facility rentals; arenas; and
    ---------------------------------------------------------------------------
    golf.

    Another form of university competition is in the schools' bookstore.
    These on-
    campus, university-owned retail operations go far beyond selling
    essential textbooks to students, but compete with local, for-profit,
    tax-paying business in offering office supplies, clothes and apparel,
    computer equipment and goods under the blanket of the institution's tax
    exempt status. Finally, universities historically competed with travel
    and tour companies by offering foreign trips that looked more like
    vacations rather than instructional endeavors.

    Schools of higher education are increasingly venturing away from their
    core missions of teaching and conducting basic research. Financial
    pressures, ranging from reduced government funding to pressures to
    limit tuition increases have led university presidents to transform
    academicians into entrepreneurs. Universities are generating revenues
    from commercial activities to supplement their budgets.

    University engagement in commercial activities could be called the
    ``Gatorade Syndrome.'' Ever since professors at the University of
    Florida invented the popular sports drink to hydrate football players
    practicing in the heat, academicians have been trying to find the next
    big discovery. Most simply consume tax dollars, divert scarce resources
    including tuition, and fail to turn profits. These university-
    sponsored enterprises have cost their schools millions, exacerbating an
    unaffordable tuition system that has made a college education a
    financial burden, if not impossibility, for most students and their
    parents.

    Universities enjoy significant advantages over for-profit companies.
    They are eligible for billions of dollars in grants from Federal and
    State governments. They often have the ability to secure non-
    competitive, sole source contracts with government agencies. They pay
    no taxes. Their overhead--buildings, electricity, even equipment, is
    already paid for and is provided for ``free.'' Their student labor
    force is either unpaid or compensated at well below prevailing market
    wages. They carry no professional liability insurance, do not have to
    pay unemployment compensation and in many cases are exempt from social
    security contributions. When universities enter into contracts to
    perform services, they usually insist on ``best effort'' clauses, which
    absolve them of ever completely finishing a project. They are also
    recipients of millions of dollars in free or discounted hardware and
    software, donated from vendor firms so that students will learn on
    their systems, be proficient in their use upon graduation and instill a
    consumer loyalty that will translate into sales once these students
    move up in the ranks of their private sector employers. The advantages
    universities bring to the market make it virtually impossible for
    private firms to compete.

    Private sector and for-profit colleges and universities face unfair
    competition from government institutions. In recent years, such private
    schools have been singled out for attack from a bevy of regulations
    proposed by the federal government that create an unfair and unlevel
    playing field. The latest effort comes in the form of a retooled
    ``gainful employment'' regulation by the Department of Education that
    is impacting private sector schools and largely leaving traditional
    public and non-profit schools untouched. The ``gainful employment''
    regulation prevents students--often low-
    income, minorities, and veterans--from having access to thousands of
    programs at private sector higher education institutions.

    In addition, federal actions, including the ``90/10 rule,'' regulations
    dealing with state authorization, and the definition of a credit hour
    all threaten to punish private sector schools to the advantage of
    traditional public institutions.

    For too many years, the unfair government-sponsored competition issue
    has not been a top priority for Congress or Administrations of either
    party. The Small Business Administration's Office conducted a series of
    hearings and issued a report, ``Government Competition: A Threat to
    Small Business'' (March 1980), and ``Unfair Competition by Non-profit
    Organizations With Small Business: An Issue for the 1980s'' (June,
    1984). The last serious look at non-profits and the UBIT by the Ways
    and Means Committee was by Congressman J.J. Pickle (D-TX) in 1987-1988.

    In February 2013, BCFC testified \14\ before this Committee including
    ``unfair university competition'' and UBIT within the hearing \15\
    entitled, ``Tax Reform and Charitable Contributions.''
    ---------------------------------------------------------------------------
        \14\ http://www.governmentcompetition.org/uploads/
    BCFC_Testimony_Palatiello_House_Ways_
    and_Means_Cmte_2-14-2013.pdf.
        \15\ http://waysandmeans.house.gov/event/update-new-time-camp-
    announces-hearing-on-tax-reform-and-charitable-contributions/.

    From April 18 through April 25, 1993, The Philadelphia Inquirer
    presented an exhaustive investigative exposition of the multibillion-
    dollar world of America's so-called non-profit industries, exposing, in
    several different contexts, the abuses of their unique tax-exempt
    status. Certainly, this sweeping indictment by The Philadelphia
    Inquirer encompasses the world of non-profit sometimes run amok.
    However, as you, Mr. Chairman, contemplate future oversight hearings
    and legislation to reform this multibillion-dollar, non-tax-paying
    competition for many of America's struggling small businesses, you will
    find valuable factual, albeit dated, information in the Inquirer
    ---------------------------------------------------------------------------
    series.

    Source: (Non-profits: America's Growth Industry They're Called Non-
    profit Businesses, But That Doesn't Mean They Can't Make Money. They
    Do--Billions Of Dollars. At The Same Time, Their Tax-exemptions Cost
    Government More Than $36 Billion A Year,'' by Gilbert M. Gaul and Neill
    A. Borowski, The Philadelphia Inquirer April 18, 1993)

    In February 1987, a GAO report found:

          The U.S. Department of Commerce estimates that $1.2 billion, or
    1.3 percent, of the $91 billion gross national product (GNP) in 1930
    could be attributed to non-profit institutions. This share grew to $131
    billion, or 3.3 percent, of the $3,989 billion GNP by 1985;
          A 1975 IRS Statistics of Income (SOI) study found that for tax-
    exempt organizations (religious, schools and colleges, cultural and
    historical, other instructional, health-related services, scientific
    research, business and professional, farming and related, mutual
    organizations, employee or membership benefit, sports-
    athletic-recreational and social, youth, conservation and
    environmental, housing, inner city or community, civil rights,
    litigation and legal aid, legislative and political advocacy, other
    activities directed to individuals, other activities directed to
    organizations, other purposes and activities, no activity reported) on
    average, 39% of their total activity receipts were business receipts;
    and
          Complete data do not exist to quantify the nature, extent, and
    impact of competition between non-profits and the private sector.
    However, the limited data available indicate that taxable businesses
    and some tax-exempt organizations are increasingly competing to provide
    similar services.
            Source: (GAO Briefing Report to the Joint Committee on
            Taxation; ``Tax Policy: Competition Between Taxable Businesses
            and Tax-Exempt Organizations'', February 27, 1987--GGD-87-40BR)

    In March 1980, a report of the Small Business Administration (SBA)
    Advocacy Task Force Group on Government Competition with Small Business
    found:

          The activities of foundations and universities were of
    particular concern to a number of witnesses;
          In Fiscal Year 1978, the IRS audited approximately 17,000 of the
    150,000 required filings by non-profits. Unrelated business income was
    discovered in 1,800 or 10.6 percent of these 17,000 audited cases. Of
    the 1,800 audits where unrelated business income was discovered, 46
    percent (828 cases) resulted in successful action by IRS to levy
    additional taxes, and a combined total of $10 million was recovered. On
    average, the IRS recovered additional taxes at the rate of $12,078 per
    audited case where unrelated business income was discovered and
    recovery action succeeded; and
          The small business community's perception of the extent of abuse
    of the tax system by non-profits strongly suggests that a more
    extensive review of unrelated business income activities is
    warranted.Source: (``Government Competition: A Threat to Small
    Business'' Report of the SBA Advocacy Task Force Group on Government
    Competition with Small Business, March 1980)

    This is a problem that is growing, not diminishing. From 1975 to 1990,
    the non-profit sector grew by 150 percent, while the gross domestic
    product grew about 50 percent.

    University competition is part of a larger problem of unfair government
    sponsored and tax-subsidized competition with private enterprise
    including government (including the insourcing of contracts performed
    by tax-paying private sector firms out of the private sector for
    performance by Federal employees), non-profits, prison industries, etc.
    The Federal government and universities can lower costs and increase
    revenue by applying the `` `Yellow Pages' Test,'' a simple test that
    says if an activity is available from a private sector company found in
    the Yellow Pages, that activity should not be a responsibility of a
    college and university and, instead, should actually be performed by a
    tax-paying private sector firm.

    In December 2012, BCFC attempted to bridge the impasse in negotiations
    on the fiscal cliff and sequestration by providing President Obama and
    Congressional leaders budget savings of $795 billion \16\ by simply
    utilizing tax-paying private sector firms for commercially available
    goods and services currently performed by a government or tax-
    subsidized entity. The federal government can achieve $795 billion in
    savings simply by getting out of activities that duplicate or compete
    with the private sector, which subsidize unfair competition with
    private, for-profit companies, or by privatizing activities for which
    there are current or potential private sector providers. This includes:
    ---------------------------------------------------------------------------
        \16\ http://archive.constantcontact.com/fs181/1102588223535/
    archive/1111796462564.html.

          Enforce UBIT on commercial activities revenue of non-profits--
    ---------------------------------------------------------------------------
    $36 Billion.

    Institutions of higher education should not be able to use their tax-
    exempt status to avoid paying income taxes on what are essentially
    commercial activities. These tax-subsidized entities should not be
    making the same kind of profits on activities that are virtually
    identical to those of a for-profit, tax-paying business.

    The IRS should more vigorously enforce current rules governing the tax
    status of universities to assure that academic activities are indeed
    related to research and education, not commercial production. Here are
    five very specific recommendations.

        1.  The Department of the Treasury should be required to provide an
    annual public estimate of revenues lost through avoidance of UBIT.

        2.  The Treasury Department should provide an official public
    estimate of potential new revenues to the Treasury if the UBIT law were
    expanded to require all commercial operations of universities to pay
    their fair share of taxes.

        3.  The law should be modified or new legislation introduced that
    lets the Treasury Department collect taxes that insures that all
    commercial activities of universities are taxable. The IRS has only one
    option today--that is to revoke an organization's charter to do
    business. They simply can't administer the law the way it is.

        4.  Congress should amend the Higher Education Act to focus
    universities on their core missions--education and basic research.
    Legislation should be passed to apply a ``commerciality'' test to all
    non-core university activities. Any university that receives direct
    federal funding, or indirect funding through tax-exempt or ``non-
    profit'' status, should be prohibited for using such institutions for
    the performance of commercial, tax generating activities otherwise
    available in the private sector.

        5.  Universities entering a commercial undertaking should be
    required to form a for-profit subsidiary that must obey all the same
    laws and regulations that apply to for-profit enterprises. It is only
    when we move beyond hidden subsidies and the ineffectual regulations of
    UBIT that both consumers and producers, and all taxpayers, will be able
    to enjoy the benefits of even-handed competition. In forming a
    commercial subsidiary, this would help implement a ``commerciality
    clause,'' and thus implement the `` `Yellow Pages' Test.''

    Unfair non-profit competition with the private sector, and small
    business, is a public policy issue deserving of immediate attention and
    reform. This hearing will provide an important forum for the private
    sector to discuss the broader aspects of this issue. As Congress seeks
    ways to grow the economy and create private sector jobs, as well as
    prepare comprehensive tax reform that lowers the corporate tax rate to
    make American business more competitive in the global market and
    simplify the tax code, BCFC respectfully recommends reform of the
    treatment of nonprofit organizations and UBIT so that unfairness is
    eliminated, appropriate revenue is raised, and counter-productive tax
    policy that disadvantages private, for profit companies, particularly
    small business, is implemented.

    We commend your efforts to further explore private sector complaints in
    this area and advance the debate. The private sector seeks a
    competitive environment in which all participants play by the same
    rules including reforms to the tax code that enable, instead of hinder,
    the private sector.

                                     ______

                      California Association of Nonprofits

                          870 Market Street, Suite 985

                            San Francisco, CA 94102

                                 (800) 776-4226

                           https://calnonprofits.org/

    March 31, 2022

    The Honorable Ron Wyden
    The Honorable Mike Crapo
    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Building
    Washington, DC 20510

    Dear Chairman Wyden, Ranking Member Crapo, and members of Senate
    Committee on Finance:

    On behalf of the California Association of Nonprofits (CalNonprofits),
    a policy alliance of more than 10,000 members, I write to express
    appreciation for your leadership in holding a hearing on charitable
    giving, a topic with vital importance to the sustainability of the
    nonprofit sector, and for considering reforms that will help ensure
    that much-needed resources get to charities more quickly.

    Through our advocacy, CalNonprofits protects and enhances the ability
    of nonprofits to serve our communities. We advocate for sufficient
    public investment in our communities, and because private philanthropy
    is also an important funding source for nonprofits, we support efforts
    to bring greater accountability to charitable donation utilization and
    greater transparency to philanthropy overall.

    The events of the past two years reinforce the important role that
    nonprofit organizations play in providing services, from serving food
    to the hungry to providing clothing and shelter for Americans in need.
    In California, there are more than 92,000 active nonprofits. We are key
    economic drivers, generating 15% of the Gross State Product; service
    providers, providing 32% of Medi-Cal services; and employers, employing
    more than 1.2 million Californians.

    Nationwide, many nonprofits are struggling to meet increased community
    needs and cover higher programmatic costs--without a corresponding
    increase in resources. The nonprofit workforce remains deeply affected
    by the pandemic. Nonprofits need resources now more than ever.

    Current charitable giving laws impede the flow of resources to
    nonprofits, and steps must be taken to increase that flow, especially
    at a time when our services are most needed. For example, current law
    allows donors to receive an upfront tax benefit for their charitable
    contributions, yet when funds are donated to vehicles such as donor-
    advised funds (DAFs), they can accumulate indefinitely without being
    distributed to charities.

    In other words, state and federal coffers experience significant losses
    as a result of these tax benefits, without the guarantee of comparable
    benefits to society of donated funds going to support charitable goals.
    Nationwide, more than $1.2 trillion sits in private foundations and
    $159 billion sits in DAFs. In fiscal year 2020 alone, contributions to
    DAFs totaled $47.85 billion, according to a 2021 National Philanthropic
    Trust report.\1\
    ---------------------------------------------------------------------------
        \1\ https://www.nptrust.org/reports/daf-report/.

    We believe reform is needed to ensure that tax deductible donations get
    to charities in a timely way, so charities can use the funds to serve
    our communities. Society should benefit in a timely way that
    corresponds closely to the time when the tax deductions are enjoyed by
    ---------------------------------------------------------------------------
    donors.

    We ask that the Committee support reforms to charitable giving laws so
    that policies are in place to free up resources currently held in
    philanthropic institutions, to get more funds to nonprofits, to align
    public benefit and public costs, and to help ensure necessary services
    for our communities.

    We would welcome the opportunity to work with members of the Senate
    Committee on Finance and other policymakers as these conversations move
    forward. Thank you, again, for your leadership.

    Sincerely,

    Jan Masaoka, CEO

                                     ______

                            Center for Fiscal Equity

                          14448 Parkvale Road, Suite 6

                              Rockville, MD 20853

                          fiscalequitycenter@yahoo.com

                          Statement of Michael Bindner

    Chairman Wyden and Ranking Member Crapo, thank you for the opportunity
    to address this issue. I will leave trend analysis to the witnesses. My
    concern is improving the taxation of this sector. Our current tax
    reform plan is attached for context. These comments repeat those
    offered in December to the Ways and Means Oversight Subcommittee on the
    Pandora Papers and those drafted for a hearing before the Oversight
    Committee on houses of worship, charities and nonprofits in June 2019
    that never took place.

    There are two questions for the taxation of charitable contributions.
    The first is where the money comes from. The second is how the outgo
    should be taxed.

    Under our proposed asset value-added tax, assets would be marked to
    market at initial public offering, option exercise and the first sale
    after inheritance, gift and donation. When assets are donated to
    charities and nonprofits, no tax will be paid. When these institutions
    sell these assets, taxes will be collected in full. Whether endowment
    income is taxed is an open question, although usually the asset value-
    added tax would be levied.

    Sales to employee-owned or cooperative firms will be zero rated, just
    as they are when a single owner sells out to an ESOP when transitioning
    out. We propose expanding this privilege to all asset sales. Note that
    as long as a business or family farm is kept in the family or sold to a
    cooperative, no tax is levied.

    Large religious organizations, charities and nonprofits have become big
    business and need to be taxed accordingly, where appropriate. Some are
    legally held as the property of the minister or bishop. Taxing such
    entities as sole proprietors makes legal sense. While this could be
    seen as targeting certain religious organizations, such as the Catholic
    and Episcopalians, their choice of organizational form is not the fault
    of the public. As such, their tax treatment must match similar business
    classes.

    Charities that have commercial operations will be subject to an Invoice
    VAT (I-VAT), as they essentially are under the TCJA provisions in
    question, like any other commercial company, particularly if these
    operations compete with type C, type S, partnership or sole proprietor
    firms that pay individual taxes at pass-through rates.

    The I-VAT will be collected on commercial goods. This is essential
    after reform to provide visibility to their customers as to taxes
    imposed by the entire supply chain and a commercial vendor or
    independent agent must pay an I-VAT. Without such treatment, every
    business into some form of charitable organization overnight, this
    would not be advisable. Fiscal conservatism should not be synonymous
    with empowering tax evasion schemes.

    Whether non-commercial operations are subject to an I-VAT depends on
    the extent they are used to fund entitlement spending and payroll taxes
    versus discretionary government spending. For example, if Social
    Security or Medicare were to become I-VAT funded, thus becoming zero
    rated at the border and replacing the payroll tax, then charitable
    organizations must continue to fund these operations, as they will
    benefit the employees of these organizations. If, however, entitlement
    services are funded through our proposed Subtraction VAT S-VAT, then
    there is an argument to leave the non-commercial activities of these
    entities VAT-exempt.

    Political organizations and committees also would pay S-VAT on their
    payroll and their purchases would not be I-VAT exempt in the long term.
    Committees that give little to candidates should not be tax-exempt, as
    they are essentially corporations whose high salaries are essentially
    partnership income in disguise, without the corresponding risk. As
    such, they should be taxed at pass-through rates. If an S-VAT is
    enacted, ads through deductions for all individuals would be
    eliminated.

    Charitable organization employees will continue to pay the employee
    contribution to Old-Age and Survivors Insurance, assuming it is not
    subsumed into our proposed Subtraction VAT (S-VAT).

    Charitable organizations will pay the S-VAT because their employees
    will benefit from the programs funded by this levy or from offsets to
    it. For example, Catholic Charities employees might designate the
    Catholic school system as an alternative provider to public schools,
    which would allow Catholic Charities agencies to take a credit on this
    levy, which would otherwise be paid against their total value added.

    Likewise, employees would be paid the same child tax credit as
    commercial employees--again as an offset to S-VAT levies. Health and
    higher education credits proposed for other enterprises would also be
    available to charitable organizations, as well as any other applicable
    credits. Note that because certain payroll and personal income taxes
    will be eliminated, the gross pay of charitable employees will decline
    in like manner to those of their commercial counterparts once tax
    reform is enacted.

    Finally, this schema is as applicable to governmental organizations as
    it is to charitable organizations, with modifications. State
    governments would be the federal S-VAT, while federal organizations
    would pay the state S-VAT, both on the same basis relating to value
    added through payroll. These organizations would not pay the S-VAT to
    themselves, however their personnel systems should contain a similar
    range of benefits.

    This schema provides a better explanation of how a Fair Tax might work
    on these levels, while also providing a rationale for adjusting
    government employee salaries and providing for non-governmental
    performance of services through the same type of alternative S-VAT
    programs.

    Thank you, again, for the opportunity to add our comments to the
    debate. Please contact us if we can be of any assistance or contribute
    direct testimony.

    Attachment One--Tax Reform, Center for Fiscal Equity, December 7, 2021

    Individual payroll taxes. Employee payroll tax of 7.2% for Old-Age and
    Survivors Insurance. Funds now collected as a matching premium to a
    consumption tax based contribution credited at an equal dollar rate for
    all workers qualified within a quarter. An employer-paid subtraction
    value-added tax would be used if offsets to private accounts are
    included. Without such accounts, the invoice value added tax would
    collect these funds. No payroll tax would be collected from employees
    if all contributions are credited on an equal dollar basis. If employee
    taxes are retained, the ceiling would be lowered to $100,000 to reduce
    benefits paid to wealthier individuals and a $16,000 floor should be
    established so that Earned Income Tax Credits are no longer needed.
    Subsidies for single workers should be abandoned in favor of radically
    higher minimum wages. If a $10 minimum wage is passed, the employee
    contribution floor would increase to $20,000.

    Wage Surtaxes. Individual income taxes on salaries, which exclude
    business taxes, above an individual standard deduction of $100,000 per
    year, will range from 7.2% to 57.6%. This tax will fund net interest on
    the debt (which will no longer be rolled over into new borrowing),
    redemption of the Social Security Trust Fund, strategic, sea and non-
    continental U.S. military deployments, veterans' health benefits as the
    result of battlefield injuries, including mental health and addiction
    and eventual debt reduction.

    Our proposed brackets have been increased from $85,000 to $100,000
    because this is the income level at the top of the 80% of tax paying
    households who earn the bottom third of adjusted gross income. Earners
    above this level are considered middle class. Likewise, the top 1% of
    income earners are at the $500,000 level, which will be used as the
    start of the highest rate.

    Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
    dividend taxes, and the estate tax. It will apply to asset sales,
    dividend distributions, exercised options, rental income, inherited and
    gifted assets and the profits from short sales. Tax payments for option
    exercises, IPOs, inherited, gifted and donated assets will be marked to
    market, with prior tax payments for that asset eliminated so that the
    seller gets no benefit from them. In this perspective, it is the
    owner's increase in value that is taxed. As with any sale of liquid or
    real assets, sales to a qualified broad-based Employee Stock Ownership
    Plan will be tax free. These taxes will fund the same spending items as
    income or S-VAT surtaxes.

    This tax will end Tax Gap issues owed by high income individuals. A 26%
    rate is between the GOP 23.8% rate (including ACA-SM surtax) and the
    Democratic 28.8% rate as proposed in the Build Back Better Act. It's
    time to quit playing football with tax rates to attract side bets. A
    single rate also stops gaming forms of ownership. Lower rates are not
    as regressive as they seem. Only the wealthy have capital gains in any
    significant amount. The de facto rate for everyone else is zero. For
    now, however, a 28.8% rate is assumed if reform is enacted by a
    Democratic majority in both Houses.

    Subtraction Value-Added Tax (S-VAT). These are employer paid Net
    Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including

          Health insurance or direct care, including veterans' health care
    for non-
    battlefield injuries and long term care.

          Employer paid educational costs in lieu of taxes are provided as
    either
    employee-directed contributions to the public or private unionized
    school of their choice or direct tuition payments for employee children
    or for workers (including ESL and remedial skills). Wages will be paid
    to students to meet opportunity costs.

          Most importantly, a refundable child tax credit at median income
    levels (with inflation adjustments) distributed with pay.

    Subsistence level benefits force the poor into servile labor. Wages and
    benefits must be high enough to provide justice and human dignity. This
    allows the ending of state administered subsidy programs and
    discourages abortions, and as such enactment must be scored as a must
    pass in voting rankings by pro-life organizations (and feminist
    organizations as well). To assure child subsidies are distributed, S-
    VAT will not be border adjustable.

    The S-VAT is also used for personal accounts in Social Security,
    provided that these accounts are insured through an insurance fund for
    all such accounts, that accounts go toward employee ownership rather
    than for a subsidy for the investment industry. Both employers and
    employees must consent to a shift to these accounts, which will occur
    if corporate democracy in existing ESOPs is given a thorough test. So
    far it has not. S-VAT funded retirement accounts will be equal-dollar
    credited for every worker. They also have the advantage of drawing on
    both payroll and profit, making it less regressive.

    A multi-tier S-VAT could replace income surtaxes in the same range.
    Some will use corporations to avoid these taxes, but that corporation
    would then pay all invoice and subtraction VAT payments (which would
    distribute tax benefits. Distributions from such corporations will be
    considered salary, not dividends.

    Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on
    purchase invoices. The rate varies according to what is being financed.
    If Medicare for All does not contain offsets for employers who fund
    their own medical personnel or for personal retirement accounts, both
    of which would otherwise be funded by an S-VAT, then they would be
    funded by the I-VAT to take advantage of border adjustability. I-VAT
    also forces everyone, from the working poor to the beneficiaries of
    inherited wealth, to pay taxes and share in the cost of government.
    Enactment of both the A-VAT and I-VAT ends the need for capital gains
    and inheritance taxes (apart from any initial payout). This tax would
    take care of the low-income Tax Gap.

    I-VAT will fund domestic discretionary spending, equal dollar employer
    OASI contributions, and non-nuclear, non-deployed military spending,
    possibly on a regional basis. Regional I-VAT would both require a
    constitutional amendment to change the requirement that all excises be
    national and to discourage unnecessary spending, especially when
    allocated for electoral reasons rather than program needs. The latter
    could also be funded by the asset VAT (decreasing the rate by from
    19.5% to 13%).

    As part of enactment, gross wages will be reduced to take into account
    the shift to S-VAT and I-VAT, however net income will be increased by
    the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
    replace pass-through and proprietary business and corporate income
    taxes.

    Carbon Added Tax (C-AT). A Carbon tax with receipt visibility, which
    allows comparison shopping based on carbon content, even if it means a
    more expensive item with lower carbon is purchased. C-AT would also
    replace fuel taxes. It will fund transportation costs, including mass
    transit, and research into alternative fuels (including fusion). This
    tax would not be border adjustable unless it is in other nations,
    however in this case the imposition of this tax at the border will be
    noted, with the U.S. tax applied to the overseas base.

    Tax Reform Summary

    This plan can be summarized as a list of specific actions:

        1.  Increase the standard deduction to workers making salaried
    income of $35,000 and over, shifting business filing to a separate tax
    on employers and eliminating all credits and deductions--starting at
    7.2%, going up to 28.8%, in $50,000 brackets.

        2.  Shift special rate taxes on capital income and gains from the
    income tax to an asset VAT. Expand the exclusion for sales to an ESOP
    to cooperatives and include sales of common and preferred stock. Mark
    option exercise and the first sale after inheritance, gift or donation
    to market.

        3.  Employers distribute the child tax credit with wages as an
    offset to their quarterly tax filing (ending annual filings).

        4.  Employers collect and pay lower tier income taxes, starting at
    $100,000 at 7.2%, with an increase to 14.4% for all salary payments
    over $150,000 going up 7.2% for every $50,000 up to $250,000.

        5.  Shift payment of HI, DI, SM (ACA) payroll taxes to employers,
    remove caps on employer payroll taxes and credit them to workers on an
    equal dollar basis.

        6.  Employer paid taxes could as easily be called a subtraction
    VAT, abolishing corporate income taxes. These should not be zero rated
    at the border.

        7.  Expand current state/federal intergovernmental subtraction VAT
    to a full GST with limited exclusions (food would be taxed) and add a
    federal portion, which would also be collected by the states. Make
    these taxes zero rated at the border. Rate should be 19.5% and replace
    employer OASI contributions. Credit workers on an equal dollar basis.

        8.  Change employee OASI of 7.2% from $18,000 ($20,000 for $10
    minimum wage) to $100,000 income are optional taxes for Old-Age and
    Survivors Insurance.

    Attachment Two--Tax Administration, Treasury Budget, February 12, 2020

    Shifting to a single system for all business taxation, particularly
    enacting invoice value-added taxes to collect revenue and employer-
    based subtraction value-added taxes to distribute benefits to workers
    will end the need for filing for most, if not all, households. Any
    remaining high salary surtax would be free of any deductions and
    credits and could as easily be collected by enacting higher tiers to a
    subtraction VAT.

    Subtraction VAT collection will closely duplicate the collection of
    payroll and income taxes--as well as employment taxes--but without
    households having to file an annual reconciliation except to verify the
    number of dependents receiving benefits.

    Tax reform will simplify tax administration on all levels. Firms will
    submit electronic receipts for I-VAT and Carbon Added Tax (C-AT)
    credit, leaving a compliance trail. S-VAT payments to providers, wages
    and child credits to verify that what is paid and what is claimed match
    and that children are not double credited from separate employers.

    A-VAT transactions are recorded by brokers, employers for option
    exercise and closing agents for real property. With ADP, reporting
    burdens are equal to those in any VAT system for I-VAT and A-VAT and
    current payroll and income tax reporting by employers.

    Employees with children will annually verify information provided by
    employers and IRS, responding by a postcard if reports do not match,
    triggering collection actions. The cliche will thus be made real.

    High salary employees who use corporations to reduce salary surtax and
    pay I-VAT and S-VAT for personal staff. Distributions from such
    corporations to owners are considered salary, not dividends.

    Transaction-based A-VAT payments end the complexity and tax avoidance
    experienced with income tax collection. Tax units with income under
    $84,000 or only one employer need not file high salary surtax returns.
    Separate gift and inheritance tax returns will no longer be required.

    State governments will collect federal and state I-VAT, C-AT, S-VAT
    payments, audit collection systems, real property A-VAT and conduct
    enforcement actions. IRS collects individual payroll and salary surtax
    payments, performs electronic data matching and receive payments and
    ADP data from states. SEC collects A-VAT receipts.

    I-VAT gives all citizens the responsibility to fund the government. C-
    AT invoices encourage lower carbon consumption, mass transit, research
    and infrastructure development. A-VAT taxation will slow market
    volatility and encourage employee ownership, while preserving family
    businesses and farms. Very little IRS Administration will be required
    once reform is fully implemented. All IRS employees could fit in a
    bathtub with room for Grover Norquist.

                                     ______

                         Colorado Nonprofit Association

                         789 Sherman Street, Suite 240

                                Denver, CO 80203

    Dear Senate Finance Committee Members:

    Thank you for all your work to support Coloradans and Americans
    throughout the pandemic, In advance of the upcoming hearing, I write on
    behalf of Colorado Nonprofit Association and its 1,100 nonprofit
    members to update you on the challenges that nonprofits in Colorado
    face and the continued need for relief and support.

    Background

    Because of the ongoing public health and economic crises, too many
    nonprofits in our state face increased demand for services, decreased
    revenue and increased expenses, and employee and volunteer shortages.
    This letter outlines those challenges and policy recommendations for
    the committee.
     Nonprofits Experienced Substantial Job Losses and Face Slow Job
            Recovery
    Before the pandemic, Colorado's nonprofits represented 5% of the
    state's private workforce, employed nearly 190,000 Coloradans, and
    contributed $40 billion of impact to Colorado's economy.\1\ While
    current employment and economic impact data for Colorado's nonprofits
    are not available, national trends indicate that nonprofits experienced
    substantial job losses in 2020 due to the pandemic and face a slower
    pace of job recovery than the private sector.
    ---------------------------------------------------------------------------
        \1\ http://www.cononprofitimpact.org/.

    Recent studies on the impact of the pandemic on the nonprofit sector
    ---------------------------------------------------------------------------
    indicated the following:

          40% reported reduced staffing levels per a 2021 Federal Reserve
    survey.\2\
    ---------------------------------------------------------------------------
        \2\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.
    ---------------------------------------------------------------------------
          13% of jobs, or 1.64 million jobs, lost by May of 2020.\3\ This
    means 25,000 Colorado nonprofit employees if job losses are presumed
    consistent with national data.
    ---------------------------------------------------------------------------
        \3\ http://ccss.jhu.edu/research-projects/nonprofit-economic-data/
    covid-nonprofit-employment/.
    ---------------------------------------------------------------------------
          337,500 job vacancies still remain as of February 2022.\4\ 5,000
    of which are vacancies for Colorado's nonprofits if job losses are
    presumed consistent with national data.
    ---------------------------------------------------------------------------
        \4\ Ibid.
    ---------------------------------------------------------------------------
          The nonprofit sector has recovered 79% of jobs lost during the
    pandemic, which lags behind the total U.S. job recovery rate of
    87%.\5\, \6\
    ---------------------------------------------------------------------------
        \5\ Ibid.
        \6\ https://www.denverpost.com/2022/03/14/colorado-employment-jobs-
    pre-pandemic-levels/.
    ---------------------------------------------------------------------------
          60% of nonprofits have vacancies between 10% and 30%. 16% have
    vacancies greater than 30% according to a December 2021 National
    Council of Nonprofits survey. Respondents cited salary competition
    (79%) and lack of child care as contributing to workforce shortages
    (23%).\7\
    ---------------------------------------------------------------------------
        \7\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.
    ---------------------------------------------------------------------------

    Charitable Giving Is Down on Federal Returns and up on State Returns

    Our review of available national data indicates that charitable giving
    is not keeping pace with needs and rising expenses:

          0.8% decrease in giving between 2019 and 2020 if one major
    donor's contributions are removed from the 2021 Giving USA study.\8\
    ---------------------------------------------------------------------------
        \8\ www.givinginstitute.org/resource/resmgr/gusa/2021_resources/
    gusa_2021_press_release_
    fina.pdf.
    ---------------------------------------------------------------------------
          42% of nonprofits with budgets under $500,000 and 29% with
    budgets over $500,000 experienced reduced donations in 2020 per the
    Urban Institute.\9\
    ---------------------------------------------------------------------------
        \9\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full_report.
    ---------------------------------------------------------------------------
          Nonprofits stating that donations are essential to their revenue
    stream were more likely to experience reduced donations in 2020 per the
    Urban Institute.\10\
    ---------------------------------------------------------------------------
        \10\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full_report.

    Fewer Coloradans took the federal charitable deduction and deducted
    ---------------------------------------------------------------------------
    less giving leading up to the pandemic:

          The number of Coloradans taking this deduction fell from 657,300
    to 278,050.\11\
    ---------------------------------------------------------------------------
        \11\ https://www.irs.gov/statistics/soi-tax-stats-historic-table-2
    for CO, 2017-2019.
    ---------------------------------------------------------------------------
          Total giving fell from over $4.5 billion in 2017 to $3.5 billion
    in 2019.\12\
    ---------------------------------------------------------------------------
        \12\ https://www.irs.gov/statistics/soi-tax-stats-historic-table-2
    for CO, 2017-2019.

    More Coloradans took the state charitable deduction and deducted more
    ---------------------------------------------------------------------------
    giving following passage of the Tax Cuts and Jobs Act:

          The number of Coloradans taking the state deduction increased
    from 153,000 in 2017 to 362,000 in 2018.\13\
    ---------------------------------------------------------------------------
        \13\ https://cdor.colorado.gov/data-and-reports/statistics-of-
    income-reports, table 25, 2017 and 2018.
    ---------------------------------------------------------------------------
          Giving on state returns increased by from $247.6 million in 2017
    to nearly $821.7 million in 2018.\14\
    ---------------------------------------------------------------------------
        \14\ https://cdor.colorado.gov/data-and-reports/statistics-of-
    income-reports, table 25, 2017 and 2018.

    Without the state deduction, declines in the number of donors and in
    overall charitable giving reported on Colorado tax returns would have
    ---------------------------------------------------------------------------
    been much greater.

    The Pandemic Negatively Impacts Volunteerism Rates in Colorado
    Before the pandemic, more than 32% of Coloradans volunteered and
    contributed over 121 million hours of service.\15\ Nationally, the
    Urban Institute reports that regular volunteers declined by 23% in
    urban areas and 41% in rural areas in 2020.\16\ Although many
    businesses are fully open to the public again, we remain concerned that
    many nonprofits have not seen volunteerism return to pre-pandemic
    levels. Lack of access to child care, increased COVID-19 risks for
    adults with vulnerabilities, and increased mental health concerns still
    contribute to reduced numbers of volunteers.
    ---------------------------------------------------------------------------
        \15\ https://americorps.gov/sites/default/files/document/
    Volunteering_in_America_States_508.
    pdf.
        \16\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full_
    report, p. 38-39.
    ---------------------------------------------------------------------------
    Many Nonprofits Benefited From Pandemic Relief; Many Did Not
    Although some nonprofits benefitted from federal and state COVID-19
    relief funds, most relief programs have been primarily targeted to
    specific industries or for-profit businesses generally. Our
    observations regarding pandemic-relief programs are the following:

          Over 5,600 Colorado nonprofits received nearly $900 million in
    forgiven PPP, which saved nearly 115,000 nonprofit jobs. However, our
    review of the data indicates that nonprofits received only 3% of the
    more than 192,000 PPP loans completed and 7% of the dollars loaned
    ($1.04 billion out of $15.06 billion).\17\
    ---------------------------------------------------------------------------
        \17\ https://www.pandemicoversight.gov/data-interactive-tools/
    interactive-dashboards/paycheck
    -protection-program.
    ---------------------------------------------------------------------------
          Volunteer-run nonprofits and nonprofits with more than 500
    employees typically did not qualify for assistance through PPP. The
    requirement to demonstrate 25% revenue losses for PPP Second Draw loans
    also left out nonprofits impacted more by increased demand rather than
    revenue losses.
          Governor Polis' COVID-19 relief fund provided $24 million of
    assistance to nonprofits but this program expired at the end of
    2020.\18\
    ---------------------------------------------------------------------------
        \18\ https://helpcoloradonow.com/covid_relief-fund/.
    ---------------------------------------------------------------------------
          Colorado's nonprofits tended to not use federal or state loan
    programs without any opportunity for forgiveness (e.g., Main Street
    Lending Program, CLIMBER loan fund, et al.). Most nonprofits prefer not
    to divert future funding from programs to pay debt.

    Colorado Nonprofit Association is asking the Colorado General Assembly
    to allocate between $25 million and $50 million of American Rescue Plan
    Act (ARPA) funds for grants to support nonprofits' essential work. ARPA
    and Treasury regulations make it clear that governments may use these
    funds in partnership with charitable nonprofits to address many
    challenges in our communities. This is a small but meaningful
    percentage of the $5.8 billion allocated to Colorado's governments
    through the Coronavirus Fiscal Recovery Fund.\19\
    ---------------------------------------------------------------------------
        \19\ https://www.councilofnonprofits.org/trends-policy-issues/
    strengthening-state-and-local-economies-partnership-nonprofits.
    ---------------------------------------------------------------------------

    Recommendations for the Senate Finance Committee

    As long-term recovery from the pandemic is still fragile, the Senate
    Finance Committee can take several actions to support Colorado's
    nonprofits in the short and long-term.

          Restore the Employee Retention Tax Credit (ERTC) from the fourth
    quarter of 2021 through the end of 2022 (S. 3625). Colorado Nonprofit
    Association joined more than 1,500 organizations from all 50 states in
    signing onto the recent letter to Congress and the Biden Administration
    seeking pandemic relief for charitable nonprofits. Restoring the ERTC
    would help address nonprofit workforce shortages especially if the
    ``gross receipts'' test is modified so more nonprofits can qualify. We
    also recommend adding child care and education subsidies as eligible
    expenses. Unlike for-profits, nonprofits cannot receive income tax
    relief from these costs.
          Continue and expand the charitable giving incentives enacted
    during the pandemic, including the universal charitable deduction for
    non-itemizers. Even though the pandemic continues to increase demand
    for nonprofits' services, several disaster-related giving incentives
    expired at the end of 2021. Colorado Nonprofit Association
    unequivocally supports renewal of the universal charitable deduction at
    least through 2022 and expansion through Universal Giving Pandemic
    Response and Recovery Act (S. 618). Passing this act will promote
    further giving by all American taxpayers of all incomes and generate
    needed resources for charitable and faith-based organizations to
    continue serving communities impacted by the pandemic.

    We also ask that you speak up during the hearing in support of
    extending expired disaster-relief incentive. This includes allowing
    itemizers to deduct charitable donations up to 100% of their adjusted
    gross income and allowing corporations to deduct charitable donations
    up to 25% of taxable income.

          Protect levels of ARPA funding allocated to state and local
    governments. These funds will also help Colorado's governments and
    nonprofits meet the needs of our communities.
          Incentivize volunteerism by addressing unfair tax treatment of
    volunteer mileage. We ask for the volunteer mileage rate to be the same
    as the business rate (currently, 58.5 cents per mile) and for
    elimination of the tax on mileage reimbursements up to the business
    rate. The rapid increase in gas prices mean increased expenses for
    nonprofits reimbursing their volunteer drivers and increased expenses
    and income taxes for those drivers.\20\ The volunteer mileage rate (14
    cents per mile) disincentivizes many Americans from being regular
    volunteer drivers.
    ---------------------------------------------------------------------------
        \20\ https://www.9news.com/article/news/local/nonprofits-service-
    organizations-gas-prices/73-fb4e061d-40e8-4858-97a4-007073250922.
    ---------------------------------------------------------------------------
          Champion the Nonprofit Sector Strength and Partnership Act of
    2022. This draft bill, sponsored by Congresswoman McCollum, would
    formalize and bolster the ability of the federal government to work in
    partnership with the nonprofit sector. Arguably, this is the most
    important way that Congress could enhance the mission-driven work of
    the nonprofit sector. However, we recognize that some effort would be
    needed to implement this bill and change this relationship between
    nonprofits and government.

    Conclusion

    As you consider the issues raised during the Senate Finance Committee
    hearing, we ask that you reflect on the important, sustaining work that
    Colorado's nonprofits performed throughout the pandemic. Nonprofits
    continue to face increasing demand for services with decreasing human
    and financial resources. In light of these unrelenting challenges, we
    ask that you consider these policy solutions and others that will
    strengthen the ability of nonprofits to meet the needs of Coloradans.

    Sincerely,

    Mark Turner
    Senior Director of Public Policy

                                     ______

                Community Foundation Public Awareness Initiative

    Today's Finance Committee hearing, ``Examining Charitable Giving and
    Trends in the Nonprofit Sector,'' is exploring current incentives for
    charitable giving and whether they can be designed more effectively, to
    motivate giving from more taxpayers across the income distribution at
    the lowest possible revenue cost. Community foundations are generally
    supportive of tax law changes, such as the Universal Giving Pandemic
    Response Act (i.e., the Lankford-Coons bill), that would expand the
    number of taxpayers receiving a tax incentive for their giving. We
    appreciate the Lankford-Coons bill was introduced with changes
    suggested by community foundations, such as making donor-advised funds
    (DAFs) eligible for charitable gifts under the Act.

    We want to offer brief testimony today on one issue which affects all
    community foundations to varying degrees: the inability of donors to
    use a DAF for IRA Charitable Rollover (Qualifying Charitable
    Distribution) gifts under Section 408(d)(8). This seemingly small
    provision impacts many of our donors every year, and has the opposite
    impact in practice than was intended. It keeps more money locked up,
    rather than getting it out into the community; it reduces the ability
    of donors to support the charities of their choice; and it makes it
    harder for IRA rollover gifts to get to smaller charities that have had
    a harder time raising money after the 2017 tax reform law and the
    COVID-19 pandemic.

    As the Finance Committee knows, the Pension Protection Act of 2006
    (PPA) defined DAFs for the first time and included a set of reforms at
    the urging of then-
    Chairman Grassley and his staff. Since the PPA, for example, a donor
    cannot use a DAF to direct gifts to individuals, private foundations,
    or non-charitable purposes. A donor cannot recommend a gift that
    provides more than an incidental benefit to the donor-advisor. And most
    closely held business interests in a DAF must be sold within five
    years. As community foundation leaders, we support all these reforms.

    The IRA Charitable Rollover was created by the PPA. Because the above
    reforms had not yet taken effect, the PPA said a taxpayer could not use
    the rollover for a gift to a DAF. A donor can use the rollover to give
    to a university endowment, where the money almost certainly isn't
    immediately utilized, or to the endowment of a local hospital or art
    museum--but they can't address a community's needs by contributing to a
    DAF at the local community foundation. Also, and most important,
    because most users of the rollover pick a single charity for their
    gift, the opportunity to donate to multiple local charities through a
    single gift transaction is lost.

    This exclusion inhibits community foundations from helping our donors
    efficiently get money to local nonprofits they support. Because DAF
    payout rates are substantial, the prohibition on DAFs doesn't promote
    greater giving. Instead, the DAF prohibition restricts donor
    flexibility by (1) codifying a preference of some charities over
    others, and (2) making it difficult for a donor to be broad-based in
    their giving.

    Here is what happens every year at community foundations across the
    country. A donor comes in and wants to direct a Qualifying Charitable
    Distribution into a DAF, and we tell them it's not allowed. This
    frustrates the donors, who don't understand the restriction. After this
    initial disappointment, one of three things happens:

        1.  The community foundation attempts a workaround, in which a
    donor makes their rollover gift directly to the foundation, either to
    an unrestricted fund or field-of-interest fund (where donors can't
    recommend specific charities) or a fund like a designated fund (where
    donors can recommend specific charities, but only a portion of the
    funds may be granted out each year);

        2.  The donor will go to another 501(c)3 charity for their gift,
    but more likely than not, it will be a single, large charity which
    could put the gift into their own endowment (i.e., it won't get spent
    immediately to address immediate community needs); or

        3.  The donor becomes discouraged and doesn't make a charitable
    gift.

    None of these outcomes are optimal for charitable giving. Therefore,
    our partnership of community foundations, representing nearly 150
    foundations of all sizes in 47 states, has been leading an effort to
    help Members of Congress understand how the DAF exclusion hurts their
    constituents. Fixing this provision, either in tax or retirement
    legislation, will have negligible revenue impact, but it will have a
    positive charitable impact in communities across the country as donors
    learn that they can easily divide up their rollover gifts.

    One of our participating CEOs, Roxie Jerde of the Community Foundation
    of Sarasota County, offers the following observations:

            The Sarasota Community is heavily populated with middle-class
            retirees who engage in philanthropic grantmaking. Most of our
            donors are in their 70s and utilize the IRA charitable rollover
            (QCD) in their annual giving. Our donors regularly make grants
            in $100, $500, and $1,000 increments to 30-40 organizations
            each year. IRA custodians do not want to cut QCD checks in
            these increments for this volume of giving. Donors are confused
            when they are told they cannot distribute the QCD into their
            DAF to make these grants. Further, our donors want to support
            grassroots organizations benefiting under-represented
            communities, but they want the oversight offered by our
            foundation concerning the use and impact of grant dollars. They
            get this oversight by granting through their DAFs. We have seen
            donors revert to granting to long-term institutional
            organizations when told they cannot grant their QCDs into their
            DAFs, thus causing grassroots organizations to suffer.

    One of the recent trends in charitable giving, which today's hearing
    reinforces, is how the 2017 tax law concentrated charitable giving
    incentives among higher-
    income people, who tend to give large gifts to big institutions. But
    what about the smaller organizations that may benefit from $250, $500,
    or $1,000 gifts, such as the ones Roxie Jerde is referencing? People
    are not going to give their entire Required Minimum Distribution (RMD)
    from their IRA to the small charity. The best tool for this small-
    dollar giving is the donor-advised fund: Let the taxpayer put their RMD
    in their DAF, and then recommend grants as they wish to as many
    charities as they choose. It makes giving easier--and when giving is
    easy, people give more.

    The key takeaway is this: Whether someone uses the Rollover to make one
    $30,000 gift, ten $3,000 gifts, or thirty $1,000 gifts, the federal tax
    implications are the same. Why not let donors have the flexibility to
    make their own choices? Why not make it easy for them to give to
    multiple charities?

    The IRA Rollover fix has broad support in the charitable field,
    including the Council on Foundations, the Alliance for Charitable
    Reform (Philanthropy Roundtable), National Philanthropic Trust, Jewish
    Federations of North America, United Way, and other leading charitable
    groups. Removing the prohibition will help promote community
    philanthropy at a time the charitable sector is being asked to do
    more--and it will make the rollover work better because it will allow
    people to use the rollover to get gifts to smaller charities.

    There are some advocates who have recently expressed concerns over the
    growth of DAFs as a popular philanthropic vehicle. We believe DAFs are
    flexible tools that promote philanthropy, and that the critics are
    misguided. But we can't stress enough that the issues sometimes raised
    in the DAF context--assertions about inactive funds, how high-net-worth
    people use DAFs, tax treatment of complex assets, etc.--these issues
    simply do not come up in the IRA rollover context. Qualifying
    Charitable Distributions are limited to taxpayers aged over 70\1/2\;
    limited to $100,000 per year; and because the money is coming directly
    from an IRA (i.e., marketable securities), complex assets like real
    estate and closely held business stock aren't an issue. Billionaires
    aren't using the rollover; middle-class Americans are.

    Our donors want to get money out the door, and they want to get money
    to smaller charities. The donor-advised fund is the most effective tool
    to do that. Fixing the IRA charitable rollover by eliminating the DAF
    prohibition would be a way to incentivize charitable giving and get
    more money to small, local charities at very modest revenue cost.

    Thank you for your attention to our concerns.

                  CFPAI Participating Foundations (March 2022)

    Alabama

    Christopher Nanni, Community Foundation of Greater Birmingham,
    Birmingham.

    Arizona

    Steve Seleznow, Arizona Community Foundation, Phoenix.
    Jenny Flynn, Community Foundation for Southern Arizona, Tucson.

    Arkansas

    Heather Larkin, Arkansas Community Foundation, Little Rock.

    California

    Ashley Swearengin, Central Valley Community Foundation, Fresno.
    Dan Baldwin, Community Foundation for Monterey County, Monterey.
    Sheryl Alexander, Community Foundation Sonoma County, Santa Rosa.
    Pam Calloway, East Bay Community Foundation, Oakland.
    Kristen Beall, Kern Community Foundation, Bakersfield.
    Rhea Suh, Marin Community Foundation, Novato.
    Shelly Hoss, Orange County Community Foundation, Newport Beach.
    Jennifer Fleming DeVoll, Pasadena Community Foundation, Pasadena.
    Linda Beech Cutler, Sacramento Region Community Foundation, Sacramento.
    Mark Stuart, San Diego Area Foundation, San Diego.
    Nicole Taylor, Silicon Valley Community Foundation, Mountain View.

    Colorado

    Tatiana Hernandez, Community Foundation Boulder County, Boulder.
    Javier Soto, Denver Foundation, Denver.
    Gary Butterworth, Pikes Peak Community Foundation, Colorado Springs.

    Connecticut

    William Ginsberg, Community Foundation for Greater New Haven, New
    Haven.
    Juanita James, Fairfield County's Community Foundation, Norwalk.

    Delaware

    Stuart Comstock-Gay, Delaware Community Foundation, Wilmington.

    District of Columbia

    Tonia Wellons, Greater Washington Community Foundation, Washington, DC

    Florida

    Mark Brewer, Central Florida Foundation, Orlando.
    Sarah Owen, Collaboratory (formerly Southwest Florida Community
    Foundation), Fort Myers.
    Theresa Grimison, Community Foundation for Brevard, Melbourne.
    Jennifer O'Flannery Anderson, Community Foundation of Broward, Ft.
    Lauderdale.
    Eileen Connolly-Keesler, Community Foundation of Collier County,
    Naples.
    Barzella Papa, Community Foundation of North Central Florida,
    Gainesville.
    Katrina Rolle, Community Foundation of North Florida, Tallahassee.
    Nina Waters, Community Foundation for Northeast Florida, Jacksonville.
    Danita Dias, Community Foundation for Palm Beach and Martin Counties,
    West Palm Beach.
    Roxie Jerde, Community Foundation of Sarasota County, Sarasota.
    Marlene Spalten, Community Foundation of Tampa Bay, Tampa.
    John Attaway, GiveWell Community Foundation, Lakeland and Winter Haven.
    Mark Pritchett, Gulf Coast Community Foundation, Sarasota.
    Jeffrey Pickering, Indian River Community Foundation, Vero Beach.
    Rebecca Fishman Lipsey, Miami Foundation, Miami.
    Duggan Cooley, Pinellas Community Foundation, Largo.

    Georgia

    Kathryn Dennis, Community Foundation of Central Georgia, Macon.
    Betsy Covington, Community Foundation of the Chattahoochee Valley,
    Columbus.
    Frank Fernandez, Community Foundation for Greater Atlanta, Atlanta.
    Randy Redner, Community Foundation of Northeast Georgia, Duluth.
    David Carlton, Community Foundation of South Georgia, Thomasville.

    Hawaii

    Micah Kane, Hawaii Community Foundation, Honolulu.

    Idaho

    Steve Burns, Idaho Community Foundation, Boise.

    Illinois

    Helene Gayle, Chicago Community Trust, Chicago.

    Indiana

    Brian Payne, Central Indiana Community Foundation, Indianapolis.
    Rose Meissner, Community Foundation of St. Joseph County, South Bend.
    Stephanie Overbey, Kosciusko County Community Foundation, Warsaw.
    Tom Kilian, Hamilton County Community Foundation, Fishers.

    Iowa

    Kristi Knous, Community Foundation of Greater Des Moines, Des Moines.
    Les Garner, Greater Cedar Rapids Community Foundation, Cedar Rapids.
    Randy Moore, Quad Cities Community Foundation, Bettendorf.

    Kansas

    Shelly Prichard, Wichita Community Foundation, Wichita.

    Louisiana

    Chris Meyer, Baton Rouge Area Foundation, Baton Rouge.
    Raymond Hebert, Community Foundation of Acadiana, Lafayette.
    Andy Kopplin, Greater New Orleans Foundation, New Orleans.

    Maryland

    Shanaysha Sauls, Baltimore Community Foundation, Baltimore.

    Massachusetts

    Peter Taylor, Berkshire-Taconic Community Foundation, Great Barrington.
    Lee Pelton, Boston Foundation, Boston.
    Katie Zobel, Community Foundation of Western Massachusetts,
    Springfield.
    Beth Francis, Essex County Community Foundation, Danvers.
    Carolyn Stempler, Greater Worcester Community Foundation, Worcester.
    Kim Heard, SouthCoast Community Foundation, New Bedford.

    Michigan

    Mariam Noland, Community Foundation for Southeast Michigan, Detroit.
    Isaiah Oliver, Greater Flint Community Foundation, Flint.
    Carrie Pickett-Erway, Kalamazoo Community Foundation, Kalamazoo.

    Minnesota

    R.T. Rybak, Minneapolis Foundation, Minneapolis.
    Eric Jolly, Minnesota Philanthropy Partners (St. Paul Foundation and
    Minnesota Community Foundation), St. Paul.

    Mississippi

    Jane Alexander, Community Foundation for Mississippi, Jackson.

    Missouri

    Brian Fogle, Community Foundation of the Ozarks, Springfield.
    Debbie Wilkerson, Greater Kansas City Community Foundation, Kansas
    City.
    Amelia Bond, Greater St. Louis Community Foundation, St. Louis.

    Montana

    Mary Rutherford, Montana Community Foundation.

    Nebraska

    Donna Kush, Omaha Community Foundation, Omaha.

    Nevada

    Gian Brosco, Nevada Community Foundation, Las Vegas.
    Claudia Andersen, Parasol Tahoe Community Foundation, Incline Village.

    New Hampshire

    Richard Ober, New Hampshire Charitable Foundation, Concord.

    New Jersey

    Hans Dekker, New Jersey Community Foundation, Morristown.

    New Mexico

    Sue Colliton, Santa Fe Community Foundation, Santa Fe.

    New York

    Cali Brooks, Adirondack Foundation, Lake Placid.
    Clotilde Dedecker, Community Foundation for Greater Buffalo, Buffalo.
    John Eberle, Community Foundation for the Greater Capital Region,
    Albany.
    Sally Cross, Community Foundations of the Hudson Valley, Kingston and
    Poughkeepsie.
    Peter Dunn, Central New York Community Foundation, Syracuse.
    Lorie Slutsky, New York Community Trust, New York City.
    Jennifer Leonard, Rochester Area Community Foundation, Rochester.

    North Carolina

    Elizabeth Brazas, Community Foundation of Western North Carolina,
    Asheville.
    Michael Marsicano, Foundation for the Carolinas, Charlotte.
    Jennifer Tolle Whiteside, North Carolina Community Foundation, Raleigh.
    Lori O'Keefe, Triangle Community Foundation, Durham.
    LaTida Smith, Winston-Salem Foundation, Winston-Salem.

    North Dakota

    Eric Wilkie, FM Area Foundation, Fargo.

    Ohio

    John Petures, Akron Community Foundation, Akron.
    Ronald Richard, Cleveland Foundation, Cleveland.
    Douglas Kridler, Columbus Foundation, Columbus.
    Cynthia Andrews, Community Foundation Lorain County, Elyria.
    Mike Parks, Dayton Foundation, Dayton.
    Ellen Katz, Greater Cincinnati Foundation, Cincinnati.
    Keith Burwell, Toledo Community Foundation, Toledo.

    Oklahoma

    Nancy Anthony, Oklahoma City Community Foundation, Oklahoma City.
    Phil Lakin, Tulsa Community Foundation, Tulsa.

    Oregon

    Max Williams, Oregon Community Foundation, Portland.

    Pennsylvania

    McCrae Martino, Community Foundation of Westmoreland County,
    Greensburg.
    Frances Sheehan, Foundation for Delaware County, Media.
    Karen Bilowith, Erie Community Foundation, Erie.
    Sam Bressi, Lancaster County Community Foundation, Lancaster.
    David Pedri, Luzerne Foundation, Luzerne.
    Pedro Ramos, Philadelphia Foundation, Philadelphia.
    Lisa Schroeder, Pittsburgh Foundation, Pittsburgh.

    Rhode Island

    Neil Steinberg, Rhode Island Foundation, Providence.

    South Carolina

    JoAnn Turnquist, Central Carolina Community Foundation, Columbia.
    Darrin Goss, Coastal Community Foundation, North Charleston.

    South Dakota

    Stephanie Judson, South Dakota Community Foundation, Pierre.

    Tennessee

    Robert Fockler, Community Foundation of Greater Memphis, Memphis.
    Michael McClamroch, East Tennessee Foundation, Knoxville.

    Texas

    Mike Nellis, Austin Community Foundation, Austin.
    David Scullin, Communities Foundation of Texas, Dallas.
    Katie Alford, Community Foundation of Abilene, Abilene.
    Matthew Randazzo, Dallas Foundation, Dallas.
    Kyle Penney, East Texas Communities Foundation, Tyler.
    Stephen Maislin, Greater Houston Community Foundation, Houston.
    Rose Bradshaw, North Texas Community Foundation, Fort Worth.
    Guy McCrary, Permian Basin Area Foundation, Midland.
    Matt Lewis, San Angelo Area Foundation, San Angelo.
    Marjie French, San Antonio Area Foundation, San Antonio.
    Ashley Allison, Waco Foundation, Waco.

    Utah

    Alex Eaton, Community Foundation of Utah, Salt Lake City.

    Vermont

    Dan Smith, Vermont Community Foundation, Middlebury.

    Virginia

    Heather Peeler, ACT for Alexandria, Alexandria.
    Jennifer Owens, Arlington Community Foundation, Arlington.
    Eileen Ellsworth, Community Foundation for Northern Virginia, Oakton.
    Debbie DiCroce, Hampton Roads Community Foundation, Norfolk.

    Washington

    Beth Stipe, Community Foundation of North Central Washington,
    Wenatchee.
    Shelly O'Quinn, Innovia Foundation, Spokane.
    David Bley, Seattle Foundation, Seattle.
    Mauri Ingram, Whatcom Community Foundation, Bellingham.

    West Virginia

    Susie Nelson, Community Foundation of the Ohio Valley, Wheeling.

    Wisconsin

    Curt Detjen, Community Foundation for the Fox Valley Region, Appleton.
    Sue Bornick, Eau Claire Community Foundation, Eau Claire.
    Ellen Gilligan, Greater Milwaukee Foundation, Milwaukee.
    Jamie Schloegel, La Crosse Community Foundation, La Crosse.
    Liz Powell, Racine Community Foundation, Racine.

    Wyoming

    Craig Showalter, Wyoming Community Foundation, Laramie.

                                     ______

                Council for Advancement and Support of Education

                         1201 Eye Street, NW, Suite 300

                           Washington, DC 20005-3915

                                +1-202-328-2273

                             https://www.case.org/

    The Council for Advancement and Support of Education thanks Chairman
    Wyden, Ranking Member Crapo, and committee members for this opportunity
    to share our comments on charitable giving and trends facing
    educational institutions, a major subsector of the overall nonprofit
    sector in the United States. CASE strongly supports the renewal and
    expansion of a universal charitable deduction to improve the American
    tax system and encourage all Americans, regardless of income, to make
    charitable gifts to colleges, universities, independent schools, and
    other charitable organizations.

    CASE is the global association for professionals in advancement--alumni
    relations, communications, fundraising, marketing, and advancement
    services--who share the goal of championing education to transform
    lives and society. Advancement professionals are critical to securing
    philanthropic support that solves institutional challenges and help
    colleges, universities, and independent schools achieve their teaching,
    research, and public service missions. CASE's membership includes
    approximately 3,100 colleges and universities, primary and secondary
    independent and international schools, and nonprofit organizations in
    80 countries around the world, with more than 2,800 of our member
    institutions located in the United States.

    Charitable donations help colleges, universities, and independent K-12
    schools achieve their teaching, research, and public service missions.
    According to our most recent Voluntary Support of Education survey,
    donors generously contributed $52.9 billion to U.S. colleges and
    universities in the fiscal year that ended June 20, 2021, up from $49.5
    billion in the previous fiscal year. This 6.9% increase in giving was
    buoyed largely by donations to restricted endowments, which often fund
    scholarships. Support over the last two years in particular targeted
    immediate needs for students and in communities as institutions worked
    to serve the public in a variety of vital ways during the pandemic.
    Donations help educational institutions fund scholarships and other aid
    for low-income students, advance ground-breaking research, and
    strengthen academic programs and faculty retention. Private support
    raised from individuals is an essential funding source for both private
    and public colleges and universities and private independent schools.

    Donors make charitable gifts to educational institutions in a variety
    of ways, often restricting how their gifts are used. Some make gifts to
    support an institution's current operations through the annual fund.
    Other donors, typically major donors, create endowed funds that provide
    a steady and reliable support long-term funding source in support of
    students, teaching, research, and other programs that would otherwise
    have to be paid for by tuition or other funding. And still others make
    planned gifts, gifts that allow an individual to make a larger gift
    from their lifetime income or estate that benefit the institution. All
    of these gifts are critical in helping educational institutions achieve
    their missions to the benefit of society.

    We encourage the committee to consider the following proposals to help
    incentivize additional giving to educational institutions.

    Renew and Expand the Charitable Deduction for Nonitemizers

    CASE is a strong supporter of providing a charitable giving incentive
    to all Americans. The charitable deduction is unique in that it
    encourages individuals to give away a portion of their income for the
    public good. U.S. tax policy should encourage all Americans, regardless
    of income, to make donations to educational institutions and other
    charitable organizations.

    We were very pleased that Congress enacted a modest, temporary
    charitable deduction for nonitemizers, also known as a universal
    charitable deduction, as part of pandemic relief legislation. This
    provision, which allowed non-itemizing taxpayers to deduct cash gifts
    of up to $300 for individuals ($600 for joint filers), was a good first
    step in encouraging the nearly 90 percent of American taxpayers who do
    not itemize to donate more to charity. Colleges, universities, and
    independent schools communicated the availability of the universal
    deduction to their students, faculty, alumni, and other key supporters.

    Unfortunately, the temporary universal charitable deduction expired on
    December 31, 2021, leaving a majority of American taxpayers without a
    charitable giving incentive. Educational institutions have had to cease
    discussing this opportunity with donors given the uncertainty around
    whether the provision will be renewed and extended.

    CASE strongly supports the Universal Giving Pandemic Response and
    Recovery Act (S. 618), which would renew the universal charitable
    deduction and increase the cap to one third of the standard deduction
    ($4,000 for individuals, $8,000 for joint filers). We are grateful for
    the bipartisan leadership and support of Senators Lankford, Coons,
    Collins, Cortez Masto, Klobuchar, Lee, Shaheen, Scott, and other
    cosponsors, including Senators Brown, Hassan, and Stabenow on the
    Finance Committee, in moving this measure forward. We urge the
    committee and Congress to move quickly to renew and expand the
    universal charitable deduction so that all American taxpayers are
    incentivized to give more to educational institutions and other
    charitable organizations.

     Avoid Caps, Floors and Other Proposals that Limit the Value of the
                        Charitable Deduction

    We also encourage the committee to avoid enacting other limitations on
    the charitable deduction that would discourage giving to educational
    institutions. Donors already face limits on the charitable
    contributions. A donor's deduction for charitable contributions cannot
    exceed more than 50 percent of the donor's Adjusted Gross Income (AGI).
    The limits are even more stringent--contributions cannot exceed more
    than 30 percent of a donor's AGI--for gifts made to private non-
    operating foundations and some gifts of capital gain property. Donors
    can carryover amounts in excess of the limits for up to five years, and
    many do carryover large gifts.

    Proposals that directly limit the value of the charitable deduction,
    such as capping the value of the charitable deduction at 28 percent for
    high-income donors, reduce the incentive for donors to give additional
    dollars to educational institutions and other charitable organizations.
    Donors who give little or nothing to charity would be unaffected by
    such a cap. Instead, such a proposal would target the most generous
    high-income donors, individuals and families who want to make large
    gifts to educational institutions or other charitable organizations.
    Why would Congress want to penalize individuals who want to give more
    of their wealth away to benefit the public good?

    Unfortunately, some have mislabeled the charitable deduction as a tax
    break for the wealthy. As Chairman Wyden has said on many occasions,
    ``the charitable deduction is a lifeline, not a loophole.'' Limiting
    the charitable deduction would not hurt high-income donors, many of
    whom would likely decide to give less if a cap or other limit was
    enacted. Students and others served by educational institutions and
    charitable organizations would ultimately be hurt by limits to the
    charitable deduction.

    The committee should also avoid enacting other limits on the deduction,
    including floors. A floor on charitable donations, such as a percentage
    of AGI floor, could disproportionately impact giving by low- and
    middle-income donors. Gifts by these donors make a tremendous
    difference for our institutions, particularly in supporting general
    operations. And many of today's low- and middle-income donors will make
    larger gifts as they progress through their careers.

    Expand the IRA Charitable Rollover to Life Income Gifts

    CASE has been a long-time supporter of the current law IRA charitable
    rollover, a provision in the tax code that allows taxpayers age 70\1/2\
    and older to distribute up to $100,000 annually from their individual
    retirement accounts (IRAs) to eligible charitable organizations,
    including colleges, universities, and independent schools, without
    having to count those distributions as income. This provision has
    generated significant new giving from seniors who want to use their IRA
    funds to support educational institutions.

    The committee can encourage additional giving by supporting the
    bipartisan Legacy IRA Act (S. 243), legislation that would expand the
    current IRA charitable rollover by allowing individuals age 65 and
    older to direct up to $400,000 annually from their IRAs to educational
    institutions through split-interest entities such as charitable gift
    annuities and charitable remainder trusts. The Legacy IRA Act will
    allow more seniors to benefit from the IRA charitable rollover and will
    help colleges, universities, and independent schools raise additional
    funds to support their missions. We applaud Senators Stabenow (D-MI)
    and Cramer (R-ND) and other cosponsors including Senators Cornyn and
    Daines on the Finance Committee, for their leadership on the Legacy IRA
    Act.

     Eliminate the Net Investment Income Excise Tax on Private Colleges and
                        Universities

    Enacted as part of the Tax Cuts and Jobs Act of 2017, the net
    investment income excise tax (also known as the ``endowment tax'')
    requires private colleges and universities with more than 500 tuition-
    paying students and endowment assets of at least $500,000 per student
    to pay a 1.4 percent tax on their net investment income. College and
    university endowments are collections of hundreds or thousands of
    charitable funds managed and invested to serve current and future
    needs. Endowments provide a steady and reliable long-term funding
    source in support of students, teaching, research, and other programs
    that would otherwise not exist, or have to be paid for by tuition or
    other funding sources.

    Instead of bringing down college costs, the net investment income tax
    does the opposite. This tax redirects charitable funds away from their
    intended purposes and discourages donor generosity, making it more
    difficult for institutions to raise and manage endowed funds that are
    essential to supporting institutions as they work to offer high-
    quality, affordable, accessible education. We urge the committee to
    repeal this misguided tax.

    We believe now, more than ever, education is the most effective away to
    advance humanity, maintain a civil society, enable the United States to
    return to its leadership role in the community of international
    scholarship and knowledge generation, and tackle myriad challenges that
    our world faces. Policies that encourage Americans to give generously
    to colleges, universities, and independent schools will be critical to
    helping our institutions meet this calling. We thank the committee for
    the opportunity to share our views and comments, and we look forward to
    working with you and your staff to identify additional ways to
    strengthen charitable giving.

                                     ______

                             Council on Foundations

                             1255 23rd St, NW, #200

                              Washington, DC 20037

    Thank you for the opportunity to provide written testimony for the
    record on the subject of ``Examining Charitable Giving and Trends in
    the Nonprofit Sector.'' We commend the committee for holding this
    hearing during a pivotal moment for nonprofits and their philanthropic
    partners.

    The Council on Foundations is a nonprofit leadership organization of
    more than 800 grantmaking foundations and corporations. We work to
    build trust in philanthropy, expand pathways to giving, engage broader
    perspectives, and help create solutions that will lead to a better
    future for all.

    A robust charitable sector is a core component of American society.
    Each year, philanthropy invests tens of billions of dollars in
    community organizations throughout the United States and around the
    world to advance the greater good. In 2020, charitable giving by
    individuals totaled more than $324 billion--the highest amount to
    date--and giving by foundations reached a high of $88.5 billion,
    according to a GivingUSA report.\1\ In fact, total giving has grown
    consistently over the last 40 years, and the World Giving Index \2\
    recently named the U.S. the most generous country of the past decade.
    Our culture of giving has resulted in vital investments that support
    nonprofit organizations, fuel innovation, fund critical research and
    projects, supply needed resources when disasters strike, and much more.
    ---------------------------------------------------------------------------
        \1\ https://givingusa.org/wp-content/uploads/2021/06/
    GUSA2021_Infographic_Digital.pdf.
        \2\ https://www.cafonline.org/docs/default-source/about-us-
    publications/caf_wgi_10th_
    edition_report_2712a_web_101019.pdf.

    Unfortunately, multiple crises are facing our communities here at home
    and abroad, and demand for support and vital services has reached
    record levels. At the same time, nonprofits are struggling to keep
    their doors open because of workforce shortages, declines in
    ---------------------------------------------------------------------------
    volunteers, funding shortfalls, and the rising costs of goods.

    When crisis hits, philanthropy and our charitable partners have
    demonstrated an unwavering commitment to swiftly act to serve our
    communities. But our support alone isn't enough. Foundations and their
    nonprofit partners need the government to enact policies that will
    enable them to provide the resources and support our communities so
    desperately need. Specifically, we encourage Congress to:

    Expand and Extend Charitable Giving Incentives

    The Council urges Congress to strengthen giving tools available to all
    Americans. Additional incentives for charitable giving will continue to
    make a difference as nonprofits respond to the needs in their
    communities. COVID relief legislation included a temporary $300
    charitable deduction for nonitemizers, which likely contributed to the
    28 percent increase in gifts of $300 on December 31, 2020 reported by
    the Fundraising Effectiveness Project.\3\ With the share of non-wealthy
    Americans who donate shrinking, a universal charitable deduction is an
    incentive for all taxpayers, and not just the small number who itemize,
    to give. The Universal Giving Pandemic Response and Recovery Act (S.
    618) would expand the charitable deduction for those who do not
    itemize--approximately 90 percent of taxpayers--up to one-third the
    standard deduction. It would also recognize gifts to donor-advised
    funds (DAFs).
    ---------------------------------------------------------------------------
        \3\ https://afpglobal.org/fundraising-effectiveness-project-giving-
    increases-significantly-2020-
    even-donor-retention-
    rates#::text=%E2%80%9CIt%27s%20striking%20that%20on%20December,
    than%2015%25%20throughout%20the%20year.

    In addition, as part of COVID relief legislation, Congress increased
    the adjusted gross income (AGI) limitation for individual cash gifts to
    public charities as well as the amount of charitable donations
    corporations can deduct. Unfortunately, gifts to DAFs and supporting
    organizations were excluded, limiting donors' flexibility just as
    charities need additional funding to keep their operations going. The
    Council urges Congress to extend the increased limits for individuals
    and corporations to ensure that all charitable vehicles, especially
    those that have long provided vital and flexible resources to their
    ---------------------------------------------------------------------------
    communities, are available to donors at this critical time.

    The fallout from the pandemic is far from over, and as additional
    crises emerge, Congress must continue to incentivize giving to the
    charitable organizations doing the on-the-ground work of community,
    economic, and public health recovery. These incentives have the
    potential to unlock billions of dollars to flow to nonprofits and into
    communities that desperately need them.

    Protect the Long-Term Flexibility of Donor-Advised Funds (DAFs)

    DAFs are a crucial tool for the community foundations doing the day-to-
    day work of rebuilding. In times of crisis, DAFs have historically been
    the most resilient giving tool, continuing to make grants at relatively
    high levels even when recessions deflate other forms of charity. This
    flexibility has allowed community foundations and other DAF sponsors to
    step up in response to the COVID-19 crisis, with DAF grants to
    nonprofits surpassing $30 billion for the first time in 2020.

    In addition, donor-advised funds play a vital role in democratizing
    philanthropy. They empower middle-income Americans to take control of
    their charitable giving, allowing them to plan out their philanthropy
    for the medium- and long-term while still giving sponsoring
    organizations the flexibility to respond to the emerging needs of their
    communities.

    The pandemic has highlighted the ability of sponsoring organizations
    such as community foundations to respond to local crises as they emerge
    while continuing to address long-term needs. The Community Foundation
    for the Ohio Valley (CFOV), for example, has maintained its support for
    programs in rural Appalachia while also responding to new challenges
    related to the pandemic. In addition to continuing support for local
    nonprofits, providing personal protective equipment for volunteers and
    workers at children's and homeless shelters, and raising and deploying
    $300,000 to help with COVID-related food insecurity and mental health
    issues, CFOV employed an emergency fund to support after school
    programs and gaps in broadband. Simultaneously, CFOV developed
    partnerships with local organizations to assess long-term community
    needs, including education, healthcare, and living-wage jobs.

    In addition, we encourage Congress to ensure distributions from an
    individual retirement account (IRA) to donor-advised funds qualify as
    part of the IRA charitable rollover. Current law prohibits donors from
    contributing to a DAF even though DAFs are a flexible and efficient
    philanthropic tool to support community philanthropy. This provision
    would provide donors and grantmakers with an important option to
    maximize the value of IRA charitable donations and allow them to
    support communities in need with financial resources.

    We urge Congress to support the continued flexibility of DAFs to
    address the emerging and long-term needs of communities across the
    country. We recommend that Congress seek to expand the overall
    philanthropic giving environment with the aim of delivering more to
    those in need--without damaging the charitable vehicles that allowed
    for record-breaking giving in 2020, just as Americans needed it most.

    Strengthen Support for the Nonprofit Sector

    Nonprofits are the backbone of our communities, and too many are
    struggling to find and maintain qualified staff, fulfill their
    missions, and meet the ongoing needs of their communities.

    Foundations have stepped up to support nonprofit organizations. Some,
    such as the San Diego Foundation, created funds specifically for
    pandemic relief. The San Diego Foundation's COVID-19 Community Response
    Fund, developed in partnership with local leaders from government,
    business, nonprofits, and schools, granted $64 million in 2020,
    including 387 grants to over 250 nonprofit organizations working on the
    frontlines of the pandemic. But foundations cannot do this important
    work alone. Congress has a duty to support nonprofits and ensure they
    can not only survive the pandemic but also thrive in its aftermath.

    The Council strongly encourages Congress to prioritize legislation that
    will strengthen the nonprofit sector and provide resources to
    organizations and communities, including passing the Work Opportunities
    and Resources to Keep Nonprofit Organizations Well (WORK NOW) Act (S.
    740). The WORK NOW Act would provide nonprofits with the funds they
    need to continue to serve their communities in a time of uncertainty
    and upheaval.

    The Council also urges Congress to pass the Legacy IRA Act (S. 243).
    This legislation would enable retiring Americans to make tax-exempt
    contributions from their IRA accounts to charities through life-income
    plans. Empowering middle-income seniors with an additional option for
    their philanthropy would help encourage needed charitable dollars to
    flow to community organizations.

    Last, the Council strongly supports the Workforce Development through
    Post-
    Graduation Scholarships Act (S. 2191). This legislation would allow
    foundations to help address the student debt crisis head-on by ensuring
    post-graduation scholarships are treated the same as traditional
    scholarships. These scholarships would provide foundations with an
    additional tool to incentivize graduates to return to regions in need
    of their skills, creating the opportunity for business growth in
    regions that have been impacted by economic upheaval. This legislation
    is a win for graduates and for struggling communities.

    The United States is the most charitable country in the world, and the
    nonprofit and charitable sectors play an essential role in our culture.
    We ask that Congress work to ensure this critical role is not eroded by
    the COVID-19 pandemic, disasters natural or manmade, or the associated
    economic crises by deploying every tool available to ensure nonprofit
    organizations can continue to respond to local needs.

    Thank you again for this opportunity to include testimony on the
    record. We appreciate this committee's leadership and its focus on the
    struggles that charitable organizations and the nonprofit sector face
    as economic and social upheaval continue. The Council on Foundations
    can provide any of the material cited in this testimony and stands
    ready to work with you to rebuild in the wake of crisis.

    Respectfully submitted,
    Kathleen Enright
    President and CEO

                                     ______

                            Food Donation Connection

                                 P.O. Box 22787

                              Knoxville, TN 37933

              Statement of Jim Larson, Vice President, Development

    Chairman Wyden and Ranking Member Crapo, on behalf of Food Donation
    Connection (``FDC''), thank you for holding this important hearing,
    ``Examining Charitable Giving and Trends in the Nonprofit Sector.'' FDC
    greatly appreciates the opportunity to provide this statement for the
    record.

    Who We Are

    Since 1992, FDC has assisted food service companies with the
    development and implementation of Harvest Programs designed to provide
    an alternative to discarding surplus food.

    We have coordinated the donation of over 750 million pounds of quality
    prepared food from food service providers located in the United States,
    Canada, Poland, Spain, as well as in other countries. In 2021, 1,300
    business entities through 14,000+ food-service locations (restaurants,
    airports, travel plazas, retailers, hotels, universities, hospitals,
    distribution centers) donated 65 million pounds of prepared surplus
    food to 10,000 hunger relief organizations.

    Our team members have experience with major restaurant chains and
    retailers in operations and food quality. Our entire full-time staff of
    30 team members is ServSafe certified in food safety.

    What We Do

    FDC manages food donation programs for food service companies
    interested in donating food. The donating process is based on donors
    receiving economic benefit through tax savings in addition to
    involvement with community and corporate goodwill.

    Donors are linked to those in need through existing non-profit hunger
    relief organizations.

    FDC administers these programs through the use of an efficient
    communication and reporting network. Program responsibilities include
    linking donor locations with food rescue groups or those feeding the
    needy, assisting in the development of product quality and handling
    standards, tax valuation, donation reporting and ongoing monitoring and
    follow-up to ensure program implementation and growth.

    FDC coordinates food donation programs for Pizza Hut, KFC, Whole Foods,
    Olive Garden, LongHorn Steakhouse, The Capital Grille, Eddie V's, Yard
    House, Bahama Breeze, Seasons 52, Cheddar's, Red Lobster, McDonald's,
    Chipotle Mexican Grill, Auntie Anne's, Chick-fil-A, HMSHost, Einstein
    Bros Bagels, Wawa, Outback Steakhouse, Fleming's Prime Steakhouse,
    Bonefish Grill, Carrabba's and others.

     Need for Regulatory Guidance Regarding Contributions of Food Inventory

    As noted in the Joint Committee on Taxation document accompanying this
    hearing,\1\ contributions of food inventory are entitled to an enhanced
    deduction under Section 170(e)(3) of the Internal Revenue Code, which
    is intended by Congress to help compensate potential donors for the
    administrative costs associated in making inventory donations. These
    costs include the identification and selection of appropriate food
    banks and other hunger relief agencies as well as the preparation, and
    packaging of food in accordance with applicable food safety
    regulations.
    ---------------------------------------------------------------------------
        \1\ Joint Committee on Taxation, ``Present Law and Background
    Relating to the Federal Tax Treatment of Charitable Contributions''
    (JCX-2-22) (March 11, 2022).

    Regulatory guidance, however, is necessary to clarify an issue created
    by the current Treasury Regulations and ensure that that Section
    170(e)(3) works as intended such that donors of food inventory are (i)
    allowed to recover their ``basis'' in contributed inventory, and (ii)
    able to compute the enhanced deduction. This clarification will help
    donors satisfy the increased demand on food banks and other hunger
    relief agencies in light of the continuing impact of the COVID-19
    ---------------------------------------------------------------------------
    crisis and the recent increase in inflation.

    FDC, along with a number of other organizations, has worked for a
    number of years to secure this needed regulatory guidance. A guidance
    project to address the issue was included in every Treasury Department/
    Internal Revenue Service Priority Guidance Plan from 2015-2016 to 2020-
    2021. In addition, H.R. 8817, The Preserving Charitable Incentives Act,
    a bipartisan bill introduced in the House of Representatives, includes
    a provision encouraging the issuance of this important guidance as soon
    as possible.

    Despite the time and resources that the government has dedicated to
    this guidance project, guidance has not yet been issued and the project
    was surprisingly dropped from the 2021-2022 Priority Guidance Plan
    without explanation. Nevertheless, we continue to believe that the need
    for this guidance should be given a priority in light of the current
    food insecurity in the country. Thus, we respectfully request your
    assistance in encouraging the Treasury Department and the Internal
    Revenue Service to prioritize and issue this important guidance as soon
    as possible.

                                     ______

                             Girl Scouts of the USA

                           Public Policy and Advocacy

                       816 Connecticut Ave., NW, Suite 5

                              Washington, DC 20006

                                P: 202-659-3780

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    March 16, 2022

    Dear Chairman Wyden, Ranking Member Crapo and Senate Finance Committee
    Members:

    On behalf of Girl Scouts of the USA, thank you for calling a hearing on
    charitable giving and trends in the nonprofit sector. We look forward
    to the testimony of nonprofit experts and to understand the interests
    and concerns of committee members.

    I am pleased Dan Cardinali, President and CEO of Independent Sector
    (IS), is speaking on behalf of the nonprofit community. We are an
    active member of IS and appreciate his comprehensive explanation of the
    sector's priorities.

    As you investigate the nonprofit sector's well-being, it is important
    to consider that many funding sources support nonprofit rebuilding and
    growth as organizations recover from the pandemic. Among those varied
    sources, two provisions have been especially helpful for Girl Scout
    councils across the country: the universal charitable deduction and the
    Employee Retention Tax Credit (ERTC).

    Charitable giving has been one important lifeline for the nonprofit
    community throughout the pandemic. As you know, Congress enacted a $300
    charitable deduction for nonitemizers in March 2020. Donors responded
    to this change with about a 28% increase in gifts of $300 on December
    31, 2020--the exact amount of the deduction. Congress extended the
    universal charitable deduction through 2021, but unfortunately, the
    temporary provision expired at the end of last year.

    I am grateful to the sponsors and cosponsors of the Universal Giving
    Pandemic Response and Recovery Act (S. 618), including members of this
    committee--Senators Lankford, Cortez Masto, Tim Scott, Stabenow, and
    Hassan. This bill would further incentivize giving by increasing the
    cap, extending the deduction through 2022, and including gifts to
    donor-advised funds. However, this bill is only a temporary response to
    a long-term issue. We must ensure the sustainability of the universal
    charitable deduction for the years to come. Congress must renew and
    extend the universal charitable deduction to ensure nonprofits have a
    reliable way to secure donations to support their missions. Girl Scout
    councils around the country rely in part upon charitable giving to
    continue their work of supporting their community and building girls of
    courage, confidence, and character.

    In addition to charitable giving, Girl Scout councils relied upon the
    Employee Retention Tax Credit to help fund operations and maintain
    staff who provide programming for girls, support volunteers and
    continue to sustain our Movement. The ERTC allowed at least half of our
    Girl Scout councils to redirect $50 million toward staff and
    operations, primarily in 2021. However, the Infrastructure Investment
    and Jobs Act (Title VI, Section 80604) retroactively halted the ERTC,
    cutting off one calendar quarter of the tax credit. On behalf of Girl
    Scouts of the USA, I strongly urge you to reinstate that credit. The
    Employee Retention Tax Credit Reinstatement Act (S. 3625) is an
    important first step to help nonprofits rebuild from the pandemic as it
    reinstates the ERTC for fourth quarter 2021, but there is more to be
    done. Beyond this bill, I will continue to ask Congress to allow
    nonprofits to access ERTC for 2022 and to modify nonprofit eligibility
    beyond the current ``gross receipts'' test to better reflect how
    nonprofits operate.

    The ERTC is a tailored relief provision designed to help organizations
    that demonstrate need--only those that meet the criteria for decline in
    revenue and employee retention are eligible to receive the credit. It
    is now--retroactively--repealed, with detrimental impacts to staff,
    operations and the communities they serve. Girl Scouts continues to
    contribute to our nation's relief, recovery, and rebuilding, and ERTC
    has been an important financial component that helps drive our success.

    Thank you for your support of the nonprofit sector and for your
    dedication to helping girls across the country. I urge you to consider
    our important requests, which would ensure that the Girl Scout Movement
    can continue to provide girls with an unmatched leadership development
    experience. If you or your staff have questions, please do not hesitate
    to reach out to me at SSanta@girlscouts.org.

    Sincerely,

    Sue Santa
    Senior Vice President, Public Policy and Advocacy

                                     ______

                       Statement Submitted by Jon Heymann
    Non-profits are the heart and soul of a city. Without them, we would
    never know what is occurring in the neediest neighborhoods and
    communities--those communities that most people never walk in, shop in,
    or worship in.

    From the homeless shelters to the afterschool programs, to the early
    learning centers, to the hospitals, to the mental health services,

          These non-profits do the research no one else does.
          These non-profits do the work no one else is equipped to do.

    They love mercy, they do justice, and they walk humbly in the midst of
    our communities. Sadly, they have been called parasites and leaches of
    the public coffers, taking needed resources that could otherwise be
    used for potholes, business incentives, downtown development, as well
    as the services of our first responders--police, fire, and EMT.

    So, yes, we have our first responders (Police, Fire, etc.), we have
    business development, we have our school system, we have our colleges
    and post-secondary certification programs (plumbing, electrical, etc.)
    to fill the high wage, high demand, high skilled jobs.

    But what do non-profits do that no one else does--let me repeat that--
    that no one else does--not government, not churches, not first
    responders, not schools nor colleges? Simply this: non-profits,
    especially as it relates to children. take a laser-tight focus on the
    gaps that prevent kids from being EDUCATED, SAFE, and HEALTHY. They
    study these gaps; they create efficiencies to plug these gaps; they
    develop processes and activities to fill these gaps. Furthermore, they
    monitor, measure and evaluate the impact of these activities in order
    to create the greatest Return on Investment (ROI) of their funding.
    Where would we be if it were not for the after-school programs,
    mentoring activities, summer camps, mental health services, as well as
    the hospitals, etc?

    Child serving non-profits. No one else in our cities builds and
    rebuilds the countless thousands of young lives that otherwise would
    lost to the streets, the gangs, the courts, the jails, and the morgues.

    Our marching orders are simple: (1) make a massive positive difference,
    (2) for the greatest number of children, (3) in the shortest period of
    time. All non-profits worthy of our support should be evaluated against
    those three measures.

    But non-profits must wrestle with a dreadful assumption: there are not
    enough resources to meet all the needs of all the children in all the
    neighborhoods. So we find ourselves in a constant state of ``triaging''
    our communities, grappling with identifying the most critical needs
    that deserve our immediate attention, and then, how do we bring these
    best practices to scale.

    Non-profits creatively and judiciously leverage their financial
    resources to add funding for their critical services and their
    underpaid staff. Here are examples of investments, and the leveraged
    resources that go into filling the gaps to help kids become educated,
    safe and healthy.

          Early Learning Coalitions make sure millions of impoverished
    children can attend a ``Quality Star Rated'' EL Center and be ready for
    kindergarten.
          Healthy Families matches local city dollars to do hospital and
    home visit to moms of brand new babies to avoid abuse and neglect.
          Mental and Behavioral Health programs have totally redesigned
    their delivery models in order to reduce the stigma and to bring their
    mental health services closer (proximity) to students with mental and
    behavioral health issues.
          Federal funding for afterschool programming has increased
    support for non-profit afterschool programs, as well as the all-day
    summer camps to prevent the ``Summer Loss.''
          Nutrition. Because of childhood obesity and diabetes, non-
    profits operate some of the largest nutrition programs that includes
    providing nutritious snacks and meals to afterschool kids, summer camp
    kids and thousands of kids throughout our local communities at a
    variety of sites: churches, community centers, etc.
          Garnering funding to get uninsured children KidCare medical
    insurance for working parents that fall below the poverty line. ``Get
    well, stay well; be well.'' When healthy well kids attend school more
    consistently, working parents don't miss as much work.
          Non-profits have talked the monumental tasks of improving their
    Data sharing, increasing participation, and improving their quality.
          Non-profits also demonstrate how their programs are improving
    both Crime Prevention and Economic Development.

    Lastly, the non-profit staff are often the very first people to
    confront the traumatic and dangerous environment of the children that
    they serve, whether it's domestic violence and discord, mental health
    emergencies, bullying, school violence, depression, suicide, gangs,
    etc., etc., etc.

    Clearly, non-profit staff are ``Essential Personnel'' and clearly
    should be considered First Responders.

                                     ______

    Letter Submitted by Aaron Horvath, Ph.D., Postdoctoral Fellow, Stanford
      University Center on Philanthropy and Civil Society; and Jean Lin,
       Ph.D., Assistant Professor, California State University, East Bay
    March 22, 2022

    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

    Dear Senate Committee on Finance,

    The following is a statement for the record in regard to the March 17,
    2022 Committee Hearing, ``Examining Charitable Giving and Trends in the
    Nonprofit Sector.'' This brief report, prepared in May 2020 and
    provided below, shares details from ongoing research on how nonprofit
    organizations around the country rose to meet the challenge of the
    COVID-19 pandemic. We observe that nonprofits of all sorts (ranging
    from soup kitchens to performance troupes to boxing clubs) proved to be
    mainstays of community survival in two crucial regards. First, they
    provided public health information, dispelled rampant misinformation,
    and helped communicate how broad directives applied to community-
    specific circumstances. Second, they adapted their services, both
    finding new ways to address longstanding needs (e.g., providing food
    and shelter) and innovating entirely new pandemic-related services
    using the resources available on hand (e.g., making and distributing
    masks).

    As we've found in our research, nonprofits served as a critical piece
    of social infrastructure, one that propped up American communities at a
    time when the public and commercial sectors were struggling to muster a
    comprehensive response to an unprecedented situation. Despite all this
    activity--which nonprofits undertook at great cost to themselves--
    efforts to support these organizations have been underwhelming.
    Certainly the Paycheck Protection Program, the nonitemizer deduction,
    and the Employee Retention Tax Credit have helped buoy the sector
    through difficult moments. But congressional inaction has allowed these
    critical measures to lapse. More must be done to sustain nonprofit
    organizations, especially as they continue to face fallout from the
    pandemic, including financial shortfalls, inflationary pressures, and a
    host of workforce challenges.

    We offer the following report as an illustration of what we stand to
    lose should these and other critical measures not be extended. If we
    fail to sustain our civic institutions at this critical moment, we risk
    not having them around to sustain us when the next crisis hits.

    Sincerely,

    Aaron Horvath and Jean Lin

                                     ______

    May 20, 2022

    Report: Nonprofits across the U.S. are helping their communities to
    survive the pandemic. But will nonprofits themselves survive?

    Aaron Horvath, Stanford University
    Jean Lin, Cal State East Bay

    ``In our 150-year history,'' writes a San Francisco homeless services
    nonprofit in a Facebook post, ``we . . . have never faced a challenge
    like COVID-19.'' It's an ominous claim for an organization that's
    weathered two outbreaks of the bubonic plague (in 1900 and 1907), the
    1918 flu, and the HIV/AIDS epidemic. But earlier this month, COVID-19
    nearly forced the organization to close. One of the organization's
    shelters became the unwitting epicenter of the city's largest
    coronavirus outbreak. Ninety-five homeless clients and ten staff tested
    positive for the disease. Within two weeks, the shelter had
    successfully moved its clients to isolated living arrangements, hired a
    hazmat crew to clean the facility, and reopened its doors in service of
    a renewed purpose: housing for homeless guests recovering from the
    virus. In concluding its Facebook post, the shelter was defiant: even
    the pandemic ``#CantStopGood.''

    At a time when government is struggling to keep pace with the pandemic,
    civic organizations are providing a patchwork of social welfare--both
    improvising new means of continuing longstanding, essential community
    services and innovating entirely new services in response to unmet
    community needs. Through an ongoing study of 800 nonprofits operating
    in regions around San Francisco (CA), Dallas (TX), Detroit (MI),
    Lancaster (PA), Miami (FL), and Sioux Falls (SD), we are finding that,
    beneath a surface of closed offices and canceled events, nonprofits are
    demonstrating surprising resilience in the face of unprecedented
    adversity. Despite dwindling funds and little support on the horizon,
    these organizations--be they knitting clubs, soup kitchens, or
    repertory theatres--are serving as a critical lifeline in the fight
    against a global pandemic.

    Nonprofits are adapting in several ways. They are rearranging
    schedules, workforces, and physical spaces to continue providing
    essential services. Responding to a tenfold growth in demand, a
    nonprofit serving the low-income Latino population of Lancaster
    converted its sit-down dining facility into a ``Grab & Go'' model.
    Likewise, organizations that, before the pandemic provided in-person
    services to homebound seniors--such as providing medicine, food, and
    companionship--have reorganized their operations around a delivery
    model, even sourcing microwaves and refrigerators to donate to
    recipients in need. One Detroit-area senior center moved its extensive
    catalogue of fitness classes online, airing some, like ``Gentle Moves
    Yoga,'' on a local TV station twice daily. As one organization puts it,
    ``our programs have not been canceled; they're just different.''

    Many nonprofits have also pivoted to meet previously unimaginable
    community needs. A science museum in Florida hosted a virtual Q&A with
    an infectious disease specialist in order to dispel rumors,
    misinformation, and other common misunderstandings about COVID-19. They
    also enrolled their powerful computer servers in a grassroots effort to
    model SARS-CoV-2 proteins--crucial in the race to develop a vaccine. A
    Miami-area business association established a ``rapid relief fund''
    providing $500 grants to low-income families otherwise ineligible for
    state aid.

    A youth boxing gym in Michigan--a state overwhelmed by infections--has
    braved snow and sleet to deliver 1,000 gallons of hand sanitizer
    throughout the region. The organization's leadership took it upon
    itself to inform the community as well. As the executive director of
    that organization put it: we ``spent countless hours on the phone
    debunking myths, putting together lists of Facebook-based COVID myths,
    calling family after family, and kid after kid--anyone who might have a
    tendency to believe Internet gossip.'' Parents who are otherwise weary
    of public health authorities are now masking up.

    In California, costume designers at a Santa Clara theatre company are
    crafting masks for state employees, postal workers, and other
    vulnerable populations. They've helped to address a PPE shortfall by
    distributing 4,000 masks since early April. And, in the lighthearted
    spirit of musical theatre, they've even released a song: ``Maskmaker,
    Maskmaker, make me a mask!''

    Put in historical perspective, one might see nonprofits' collective
    contributions to pandemic relief as akin to the auto industry's
    contributions to American war efforts during World War II. Where
    carmakers repurposed their factories to produce plane engines,
    artillery, and armor, nonprofits are deploying staff, volunteers, and
    facilities to produce masks, create care packages, and provide other
    essential services. But where the work of GM and Chrysler was
    underwritten by Uncle Sam, nonprofits are acting on their own volition,
    often without sufficient support, and performing services that, in this
    unsteady economic moment, are unsustainable and may prove financially
    ruinous. The economic fallout of the pandemic threatens to further
    undercut already precarious funding streams, and nonprofits are facing
    grave difficulties staying afloat.

    As nonprofits bend over backwards to serve their communities during the
    crisis, who is bending over backwards for them?

    To be sure, the CARES Act offers charitable provisions--emergency
    funding, loan forgiveness, and donation incentives. But efforts to
    access federal support have been hampered by red tape and delay.
    Philanthropic foundations, often touted for funding what public funders
    miss, have relaxed their grant restrictions, allowing grantees greater
    flexibility. But the rules governing philanthropic endowments will
    likely impede any substantial increase in the total dollar amount of
    foundation giving.

    If nonprofits cannot secure continued support, their ability to respond
    to community needs will be undermined and the already formidable fault
    lines of inequality will grow even wider. Communities will suffer when
    neither the state nor nonprofits take the lead.

    Social service provision and the protection of public health has
    historically fallen to governments. But COVID-19 struck during a period
    of public welfare cutbacks when nonprofits were already shouldering an
    undue burden. The political climate and unknown duration of the current
    emergency do not afford nonprofits the luxury of suspending work until
    normalcy resumes. What's become clear over the past several months is
    that the whole gamut of nonprofit services are starting to look
    essential--both for the maintenance of life and the maintenance of
    communities in which we live.

                                     ______

                             Idaho Nonprofit Center

                       5257 W. Fairview Ave., Suite #260

                                Boise, ID 83706

    March 17, 2022

    The Honorable Mike Crapo
    U.S. Senate
    Washington, DC 20510

    Dear Senator Crapo,

    On behalf of the Idaho Nonprofit Center and the 7,268 charitable
    nonprofits in our state and their more than 60,000 employees, I write
    in advance of the upcoming hearing, ``Examining Charitable Giving and
    Trends in the Nonprofit Sector,'' to thank you for your past support
    for pandemic relief, to update you on the ongoing challenges that
    nonprofits are facing, and to explain the need for targeted relief
    within the jurisdiction of the Senate Finance Committee.

    Idaho has prided itself as a state with a small government footprint
    and where solutions to problems are solved by local communities
    themselves. As such, Idaho nonprofits have played an immense role in
    providing services and community solutions both before and during the
    pandemic. In short, we're proud to say that Idaho runs on nonprofits.
    But nonprofits need your help.

    The Idaho Nonprofit Sector Before and During the Pandemic

    Data from the Idaho Nonprofit Center's 2020 State of the Sector Report,
    compiled in partnership with the University of Idaho, shows that prior
    to the pandemic, 10% of all private sector jobs in Idaho were with
    nonprofits. More than 7,000 nonprofit organizations produced 64,073
    jobs and paid $4.25 billion in total employee compensation. Notably,
    Idaho nonprofits utilized $4.1 billion from out-of-state funding
    sources (e.g., Federal grants).

    The pandemic has taken a toll on all Idahoans. Surveys conducted over
    the past two years demonstrate that Idaho nonprofits have borne an
    outsized burden, both as employers and as providers of essential
    programs and services:

          95% of nonprofits canceled events and expected reduced revenues
    as a result.
          58% of respondents report an increase in demand for services.
          42% of respondents report that the cost of providing services
    has increased.
          36% of organizations report that their financial reserves have
    decreased.
          31% of organizations reported decreased individual donations.
          51% of organizations reported decreased earned income.

    Also, data is not back yet for our forthcoming 2022 State of the Sector
    Report, but nonprofit job loss is an expected outcome. Nationally, the
    nonprofit sector was still more than 450,000 short of pre-pandemic
    levels, according to the report COVID-19 Jobs Update, December 2021 \1\
    from the Center for Civil Society Studies at Johns Hopkins University.
    That report found, ``as of the end of 2021, nonprofits have recovered
    approximately 72.1% of the jobs estimated to have been lost as of May
    2020.''
    ---------------------------------------------------------------------------
        \1\ https://ccss.jhu.edu/december-2021-jobs/.

    With the above context, now address three areas of challenges that
    nonprofits are facing and propose tax policy solutions for your
    consideration: the lack of resources, the lack of staff, and the lack
    of volunteers--all of which are essential to advancing nonprofit
    missions.

    Charitable Giving Tax Incentives

    Charitable giving nationwide has not kept up with need and rising
    expenses. The 2021 Giving USA report found that individual giving
    decreased by nearly 0.8 percent in 2020 compared with 2019, when one
    major donor's contributions are removed from the data. A separate
    analysis, the Nonprofit Trends and Impacts 2021 \2\ from the Urban
    Institute, found that small nonprofits were under particular stress.
    ``Forty-two percent of organizations with budgets under $500,000
    experienced decreased donations in 2020, compared with 29 percent of
    organizations with budgets of $500,000 or more.'' Nonprofits that said
    donations were essential to their revenue stream were also more likely
    to experience decreased donations in 2020.
    ---------------------------------------------------------------------------
        \2\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full_
    report.

    There are no up-to-date sources of Idaho giving data. We can look to
    the results of the Idaho Gives day, put on by the Idaho Nonprofit
    Center, that is the state's largest multi-day giving event. Last year
    16,000+ donors contributed $3.9 million to 600+ nonprofits in the
    ---------------------------------------------------------------------------
    state. Here is a breakdown in recent years:

          2019 ``Idaho Gives'' Giving Total: $1.9M.
          2020 ``Idaho Gives'' Giving Total: $3.9M.
          2021 ``Idaho Gives'' Giving Total: $3.9M.
          2019 Average gift size: $154/person.
          2021 Average Gift size: $250/person.

    Note that the average donation increased to $250, right in line with
    the universal charitable deduction amounts available to those who claim
    the standard deduction on their tax forms. We believe these numbers for
    ``Idaho Gives'' tell a story--the public was likely incentivized to
    give more to 600+ Idaho nonprofits when the universal charitable giving
    deduction was in effect in 2020 and 2021.
    Tax Policy Solutions
    In the aftermath of virtually every natural disaster since Hurricane
    Katrina, Congress has recognized the value of nonprofit relief and
    recovery efforts by enacting charitable giving incentives that
    encourage some individuals and corporations to help cover some of the
    costs of these community-based services. The COVID-19 pandemic and
    resulting economic crises have certainly qualified as natural disasters
    and Congress--a bipartisan basis--swiftly enacted giving incentives for
    those who itemize and corporations. Recognizing the catastrophic impact
    of health and economic crises, Congress went further by enacting, and
    then expanding and extending, the universal charitable or nonitemizer
    deduction to ensure that all taxpayers, including those who claim the
    standard deduction received a tax benefit for giving back to their
    communities by supporting the work of charitable nonprofits.

    Regrettably, each of these disaster-related giving incentives was
    allowed to expire at the end of 2021. Yet, the pandemic continues to
    disrupt services, individuals in our communities continue to come to
    their local nonprofits for support, and private giving to these
    frontline organizations still has not returned to pre-pandemic levels.
    We anticipate that the need to restore and improve these giving
    incentives will be extensively discussed during the Senate Finance
    Committee hearing on Thursday. We want to be clear that the Idaho
    Nonprofit Center strongly supports renewal of the universal charitable
    (non-itemizer) deduction at least through 2022. Indeed, we fully
    endorse the Universal Giving Pandemic Response and Recovery Act,\3\ S.
    618, because it will further promote giving by all American taxpayers--
    regardless of their income--and generate needed resources for
    charitable and faith-based organizations to continue providing vital
    services to families, workers, and communities, especially those
    critically impacted by the ongoing pandemic.
    ---------------------------------------------------------------------------
        \3\ https://www.congress.gov/bill/117th-congress/senate-bill/618/
    text?q=%7B%22search%22%3
    A%5B%22s618%22%2C%22s618%22%5D%7D&r=1&s=1.

    Similarly, we ask that you speak up during the hearing in support of
    extending the two additional disaster-relief giving incentives that
    expired on December 31, 2021--the provision permitting individuals who
    itemize to deduct charitable donations up to 100% of their adjusted
    gross income and the measure allowing corporations to deduct charitable
    donations up to 25% of taxable income.

    Nonprofit Workforce Shortages Crisis

    One of the greatest challenges that nonprofits of every type of mission
    are experiencing is the inability to hire and retain qualified workers.
    A Federal Reserve survey \4\ found that 40% of responding organizations
    reported that staffing levels are down. This past fall, the National
    Council of Nonprofits conducted a survey of the difficulties nonprofits
    across the country were confronting in retaining staff and filling
    vacancies. Three out of five (60%) survey respondents reported
    vacancies of between 10% and 30%, according to the NCN report, The
    Scope and Impact of Nonprofit Workforce Shortages,\5\ published in
    December. Another 16% reported vacancies greater than 30%. Nationwide,
    nonprofits explained the causes of the vacancies as salary competition,
    typically with employers outside the nonprofit sector (79%) and the
    inability of potential employees to find child care (23%).
    ---------------------------------------------------------------------------
        \4\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.
        \5\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.

    The survey responses of Idaho nonprofits make clear that these
    workforce challenges are no mere inconveniences; they are hurting the
    people the organizations serve. ``We are a small senior center
    providing over 2600 meals per month to both congregate diners as well
    as to home bound seniors,'' shared a human services provider,
    explaining, ``We have a small staff of 3 to accomplish this task in a
    dilapidated kitchen with equipment that is over 20 years old and
    falling apart.'' Regarding the workforce shortage, they noted, ``In
    addition, we have recently lost 2 staff members, making our situation
    even more critical.'' Another Idaho nonprofit summarized the problem:
    ``Service needs are increasing while staff and resources are
    decreasing.'' They added, ``Having to turn clients away due to staffing
    is getting harder, our staff are working more hours to meet the
    ---------------------------------------------------------------------------
    needs.''

    Idaho nonprofits similarly report significant challenges. Nearly 40% of
    nonprofits surveyed in late 2021 said hiring is ``difficult or very
    difficult'' right now. A nonprofit human service provider in the state
    shared, ``It is much harder to find qualified employees to fill
    roles,'' adding, ``It will likely be at least one more full year before
    we get back to previous staffing levels that are adequate.''
    Tax Policy Solutions
    The Idaho Nonprofit Center and dozens of Idaho nonprofits joined more
    than 1,500 organizations from all 50 states in signing onto the recent
    letter to Congress and the Administration seeking Pandemic and
    Workforce Shortage Relief for Charitable Nonprofits.\6\ Among other
    things, that letter calls on Congress to address critical staffing
    shortages at nonprofits by retroactively restoring the Employee
    Retention Tax Credit, as proposed in the bipartisan ERTC Reinstatement
    Act (S. 3625), and extend this refundable payroll tax credit through
    2022.
    ---------------------------------------------------------------------------
        \6\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-work
    force-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advocacy%
    20Updates%20%20February%2022%202022&utm_medium=email.

    To the address the impact of the unique impact of nonprofit workforce
    shortages on individuals and communities, we ask that you modify
    nonprofit eligibility under the ERTC beyond the current ``gross
    receipts'' test to ensure more nonprofits qualify. We also request that
    Congress revise the definition of eligible payroll expenses under the
    ERTC to include child care and education subsidies to reflect the
    increased costs charitable organizations experienced as they struggle
    to maintain or expand services. We believe this improvement is
    justified because, unlike for-profit employers, tax-exempt nonprofits
    are not currently able to receive income-tax relief for providing those
    employee benefits. Our proposal provides a level of tax fairness and
    parity that does not currently exist.

    Volunteers Have Not Returned

    A unique aspect of charitable organizations is that they can expand
    their impact by leveraging the commitment of armies of volunteers who
    are dedicated to the work of nonprofits in their communities. Pre-
    pandemic estimates by AmeriCorps \7\ indicate that the volunteerism
    rate in Idaho was 37.9%, contributing 48.6 million hours of service.
    Nationally and in Idaho, nonprofits reported throughout the pandemic
    that volunteerism dropped precipitously. Now, however, as many
    businesses return to public operations, many nonprofits still have not
    seen their volunteers return to pre-pandemic levels. Data from surveys
    conducted by the Idaho Nonprofit Center confirm that 60% nonprofits
    report a decrease in volunteers during the pandemic.
    ---------------------------------------------------------------------------
        \7\ https://americorps.gov/sites/default/files/document/
    Volunteering_in_America_States_508.
    pdf.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    As discussed in the recent nonprofit letter on policy priorities,\8\
    Congress can incentivize volunteerism by eliminating unfair tax
    policies. Specifically, we seek an increase in the Volunteer Mileage
    Rate for nonprofit volunteer drivers to the business rate (58.5 cents/
    mile) for 2022 and the elimination of the tax on mileage reimbursements
    up to the business rate. The rapid increase in gas prices mean that
    many nonprofits will need to reimburse their volunteers for driving on
    the charity's behalf. Yet, those drivers will be forced to pay income
    tax on any reimbursement rate greater than the volunteer mileage
    statutory rate of 14 cents per mile. This existing tax policy, enforced
    at both the federal and state levels, imposes a disincentive on all but
    the most well-off volunteers. It is unfair, harmful to the missions of
    charitable organizations, and must be changed.
    ---------------------------------------------------------------------------
        \8\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-work
    force-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advocacy%
    20Updates%20%20February%2022%202022&utm_medium=email.
    ---------------------------------------------------------------------------

    Conclusion

    As you consider the issues raised during the Finance Committee hearing,
    we ask that you reflect in the important, sustaining work that Idaho
    nonprofits performed throughout the pandemic and recognize that our
    challenges are far from over. Most for-profit businesses and government
    offices have or soon will reopen to something amounting to normal
    business. Most charitable organizations--particularly those addressing
    the immediate needs of our residents--never closed. Yet, at this stage
    in the pandemic when demand for nonprofit services remains high,
    Idaho's nonprofits remain short of resources to meet normal as well as
    pandemic-related expenses. But we don't just lack adequate resources;
    our nonprofits lack the staff and volunteers to meet the very high
    needs, which is resulting in waiting lists, denial of services, and
    outright closures of local nonprofits. In light of these compelling
    challenges, we ask that you champion tax-policy solutions, at the
    hearing and in the Senate, that will restore and enhance the charitable
    giving incentives and the Employee Retention Tax Credit, and remove tax
    disincentives for volunteers to support the missions of nonprofits in
    their communities.

    Sincerely,

    Kevin Bailey, CEO
    kbailey@idahononprofits.org
    208-424-2229

                                     ______

                         Indiana Philanthropy Alliance

                           32 East Washington Street

                          Indianapolis, Indiana 46204

    Dear Chairman Wyden, Ranking Member Crapo, and Members of Committee,
    thank you for holding the ``Examining Charitable Giving and Trends in
    the Nonprofit Sector'' hearing on March 17, 2022.

    Indiana is home to the second largest private foundation in the country
    and has the most independent community foundations in the United
    States--including at least one in all 92 Indiana counties. Indiana
    Philanthropy Alliance represents these foundations as well as a rich
    variety of generous family, private, public, and corporate foundations,
    and other social investors.

    The philanthropic sector plays an important role in promoting and
    supporting the quality of life for Hoosiers. Over 1,200 foundations
    annually distribute more than $2 billion to nonprofits in support of a
    broad range of health, educational, cultural, human service,
    environmental, and other causes, with 76% going to Indiana-based
    organizations. Not only are these grantmakers investing in Indiana
    nonprofit organizations, they convene local leaders, collaborate on
    critical issues, seek innovative solutions, share knowledge, and
    advocate on behalf of local community needs. Additionally, nonprofit
    organizations are a major economic force in Indiana. On average, 1 in
    10 Hoosiers are employed by the nonprofit sector.

    It is an honor to represent the interests of Indiana's philanthropic
    sector and encourage charitable giving for every Hoosier. Given the
    opportunity, giving in Indiana has the potential to improve lives now
    and for generations to come.

    With this in mind, Indiana Philanthropy Alliance respectfully asks for
    consideration of the following legislative proposals under the
    Committee's jurisdiction:

    Oppose the Accelerating Charitable Efforts Act (ACE Act)

    To increase charitable contributions, we must find ways to make giving
    easy. Fewer restrictions and more incentives clears the way for
    organizations to think creatively, build partnerships, and quickly
    bring more resources to the needs of our communities.

    The ACE Act (S. 1982/H.R. 6595) purports to increase resources for
    charities. However, the provisions within the bill would do the
    opposite--harming the exact charitable organizations and communities
    its authors seek to help.

    The bill's payout requirement on donor-advised funds (DAF) seeks a
    solution to a problem that does not exist while creating complexity and
    administrative burdens for community, private, and family foundations.
    This payout assumes a gross underspend from DAFs, without any
    substantiating data, while running counter to what is well-documented.
    In fact, grantmaking from DAFs to qualified charities totaled almost
    $35 billion in 2020 (a 117% increase since 2016) with a 23% average
    payout. Research conducted on these funds within the Hoosier state by
    Indiana Philanthropy Alliance and national nonprofit data clearinghouse
    Candid found DAF payouts by community foundations topped 9%.
    Additionally, 37% of all Indiana community foundation grants in 2020
    were from DAFs, totaling over $68.4 million going back into local
    communities. While ACE Act includes an exception for community
    foundation DAFs under $1 million, this leaves out a significant and
    growing number of community foundation DAFs over this threshold. In
    Indiana, there are at least 63 such DAFs, and in 2021, they paid out an
    estimated 7%.

    Under the current rules governing philanthropy, organizations can save
    and invest to not only address today's needs, but to ensure there will
    be a safety net when the next crisis occurs. However, by requiring
    certain DAF dollars to be exhausted within 15 years, the ACE Act would
    set a dangerous precedent of eliminating endowments and the benefit of
    exponential value growth over time. By failing to provide a safety net
    for the future, we will be leaving communities vulnerable to future
    disasters--like we have seen during COVID-19.

    The ACE Act alters the structure of philanthropy without regard for
    unintended consequences. The proposed legislation would require
    foundations, many with three or fewer employees, to undertake a new
    system of accounting, increasing administrative costs. It would also
    eliminate donor privacy for some, while holding family foundations to
    stricter standards than other private foundations, creating a second
    unnecessary set of guidelines to monitor the same aspects of foundation
    operations.

    Encourage Giving with Universal Charitable Deduction

    Indiana Philanthropy Alliance urges the Committee to support
    legislation making the charitable deduction available to all
    taxpayers--regardless of their tax rate or whether they itemize. This
    includes The Universal Giving Pandemic Response and Recovery Act, S.
    618, H.R. 1704. Such tax incentives encourage individuals to give away
    more of their income, devoting it to their community's needs rather
    than their own.

    Section 2204 of the CARES Act, signed into law in March 2020, permitted
    eligible individuals who do not itemize deductions to deduct $300 of
    qualified charitable contributions throughout 2020. In December 2020,
    Congress extended the universal charitable deduction availability
    through 2021 and increased the cap to $600 for joint filers.

    Since March 2020, charitable giving--especially of gifts less than the
    $300 cap--has increased significantly. According to data collected by
    the Fundraising Effectiveness Project, on December 31, 2020, there was
    a 28% increase of gifts of exactly $300, as compared with the previous
    year. Plus, gifts of $250 or less increased by more than 15% in the
    fourth quarter of 2020. While we know there are many factors that
    contribute to increased donations, one very compelling factor is likely
    the availability of the charitable deduction to nonitemizers.

    Support Current Distribution Requirements by Private Foundations

    Indiana Philanthropy Alliance urges the Committee to support the
    current 5% payout level for private foundation distributions that
    allows for the availability of funds for distribution in perpetuity.
    Previous national studies have shown that the current payout is optimum
    for supporting the long-term position of a foundation and ensuring the
    availability of charitable grantmaking for the future. This 5% is
    merely a minimum, and it's important to note that private foundations
    can, and often do, choose to pay much more. For example, Ball Brothers
    Foundation--a private foundation based in Muncie, Indiana--was
    established in 1926 with $3.5 million. 2022 marks Ball Brothers
    Foundation's highest payout in history--$10 million. This incredible
    gift was injected into the local community at a critical moment in time
    and would not have been possible with higher mandatory payouts draining
    the foundation's principal.

    Recognize Nonprofit Cemeteries as Public Charities

    Indiana Philanthropy Alliance urges the Committee to support the Grave
    Injustice Parity Act, H.R. 6226, which would amend the tax code to
    recognize nonprofit cemeteries as public charities. This bill would
    make nonprofit cemeteries less reliant on local, state, and federal
    dollars. It also simplifies the tax code by creating parity for
    501(c)(13) cemeteries across all sections of the tax code listing
    deductible charities.

    Under the current tax code, nonprofit cemeteries--not categorized as
    religious or municipal--are categorized as 501(c)13 organizations, not
    501(c)3 public charities. This is a problem because not only are these
    cemeteries restricted from receiving estate gifts from people wanting
    to maintain family burial sites, they also cannot receive gifts from
    public or private foundations. Additionally, community foundations,
    which manage endowments benefiting public charities, cannot hold
    designated funds or endowments for these cemeteries. There are over
    12,000 such cemeteries in existence in the U.S., with Indiana ranking
    6th highest in the nation with 607.

    This change would have a negligible effect on federal revenues while
    continuing to allow charitable dollars to flow towards charities. The
    Congressional Joint Committee on Taxation found the 10-year loss of
    federal revenue as a result of this legislation would be less than $2
    million.

    Permit Foundations to Provide Post-Graduation Scholarship Programs

    Like many other states, Indiana has a talent problem in rural
    communities--with 240,000 vacant positions (Jan. 2022, Bureau of Labor
    Statistics). Further exacerbating this problem, about 10,000 people
    leave the state each year after they graduate (20% of graduates).
    Without an adequate workforce, economic growth cannot occur. To
    strengthen Indiana's economy, efforts must be made to incentivize
    workers to return to their communities after graduation.

    Indiana Philanthropy Alliance urges the Committee to support
    legislation (including the Workforce Development Through Post-
    Graduation Scholarships Act, S. 2191/H.R. 4095) that permits
    foundations to provide post-graduation scholarship programs. Doing so
    promotes talent attraction and retention in communities by providing
    student loan forgiveness to college students after graduation. Such
    legislation will combat ``brain drain,'' stimulate regional economic
    growth, and address the growing student debt crisis.

    A post-graduation scholarship is a type of charitable grant that
    foundations would make to attract individuals who have career skills
    needed in a particular region, encouraging them to make their homes and
    build their careers in that community. It would function much like a
    traditional scholarship but would pay off a portion of student loans
    held by an individual who has completed a degree or technical program
    that qualifies them to work in a chosen career field needed in a
    community.

                                     ______

                   Initiative to Accelerate Charitable Giving
    March 17, 2022

    The Honorable Ron Wyden
    The Honorable Mike Crapo
    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Building
    Washington, DC 20510

    Dear Chairmen Wyden, Ranking Member Crapo, and members of Senate
    Committee on Finance:

    On behalf of the Initiative to Accelerate Charitable Giving (IACG),\1\
    a coalition of philanthropists, leaders of major foundations, non-
    profits, and others who represent a broad spectrum of interests across
    the philanthropic community, we appreciate your leadership on how to
    strengthen America's working charities, including by considering
    reforms that will ensure more money reaches these charities faster.
    ---------------------------------------------------------------------------
        \1\ https://acceleratecharitablegiving.org/.

    The crises of the last several years have reinforced the important role
    that our nation's charities play in providing needed services to our
    communities, from serving food to the hungry to providing clothing and
    shelter for Americans in need. It has become increasingly clear,
    however, that some of our antiquated charitable giving laws no longer
    work as intended, and steps must be taken to increase the pace and flow
    ---------------------------------------------------------------------------
    of resources to charitable organizations.

    With more than $1 trillion sitting in private foundations and donor-
    advised funds (DAFs) for which donors already have received tax
    deductions, and almost 90 percent of Americans not receiving any tax
    benefit for their charitable giving, one report showed that more than
    one-third of nonprofits \2\ throughout the country are in jeopardy of
    closing within two years. In addition, the nonprofit workforce is still
    roughly 459,000 jobs \3\ below its pre-pandemic level.
    ---------------------------------------------------------------------------
        \2\ https://apnews.com/article/coronavirus-puts-1-in-3-nonprofits-
    financial-jeopardy-93d410c99425f0ac54b3190a656db200.
        \3\ http://ccss.jhu.edu/december-2021-jobs/.

    Now more than ever, we must restore the connection between charitable
    tax benefits and benefits to charities. Our coalition has come together
    in support of the following common-sense reforms \4\ that we believe
    could significantly increase the flow of resources to working
    charities:
    ---------------------------------------------------------------------------
        \4\ https://acceleratecharitablegiving.org/reforms/.

          For private foundations, close loopholes to better ensure that
    distributions qualifying for the payout requirement are available for
    use by working charities; and encourage greater payout through reforms
    to the excise tax.
          For DAFs, adopt measures to ensure that DAF account balances are
    distributed to working charities within a reasonable period of time.
          For individuals, incentivize greater giving by improving and
    extending the new non-itemizer charitable deduction in a cost-effective
    way.

    We look forward to working with members of the Senate Committee on
    Finance and policymakers across the spectrum as this conversation moves
    forward.

    Sincerely,

    Members of the Initiative to Accelerate Charitable Giving

                                     ______

                          Iowa Council of Foundations

                                6919 Vista Drive

                           West Des Moines, IA 50266

                                      and
                              United Ways of Iowa

                             1111 9th Street, #295

                              Des Moines, IA 50134

         Statement of Kari McCann Boutell, President, Iowa Council of
      Foundations; and Deann Cook, President and CEO, United Ways of Iowa

    On behalf of over 14,000 nonprofits and over 147,000 nonprofit
    employees working in organizations across Iowa, we submit this
    statement to encourage additional nonprofit supports and charitable
    giving incentives following the Senate Finance Committee hearing,
    ``Examining Charitable Giving and Trends in the Nonprofit Sector.'' We
    appreciate the variety of programs and incentives that have aided the
    charitable sector during the pandemic.

    We have heard from members of our networks and the broader nonprofit
    community in Iowa about the lifeline that programs like the Paycheck
    Protection Program and the Employee Retention Tax Credit were over the
    last two years. Those programs helped keep doors open but many
    nonprofits are still struggling with ongoing challenges. The sector
    needs targeted supports to fully recover and sustain operations to
    continue providing critical services for our state.

    Our organizations jointly advocated for targeted relief for Iowa
    nonprofits in the early months of the pandemic. We were able to secure
    $10 million in CARES Act funding to establish the Iowa Nonprofit
    Recovery Fund. In administering that grant program, we learned that
    many Iowa nonprofits experienced a sharp decrease in revenue at the
    same time they were experiencing a sharp increase in demand for
    services. Periodic nonprofit surveying completed by the Iowa Economic
    Development Authority and the University of Northern Iowa's Institute
    for Decision Making tells us that these trends are persisting two years
    later. That, coupled with rising costs and workforce shortages, has
    many nonprofits struggling to meet demands.

    We see the following strategies as the most valuable ways Congress can
    support the charitable sector now and moving forward:

          We urge you to support the Universal Giving Pandemic Response
    and Recovery Act (S. 618).
          We urge you to support the retroactive restoration of the
    Employee Retention Tax Credit, as proposed in the bipartisan ERTC
    Reinstatement Act (S. 3625).
          We urge you to increase the Volunteer Mileage Rate for nonprofit
    volunteer drivers to the business rate (58.5 cents/mile) for 2022 and
    eliminate the tax on mileage reimbursements up to the business rate.

    We thank you for your support of the charitable sector and ask for your
    continued commitment to nonprofit recovery and charitable giving
    incentives to strengthen the critical work of Iowa nonprofits. Please
    reach out if we can provide additional information or help answer any
    questions.

                                     ______

                      Jewish Federations of North America

                         The Max M. Fisher Headquarters

                             25 Broadway, Suite 700

                               New York, NY 10004

                                 p 212-284-6548

                                 f 212-271-6741

                       https://www.jewishfederations.org/

    The Jewish Federations of North America (JFNA) appreciate the
    opportunity to submit a statement for the record relating to the Senate
    Finance Committee's March 17, 2022, hearing titled ``Examining
    Charitable Giving and Trends in the Nonprofit Sector.'' We applaud the
    leadership of Chairman Wyden, Ranking Member Crapo, and Members of the
    Committee for holding this hearing highlighting issues important to the
    charitable sector.

    Background on JFNA

    JFNA represents 146 Jewish Federations and over 300 Network
    communities, which raise and distribute more than $3 billion annually,
    and, through planned giving and endowment programs, support social
    welfare, social services, and educational needs in society. The
    Federation movement, collectively among the top 10 charities on the
    continent, protects and enhances the well-being of Jews worldwide
    through the values of tikkun olam (repairing the world), tzedakah
    (charity and social justice) and Torah (Jewish learning).

    In the fields of caregiving, aging, philanthropy, disability, foreign
    policy, nonprofit security and health care, we are thought leaders and
    advocates. We promote a public-private partnership to support thousands
    of agencies serving more than a million clients of all backgrounds,
    Jewish and non-Jewish alike, including hospitals, nursing homes,
    community centers, family and children's service agencies, and
    vocational training programs.

    At a time when Jews are less economically and physically secure than a
    decade ago, JFNA leads a continental response, providing assistance and
    rapidly raising and distributing funds to serve the most vulnerable
    among us. We have provided immediate relief and long-term assistance to
    Jewish and non-Jewish victims of natural and manmade disasters around
    the globe, including Houston, the Philippines, Haiti, Japan, and, now,
    in Ukraine.

    Current Tax Policy Priorities

    JFNA appreciates the opportunity to highlight the below tax policy
    issues important to our Federations and the nonprofit sector.
    Universal Charitable Deduction
    The Jewish Federations strongly supports the renewal and expansion of
    the universal charitable deduction and the Universal Giving Pandemic
    Response and Recovery Act (S. 618). As the nonprofit sector works to
    recover from the crippling effects of the COVID pandemic, it is
    critically important to ensure that Americans who donate to charities
    and religious organizations can receive a tax deduction at an amount
    higher than the most recent $300 deduction level (before the provisions
    expired last year).

    A significant amount of charitable giving and grantmaking at our Jewish
    Federations are conducted through donor-advised funds, which is why we
    strongly support the provision in S. 618 that enhances the non-itemizer
    provision by including gifts to donor-advised funds. We believe this
    would allow for more charitable grantmaking and assist communities and
    nonprofits during times of crisis.
    Preserving and Strengthening Donor-Advised Funds
    Donor-advised funds (DAFs) are an efficient philanthropic tool that
    allow Jewish Federations to raise and grant charitable dollars for the
    benefit of our local communities. In 2020, Jewish Federations
    collectively granted more than $1.5 billion from DAFs, and Federations
    typically achieve a payout rate for DAFs that is well over 20 percent.

    DAF grants are particularly important during emergencies. Responding to
    COVID-19, Federations raised supplemental funds that exceeded $200
    million with more than $80 million coming directly from grants from
    DAFs. Federation DAF distributions were up 10% in 2020 compared to
    2019, mostly because of the pandemic. More recently in response to
    Hurricane Ida, JFNA raised and distributed $250,000 in the fall of 2021
    to provide assistance in the Gulf Coast with more than half of that
    funding originating from DAFs. In the last several weeks, we have
    already raised and distributed $24 million in Ukrainian relief with
    much more to come. A very significant percent of that funding will have
    originated from donor-advised funds.

    JFNA urges Congress to protect and preserve DAFs as an important
    philanthropic tool and we encourage policymakers to reject legislation
    that would disincentivize DAFs and suppress charitable grantmaking.
    Attached is a recent letter led by the Jewish Federations signed by
    more than 300 charitable groups rejecting legislation that would
    negatively impact DAFs. DAF grants have been vital to helping
    nonprofits weather the COVID pandemic and continue their charitable
    mission.
    Employee Retention Tax Credit
    The Jewish Federations support extending and modifying the Employee
    Retention Tax Credit (ERTC) as one way to assist nonprofits in
    combating the effects of the COVID pandemic and the staffing shortages
    currently faced by charitable organizations.

    Prior to the pandemic, charitable nonprofits employed more than 12
    million people, making the nonprofit sector the third largest industry
    in the country--larger than the construction, financial services, and
    manufacturing industries. As of December 2021, there were 450,000 fewer
    employees in the nonprofit sector as charitable organizations report
    significant difficulties retaining staff and filling vacancies. As the
    economy seeks to recover from the COVID pandemic, having a fully
    staffed charitable sector is critical.

    To alleviate this workforce crisis in the charitable sector, the Jewish
    Federations encourage Congress to:

          Retroactively restore the Employee Retention Tax Credit, as
    proposed in S. 3625, the ERTC Reinstatement Act,
          Extend this refundable payroll tax credit through 2022, and
          Modify nonprofit eligibility beyond the current ``gross
    receipts'' test and define eligible payroll expenses to include
    childcare and education subsidies to reflect the increased costs
    charitable organizations are experiencing as they struggle to maintain
    or expand services to meet the local needs throughout the health and
    economic crisis.
    Legacy IRA Act
    The Jewish Federations support S. 243, the Legacy IRA Act. The
    legislation would permanently expand the current IRA charitable
    rollover by allowing seniors starting at age 65 to make tax-free IRA
    rollovers to charities through life-income plans (charitable gift
    annuities or charitable remainder trusts). The legislation would also
    increase the annual rollover limit to $400,000 by which seniors can
    give to charities through their IRA.

    The current IRA charitable rollover has been a successful philanthropic
    tool as it has generated millions of dollars in new charitable
    contributions. Expanding the provision will only further charitable
    giving and benefit local nonprofits during this critical time. We
    encourage Congress to pass this bipartisan piece of legislation.

                                     ______

    Attachment:

    August 2, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chair                               Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    Dear Chairman Wyden and Ranking Member Crapo:

    On behalf of the more than 300 undersigned national and community
    organizations representing each of the 50 states, we write to express
    our opposition to the Accelerating Charitable Efforts Act. This
    legislation recently introduced by Senators Angus King (I-ME) and
    Charles Grassley (R-IA) as S. 1981 would undermine important charitable
    tax incentives in ways that could be devastating to the vulnerable
    community members supported by our philanthropy.

    S. 1981 seeks to place restrictions on private foundations and donor-
    advised funds (DAFs), which are a fast-growing tool for philanthropists
    at all levels to make multi-generational commitments to charity. DAFs
    are the simplest, most flexible, and most economical way for
    philanthropists to make these gifts. Supporters of DAFs call them
    ``greenhouses'' rather than ``warehouses'' for charitable giving. They
    encourage donors and their families to develop long-term giving plans
    and ensure that charities have the resources to realize their
    philanthropic visions far into the future.

    Among the significant benefits of DAFs are that they allow charitable
    gifts to grow over time and thus have a much bigger impact, provide a
    simpler and less expensive vehicle than setting up and running a
    private foundation, and use funds--which are donated irrevocably--
    exclusively for charitable purposes. National data from the 2020 DAF
    Report shows that DAFs annually allocate an average of 20% of their
    assets on hand to qualified charities--by contrast, foundations are
    required to distribute 5% of their funds per year.

    The core argument promoted by supporters of the Accelerating Charitable
    Efforts Act is that DAFs keep funds locked up and unavailable to meet
    pressing needs. This is not borne out by our experience in which grants
    from DAF holders resulted in the immediate spending of more than $200
    million to alleviate suffering from the pandemic.

    The Accelerating Charitable Efforts Act would limit DAFs by requiring
    that their funds be spent within a prescribed time-period (such as 15
    years), limiting the life of a DAF, delaying the charitable tax
    deduction until the funds are disbursed, and not permitting the donor
    to deduct the fair market value of property given to a DAF. These
    provisions would reduce the incentive for donors to use DAFs, pave the
    way for their elimination, and sharply curtail philanthropic giving to
    charities and their beneficiaries. Moreover, the various restrictions
    proposed by the legislation would serve to add to the administrative
    burdens and expenses of those charities that sponsor DAF programs. In
    short, it would diminish rather than enhance our communities' and their
    donors' ability to support urgent charitable needs throughout our
    country and across the globe.

    The legislation would also restrict the useful ways that private
    foundations use DAFs to further their charitable missions, as well as
    disallow foundations from treating certain administrative expenses
    (such as salaries and expenses paid to family members) as a qualifying
    distribution. As opposed to seeking to expand these important
    philanthropic tools, the legislation would inhibit their important
    charitable work.

    We have grave concerns with the Accelerating Charitable Efforts Act and
    look forward to working with you and your colleagues to advance the
    interests of the charitable sector and enact policy solutions that
    promote, rather than suppress, both short-term and long-term
    philanthropy. We would welcome the opportunity to brief you and your
    staff on our position on this bill. To discuss this legislation, please
    reach out to The Jewish Federations of North America (Stephan.Kline@
    JewishFederations.org) or the Community Foundation Public Awareness
    Initiative (jhamond@vsadc.com).

    Sincerely,

    The Jewish Federations of North America
    The Community Foundation Public Awareness Initiative

                             National Organizations
    ADL                                  Girls Inc.
    Agudath Israel of America            Good News Communications, Inc.
    American Jewish Committee            HIAS
    American Lung Association            Hillel International
    American Red Cross                   JCC Association of North America
    Arthritis Foundation                 Jewish Council for Public Affairs
    Association of Jewish Aging          Jewish Women International
     Services
    B'nai B'rith International           Lutheran Center for Religious
                                          Liberty
    BBYO                                 Lutheran Services in America
    Citygate Network                     Mennonite Health Services
    Council for Christian Colleges and   National Coalition Supporting
     Universities                         Eurasian Jewry
    Council for Health and Human         National Philanthropic Trust
     Service
    Ministries (United Church of         Network of Jewish Human Service
     Christ)                              Agencies
    Dance/USA                            One Mission Society
    Disabled Children's Fund             OPERA America
    DonorsTrust                          Philanthropy Roundtable
    Easterseals                          Stewardship Matters
    Evangelical Council for Financial    U.S. Council of Muslim
     Accountability                       Organizations
    Faith and Giving                     Union for Reform Judaism

                    Regional, State, and Local Organizations
    Aaron Family JCC of Dallas (TX)      CREATE Foundation (Tupelo, MS)
    Adath Israel (Cincinnati, OH)        Dallas Hebrew Free Loan Association
                                          (TX)
    Adath Israel of the Main Line        Dayton Foundation (OH)
     (Merion Station, PA)
    Adirondack Foundation (Lake Placid,  East Texas Communities Foundation
     NY)
    Arizona Community Foundation         East Valley JCC (Chandler, AZ)
    Arkansas Community Foundation        Eau Claire Community Foundation
                                          (WI)
    Associated: Jewish Community         Erie Community Foundation (PA)
     Federation of Baltimore (MD)
    Baltimore Jewish Council (MD)        Fargo-Moorhead Area Foundation (ND)
    Birmingham Jewish Federation (AL)    Federated Jewish Charities of
                                          Charleston, Inc. (WV)
    Birmingham Jewish Foundation (AL)    Federation for Jewish Philanthropy
                                          of Upper Fairfield County (CT)
    Brindza Family Fund (Yorktown, VA)   Federation Housing (Philadelphia,
                                          PA)
    Capin Advisory Services (Grayson,    Flint Jewish Federation (MI)
     GA)
    Cedar Village Foundation             Foundation for Delaware County (PA)
     (Cincinnati, OH)
    Central New York Community           Foundation for the Charlotte Jewish
     Foundation                           Community (NC)
    Chabad at Dartmouth (Hanover, NH)    Gesher Jewish Day School (Fairfax,
                                          VA)
    Charleston Jewish Federation (SC)    Gratz College (Wyncote, PA)
    Cincinnati Community Kollel (OH)     Greater Miami Jewish Federation
                                          (FL)
    City Mission of Findlay (OH)         Greater New Orleans Foundation (LA)
    Cleveland Foundation (OH)            Greater Toledo Community Foundation
                                          (OH)
    Combined Jewish Philanthropies of    Greensboro Jewish Federation (NC)
     Greater Boston (MA)
    Communities Foundation of Texas      Guardians of the Sick (Brooklyn,
                                          NY)
    Community Foundation Boulder County  Gulf Coast Community Foundation
     (CO)                                 (FL)
    Community Foundation for Brevard     Hawaii Community Foundation
     (FL)
    Community Foundation for Greater     Hebrew Congregation of St. Thomas
     Buffalo (NY)                         (VI)
    Community Foundation for Northeast   Hebrew Day School of Ann Arbor (MI)
     Florida
    Community Foundation for Northeast   Hillel at Temple University
     Georgia                              (Philadelphia, PA)
    Community Foundation for the         Holland Rescue Mission (MI)
     Greater Capital Region (Albany,
     NY)
    Community Foundation of Acadiana     Houston Jewish Community Foundation
     (Lafayette, LA)                      (TX)
    Community Foundation of Collier      Idaho Community Foundation
     County (FL)
    Community Foundation of Greater      Indianapolis Jewish Community
     Birmingham (AL)                      Relations Council (IN)
    Community Foundation of Jackson      JCADA (Rockville, MD)
     Hole (WY)
    Community Foundation of Northern     JCC of Greater Baltimore (MD)
     Colorado
    Community Foundation of Sarasota     JCRC of Atlanta (GA)
     County (FL)
    Community Foundation of St. Joseph   JCRC of Greater Washington (DC)
     County (IN)
    Community Foundation of Tompkins     JCRC/AJC (Detroit, MI)
     County (NY)
    Community Foundations of the Hudson  JEVS Human Services (Philadelphia,
     Valley (Poughkeepsie, NY)            PA)
    Community Foundation of Western      Jewish Alliance of Greater Rhode
     Massachusetts                        Island
    Congregation Agudat Achim            Jewish Cemeteries of Greater
     (Schenectady, NY)                    Cincinnati (OH)
    Congregation Beth Abraham-Jacob      Jewish Communal Fund (New York, NY)
     (Albany, NY)
    Congregation Beth El (Bangor, ME)    Jewish Community Federation of
                                          Richmond (VA)
    Congregation Beth Shalom (Missoula,  Jewish Community Foundation of
     MT)                                  Greater Kansas City (KS)
    Congregation Bnai Israel (Little     Jewish Community Foundation of
     Rock, AR)                            Greater MetroWest NJ
    Congregation Brothers of Israel      Jewish Community Foundation of
     (Newtown, PA)                        Greater Phoenix (AZ)
    Congregation Etz Chaim (Marietta,    Jewish Community Foundation of San
     GA)                                  Diego (CA)
    Congregation Sha'arei Torah          Jewish Federation of Greater
     (Cincinnati, OH)                     Harrisburg (PA)
    Jewish Community Foundation of       Jewish Federation of Ocean County
     Southern Arizona                     (NJ)
    Jewish Community Foundation of the   Jewish Federation of Omaha
     Minneapolis Jewish Federation (MN)   Foundation (NE)
    Jewish Community Foundation, Inc.    Jewish Federation of Orange County
     (Cherry Hill, NJ)                    (CA)
    Jewish Community of Louisville Inc.  Jewish Federation of Palm Beach
     (KY)                                 County
    Jewish Community Relations Council   Jewish Federation of Princeton
     of Columbus (OH)                     Mercer Bucks (NJ, PA)
    Jewish Community Relations Council   Jewish Federation of Reading/Berks
     of Greater Charleston (SC)           (PA)
    Jewish Community Relations Council   Jewish Federation of Sacramento
     of Minnesota and the Dakotas         (CA)
    Jewish Community Relations Council   Jewish Federation of San Antonio
     of Southern New Jersey               (TX)
    Jewish Community Relations Council   Jewish Federation of San Diego
     of the United Jewish Federation of   County (CA)
     Tidewater (VA)
    Jewish Community Services            Jewish Federation of Somerset,
     (Baltimore, MD)                      Hunterdon and Warren Counties (NJ)
    Jewish Endowment Foundation of       Jewish Federation of South Palm
     Louisiana                            Beach County (FL)
    Jewish Family and Children's         Jewish Federation of Southern
     Services, San Francisco Bay Area     Arizona
     (CA)
    Jewish Family and Children's         Jewish Federation of Southern NJ
     Service (Cherry Hill, NJ)
    Jewish Family and Community          Jewish Federation of St. Louis (MO)
     Services of Pittsburgh (PA)
    Jewish Family Service of Colorado    Jewish Federation of the Berkshires
                                          (Pittsfield, MA)
    Jewish Family Service of Greater     Jewish Federation of the Bluegrass
     Dallas (TX)                          (Lexington, KY)
    Jewish Family Service of Greater     Jewish Federation of the Greater
     New Orleans (LA)                     San Gabriel and Pomona Valleys
                                          (CA)
    Jewish Family Service of             Jewish Federation of the Lehigh
     Metropolitan Detroit (MI)            Valley (PA)
    Jewish Family Service of Somerset,   Jewish Federation of the Virginia
     Hunterdon and Warren Counties (NJ)   Peninsula
    Jewish Family Services of            Jewish Federation of Western
     Northeastern New York                Massachusetts
    Jewish Federation and Foundation of  Jewish Fertility Foundation
     Northeast Florida                    (Atlanta, GA)
    Jewish Federation Association of     Jewish Foundation of Greensboro
     Connecticut                          (NC)
    Jewish Federation in the Heart of    Jewish Foundation of Memphis (TN)
     New Jersey (South River, NJ)
    Jewish Federation of Broward County  Jewish Foundation of Nashville (TN)
     (FL)
    Jewish Federation of Central         Jewish Home of Cincinnati (OH)
     Massachusetts
    Jewish Federation of Chicago (IL)    Jewish Interfaith Education
                                          Council, Inc. (Sioux Falls, SD)
    Jewish Federation of Cincinnati      Jewish Kids Groups (Atlanta, GA)
     (OH)
    Jewish Federation of Cleveland (OH)  Jewish Long Beach (CA)
    Jewish Federation of Cumberland,     Jewish Museum of Maryland
     Gloucester and Salem (NJ)
    Jewish Federation of Delaware        Jewish Nevada
    Jewish Federation of Eastern         Jewish Silicon Valley
     Connecticut
    Jewish Federation of El Paso (TX)    Jewish United Fund (Chicago, IL)
    Jewish Federation of Grand Rapids    Jewish Volunteer Connection
     (MI)                                 (Baltimore, MD)
    Jewish Federation of Greater Ann     Jewish Women's Fund of Atlanta (GA)
     Arbor (MI)
    Jewish Federation of Greater         JEWISHcolorado
     Atlanta (GA)
    Jewish Federation of Greater         JewishColumbus
     Charlotte (NC)
    Jewish Federation of Greater         JFBP LLC (New York, NY)
     Chattanooga (TN)
    Jewish Federation of Greater Dallas  Johns Hopkins Hillel (Baltimore,
     (TX)                                 MD)
    Jewish Federation of Greater Des     JVS Career Services (Cincinnati,
     Moines (IA)                          OH)
    Jewish Federation of Greater         Katz JCC (Cherry Hill, NJ)
     Hartford (CT)
    Jewish Federation of Greater         La Crosse Community Foundation (WI)
     Houston (TX)
    Jewish Federation of Greater         Long Island Community Foundation
     Indianapolis (IN)                    (NY)
    Jewish Federation of Greater Kansas  Lubavitch of Montgomery County (PA)
     City (KS and MO)
    Jewish Federation of Greater         Mack's Center for Jewish Education
     MetroWest NJ                         (Baltimore, MD)
    Jewish Federation of Greater Naples  Main Line Reform Temple (Wynnewood,
     (FL)                                 PA)
    Jewish Federation of Greater New     Mayerson JCC (Cincinnati, OH)
     Orleans (LA)
    Jewish Federation of Greater         Memphis Jewish Federation (TN)
     Philadelphia (PA)
    Jewish Federation of Greater         Michigan Hillel
     Phoenix (AZ)
    Jewish Federation of Greater         Milwaukee Jewish Federation (WI)
     Pittsburgh (PA)
    Jewish Federation of Greater         Minneapolis Jewish Federation (MN)
     Portland (OH)
    Jewish Federation of Greater         N. E. Miles Jewish Day School
     Rochester (NY)                       (Birmingham, AL)
    Jewish Federation of Greater         Nancy and David Wolf Holocaust and
     Rockford (IL)                        Humanity Center (Cincinnati, OH)
    Jewish Federation of Greater Santa   New Life Mission (Melbourne, FL)
     Barbara (CA)
    Jewish Federation of Greater         New York Community Trust
     Seattle (WA)
    Jewish Federation of Greater Toledo  North Louisiana Jewish Federation
     (OH)
    Jewish Federation of Greater         Ohio Jewish Communities
     Washington (DC, MD, VA)
    Jewish Federation of Howard County   Omaha Community Foundation (NE)
     (MD)
    Jewish Federation of Lee and         Open Door Mission (Glens Falls, NY)
     Charlotte Counties (FL)
    Jewish Federation of Madison (WI)    Oregon Community Foundation
    Jewish Federation of Metropolitan    Parasol Tahoe Community Foundation
     Detroit (MI)                         (NV)
    Jewish Federation of Nashville and   Philadelphia Foundation (PA)
     Middle Tennessee
    Jewish Federation of New Hampshire   Philadelphia Friendship Circle (PA)
    Jewish Federation of New Mexico      Pikes Peak Community Foundation
                                          (CO)
    Jewish Federation of Northern New    Pinellas Community Foundation (FL)
     Jersey

                                     ______

                         League of American Orchestras

                           520 8th Avenue, Suite 2005

                               New York, NY 10018

                        https://americanorchestras.org/

                  Statement of Simon Woods, President and CEO
                         League of American Orchestras

    The League of American Orchestras thanks the Senate Committee on
    Finance for holding a hearing dedicated to ``Examining Charitable
    Giving and Trends in the Nonprofit Sector.'' Given the prolonged
    duration of the COVID-19 pandemic and its impact on the nonprofit
    sector, the Committee's hearing is a particularly important opportunity
    to commit to federal policy action that will respond to the unique and
    urgent needs of America's nonprofit sector. The League of American
    Orchestras leads, supports, and champions America's orchestras and the
    vitality of the music they perform. Its diverse membership runs the
    gamut from world-renowned orchestras to community groups, from summer
    festivals to student and youth ensembles, from conservatories to
    libraries, from businesses serving orchestras to individual
    participants in symphonic music. Founded in 1942 and chartered by
    Congress in 1962, the League links a national network of thousands of
    instrumentalists, conductors, managers and administrators, board
    members, volunteers, and business partners.

    Orchestras deliver on their nonprofit mission in communities nationwide
    through their vibrant artistry, community partnerships, and commitment
    to lifelong learning through music. Like thousands of other nonprofits
    in the arts, education, and human services, and other local
    organizations, the more than 1,600 American orchestras in communities
    across the United States are classified as 501(c)(3) tax-exempt
    organizations. This exemption and the incentive to give private
    donations are essential to sustaining the capacity of orchestras as
    employers, community partners, artistic innovators, and providers of
    lifelong learning. Even as orchestras faced unprecedented challenges
    throughout the course of the pandemic, their resilience and creativity
    are evidenced in their ongoing contributions to their communities and
    innovative strategies to deliver on their nonprofit mission under the
    most extraordinary circumstances. At the height of COVID-19
    restrictions on participation in live performance events, orchestras
    innovated to provide safe live arts experiences, online performances,
    and learning opportunities nationwide. Entering the 2020-21 season,
    orchestras participating in a survey indicated that digital orchestra
    music was being delivered to at-home audiences in the form of live-
    streamed concerts (81%), streaming of archival recordings (41%), and
    new creative content curated specifically for social media (59%)--much
    of it free of charge (64%). Orchestras continue to offer both live
    performance events and online offerings, often partnering with
    caregivers, schools, and community-based organizations to reach in-
    person and online audiences.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    .epsOrchestras are part of the wider nonprofit economic engine that
    supports workforces and community revitalization amid COVID-19
    recovery. Orchestra expenses totaled more than $2.1 billion in 2019.
    Their economic impact far exceeds that amount as orchestras create
    jobs, engage in commerce with local businesses, and spur local
    expenditures on related goods and services. Orchestras support a
    substantial workforce in communities across the country, engaging a
    large ensemble of 80 or more musicians for concerts, supported by a
    creative workforce of composers, administrative staff, stage
    technicians, ushers, and other professionals. America's adult and youth
    orchestras employ a dynamic team of teaching artists, community
    engagement professionals, and expert program staff that deliver
    lifelong learning through music.

    As part of the nonprofit charitable sector, orchestras depend upon
    private philanthropy and civic support to fuel programs that serve
    community needs. Orchestras are 501(c)(3) nonprofit organizations,
    exist in all 50 states, serving virtually every community, with annual
    budgets ranging from less than $30,000 to more than $100 million. Two
    thirds of all orchestras have budgets under $300,000. The artistic
    presentations, educational offerings, and community-based programming
    generated by the orchestra workforce is supported by a critical
    combination of public and private support, and not by ticket sales
    alone. Support from donors across the economic spectrum is essential to
    making this work possible, as orchestras respond to the needs of
    communities and form partnerships through education, artistic, economic
    development, and social service programs. When examining giving to
    orchestras by individual donors who are not trustees, there is evidence
    of a broad base of community support for the orchestras' work; each
    year from 2010 through 2014, roughly 75% of the gifts made by non-
    trustee individuals were under $250, including 45% under $100, and 30%
    in the $100-$249 range. Community members with a wide range of economic
    means find value in their local orchestras and invest in their
    sustainability.

    The COVID-19 pandemic has made charitable giving even more essential.
    Prior to the onset of the pandemic, private giving accounted for 43% of
    orchestra revenues. Like for-profit businesses, orchestras suffered
    severe earned revenue losses that threatened their workforces and their
    missions. By the summer of 2020--even before the full force of the
    pandemic was felt--orchestras responding to a League survey reported
    that private giving accounted for 51% of the revenues that support the
    orchestras' workforces and mission. While decisions about operations
    during the pandemic have been closely connected to local and state
    public health mandates and each orchestra's individual financial
    situation continues to vary based on the return to live in-person
    performances, very many continue to suffer significant pandemic-related
    revenue losses. As infection rates fell on the retreat of the Delta
    variant, orchestras began to make gains in ticket sales, which provided
    hope for recovery in the longer term. However, the return of audiences
    from week to week was uneven, and the onset of the Omicron variant has
    had a severe and long-reaching impact on orchestras' financial capacity
    and workforce. Orchestras recently surveyed by the League are
    projecting ongoing revenue declines and increasing costs. When asked to
    look ahead to their potential organizational capacity for their fiscal
    year 2023 operations, only 35% were confident or very confident that
    philanthropy would sustain at its current level and only 32% were
    confident or very confident that ticket revenue would recover to its
    2019 level.

    We urge the Committee to partner with the nonprofit sector to ensure
    that any future pandemic-related or long-term support for the small
    business sector is structured so that nonprofit organizations are
    assured eligibility. Careful attention by Congress to nonprofit
    eligibility for COVID relief was essential to unlocking access to
    relief for orchestras and other nonprofit organizations. Federal
    support has made it possible to keep doors open, utility bills paid,
    and many workers on payroll, but the duration of the pandemic continues
    to strain all revenue sources and new and renewed federal assistance is
    needed. We are extremely grateful for the federal support to-date that
    has provided essential assistance during such an unprecedented and
    prolonged public health crisis. Of orchestras responding to a recent
    League of American Orchestras survey, 92% reported that federal relief
    had a significant or very significant impact on their ability to
    maintain their performance and other program activity, and 90% reported
    that these funds had a significant or very significant impact on their
    ability to retain their workforce. In addition to Shuttered Venue
    Operators Grants and dedicated National Endowment for the Arts funding,
    nonprofit access to forgivable Paycheck Protection Program loans,
    Employee Retention Tax Credits, enhanced charitable giving incentives,
    and other forms governmental assistance have helped to see orchestras
    through the first two years of the pandemic. However, most forms of
    federal relief expired at the end of 2021, and the need for help
    persists.

    Orchestras and the wider nonprofit sector will be essential
    contributors to our nation's recovery from the pandemic and must be
    supported by federal policies that restore and further strengthen the
    sector nationwide. The League of American Orchestras is closely
    partnered with the National Council of Nonprofits, Independent Sector,
    and the Charitable Giving Coalition in support of comprehensive policy
    action to increase support for the nation's charitable sector, and we
    support the written recommendations submitted to this committee by
    those organizations. We urge the Committee to lead Congressional action
    on policies that are urgently needed, and to seek partnership with the
    nonprofit sector to ensure that long-term federal leadership
    proactively supports our nation's charitable and philanthropic sectors.

    This Committee can support the following action on active proposals
    related to tax policy and the nonprofit sector:

          Increase charitable giving by reinstating and making permanent
    the above-the-line, universal charitable deduction. Federal COVID-19
    Relief recognized how important giving incentives are by including in
    the CARES Act a $300 ``universal charitable deduction'' available to
    all taxpayers and extending that provision in the COVID-19 Economic
    Relief Bill along with allowing up to a $600 deduction for joint filers
    in 2021. Expanding and making this provision permanent will grow the
    capacity of the nonprofit arts sector to support communities. While the
    initial impulse to give comes from the heart, studies have repeatedly
    shown that charitable giving incentives have a significant impact on
    how much and when donors contribute.

          Reinstate the ability for individuals who itemize on their taxes
    to deduct up to 100% of their adjusted gross income for charitable
    contributions, and the ability of corporations to deduct up to 25% of
    taxable income.

          Enact the Legacy IRA Act, which would expand the Charitable IRA
    Rollover to treat donations made by retirees to gift annuity programs
    as pre-tax income.

          Reinstate the Employee Retention Tax Credit for the fourth
    quarter of 2021 and extend its duration, modifying nonprofit
    eligibility beyond the current ``gross receipts'' test. Orchestras are
    among the many nonprofit employers that have been counting on quarter
    four 2021 access to the ERTC to support the decisions they made to
    bring employees back on the payroll and increase operating capacity to
    serve their communities.

          Enact the Artist-Museum Partnership Act, which would encourage
    new gifts by living composers and conductors, including original
    manuscripts, marked scores, and performance notes. For composers and
    conductors considering whether to contribute their works and archives
    to a charitable organization or to make them available to private
    collectors, the ability to take a fair-market value tax deduction may
    be the key incentive that allows the artist to contribute their work to
    a nonprofit cultural organization.

          Enact the Performing Artist Tax Parity Act of 2021, which would
    reinstate deductions for unreimbursed employee business expenses.
    Across occupations, comprehensive tax reform passed into law in 2017
    eliminated the opportunity to deduct unreimbursed employee business
    expenses that exceed 2% of adjusted gross income. For musicians who are
    employees, this means that the costs of supplies, instruments,
    professional dues, and other expenses essential to employment are no
    longer tax-deductible.

          Support dedicated relief resources for nonprofit organizations
    and their workforce, as proposed in the WORK Now Act.

    On behalf of the 1,200 nonprofit orchestras and 400 nonprofit youth
    orchestras across the nation, the League of American Orchestras is
    incredibly grateful for the leadership from this Committee to examine
    ways that the federal government can support our nation's nonprofit
    sector. Enhanced federal incentives for charitable giving and
    leadership to support the strength and growth of nonprofit
    organizations, will support orchestras' workers, operating costs, and
    mission-critical activity. Thank you for this opportunity to share ways
    in which this Committee and the broader federal government can increase
    support for the nonprofit sector.

                                     ______

                         Michigan Nonprofit Association

                         330 Marshall Street, Suite 200

                               Lansing, MI 48912

    U.S. Senate
    Committee on Finance

    On behalf of the Michigan Nonprofit Association and the more than
    50,000 charitable nonprofits in our state, I write in advance of the
    upcoming hearing, ``Examining Charitable Giving and Trends in the
    Nonprofit Sector,'' to thank you for your past support for pandemic
    relief, to update you on the ongoing challenges that nonprofits are
    facing, and to explain the need for targeted relief within the
    jurisdiction of the Senate Finance Committee.

    In the face of the ongoing public health and economic crises, too many
    Michigan nonprofits are still struggling to meet increased demands for
    services, confronting a combination of decreased revenue, expenses that
    are higher than pre-pandemic, and nonprofit workforce and volunteer
    staffing shortages. See the results of the National COVID-19 Community
    Impact Survey \1\ administered by the Federal Reserve System. The
    relief provided by Congress made the difference for many organizations
    by replacing revenues lost due to declines in individual and corporate
    giving, fees for service, and canceled fundraising events. The largest
    of these by far was forgivable loans under the Paycheck Protection
    Program. More than 6,500 Michigan nonprofits received nearly $1 billion
    in forgiven PPP loans in 2020 and 2021, according to Small Business
    Administration data.\2\ Those funds saved about 170,000 nonprofit jobs,
    the SBA reports, which enabled these organizations to serve our
    communities. However, the PPP program and most other pandemic relief
    programs have expired, yet the need for, and burdens on, charitable
    organizations remain great.
    ---------------------------------------------------------------------------
        \1\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.
        \2\ https://www.pandemicoversight.gov/data-interactive-tools/
    interactive-dashboards/paycheck-protection-program.

    With the above context, we bring to your attention three areas of
    challenges that nonprofits are facing and propose tax policy solutions
    for your consideration: the lack of resources, the lack of staff, and
    the lack of volunteers--all of which are essential to advancing
    nonprofit missions.

    Charitable Giving Has Not Kept Up

    Charitable giving nationwide has not kept up with need and rising
    expenses. The 2021 Giving USA report \3\ found that individual giving
    decreased by nearly 0.8 percent in 2020 compared with 2019, when one
    major donor's contributions are removed from the data. A separate
    analysis, the Nonprofit Trends and Impacts 2021 from the Urban
    Institute, found that small nonprofits were under particular stress.
    ``Forty-two percent of organizations with budgets under $500,000
    experienced decreased donations in 2020, compared with 29 percent of
    organizations with budgets of $500,000 or more.'' Nonprofits that said
    donations were essential to their revenue stream were also more likely
    to experience decreased donations in 2020. In Michigan, our data show
    nonprofits with budgets under $1,000,000 report that financial support
    generated by individual donations is down 46 percent. With donations
    cut in half, many of Michigan's small nonprofits find themselves in
    dire need of financial assistance with only 3 to 6 months of operating
    cash on hand.
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        \3\ https://store.givingusa.org/pages/annual-subscription.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    In the aftermath of virtually every natural disaster since Hurricane
    Katrina, Congress has recognized the value of nonprofit relief and
    recovery efforts by enacting charitable giving incentives that
    encourage some individuals and corporations to help cover some of the
    costs of these community-based services. The COVID-19 pandemic and
    resulting economic crises have certainly qualified as natural disasters
    and Congress--on a bipartisan basis--swiftly enacted giving incentives
    for those who itemize and corporations. Recognizing the catastrophic
    impact of the health and economic crises, Congress went further by
    enacting, and then expanding and extending, the universal charitable or
    nonitemizer deduction to ensure that all taxpayers, including those who
    claim the standard deduction received a tax benefit for giving back to
    their communities by supporting the work of charitable nonprofits.

    As a cosponsor of the Universal Giving Pandemic Response and Recovery
    Act,\4\ S. 618, you know well the benefits of the nonitemizer
    charitable giving incentive. Like you, the Michigan Nonprofit
    Association fully endorses this important piece of legislation because
    it will further promote giving by all American taxpayers--regardless of
    their income--to give to the work of charitable nonprofits, thereby
    ensuring that our country retains a strong and independent civil
    society. It will also provide needed resources for charitable and
    faith-based organizations to continue providing vital services to
    families, workers, and communities, especially those critically
    impacted by the ongoing pandemic. We ask that you make a strong
    statement in support of S. 618 during Thursday's hearing and encourage
    your colleagues to join you in supporting this bill to strengthen our
    communities.
    ---------------------------------------------------------------------------
        \4\ https://www.congress.gov/bill/117th-congress/senate-bill/618/
    text?q=%7B%22search%22%
    3A%5B%22s618%22%2C%22s618%22%5D%7D&r=1&s=1.

    Similarly, we ask that you speak in support of extending the two
    additional disaster-relief giving incentives that expired on December
    31, 2021--the provision permitting individuals who itemize to deduct
    charitable donations up to 100% of their adjusted gross income and the
    measure allowing corporations to deduct charitable donations up to 25%
    of taxable income.

    Nonprofit Workforce Shortages Crisis

    One of the greatest challenges that nonprofits of every type of mission
    are experiencing is the inability to hire and retain qualified workers.
    The Federal Reserve survey, referenced above, found that 40% of
    responding organizations reported that staffing levels are down. As of
    December 2021, the nonprofit sector was still more than 450,000 short
    of pre-pandemic levels, according to the report COVID-19 Jobs Update,
    December 2021 \5\ from the Center for Civil Society Studies at Johns
    Hopkins University. The report found, ``as of the end of 2021,
    nonprofits have recovered approximately 72.1% of the jobs estimated to
    have been lost as of May 2020.''
    ---------------------------------------------------------------------------
        \5\ https://ccss.jhu.edu/december-2021-jobs/.

    This past fall, the National Council of Nonprofits conducted a survey
    of the difficulties nonprofits across the country were confronting in
    retaining staff and filling vacancies. Three out of five (60%) survey
    respondents reported vacancies of between 10% and 30%, according to the
    NCN report, The Scope and Impact of Nonprofit Workforce Shortages,\6\
    published in December. Another 16% reported vacancies greater than 30%.
    Nationwide, nonprofits explained the causes of the vacancies as salary
    competition, typically with employers outside the nonprofit sector
    (79%) and the inability of potential employees to find childcare (23%).
    ---------------------------------------------------------------------------
        \6\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.

    The survey responses of Michigan nonprofits make clear that these
    workforce challenges are no mere inconveniences; they are hurting the
    people the organizations serve. A related challenge is payment
    schedules. A nonprofit healthcare provider shared, ``Child Welfare
    program consists of taking care of foster care children, licensing of
    foster care homes and we have had 50% turn over within the last year
    (COVID) and we are not able to find fully licensed social workers to
    service our mental health and substance abuse/addiction clients.'' A
    Marquette human services provider explained, ``We have significantly
    raised our entry wage and created a pay scale for staff,'' adding, ``We
    continue to not be able to compete with state wages and benefits for
    ---------------------------------------------------------------------------
    the exact same job.''

    To another Michigan human service provider, ``The most significant
    problem is granted funds are coming in extremely slow.'' In particular,
    ``Granting municipalities and government agencies have not awarded
    funds for the 2021-2022 program year, which began in July 2021.''
    Almost needless to say, the nonprofit observed, ``This has hindered our
    ability to hire and extend program hours.''

    Finally, a professional at an education-focused nonprofit had this
    plea: ``Please help to support the concerns within [the nonprofit
    policy priorities letter].\7\ As a servant to the community, it is
    becoming much more difficult to address the needs of our impoverished
    community with limited staffing. Increasing wages at the beginning of a
    program year is easy, but the financial struggle is finding funding
    throughout the program year for new hires. This would be considered a
    financial, unforeseen cost, which has proven to be difficult to
    resolve.''
    ---------------------------------------------------------------------------
        \7\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-work
    force-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advocacy%
    20Updates%20%20February%2022%202022&utm_medium=email.
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    Tax Policy Solutions
    The Michigan Nonprofit Association and dozens of Michigan nonprofits
    joined more than 1,500 organizations from all 50 states in signing onto
    the recent letter to Congress and the Administration seeking Pandemic
    and Workforce Shortage Relief for Charitable Nonprofits.\8\ Among other
    things, that letter calls on Congress to address critical staffing
    shortages at nonprofits by retroactively restoring the Employee
    Retention Tax Credit, as proposed in the bipartisan ERTC Reinstatement
    Act (S. 3625) and extending this refundable payroll tax credit through
    2022. To the address the unique impact of nonprofit workforce shortages
    on individuals and communities, we ask that you modify nonprofit
    eligibility under the ERTC beyond the current ``gross receipts'' test
    to ensure more nonprofits qualify. We also request that Congress revise
    the definition of eligible payroll expenses under the ERTC to include
    childcare and education subsidies to reflect the increased costs
    charitable organizations experienced as they struggle to maintain or
    expand services. We believe this improvement is justified because,
    unlike for-profit employers, tax-exempt nonprofits are not currently
    able to receive income-tax relief for providing those employee
    benefits. Our proposal provides a level of tax fairness and parity that
    does not currently exist.
    ---------------------------------------------------------------------------
        \8\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-work
    force-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advocacy%
    20Updates%20%20February%2022%202022&utm_medium=email.
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    Volunteers Have Not Returned

    A unique aspect of charitable organizations is that they can expand
    their impact by leveraging the commitment of armies of volunteers who
    are dedicated to the work of nonprofits in their communities. Pre-
    pandemic estimates by AmeriCorps \9\ indicate that the volunteerism
    rate in Michigan was 29.4%, contributing 185.9 million hours of
    service. Nationally and in Michigan, nonprofits reported throughout the
    pandemic that volunteerism dropped precipitously. Now, however, as many
    businesses return to public operations, many nonprofits still have not
    seen their volunteers return to pre-pandemic levels. Volunteering is
    still depressed--parents have additional family demands, older
    Michiganders and others from vulnerable populations have safety
    concerns with returning to in-person volunteering, and in general
    people are stressed and have reduced time and energy to volunteer.
    ---------------------------------------------------------------------------
        \9\ https://americorps.gov/sites/default/files/document/
    Volunteering_in_America_States_508.
    pdf.
    ---------------------------------------------------------------------------
    Tax Policy Solutions
    As discussed in the recent nonprofit letter on policy priorities,\10\
    Congress can incentivize volunteerism by eliminating unfair tax
    policies. Specifically, we seek an increase in the Volunteer Mileage
    Rate for nonprofit volunteer drivers to the business rate (58.5 cents/
    mile) for 2022 and the elimination of the tax on mileage reimbursements
    up to the business rate. The rapid increase in gas prices means that
    many nonprofits will need to reimburse their volunteers for driving on
    the charity's behalf. Yet, those drivers will be forced to pay income
    tax on any reimbursement rate greater than the volunteer mileage
    statutory rate of 14 cents per mile. This existing tax policy, enforced
    at both the federal and state levels, imposes a disincentive on all but
    the most well-off volunteers. It is unfair, harmful to the missions of
    charitable organizations, and must be changed.
    ---------------------------------------------------------------------------
        \10\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-
    workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advoca
    cy%20Updates%20%20February%2022%202022&utm_medium=email.
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    American Rescue Plan Act Resources

    Before closing, I want to raise an important issue that, while not
    within the Finance Committee's jurisdiction, is of critical concern to
    the charitable nonprofits in our state. The American Rescue Plan Act
    allocated $10.9 billion to governments in Michigan through the
    Coronavirus State and Local Fiscal Recovery Fund. The federal
    government is showing tremendous trust that governments closest to the
    people and their problems are best positioned to decide the best ways
    to spend their allocated resources to meet local needs. While available
    for many purposes, the statute and Treasury Department regulations make
    abundantly clear that governments at all levels may use these funds in
    partnership with charitable nonprofits to address many challenges in
    our communities. The Michigan Nonprofit Association is actively engaged
    in working with state and local officials to ensure the money is
    properly invested. We ask that you and your Senate colleagues allow
    these ARPA funds to go to the state and local governments as scheduled
    so that we may achieve greater impact.

    Conclusion

    As you consider the issues raised during the Finance Committee hearing,
    we ask that you reflect in the important, sustaining work that Michigan
    nonprofits performed throughout the pandemic and recognize that our
    challenges are far from over. Most for-profit businesses and government
    offices have or soon will reopen to something amounting to normal
    business. Most charitable organizations--particularly those addressing
    the immediate needs of our residents--never had the luxury of closing.
    Yet, at this stage in the pandemic when demand for nonprofit services
    remains high, Michigan's nonprofits remain short of resources to meet
    normal as well as pandemic-related expenses. But we don't just lack
    adequate resources; our nonprofits lack the staff and volunteers to
    meet the very high needs, which is resulting in waiting lists, denial
    of services, and outright closures of local nonprofits. In light of
    these compelling challenges, we ask that you champion tax-policy
    solutions, at the hearing and in the Senate, that will restore and
    enhance the charitable giving incentives and the Employee Retention Tax
    Credit and remove tax disincentives for volunteers to support the
    missions of nonprofits in their communities.

    Sincerely,

    Kelley J. Kuhn
    President and CEO

                                     ______

                         National Council of Nonprofits

                       1001 G Street, NW, Suite 700 East

                              Washington, DC 20001

                                  202-962-0322

                            councilofnonprofits.org

               Statement of Tim Delaney, President and CEO; and
               David L. Thompson, Vice President of Public Policy

    Charitable nonprofits improve our lives, add vitality to our
    communities, contribute to our local and national economies, and
    enhance the health of our democracy. But too often, nonprofits are
    taken for granted and under-resourced, limiting their ability to
    advance their missions.

    The National Council of Nonprofits is the largest network of nonprofits
    in North America. We focus on the 97% of charitable nonprofits with
    budgets under $5 million--food banks, neighborhood health clinics,
    community theatres, domestic violence shelters, senior centers, and
    more--the organizations whose absence would leave huge voids in their
    communities. Working with our core network and other collaborative
    partners, we champion, inform, and connect organizations across the
    country to get things done for nonprofits and the people and
    communities they serve.

    Overview

    Your constituents and our nation benefit from and depend on local
    charitable nonprofits. Those organizations are still struggling under
    severe strains as they help our communities through and out of the
    worst public-health and economic crises of our lifetimes. Congress
    initially enacted tax policies and programs to build a bridge to get
    our country, including nonprofits, safely to the other side of the
    COVID-19 pandemic. But most of those policies and programs expired
    before safety could be reached, in part because surges of the Delta and
    Omicron variants prolonged the pandemic, further disrupting lives and
    nonprofit operations. The continuing difficulties have made the
    unprecedented--and accelerating--nonprofit workforce shortage even more
    complex. It is imperative that Congress swiftly restore and revise tax
    policies and programs that will enable charitable organizations to
    advance their missions on which so many rely.

     Multiple Forces Have Put Charitable Nonprofits Under Severe Strains,
                        Placing Your Constituents at Risk

    The public is at risk because nonprofits do not have the resources and
    support they need to meet the soaring demands for their services. This
    condition predates the pandemic;\1\ the country's dual health and
    economic crises have severely exacerbated the problem. Too many
    nonprofits are still struggling to meet increased demands for their
    services, confronting a combination of both decreased revenues and
    higher expenses than pre-pandemic levels. Consequently, extreme burnout
    of paid and volunteer staff has created a dangerous nonprofit workforce
    shortage. The public cannot afford for Congress to ignore this growing
    crisis.
    ---------------------------------------------------------------------------
        \1\ https://www.nonprofitimpactmatters.org/site/assets/files/1/
    nonprofit-impact-matters-sept-2019-1.pdf.
    ---------------------------------------------------------------------------
    The Public's Needs Exceed Nonprofit Capacity
    We urge you to consider these alarming trends:

          More than 75 percent of the 2,237 charitable nonprofits
    responding to an August 2021 nationwide survey by the Federal Reserve
    reported that demand for their services had increased over pre-pandemic
    levels. See Perspectives from Main Street: The impact of COVID-19 on
    communities and the entities serving them,\2\ Federal Reserve Community
    Development Staff, Oct. 12, 2021 (separate run of charitable nonprofit
    responses).
    ---------------------------------------------------------------------------
        \2\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.
    ---------------------------------------------------------------------------
          Almost half (45 percent) noted a decrease in their ability to
    meet those needs.
          A quarter (26 percent) of the more than a thousand charitable
    nonprofits from all 50 states responding to a late 2021 nationwide
    survey by the National Council of Nonprofits reported that demand for
    their services had so exceeded their capacity that they had to create a
    waiting list that is more than a month long, with some organizations
    highlighting that some clients have had to wait years to receive
    services. Another 21 percent said they do not have a wait list--
    because, without adequate resources, they are no longer accepting new
    clients or referrals and have had to turn people away. (Combined, that
    is 46 percent unable to meet demands.) See The Scope and Impact of
    Nonprofit Workforce Shortages,\3\ National Council of Nonprofits,
    December 2021.
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        \3\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.
    ---------------------------------------------------------------------------
          These results are consistent with what state associations of
    nonprofits across the country have documented through their own
    statewide surveys \4\ of the pandemic's impact on nonprofits.
    ---------------------------------------------------------------------------
        \4\ https://www.councilofnonprofits.org/data-how-the-pandemic-and-
    economic-crises-are-affecting-nonprofits.

    The Federal Reserve survey also documented significant financial
    strains on charitable nonprofits:\5\
    ---------------------------------------------------------------------------
        \5\ https://fedcommunities.org/data/main-street-covid19-survey-
    2021/.

          Expenses had increased for nearly three-quarters of the
    responding organizations--and that was before inflation shot up to the
    current rate of 7.9 percent.
          Individual donations and corporate donations were each down for
    nearly half of the nonprofits--and significantly down for nearly a
    fourth.

    Those results are consistent with other recent reports. The Nonprofit
    Trends and Impacts 2021 \6\ Research Report from the Urban Institute
    found that 40 percent of organizations reported losses in total revenue
    for 2020. Smaller nonprofits were under heightened stress. ``Forty-two
    percent of organizations with budgets under $500,000 experienced
    decreased donations in 2020, compared with 29 percent of organizations
    with budgets of $500,000 or more.'' Nonprofits that said donations were
    essential to their revenue stream were also more likely to have
    experienced decreased donations in 2020.\7\
    ---------------------------------------------------------------------------
        \6\ https://www.urban.org/research/publication/nonprofit-trends-
    and-impacts-2021/view/full_
    report.
        \7\ At first glance, two reports suggest that giving increased in
    2020 compared with 2019. But when removing MacKenzie Scott's outsized
    contributions ($6 billion) to 460 organizations from the data in the
    2021 Giving USA report (https://ccss.jhu.edu/december-2021-jobs/),
    individual giving decreased by nearly 0.8 percent. The Fundraising
    Effectiveness Project [FEP] (https://afpglobal.org/
    FundraisingEffectivenessProject) report suggests that the numbers of
    donations and donors rose in 2020. However, Ben Miller, Chief Analytic
    Officer of Donor Trends and Vice Chair of the FEP, explained when
    interviewed, ``An important nuance to the Fundraising Effectiveness
    Project's reports is that we are measuring the average increase in
    donors and dollars. For 2020, this could be misleading because, while
    in total there were more donors and dollars as compared to 2019, the
    majority of organizations actually saw decreases in both. While
    donations increased by 10.6 percent on average, the median result was
    actually a 6.6 percent decrease in donations. Donors increased by 7.3
    percent on average, but the median was down by 7.6 percent. This means
    that the majority of nonprofits saw declines in both donations and
    donors in 2020, even though more people donated more money.'' See The
    Data Show What We Already Know: Nonprofit Helpers Need Help (https://
    www.nytimes.com/2022/03/10/business/economy/cpi-inflation-february-
    2022.html#::text=Inflation%20Rises%20to%207.9%20Percent%20
    for%20February%202022%20%2D%20The%20New%20York%20Timeshttps://
    www.councilofnon
    profits.org/thought-leadership/the-data-show-what-we-know-the-
    nonprofit-helpers-need-help), Amy Silver O'Leary, National Council of
    Nonprofits, Nov. 23, 2021 (emphasis added).
    ---------------------------------------------------------------------------
    Unprecedented--and Dangerous--Nonprofit Workforce Shortages
    One of the greatest challenges that nonprofits of every type of mission
    are experiencing across the country is the inability to hire and retain
    qualified workers. The Federal Reserve survey, referenced above, found
    that staffing levels were down for more than 40 percent of the
    nonprofits surveyed. Indeed, as recently as December the nonprofit
    sector was still more than 450,000 short of pre-pandemic levels,
    according to the COVID-19 Jobs Update, December 2021 \8\ from the
    Center for Civil Society Studies at Johns Hopkins University. The
    report found, ``as of the end of 2021, nonprofits have [only] recovered
    approximately 72.1% of the jobs estimated to have been lost as of May
    2020.''
    ---------------------------------------------------------------------------
        \8\ https://ccss.jhu.edu/december-2021-jobs/.

    Yet what was initially considered to be a challenge for nonprofits has
    become a crisis due to burdens of the pandemic era. The crisis needs
    rapid remedy. To better understand the extent and causes for nonprofits
    confronting difficulties in retaining staff and filling vacancies, the
    National Council of Nonprofits conducted a survey late last year. A
    third of nonprofits (34%) reported job vacancy rates of between 10% and
    19%, and a troubling 26% responded that they had job openings for 20%
    to 29% of their positions. Another 16% percent reported vacancies
    greater than 30 percent. See The Scope and Impact of Nonprofit
    Workforce Shortages,\9\ December 2021.
    ---------------------------------------------------------------------------
        \9\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Although nonprofits nationwide reported various factors creating
    ---------------------------------------------------------------------------
    the difficulties, they identified two predominant causes:

        1.  Salary competition--four out of five nonprofits (79%)
    identified it as a factor. Even those startling numbers do not tell the
    full story. Frontline practitioners from across the country shared
    their observations about the reasons behind the growing nonprofit
    workforce shortages, why they matter in the real world, and how it
    affects their communities.

              North Carolina human service professional: ``Pay is the
    biggest challenge, as many organizations (for profit and nonprofit) are
    competing for the same groups of people,'' and ``we can't always
    compete with salary, benefits, and hours.''
              Texas human service provider: other employers ``are
    basically poaching from nonprofits that cannot offer the higher pay.''

             Survey participants noticed a distinct change in who is luring
    nonprofit employees away:

              Massachusetts nonprofit: direct ``competition from retail
    sector.''
              New York City early childhood center: the City's Department
    of Education has its own shortages, and ``as a result, they are
    poaching our staff to fill their vacancies.''
              Rhode Island family services provider: ``The inability to
    compensate staff adequately, based on their education and experience,
    often leads to high staff turnover rates, low workplace morale, and
    high levels of burnout among providers.''
              Maryland nonprofit about government contract/grant problems:
    ``We cannot provide the same level of service, let alone meet current
    increased demands due to COVID, without an increase that allows us to
    cover increased costs, the need to raise salaries and bring on new
    staff.'' Consequently, ``our ability to meet the demand for our
    services continues to decrease every year.''

             The result is that nonprofits are suffering a brain and
    experience drain as longtime professionals leave the sector--and the
    missions they support--because the under-resourced nonprofits cannot
    compete. That drain, and the inability of nonprofit to replace staff,
    results too often in the public facing delayed or complete loss of
    services.

        2.  Inability to find child care--a quarter (23%) identified it as
    a factor. Nonprofit and other employers also face a significant
    challenge in attracting and retaining job candidates due to the lack of
    availability of high-quality, affordable, and available child care.
    Because women comprise 66 percent of the nonprofit workforce, they are
    disproportionately impacted by the lack of child care, in part due to
    the outsized caregiving burden they carry for their households and
    communities. As employers and, in many cases, child care providers,
    charitable nonprofits are deeply concerned that the lack of child care
    and equitable wages are impediments to all; as one expert said on a
    recent Federal Reserve webinar, ``There is no recovery of the economy
    without child care.'' Maintaining quality, safety and enriching
    environments that nurture children is costly. Yet, nonprofit child care
    providers are reluctant to pass on higher costs to families because the
    price of child care already makes this critical service out of reach
    for too many families. Therefore, we urge Congress to provide robust
    funding to expand access to high quality child care that is affordable,
    dependable, and accessible, and supports livable wages and skill-based
    training for nonprofit child care professionals.
    A Precipitous Decline in Volunteerism

    The brewing crisis of the nonprofit workforce shortage is not just with
    paid nonprofit employees. The shortage extends to nonprofits' volunteer
    workforce.

    Many types of nonprofits rely on volunteers, such as drivers delivering
    meals to homebound individuals. Yet volunteerism has fallen
    dramatically since the pandemic hit, thus limiting the ability of
    organizations to continue providing pandemic relief and recovery. The
    pandemic kept, and is keeping, many long-term volunteers away as they
    stopped donating their time and talent out of concern for public health
    (their own, and to avoid becoming a carrier who could unknowingly
    transmit COVID-19).

    For a variety of reasons, volunteers have not been returning. Parents
    have additional family demands, older individuals and others from
    vulnerable populations have safety concerns with returning to in-person
    volunteering, and in general people are stressed and have reduced time
    and energy to volunteer.

    An old tax policy is also prohibiting volunteers from returning and new
    volunteers from stepping forward. Nonprofits have begun hearing from
    more people who used to donate their time that they cannot afford to
    volunteer because of the high cost of gas. This week, the average price
    of a gallon of gasoline is $4.43, following Russia's invasion of
    Ukraine, according to USA Today.\10\ When Congress established the
    statutory 14 cents per mile as the Volunteer Mileage Rate in 1997, the
    average cost of gasoline was $1.23, according to the U.S. Department of
    Energy.\11\ Yet for a quarter century, Congress has never gone back to
    increase that mileage rate. See generally Charitable Volunteers Mileage
    Reimbursement,\12\ Congressional Research Service, RS20296, May 30,
    2008.
    ---------------------------------------------------------------------------
        \10\ https://www.usnews.com/news/us/articles/2022-03-13/average-us-
    gas-price-spikes-79-cents-over-2-weeks-to-4-43.
        \11\ https://www.energy.gov/eere/vehicles/fact-888-august-31-2015-
    historical-gas-prices.
        \12\ https://www.everycrsreport.com/files/
    20080530_RS20296_50efe63efb9b50d43b510d7db6c4
    b7555051709f.pdf.

    When volunteers are no longer available, the only choices for
    charitable nonprofits are to stop providing the services or try to hire
    people to fill cover those shifts. As a North Carolina human services
    nonprofit reported, ``We are finding that volunteers are not returning,
    resulting in a need to hire for positions previously filled by
    volunteers.'' But that returns to the challenge of raising adequate
    funds. As a Minnesota arts organization wrote, ``Because history
    museums grew out of volunteer-only organizations (and many still are
    volunteer-only), we have had difficulty as a field finding sufficient
    funding streams to hire the staff we truly need to operate.''
     Profound Risks for the Public When Nonprofits Cannot Operate at Full
            Capacity
    Participants in the National Council of Nonprofits workforce survey
    made clear their views that the toll on community members' lives caused
    by workforce shortages is significant and regrettable. Among the
    nonprofits reporting at least a one-month waiting list for services is
    a domestic violence shelter in Montana. Another organization reported
    having as many as 1,500 children on their waiting list. ``We are having
    difficulty filling child care positions--educators/teachers,'' a
    Vermont human service provider shared. ``This has caused us to close
    classrooms, consolidate and put burden and pressure on our existing
    staff,'' they lamented, adding ``the alternative is not serving
    families who need child care.''

    Many organizations explained that, due to job vacancies, they had been
    forced to limit services and reduce the number of individuals they
    could assist. One stated, ``We do not keep a wait list, but we serve
    less than 5% of those calling for shelter or rent and utility
    assistance.'' Another acknowledged, ``We have had to close for business
    several times during the past 9 months due to being at capacity.''

    The human toll extends beyond people needing services; it often
    includes nonprofit employees and volunteers working beyond their
    sustainable capacities to ensure services continue to be provided to as
    many people as possible. As an Illinois nonprofit leader observed when
    completing the survey, ``The stress of covering vacant positions on top
    of low pay is overwhelming,'' with ``some staff covering
    responsibilities for three other positions simultaneously.'' So, being
    forced to cut back is not due to a lack of will or dedication. Rather,
    there are simply human limitations. A human services provider in Oregon
    shared, ``Our frontline workers are exhausted and under stress.'' Added
    another, ``The nature of the work we do in providing support to trauma
    survivors and the hours we operate take a toll on staff during the best
    of times.'' They continued with insights on the reality of our times:
    ``During a pandemic, where staff have to juggle personal and
    professional challenges in new and wildly different ways, the rates of
    burnout are exponential.''

    In summary, nonprofits facing job vacancies reported a number of coping
    techniques ranging from ``cutting programing to focus on client service
    delivery'' to having to ``turn people away many times in a month.''
    Some described how they adjusted days and times to continue providing
    at least some services. Still others have been forced to refuse added
    caseloads. Too many organizations in the nonprofit community maxed out
    on their capacity long ago. Something must be done, for nonprofits and
    for the public relying on those nonprofits.
    _______________________________________________________________________

                          The Context: How We Got Here
     Every one of your constituents benefits from the work of America's 1.3
     million charitable nonprofits, whether directly or indirectly:
     nonprofits protect, feed, heal, shelter, educate, inspire, enlighten,
     nurture, and console.

     When the pandemic first struck, small and midsize nonprofits embedded
     in local communities mobilized to offer critical support. They were
     determined, innovative, and--ultimately--exhausted doing so much more,
     for so many more people, for much longer than anyone imagined.

     The pandemic initially wiped out more than 1.6 million nonprofit jobs.
     Simultaneously, the public's reliance on and demand for nonprofit
     services skyrocketed for hundreds of thousands of nonprofits while
     revenues plummeted for most, straining too many organizations past
     capacity and jeopardizing delivery of drastically needed services.

     In 2020, recognizing how heavily your constituents were and would be
     relying on charitable nonprofits to provide relief, Congress supported
     the work of nonprofits by making charitable nonprofits eligible for
     Paycheck Protection Program (``PPP'') loans, including nonprofits in
     the Employee Retention Tax Credit (``ERTC''), providing (limited)
     unemployment insurance relief, and enacting enhanced charitable giving
     incentives.

     But then Congress closed the PPP program in May 2021, ended
     unemployment relief to workers and employers before Labor Day,
     retroactively stopped the ERTC program at the end of September, and let
     all of the enhanced charitable giving incentives expire on December 31.
     In hindsight, Congress ended those programs prematurely, because the
     COVID-19 pandemic--fueled by the Delta and Omicron variants that surged
     after most of the relief programs ended--continues to ravage our
     nation's health, economy, and recovery.

     Consequently, the sudden removal of relief programs--while pandemic-
     related economic struggles continue--has hit nonprofits especially
     hard, once again threatening the ability of nonprofits to operate and
     deliver services on which your constituents and our nation rely.
    ------------------------------------------------------------------------

    How to Move Forward: Bipartisan Policy Solutions Exist

    The solutions identified below are neither novel nor entirely our own.
    Rather, more than 1,500 charitable nonprofits from all 50 states and
    the District of Columbia have signed the attached joint Nonprofit
    Community Letter on the Pandemic and Workforce Shortage Relief for
    Charitable Nonprofits.\13\
    ---------------------------------------------------------------------------
        \13\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-
    workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Action%20Alert%20
    %20Nonprofit%20Pandemic%20and%20Workforce%20Shortage%20Relief&utm_medium
    =email.

    Those 1,500+ organizations call on Congress and the President to enact
    legislation that would help charitable nonprofits overcome three
    obstacles limiting their ability to advance their missions of helping
    people in local communities: lack of resources, lack of staff, and lack
    of volunteers. That letter identifies multiple policy solutions within
    each category. The Senate Finance Committee has direct jurisdiction on
    the seven enumerated solutions below.
    Generate Resources to Meet the Needs of Relief and Recovery
    Charitable giving is down, and giving incentives enacted by Congress
    have expired. For charitable nonprofits to have the resources they need
    to continue to operate and provide needed disaster relief and recovery
    in local communities, Congress needs to restore and improve tax
    incentives for charitable giving. We call on Congress to give priority
    to the three disaster relief charitable giving incentives that expired
    at the end of 2021:

        1.  Renew the universal charitable (non-itemizer) deduction at
    least through 2022 and improve it by significantly increasing the cap
    on the deduction, as proposed in the bipartisan Universal Giving
    Pandemic Response and Recovery Act (S.618/H.R.1704).

        2.  Reinstate the 100% AGI cap on individual donations to permit
    individuals who itemize to deduct charitable donations up to 100% of
    their adjusted gross income.

        3.  Reinstate the 25% income tax cap on corporate donations to
    allow corporations to deduct charitable donations up to 25% of their
    taxable income.
    Address Critical Staffing Shortages
    Charitable organizations need relief from the devastating and well-
    documented nonprofit workforce shortage.\14\ Specifically, we ask that
    Congress reinstate and improve the Employee Retention Tax Credit (ERTC)
    in these ways:
    ---------------------------------------------------------------------------
        \14\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-workforce-shortages-report.pdf.

        4.  Retroactively restore the ERTC, as proposed in the bipartisan
    ERTC Reinstatement Act (H.R. 6161/S. 3625) and extend this refundable
    ---------------------------------------------------------------------------
    payroll tax credit through 2022.

        5.  Modify the ERTC eligibility for nonprofits beyond the current
    ``gross receipts'' test to ensure more nonprofits qualify as a way to
    address the impact of the unique impact of nonprofit workforce
    shortages on individuals and communities.

        6.  Revise the definition of eligible payroll expenses under the
    ERTC to include child care and education subsidies to reflect the
    increased costs charitable organizations experienced as they have
    struggled to maintain or expand services. We believe this improvement
    is justified because, unlike for-profit employers, tax-exempt
    nonprofits are not currently able to receive income-tax relief for
    providing those employee benefits. This proposed revision provides a
    level of tax fairness and parity that does not currently exist.
    Promote the Return of Volunteers to Nonprofits
    Congress has not adjusted the Volunteer Mileage Rate since setting it a
    quarter century ago. On behalf of volunteers, the people they serve,
    and charitable nonprofits who depend on volunteers willing to make a
    difference in the lives of others, we urge Congress:

        7.  Eliminate the unfair tax policy that for too long has
    effectively discouraged individuals from volunteering and replace the
    14 cents/mile volunteer mileage rate by matching it to the business
    rate (currently 58.5 cents/mile). Also, eliminate the income tax on
    mileage reimbursements by nonprofits up to the business rate so
    individuals are not penalized for volunteering.

    Conclusion

    The charitable nonprofit sector is the backbone of our communities. We
    continue to face unprecedented challenges as we assist you and the
    American people in providing pandemic relief and economic recovery. We
    call on Congress to take action now to alleviate the many challenges
    addressed in this Statement. The tax policies proposed here, in the
    attached nonprofit community letter, and by charitable organizations
    throughout the country are sought for the benefit of the people we
    collectively serve. The networks of the National Council of Nonprofits
    stand ready to answer questions and work with you to advance solutions
    to our communities needs.

    Attached: Nonprofit Community Letter on the Pandemic and Workforce
    Shortage Relief for Charitable Nonprofits, https://
    www.councilofnonprofits.org/sites/default/files/documents/nonprofit-
    pandemic-workforce-shortage-relief-letter.pdf?utm_source=
    sendinblue&utm_campaign=Action%20Alert%20%20Nonprofit%20Pandemic%20and
    %20Workforce%20Shortage%20Relief&utm_medium=email (signed by more than
    1,500 nonprofits from all 50 states and DC).

                                     ______

                            National Health Council

                           1730 M St., NW, Suite 500

                           Washington, DC 20036-4561

                                 (202) 785-3910

                       https://nationalhealthcouncil.org/

             Statement of Randall L. Rutta, Chief Executive Officer

    Chairman Wyden, Ranking Member Crapo, and Members of the Committee on
    Finance, on behalf of the National Health Council (NHC), I am writing
    to share our perspective on charitable giving trends and potential
    policy solutions to strengthen the nonprofit sector, one of the most
    vital employment sectors, creating good-paying jobs and providing
    needed services and supports to the American public.

    Background on the NHC

    Created by and for patient organizations more than 100 years ago, the
    National Health Council (NHC) brings diverse organizations together to
    forge consensus and drive patient-centered health policy. We promote
    increased access to affordable, high-value, sustainable health care.
    Made up of more than 145 national health-
    related organizations and businesses, the NHC's core membership
    includes the nation's leading patient organizations. Other members
    include health-related associations and nonprofit organizations
    including the provider, research, and family caregiver communities; and
    businesses representing biopharmaceutical, device, diagnostic, generic
    drug, and payer organizations. To learn more about the National Health
    Council, visit https://www.nationalhealthcouncil.org.

    We thank you for the opportunity to submit our statement ahead of the
    Congressional hearing and look forward to providing further support to
    the nation's nonprofit sector, particularly the patient advocacy
    community.

    Importance of the Patient Advocacy Community

    Charitable nonprofits are essential to our country's economic and
    social well-being. The COVID-19 emergency has highlighted the
    importance of nonprofit organizations as they have risen to the
    challenge of responding to the health and other trials the pandemic has
    presented. The patient advocacy community has particularly stepped-up,
    providing services and information to people with chronic conditions
    and disabilities as well as advocating for the health and safety needs
    of their communities. However, the pandemic has also presented many
    challenges for patient organizations. These include reduced giving,
    cancellation of fundraising events and meetings that are necessary for
    organization's financial health, a decreased workforce, loss of
    volunteers, and more. As we emerge from the pandemic, we urge Congress
    to undertake efforts to both help the nonprofit community recover from
    the effects of the last two years as well as address issues affecting
    nonprofits that existed before the pandemic.

    Charitable Giving Incentives

    Incentives for charitable giving are needed more than ever as
    nonprofits respond to the health and economic crises and will be
    critical in the future as patient organizations play an essential role
    in recovery efforts.

    In 2018 the standard deduction was doubled, which resulted in a
    significant decrease in the number of taxpayers choosing to itemize
    their deductions. This, in turn, disincentivized charitable giving,
    resulting in reduced nonprofit revenue. Individual giving declined 3.4%
    in 2018 adjusted for inflation, according to Giving USA 2019: The
    Annual Report on Philanthropy for the Year 2018.\1\ We are grateful for
    the temporary increase in the charitable giving deduction above the
    standard deduction in COVID relief legislation. This increase
    incentivizes giving by small donors, who are the backbone of many
    patient advocacy organizations. We urge Congress and the Administration
    to renew the universal charitable (deduction for non-itemizers and
    significantly increase the cap on the deduction, as proposed in the
    bipartisan Universal Giving Pandemic Response and Recovery Act (S.618/
    H.R.1704). Similarly, we call on policymakers to extend two additional
    disaster-relief giving incentives that expired on December 31, 2021--
    the provision permitting individuals who itemize to deduct charitable
    donations up to 100% of their adjusted gross income and the measure
    allowing corporations to deduct charitable donations up to 25% of
    taxable income.
    ---------------------------------------------------------------------------
        \1\ https://givingusa.org/.
    ---------------------------------------------------------------------------

    Addressing the Nonprofit Workforce

    The nonprofit sector is the third largest employment sector in the
    country. The economic toll of COVID-19 is clear and has a direct impact
    on the ability of nonprofits to play the vital role they fulfill in our
    communities. As of December 2021, there are 450,000 fewer employees in
    the nonprofit sector as charitable organizations report significant
    difficulties retaining staff and filling vacancies. The impact of the
    shortages can be seen in virtually every community as nonprofits are
    forced to restrict needed services, institute waiting lists, or close
    operations entirely. We call on Congress to retroactively restore the
    Employee Retention Tax Credit, as proposed in the bipartisan ERTC
    Reinstatement Act (H.R. 6161/S. 3625), extend this refundable payroll
    tax credit through 2022. We also ask Congress to modify nonprofit
    eligibility beyond the current ``gross receipts'' test and definition
    of eligible payroll expenses to include child care and education
    subsidies to reflect the increased costs charitable organizations
    experienced as they struggle to maintain or expand services to meet
    local needs throughout the health and economic crisis. In addition, we
    ask that any relief package should also include core components of the
    Work Opportunities and Resources to Keep Nonprofit Organizations Well
    Act, or WORK NOW Act (S. 740/H.R. 1987), which would infuse funds into
    the nonprofit community across the country to get people back to work
    and make sure nonprofits are able to meet the needs of the populations
    they serve.

    Conclusion

    The NHC would like to thank the Committee on Finance for their support
    of the nonprofit community. The NHC is ready to work with Congress in
    any capacity necessary on the issues pertaining to the health of
    nonprofits. Thank you for the opportunity to provide the perspective of
    the NHC and, by extension, millions of people with chronic conditions
    and disabilities in the U.S.

                                     ______

                            National Taxpayers Union

                          122 C Street, NW, Suite 650

                              Washington, DC 20001

                             Phone: (703) 683-5700

                              Fax: (703) 683-5722

                                    ntu.org

                                 March 16, 2022

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chair                               Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    Dear Chair Wyden, Ranking Member Crapo, and Members of the Committee:

    On behalf of National Taxpayers Union (NTU), the nation's oldest
    taxpayer advocacy organization, we write in regard to your March 17
    hearing, ``Examining Charitable Giving and Trends in the Nonprofit
    Sector.''\1\ As a 501(c)(4) nonprofit organization, NTU is directly
    affected by Congressional efforts to change or reform the federal
    government's policy treatment of charitable giving--as is NTU's
    research arm NTU Foundation, a 501(c)(3) nonprofit organization.
    ---------------------------------------------------------------------------
        \1\ United States Senate Committee on Finance. ``Examining
    Charitable Giving and Trends in the Nonprofit Sector.'' March 2022.
    Retrieved from: https://www.finance.senate.gov/hearings/examining-
    charitable-giving-and-trends-in-the-nonprofit-sector (accessed March
    15, 2022.)

    NTU has also advised Members of Congress and their staff on a variety
    of tax policy issues, including the tax treatment of nonprofit
    organizations, for decades, and we work with dozens of organizations
    across the ideological spectrum that share our nonprofit status. In
    other words, NTU has expertise in the subject of the Committee's
    hearing and would be significantly impacted by any proposals that arise
    ---------------------------------------------------------------------------
    from this hearing.

    Specifically, we have endorsed a number of proposals that we believe
    would make it easier for nonprofit organizations to carry out their
    missions and for Americans to freely and robustly support those
    missions. We have also done extensive policy research and issue
    advocacy with regards to conservation easement tax deductions, a
    possible topic at the Committee's hearing, and have also

    NTU Reform Recommendations

    Notwithstanding our concerns with proposals to retroactively increase
    taxes and penalties in the administration of certain charitable
    deductions (outlined further below), NTU has offered and/or endorsed
    several policy proposals in recent years that we believe have
    bipartisan potential in the nonprofit and charitable sectors.

    Each of these proposals would either make it easier for nonprofits to
    carry out their important missions, either by making it easier for
    Americans to contribute to nonprofit organizations of their choice or
    by making it easier for nonprofits to comply with a complex and ever-
    changing tax code.

    When Congress considered extending the charitable contribution
    deduction for non-itemizers last year, NTU shared some of our concerns
    and instead pointed to our support for the bipartisan Everyday
    Philanthropist Act from Sens. Ben Sasse (R-NE) and Tammy Baldwin (D-
    WI), and Reps. Vern Buchanan (R-FL) and Tom Souzzi (D-NY).

    As we wrote in December 2021:

            While this provision [to provide a charitable contribution
            deduction for non-itemizers] may be well-intentioned, NTU
            believes there are better alternatives to encourage charitable
            giving in a fiscally responsible manner. One such framework
            could be the one proposed in the Everyday Philanthropist Act
            (H.R. 4585), introduced by Representatives Vern Buchanan (R-FL)
            and Tom Souzzi (D-NY). Similar to Flexible Spending Accounts
            (FSAs) that allow Americans to fund medical expenses on a pre-
            tax basis, this bipartisan legislation would allow workers to
            utilize Flexible Giving Accounts up to $2,700 of their annual
            pre-tax earnings. As NTU President Pete Sepp explained, ``the
            legislation draws upon the successful infrastructure that has
            already been established to support Flexible Spending Accounts,
            which were created by law in 1978 and have subsequently been
            refined by IRS guidance.'' While there are likely other
            alternatives to the $300 above line deduction, this is one
            option that would support charitable giving and protect
            taxpayers' privacy.\2\
    ---------------------------------------------------------------------------
        \2\ Lautz, Andrew; and Yepez, Will. ``Not All Tax Extenders Are
    Created Equal--2021.'' NTU, December 1, 2021. Retrieved from: https://
    www.ntu.org/publications/detail/not-all-tax-extenders-are-created-
    equal-2021#h.qe2pfuaeq87q.

    Indeed, our support for the Everyday Philanthropist Act--which is
    sponsored by a Member of this Committee, Senator Sasse--is based in
    part on the ongoing need to protect the privacy of donors and
    taxpayers, as we noted in an August 2020 support letter for the
    ---------------------------------------------------------------------------
    legislation:

            Additionally, [the Everyday Philanthropist Act] augments
            administrability in the sense that if they so choose, employers
            can provide part of the framework for taxpayers to make
            donations to charities whether in place of, or as a complement
            to, any other tax-deductible contributions they may wish to
            make on their returns. The Flexible Giving Accounts envisioned
            in the bill should effectively be less susceptible to audit
            because of the documentation trail they establish, giving some
            peace of mind to those taxpayers who opt solely for making
            gifts directly out of their employer-provided compensation.\3\
    ---------------------------------------------------------------------------
        \3\ Sepp, Pete. ``Letter of Support for the Everyday Philanthropist
    Act.'' NTU, August 10, 2020. Retrieved from: https://www.ntu.org/
    publications/detail/letter-of-support-for-the-everyday-philanthropist-
    act.

    NTU also believes that Congress could improve tax administration and
    compliance for the nonprofit sector, a particularly important
    consideration given many nonprofit organizations are small and/or
    ---------------------------------------------------------------------------
    resource-constrained.

    In January 2022, we wrote to Members of this Committee on ways Congress
    could simplify and reform the filing process surrounding Form 990.\4\
    We recommended:
    ---------------------------------------------------------------------------
        \4\ Sepp, Pete. ``Congress Should Explore Form 990 Reform,
    Simplification in 2022.'' NTU, January 31, 2022. Retrieved from:
    https://www.ntu.org/publications/detail/congress-should-explore-form-
    990-reform-simplification-in-2022.

          Revisiting the cash flow and asset filing thresholds for the
    Form 990-EZ and the long Form 990, which have not been adjusted for
    more than a decade, and pursuing additional opportunities to improve
    the filing process for nonprofit organizations;
          Examining the rationale for both expanded and reduced filing
    requirements for different areas of the nonprofit sector, where
    treatment is sometimes unequal;
          Giving specific consideration to a comprehensive IRS report on
    improving the taxpayer experience--required by the Taxpayer First Act--
    that would, if certain reforms are enacted, directly affect nonprofit
    organizations; and
          Examining state-level developments affecting nonprofits that
    could afford opportunities for harmonization and cooperation at the
    federal level.

    Conservation Easement Deductions

    One area of charitable giving tax policy the Committee may re-explore
    today (and highlighted in a JCT document prepared for the hearing)
    encompasses the Section 170(h) deduction. As part of NTU's longstanding
    work on tax administration, we have amassed considerable experience in
    this area that may interest the Committee. Why should this be the case,
    given the deduction's relatively minor revenue impact?

    For one, the Section 170(h) deduction has ably fulfilled bipartisan
    Congressional intent by encouraging conservation of land and historic
    structures through private management--a far more cost-efficient method
    for taxpayers than outright federal ownership of these properties.
    Second, and more important from our perspective, despite continuous
    statements from the IRS and Members in support of 170(h), detrimental
    actions against the deduction have spoken louder than benign words.\5\
    ---------------------------------------------------------------------------
        \5\ For background, see: Hickman, Bryan. ``Environmental Tax
    Deduction at Risk Due to Overzealous IRS.'' NTU, July 29, 2019.
    Retrieved from: https://www.ntu.org/publications/detail/environmental-
    tax-deduction-at-risk-due-to-overzealous-irs; See also: Sepp, Pete.
    ``Shortsighted: How the IRS's Campaign against Conservation Easement
    Deductions Threatens Taxpayers and the Environment.'' NTU, November 29,
    2018. Retrieved from: https://www.ntu.org/publications/page/
    shortsighted-how-the-irss-campaign-against-conservation-easement-
    deductions-threatens-taxpayers-and-the-environment.

    Over our 50-plus-year history, we have encountered instances of tax law
    enforcement against small groups of taxpayers that have an outsized
    impact on the entire filing population (e.g., the expansion of summons
    authority as well as designating cases for litigation). In our recent
    memory, none have exceeded the collateral damage inflicted on the
    system of tax administration more than the Service's pursuit of what it
    calls ``syndicated conservation easement transactions'' since the
    ---------------------------------------------------------------------------
    issuance of a listed transaction notice in 2016. This includes:

          Retroactivity. Although issued in late 2016, Notice 2017-10 has
    been the basis of a near-100 percent IRS audit rate of partnership-
    based conservation easement transactions, some dating back many years
    prior. Audits are, by their nature, backward-looking, yet they are
    normally confined to establishing whether a taxpayer faithfully
    complied with laws, rules, and other guidance that were firmly anchored
    in place during the year for which the examination was launched.
    Current IRS audits of partnership easements are often based on the
    Service's shifting interpretations of laws and rulings, some of them
    upending decades of established understanding of how Section 170(h)
    deductions should be structured. Some legislation in Congress would
    effectively ratify and validate this flawed approach.
          Arbitrary Litigation Strategies. Going with the Service's
    extremely aggressive assertion of retroactive application of its
    shifting positions in audits has been its similarly fluid stance in
    court. The resulting caseloads have now strained to the breaking point
    a tax jurisprudence system that is simultaneously bearing the
    administrative fallout of the pandemic. The first wave of IRS lawsuits
    challenging Section 170(h) deductions tended to center on the appraised
    value of the conservation easements underlying the taxpayers' claims.
    Yet, after a string of court losses where the government fatuously
    argued zero or minimal value to all the easements under scrutiny,
    further waves of IRS litigation made far more exotic arguments against
    ``foot faults'' involving highly technical details of easement
    agreements themselves--details which the entire conservation and
    historic preservation communities had long regarded as settled
    features. As David Wooldridge, an attorney representing taxpayers in a
    conservation easement case, Belair Woods, LLC, noted, ``Proceeds
    clauses similar to the one in Belair appear in most conservation
    easement deeds that were granted prior to IRS raising this issue in
    Rose Hill, and many granted afterwards. These include the so-called
    syndicated conservation easements, but they also include most easements
    that would be considered `traditional.' The Service's position
    therefore would invalidate easement deductions for a majority of
    existing conservation easements, both traditional and `syndicated.'
    ''\6\ This should be unacceptable to thoughtful policymakers.
    ---------------------------------------------------------------------------
        \6\ Reilly, Peter J. ``Conservation Easements: Is IRS Burning the
    Forest in Order to Save It?'' Forbes, August 5, 2020. Retrieved from:
    https://www.forbes.com/sites/peterjreilly/2020/08/05/conservation-
    easementsis-irs-burning-the-forest-to-save-it/?sh=617850624904
    (accessed March 16, 2022.)
    ---------------------------------------------------------------------------
          Taxpayer Rights Reversals. Throughout NTU's history, we have
    witnessed the development of IRS tactics intended to target one
    perceived problem which evolved into widespread use. In its zeal to
    scrutinize taxpayers claiming 170(h) deductions, the IRS has trampled
    on key protections that NTU has actively championed for many years,
    including supervisor approval requirements for penalty determinations,
    due process for appraisers, access to independent administrative
    appeals, the acknowledgment of facts process for information document
    requests, confidentiality of communication between taxpayers and
    advisors, and Administrative Procedure Act (APA) conventions in
    crafting guidance. As a leading advocate of no fewer than five
    significant taxpayer protection bills signed into law since 1988, NTU
    implores you to consider this rising toll on the good work of your
    predecessors in establishing procedural balance for enforcement of our
    tax laws.

    Even as they criticized so-called ``syndicated transactions'' in an
    August 2020 report both the Chair and Ranking Member of this Committee
    recognized Section 170(h) as ``an important tool for the preservation
    of our environment'' and ``a program that's critical to preserving open
    lands.''\7\ If these statements are to hold true today, then Congress
    can make calibrations to the law that will uphold 170(h), protect
    taxpayers, and serve the government's long-term interests. A media
    account in December 2021 seemed to indicate that lawmakers might
    consider 170(h) changes that would be prospective in nature; if true,
    this would represent major progress toward a rational response. Other
    steps, which we have often recommended, include:
    ---------------------------------------------------------------------------
        \7\ United States Senate Committee on Finance. ``Finance Committee
    Releases Report on Syndicated Conservation-Easement Transactions.''
    August 25, 2020. Retrieved from: https://www.finance.senate.gov/
    chairmans-news/finance-committee-releases-report-on-syndicated-
    conservation-easement-transactions (accessed March 16, 2022.)

          A legislative branch directive for the IRS to develop ``safe
    harbor'' guidance surrounding easement deduction structures (a process
    the National Taxpayer Advocate has recommended in reports to Congress,
    and which Treasury Secretary Yellen expressed interest in pursuing
    during her 2021 confirmation hearing);
          Creation of an expert panel to resolve complex questions of
    valuation in easements, modeled after a similar body created to provide
    clarity for donations of art;
          Follow-on legislation that would clarify and require vigorous
    implementation of the Taxpayer First Act of 2019, including a
    taxpayer's right to appeal; and
          Where possible, adopting by statute the recommendations for
    conservation easement deductions offered through the IRS Advisory
    Council through a detailed report in 2009. Given the recent Oakbrook
    ruling, and the prospect for litigation in this space the government
    may lose, Congress might better focus its attention on clarifying
    directly the terms of a legitimate easement agreement as well as
    subjecting the IRS to prudent notice and comment requirements than
    seeking punitive legislation driven by prospective (and tenuous)
    revenue scores.

    As we have written before, solving the administrative issues that have
    arisen under Section 170(h) in a fair, responsible, and consistent
    manner would serve the government, taxpayers, and practitioners far
    better than retroactive, punitive legislation giving cover to an IRS
    that has lost all perspective on this area of law--and, in the process,
    threatening taxpayers who will never even contemplate claiming
    conservation easements.

    We appreciate your consideration of NTU's research and reform
    recommendations on the important subject of your March 17 hearing.
    Should you have any questions, we are at your service.

    Sincerely,

    Pete Sepp
    President

    Andrew Lautz
    Director of Federal Policy

                                     ______

                            NH Center for Nonprofits

                         194 Pleasant Street, Suite 14

                               Concord, NH 03301

                               Tel: 603-225-1947

    The Honorable Margaret Wood Hassan
    U.S. Senate
    Washington, DC 20510

    March 14, 2022

    Dear Senator Hassan:

    Thank you for your ongoing leadership and advocacy for the nonprofit
    sector in New Hampshire. In advance of the upcoming Senate Finance
    hearing, ``Examining Charitable Giving and Trends in the Nonprofit
    Sector,'' I am writing to update you on the ongoing challenges that
    nonprofits are facing, and to explain the need for targeted relief
    within the jurisdiction of the Senate Finance Committee.

    As you know, relief packages that you helped secure sustained New
    Hampshire's nonprofit sector during the pandemic. The largest of these
    by far was forgivable loans under the Paycheck Protection Program.
    According to Small Business Administration data,\1\ nearly 1,500 New
    Hampshire nonprofits received almost than $270 million in forgiven PPP
    loans in 2020 and 2021.
    ---------------------------------------------------------------------------
        \1\ https://www.pandemicoversight.gov/data-interactive-tools/
    interactive-dashboards/paycheck-protection-program.

    However, PPP has expired and the nonprofit sector is now operating
    within an environment of increased demand for services, a significant
    labor shortage including a lack of volunteers, and increased
    operational costs. Given this context, we ask you to support policy
    solutions outlined herein to support nonprofits in the Granite State.

    Nonitemizer Charitable Giving Incentive

    We are grateful for your co-sponsorship of the Universal Giving
    Pandemic Response and Recovery Act,\2\ S. 618. The NH Center for
    Nonprofits fully endorses this important piece of legislation because
    it will further promote giving by all taxpayers, regardless of their
    income, to donate to charitable nonprofits. We ask that you consider
    speaking in support of S. 618 during Thursday's hearing and encourage
    your colleagues to join you in supporting this bill.
    ---------------------------------------------------------------------------
        \2\ https://www.congress.gov/bill/117th-congress/senate-bill/618/
    text?q=%7B%22search%22%
    3A%5B%22s618%22%2C%22s618%22%5D%7D&r=1&s=1.

    Similarly, we ask that you advocate for the extension of two additional
    disaster-
    relief giving incentives that expired on December 31, 2021: the
    provision permitting individuals who itemize to deduct charitable
    donations up to 100% of their adjusted gross income; and the measure
    allowing corporations to deduct charitable donations up to 25% of
    taxable income.

    Employee Retention Tax Credit

    Again, thank you for sponsoring the ERTC Reinstatement Act, S. 3625.
    The NH Center for Nonprofits joined more than 1,500 organizations from
    all 50 states in signing onto the recent letter to Congress and the
    Administration seeking Pandemic and Workforce Shortage Relief for
    Charitable Nonprofits.\3\ Among other things, that letter calls on
    Congress to address critical staffing shortages at nonprofits by
    supporting your bill. To the address the impact of nonprofit workforce
    shortages, we ask that you modify nonprofit eligibility under the ERTC
    beyond the current ``gross receipts'' test to ensure more nonprofits
    qualify. We also request that Congress revise the definition of
    eligible payroll expenses under the ERTC to include child care and
    education subsidies to reflect the increased costs charitable
    organizations experienced as they struggle to maintain or expand
    services.
    ---------------------------------------------------------------------------
        \3\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-
    workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advoca
    cy%20Updates%20%20February%2022%202022&utm_medium=email.
    ---------------------------------------------------------------------------

    Volunteerism Incentives

    As discussed in the recent nonprofit letter on policy priorities,\4\
    the decline of volunteerism is having an adverse impact on the work of
    nonprofits. Pre-pandemic estimates by AmeriCorps indicate that the
    volunteerism rate in New Hampshire was 35.7%, contributing 36.6 million
    hours of service. Nationally and in New Hampshire, nonprofits reported
    that volunteerism dropped precipitously. Congress can help incentivize
    volunteerism by increasing the Volunteer Mileage Rate for nonprofit
    volunteer drivers to the business rate (58.5 cents/mile) for 2022 and
    eliminate the tax on mileage reimbursements. The existing policy of low
    and taxable reimbursements continue to hamper nonprofits as they seek
    to restore and incentivize volunteerism.
    ---------------------------------------------------------------------------
        \4\ https://www.councilofnonprofits.org/sites/default/files/
    documents/nonprofit-pandemic-
    workforce-shortage-relief-
    letter.pdf?utm_source=sendinblue&utm_campaign=Nonprofit%20Advoca
    cy%20Updates%20%20February%2022%202022&utm_medium=email.

    Please do not hesitate to reach out to the NH Center for Nonprofits if
    we can support you in your advocacy and leadership for policies that
    strengthen the nonprofit sector that, in turn, strengthen New Hampshire
    ---------------------------------------------------------------------------
    communities.

    Sincerely,

    Kathleen Reardon, CEO

                                     ______

                               Nonprofit Alliance

                            1319 F Street, NW, #700

                              Washington, DC 20004

                                 (202) 516-5886

    March 17, 2022

    Dear Chairman Wyden, Ranking Member Crapo, and Members of the
    Committee:

    We write to you on behalf of our nearly 300 member organizations
    representing the nonprofit sector urging you to renew and increase the
    Universal Charitable Deduction.

    The Nonprofit Alliance is a broad coalition of charities and firms that
    serve nonprofit organizations. We share a common purpose to promote,
    protect, and strengthen the nonprofit sector.

    Charitable deductions incentivize giving and encourage individuals to
    support causes at a higher level than they otherwise would. This
    enables vital organizations to generate funds necessary to their much-
    needed mission-focused work.

          The urgent and immediate need is an extension of the Universal
    Charitable Deduction for 2022.

          Then, ultimately, we need the passage of S. 618 (and its
    companion House bill H.R. 1704) to renew the Universal Charitable
    Deduction and increase its cap to one-third of the standard deduction.

    Swift enactment of these measures will provide donors with the
    certainty they need to continue giving, encourage giving as a critical
    part of our vibrant society, and ensure charities across our nation
    continue to receive the funds necessary to serve their communities and
    fulfill their philanthropic missions. As Chairman Wyden has often noted
    about the deduction, ``It's a lifeline.''

    The charitable deduction that is currently available for 2022 is
    inadequate, as it applies only to those taxpayers who itemize their
    expenses. Recent estimates suggest only about 12 percent of all
    taxpayers itemize, yet the nonprofit sector depends on many more
    individuals to support their causes. This is a missed opportunity to
    incentivize the other 88% of middle-class American taxpayers.

    The temporary Universal Charitable Deduction that was enacted in 2020
    and extended through 2021 was a step in the right direction. It
    democratized charitable giving. In 2020, a year of exceptional
    challenge and need, individual Americans gave over $324 billion to
    charitable causes (Giving USA 2021), generosity that was stimulated by
    the charitable deduction for all taxpayers.

    This effective deduction expired at the end of 2021, resulting in
    uncertainty for some of the most generous Americans and the charities
    that rely on their donations to deliver vital services to their
    communities.

    With the expiration, charities can no longer use the universal
    charitable deduction as an incentive for their donors, posting on their
    websites or including in their mailings that non-itemizers can claim
    either a $600 (if married and filing jointly) or $300 (for single
    taxpayers) deduction for charitable contributions.

    Time is of the essence. The nonprofit sector relies on the deduction as
    an incentive and every day that goes by without a universal deduction
    is a missed opportunity. Now already in the second half of March,
    charities have lost nearly three months of 2022 when the deduction
    could have inspired giving. With shortages in envelopes and other paper
    products, nonprofits are also facing long lead times, working today in
    late March on mailings that are not expected to reach potential donors
    until late June. Without the extension of the Universal Charitable
    Deduction now, these charities will not be able to make the most of the
    $600 and $300 universal deduction open to non-itemizers.

    If Congress does in fact extend the Universal Charitable Deduction
    retroactive to January 1, 2022, and the extension becomes law,
    charitable organizations can immediately publicize the existence of the
    deduction. That can work quickly for websites and social media but not,
    of course, for mail (which remains a linchpin of most fundraising
    programs).

    We recognize this is very different from the corporate entities that
    also saw tax deductions expire on December 31, 2021. Most of the
    corporate provisions could wait to be enacted as late as April 2023
    when most companies will file their 2022 tax returns and still enjoy
    the maximum benefit of the extension (provided Congress follows its
    customary practice of making the enactment retroactive to January 1,
    2022). However, a nonprofit's ability to benefit depends on using the
    deduction as an incentive now.

    Very simply, the nonprofit community does not have the luxury of time
    on its side. We need the immediate extension of the Universal
    Charitable Deduction.

    We greatly appreciate the strong bipartisan support this legislation
    has received, led by Senators Lankford and Coons. On the Finance
    Committee, under the leadership of Senator Lankford, support for S. 618
    has been joined by Senators Scott, Stabenow, Cortez Masto, Hassan, and
    Brown. A total of six members of the Finance Committee and in aggregate
    16 Senators--eight Democrats and eight Republicans--have signed onto
    this important legislation. Clearly this issue is not defined by party
    and is supported by wide swaths of Americans.

    We strongly commend the leadership of these 16 Senators and urge the
    Senate to join them to renew the Universal Charitable Deduction--and
    pass S. 618--as soon as possible.

    The Nonprofit Alliance stands ready to offer any and all assistance to
    get this important measure enacted into law.

    Respectfully,

    Mark Micali
    Vice President, Government Affairs

                                     ______

                             Philanthropy Colorado

                         5855 Wadsworth Bypass, Unit A

                                Arvada, CO 80003

    Philanthropy Colorado urges Congress to make charitable giving
    incentives available to all.

    Thank you for the opportunity to submit a statement to be included in
    the record for the Senate Finance Committee Hearing: ``Examining
    Charitable Giving and Trends in the Nonprofit Sector,'' held on March
    17, 2022.

    Philanthropy Colorado leads and serves the diverse network of more than
    100 charitable foundations and organizations investing in nonprofits
    across our state. These nonprofits provide critical services and create
    jobs as they strive to achieve their missions. We join with others in
    urging Congress to ensure all taxpayers have access to incentives for
    giving generously to nonprofits working on behalf of communities
    throughout Colorado and beyond.

    Colorado-based foundations provide more than $1 billion annually to
    support charitable organizations and the people and causes they serve--
    everything from education to health to basic needs. While foundations
    provide critical financial resources to these nonprofits, individuals
    have historically given an even greater amount--more than $5 billion a
    year in Colorado according to IRS data we tracked before the passage of
    the 2017 federal tax law reduced the pool of itemizing taxpayers.

    We urge you to restore and expand the recently expired ``above-the-
    line'' charitable deduction for the almost 90% of taxpayers who now
    take the higher standard deduction instead of itemizing on their
    returns. Making these taxpayers eligible for even a small temporary
    deduction for donations made during the pandemic had a measurable
    impact on giving by less wealthy households. According to data
    collected by our national partners in the Charitable Giving Coalition,
    small donations jumped significantly when this tax break was announced
    in 2020.

    While many factors contribute to generosity, tax breaks have long
    provided an important motivation for giving at every level. A
    charitable giving incentive for non-itemizers will engage a broader
    range of donors and help them establish a pattern of giving that is
    likely to continue. The tax deduction is particularly important at this
    time when the need for nonprofit services has surged. We urge you to
    support policies that encourage charitable giving long into the future.

    Thank you for considering our comments. Please let us know if you have
    any questions about the role of foundations and nonprofits, the work
    they do to address systemic issues, and their substantial economic
    impact.

    Joanne Kelley
    Chief Executive Officer

                                     ______

       Statement Submitted by William J. Snape, III, Professor, American
          University, Washington College of Law; Director, Program on
    Environmental and Energy Law; and Senior Counsel, Center for Biological
                                   Diversity
        Over the past several years, I have closely examined many
    conservation easements authorized under the federal tax code. My
    findings were published in 171 Federal Tax Notes, Volume 171 (May 10,
    2021) at 875-885.

        In response to repeated criticisms of conservation easements by
    Senator Daines of Montana, I have modified the above-cited report to
    demonstrate that conservation easements are a very valuable tool in our
    national conservation toolbox. Frequently, conservation easements are
    the only tool we possess to protect fish, wildlife, plants, and habitat
    on private lands.

        While there are legislative reforms I could suggest, they would
    take diligent time and cautious effort to legislate. Picking easy
    scapegoats is neither effective nor accurate in this complex policy
    arena. The number of ``bad'' conservation easements appears quite low.
    What is unknown is how much the federal government pays for specific
    easement gifts under Section 170 of the federal tax code, and how those
    properties are maintained or managed in perpetuity. We urge greater
    involvement by the U.S. Geological Service (and its mapping and data
    services), as well as greater transparency by the Internal Revenue
    Service. Some reforms could occur administratively with no new
    statutory language.

        Thank you for considering this comment as well as the excerpt of
    our 2021 report, immediately below.

                                     ______

        Recently, federal conservation easements under the tax code have
    come under attack by some federal legislators. Some easement donations
    have been criticized for lack of conservation value. Other easement
    donations have been criticized because of the corporate and financial
    structure of the donor(s), which itself leads to and/or further
    contributes to the more general problem of valuation of these
    donations, and whether and to what extent the U.S. Internal Review
    Service (IRS) approvals of over-valued appraisals from easement donors
    is leading to fraudulent or unfair transactions that drain the Federal
    Treasury.

        In consideration of these issues, we asked a fundamental threshold
    question--how effective are conservation easements at protecting
    wildlife and important habitat? Because financial data relating to tax
    returns and specific parcels of land and water are confidential pieces
    of information, this study does not analyze the cost-effectiveness of
    the current federal tax easement system. However, our examination of
    several hundred conservation easements leads us to conclude that the
    federal tax deduction tool for conservation easements is a very
    valuable piece of the overall national conservation puzzle.

        Looking at the value of conservation easements in protecting
    biological diversity, including wildlife and habitat, a team of
    researchers at the American University Washington College of Law
    studied 201 conservation easements across the country. The study's
    focus was on the biological baseline reports (``BBRs'') prepared for
    all conservation easements. Produced by outside experts, the BBRs
    provide detail, including maps and photographs, of all the resources
    (broadly defined) on the property and layout the conservation purposes
    that will define the conservation easement.

        This study did not include any analysis on the tax value of the
    proposed land donations or any investigation into the type of donor
    landowners and donee land trusts. We focused on whether private land
    conservation easements significantly contribute to wildlife and habitat
    protection and whether this tool is as effective as federal and state
    statutes designating public land protections.

        The final results revealed that conservation easements are a tool
    that effectively contributes to conservation, particularly the
    protection of wildlife and habitat.

       Table 1: Overall Grades--Assessment Includes Wildlife, Habitat, and
                                  Other Factors
    ------------------------------------------------------------------------
             Overall Rating                # of BBRs           % of BBRs
    ------------------------------------------------------------------------
    1--Fully meets conservation                     118               58.7%
     goals
    ------------------------------------------------------------------------
    2--Adequately meets conservation                 74               36.8%
     goals
    ------------------------------------------------------------------------
    3--Inadequately meets or sets                     8                4.0%
     conservation goals
    ------------------------------------------------------------------------
    Ranked between 1 and 2                            1                0.5%
    ------------------------------------------------------------------------
    Grand Total                                     201              100.0%
    ------------------------------------------------------------------------

    Where, When, and How Big Are the Easements?

                1. Year of Establishment

        The BBRs spanned from 2002 to 2018. The majority of easements
    reviewed, 184 of 201, or 91.5%, were established between 2013 and 2018.

                     Table 2: When Were the BBRs Completed?
    ------------------------------------------------------------------------
                  Year                     # of BBRs           % of BBRs
    ------------------------------------------------------------------------
    2002                                              1                0.5%
    ------------------------------------------------------------------------
    2005                                              1                0.5%
    ------------------------------------------------------------------------
    2007                                              1                0.5%
    ------------------------------------------------------------------------
    2010                                              1                0.5%
    ------------------------------------------------------------------------
    2011                                              1                0.5%
    ------------------------------------------------------------------------
    2012                                              6                3.0%
    ------------------------------------------------------------------------
    2013                                             16                7.9%
    ------------------------------------------------------------------------
    2014                                             31               15.4%
    ------------------------------------------------------------------------
    2015                                             25               12.4%
    ------------------------------------------------------------------------
    2016                                             49               24.4%
    ------------------------------------------------------------------------
    2017                                             54               26.9%
    ------------------------------------------------------------------------
    2018                                              9                4.5%
    ------------------------------------------------------------------------
    (blank)                                           6                3.0%
    ------------------------------------------------------------------------
    Grand Total                                     201              100.0%
    ------------------------------------------------------------------------

                2. Acreage
        Our study found a wide variety of donation sizes, ranging from
    thousands of acres to just 10. The study also found no correlation
    between the size of donation and the potential value of the
    conservation easement.

                            Table 3: Size of Donation
    Maximum acreage (largest donation)        3,223
    ------------------------------------------------------------------------
    Average acreage                           379
    ------------------------------------------------------------------------
    Median acreage                            179
    ------------------------------------------------------------------------
    Minimum acreage (smallest donation)       10
    ------------------------------------------------------------------------

                3. States
        The conservation easements are distributed over seventeen states.
    Predominantly, the easements in this study are located in eleven states
    in the Southeast United States and represent 192, or 95.5% of the BBRs
    studied. Nine easements, or 4.5%, are located in the West and Midwest.

                Table 4: State Distribution of BBRs in This Study
    ------------------------------------------------------------------------
                                                               Total Acres
              State             # of BBRs      % of BBRs         Donated
    ------------------------------------------------------------------------
    AL                        22             10.9%          4,683
    ------------------------------------------------------------------------
    CA                        1              0.5%           557
    ------------------------------------------------------------------------
    FL                        8              4.0%           3,295
    ------------------------------------------------------------------------
    GA                        117            58.2%          39,657
    ------------------------------------------------------------------------
    IL                        1              0.5%           102
    ------------------------------------------------------------------------
    KY                        1              0.5%           180
    ------------------------------------------------------------------------
    LA                        2              1.0%           1,184
    ------------------------------------------------------------------------
    MS                        2              1.0%           274
    ------------------------------------------------------------------------
    NC                        8              4.0%           1,784
    ------------------------------------------------------------------------
    NV                        1              0.5%           812
    ------------------------------------------------------------------------
    OK                        1              0.5%           80
    ------------------------------------------------------------------------
    OR                        1              0.5%           61
    ------------------------------------------------------------------------
    SC                        9              4.5%           3,438
    ------------------------------------------------------------------------
    TN                        16             7.9%           13,469
    ------------------------------------------------------------------------
    TX                        4              2.0%           2,020
    ------------------------------------------------------------------------
    VA                        2              1.0%           1,297
    ------------------------------------------------------------------------
    WV                        5              2.5%           2,823
    ------------------------------------------------------------------------
    Grand Total               201            100.0%         75,715
    ------------------------------------------------------------------------

                4. Landowners--Donors
        One piece of information gathered was donor type, although the
    assessment did not undertake to determine the value of an easement
    based on its donor type. Differences between these types of donors were
    beyond the scope of this study. The statistic relevant to this review
    found that most BBRs in the study were syndicated owners. Also, there
    was no correlation between the assigned rankings and any of these donor
    types.

       Table 5: BBRs Prepared for LLC Property Owners or Individual/Family
                                   Landowners
    ------------------------------------------------------------------------
       Donor Business Entity Type          # of BBRs           % of BBRs
    ------------------------------------------------------------------------
    LLC                                             172               85.6%
    ------------------------------------------------------------------------
    LLLP                                              1                0.5%
    ------------------------------------------------------------------------
    LLP                                               1                0.5%
    ------------------------------------------------------------------------
    LP                                                1                0.5%
    ------------------------------------------------------------------------
    Unknown \1\                                      26               12.9%
    ------------------------------------------------------------------------
    Grand Total                                     201              100.0%
    ------------------------------------------------------------------------
    \1\ Of the 26 ``unknown'' donor types, 4 appeared to be individual
      landowners, however the actual number of individuals vs. syndicated
      donors in our data set was not definitively confirmed.

                5. Land trusts--Donees
        The tax regulations require the conservation easement holder to be
    a ``qualified organization,'' a government agency or charitable
    organization, capable of holding the land in trust. Nine land trust
    organizations hold most of the 201 conservation easement donations in
    this study.
                6. Conservation Easement Authorization Type
        To claim a tax deduction under Sec. 170(h), Congress has required
    donation for any of the four following conservation purposes: (1)
    outdoor recreation and/or education for the general public; (2)
    protection of habitat; (3) preservation of delineated open space; and
    (4) historic preservation. Table 6 contains a breakdown of the
    easements' conservation purposes.

    Table 6: Conservation Easement Authorization Type--Conservation Purposes
    ------------------------------------------------------------------------
              Authorization Under 170(h)                    # of BBRs
    ------------------------------------------------------------------------
    (i) outdoor recreation, education                                    18
    ------------------------------------------------------------------------
    (ii) natural habitat/wildlife                                       175
    ------------------------------------------------------------------------
    (iii) (I) scenic enjoyment                                          133
    ------------------------------------------------------------------------
    (iii) (II) federal, state or local govt policy                      187
    ------------------------------------------------------------------------
    (iv) historic area or structure                                      29
    ------------------------------------------------------------------------

        While many of the easements listed more than one of these
    conservation purposes in the BBRs, this study focused solely on whether
    the easements' value in promoting the conservation of natural habitat
    and wildlife. The evaluation of an easement reflects the analysis of
    the easement's potential to preserve land based on the following four
    elements effectively:

            Natural habitat and wildlife.
            Present and future economic uses of the easement.
            Consideration of the impacts of climate change on the
    easement.
            Monitoring and compliance mechanisms.

        This study did not focus on easements with conservation purposes
    primarily for historic areas or outdoor recreation unless there was an
    impact on the easement's effectiveness to protect natural habitat and
    wildlife because of those purposes.

        More than 87% of the BBRs reviewed in our study indicate the
    easement's primary purpose is to protect specific habitats for
    wildlife. The preservation goals were similar across the easements,
    despite the variety of ecosystems or size of the donation.

        The following two tables display the rankings for habitat
    protection and wildlife conservation. The grades assigned are ``1'' if
    the protections are outstanding, ``2'' if the protections are average,
    and ``3'' if the protections are deficient. The three questions
    considered were: (1) if the purpose of the easement appears to be at
    least in part for wildlife and/or habitat; (2) if the easement appears
    to actually conserve wildlife and/or protect habitat; and (3) whether
    the wildlife conservation and/or habitat protection value is
    independently validated in the easement by a government agency or
    scientific association.

                       Table 7: Habitat Protection Ranking
    ------------------------------------------------------------------------
                  Grade                     # of BBRs          % of BBRs
    ------------------------------------------------------------------------
    1                                  148                 73.6%
    ------------------------------------------------------------------------
    2                                  47                  23.4%
    ------------------------------------------------------------------------
    3                                  6                   3.0%
    ------------------------------------------------------------------------
    Grand Total                        201                 100.0%
    ------------------------------------------------------------------------

        Together, the 195 BBRs ranked ``1''and ``2'' suggest that of the
    conservation easements in this study, 97% have included potentially
    effective protections for natural habitats.

                     Table 8: Wildlife Conservation Ranking
    ------------------------------------------------------------------------
                  Grade                     # of BBRs          % of BBRs
    ------------------------------------------------------------------------
    1                                  107                 53.2%
    ------------------------------------------------------------------------
    2                                  84                  41.8%
    ------------------------------------------------------------------------
    3                                  10                  5.0%
    ------------------------------------------------------------------------
    Grand Total                        201                 100.0%
    ------------------------------------------------------------------------

        Our overall grading of the BBRs for wildlife conservation produced
    107, or 53.2%, with superior protection in place. Together, BBRs rated
    ``1'' and ``2'' account for 191, or 95% of the study's easements. Where
    BBRs listed wildlife protection as a core value, over half provided
    specific management plans and lists of species to protect, including
    but not limited to endangered or threatened species, both federal and
    state. In the BBRs, five primary themes emerged: (1) promote healthy
    forests, (2) preserve water quality, (3) protect threatened or
    endangered species, (4) preserve unique habitats, and (5) establish or
    extend wildlife migration corridors.

    Summary and Recommendations

        Based on the final data and results of the study, our initial
    conclusion that conservation easements do contribute to wildlife and
    habitat conservation objectives is supported. Conservation easements
    are valuable tools that allow agreements between a landowner and land
    trust to set aside land for protection, land that might otherwise be
    sold for development, for urbanization, or commercial enterprises.

        Conservation easements are valuable mechanisms where, if the BBRs
    and contracts are written to effectively address the conservation
    values the easement is trying to protect, natural habitat and wildlife
    will win lasting protection.

        While Congress could clarify valuation and other public interest
    considerations more specifically, the IRS possesses significant
    administrative authority to correct some of the problems identified
    over the last decade. These reforms include the following:

            The IRS should immediately issue guidance, and perhaps
    rulemaking, on how it will analyze and enforce donations of
    conservation easements in terms of: (a) transparent and improved
    appraisal processes of the donations; (b) transparency of and
    requirements for biological baseline reports including public
    monitoring to ensure that the donation has an adequate conservation
    purpose; (c) creation of a ``safe harbor'' provision to help landowners
    decipher the proper ``extinguishment clause'' language to use in in
    easement deeds.
            Instead of focusing solely on syndicated conservation easement
    donations, Congress and the IRS should examine the overall structure of
    conservation easement creation, including accurate and transparent
    appraisals, independent affirmance of the conservation value of each
    conservation easement, and perhaps most importantly, clarifying the
    IRS's new role as a de facto federal land agency.
            While most 170(h) conservation easements appear legitimate,
    the potential for abuse is high and the public should only be paying
    for conservation easements through the tax code that tangibly increase
    conservation, help mitigate the existential threats of climate change,
    and address inequity and environmental justice. It seems sensible to
    desire greater involvement by the U.S. Geological Service in evaluating
    and monitoring these easements \2\ as part of this country's larger
    goal to protect and conserve more land and water by 2030 and beyond.\3\
    ---------------------------------------------------------------------------
        \2\ See U.S. Geological Service, Major Update for America's
    Inventory of Parks and Other Protected Areas (July 9, 2019). (A new
    version of the Protected Areas Database of the U.S., or PAD-US, has
    major federal, state and easement updates, an easier-to-use data
    structure, new web services, and mapping capabilities.
        \3\ See, e.g., Center for Biological Diversity, Biden Executive
    Order Pushes Protection of 30% of America's Land, Oceans (January 27,
    2021). (A year ago the Center launched Saving Life on Earth, a plan
    that calls for a $100 billion investment to save species and the
    creation of new national monuments and parks, wildlife refuges and
    marine sanctuaries so that 30% of U.S. lands and waters are fully
    conserved and protected by 2030 and 50% by 2050).

                                     ______

                          Theatre Communications Group

                         520 Eighth Avenue, 24th Floor

                               New York, NY 10018

                                 (212) 609-5928

                                lbaskin@tcg.org

                          https://circle.tcg.org/home

                Statement of Laurie Baskin, Director of Advocacy

    Theatre Communications Group thanks the Senate Committee on Finance for
    holding a hearing dedicated to ``Examining Charitable Giving and Trends
    in the Nonprofit Sector.'' Given the prolonged duration of the COVID-19
    pandemic and its impact on the nonprofit sector, the Committee's
    hearing is a particularly important opportunity to commit to federal
    policy action that will respond to the unique and urgent needs of
    America's nonprofit sector.

    Theatre Communications Group (TCG), the national organization for
    theatre, leads for a just and thriving theatre ecology. Since its
    founding in 1961, TCG's constituency has grown from a handful of
    groundbreaking theatres to over 700 Member Theatres and affiliate
    organizations and over 7,000 Individual Members. Through its programs
    and services, TCG reaches over one million students, audience members,
    and theatre professionals each year. TCG offers networking and
    knowledge-building opportunities through research, communications, and
    events, including the annual TCG National Conference, one of the
    largest nationwide gatherings of theatre people; awards grants and
    scholarships to theatre companies and individual artists; advocates on
    the federal level; and through the Global Theater Initiative, TCG's
    partnership with the Laboratory for Global Performance and Politics,
    serves as the U.S. Center of the International Theatre Institute. TCG
    is North America's largest independent trade publisher of dramatic
    literature, with 18 Pulitzer Prizes for Drama on the TCG booklist. It
    also publishes the award-winning American Theatre magazine and
    ARTSEARCH, the essential source for a career in the arts. TCG believes
    its vision of ``a better world for theatre, and a better world because
    of theatre'' can be achieved through individual and collective action,
    adaptive and responsive leadership, and equitable representation in all
    areas of practice.

    Theatres deliver on their nonprofit mission in communities nationwide
    through their vibrant artistry, community partnerships, and commitment
    to lifelong learning. Like thousands of other nonprofits in the arts,
    education, and human services, and other local organizations, theatres
    in communities across the United States are classified as 501(c)(3)
    tax-exempt organizations. This exemption and the incentive to give
    private donations are essential to sustaining the capacity of theatres
    as employers, community partners, artistic innovators, and providers of
    lifelong learning. Even as theatres faced unprecedented challenges
    throughout the course of the pandemic, their resilience and creativity
    are evidenced in their ongoing contributions to their communities and
    innovative strategies to deliver on their nonprofit mission under the
    most extraordinary circumstances. At the height of COVID-19
    restrictions on participation in live performance events, theatres
    innovated to provide safe live arts experiences, online performances,
    and learning opportunities nationwide. Theatres continue to offer both
    live performance events and online offerings, often partnering with
    caregivers, schools, and community-based organizations to reach in-
    person and online audiences.

    Theatres are part of the wider nonprofit economic engine that supports
    workforces and community revitalization amid COVID-19 recovery. Theatre
    expenses totaled more than $2.1 billion in 2020. Their economic impact
    far exceeds that amount as theatres create jobs, engage in commerce
    with local businesses, and spur local expenditures on related goods and
    services. Theatres support a substantial workforce in communities
    across the country, employing 93,000 theatre workers in 2020.

    As part of the nonprofit charitable sector, theatres depend upon
    private philanthropy and civic support to fuel programs that serve
    community needs. Theatres are 501(c)(3) nonprofit organizations, exist
    in all 50 states, serving virtually every community, with annual
    budgets ranging from less than $70,000 to more than $50 million. The
    artistic presentations, educational offerings, and community-based
    programming generated by the theatre workforce is supported by a
    critical combination of public and private support, and not by ticket
    sales alone. Support from donors across the economic spectrum is
    essential to making this work possible, as theatres respond to the
    needs of communities and form partnerships through education, artistic,
    economic development, and social service programs. Individual donors
    who are not theatre trustees collectively proved to be the largest
    contributed income source for theatres.

    The COVID-19 pandemic has made charitable giving even more essential.
    Prior to the onset of the pandemic, contributed revenue generally
    covered about 42% of expenses for the largest theatres and about 70%
    for the smallest. Like for-profit businesses, theatres suffered severe
    earned revenue losses due to the pandemic that threatened their
    workforces and their missions. While decisions about operations during
    the pandemic have been closely connected to local and state public
    health mandates and each theatre's individual financial situation
    continues to vary based on its ability to return to live in-person
    performances, many continue to suffer significant pandemic-related
    revenue losses. As infection rates fell on the retreat of the Delta
    variant, theatres began to make gains in ticket sales, which provided
    hope for recovery in the longer term. However, the return of audiences
    from week to week was uneven, and the onset of the Omicron variant has
    had a severe and long-reaching impact on theatres' financial capacity
    and workforce. Theatre managers are deeply concerned about their bottom
    lines for fiscal year 2023 and 2024.

    We urge the Committee to partner with the nonprofit sector to ensure
    that any future pandemic-related or long-term support for the small
    business sector is structured so that nonprofit organizations are
    assured eligibility. Careful attention by Congress to nonprofit
    eligibility for COVID relief was essential to unlocking access to
    relief for theatres and other nonprofit organizations. Federal support
    has made it possible to keep doors open, utility bills paid, and many
    workers on payroll, but the duration of the pandemic continues to
    strain all revenue sources and new and renewed federal assistance is
    desperately needed. We are extremely grateful for the federal support
    to-date that has provided essential assistance during such an
    unprecedented and prolonged public health crisis. In addition to
    Shuttered Venue Operators Grants and dedicated National Endowment for
    the Arts funding, nonprofit access to forgivable Paycheck Protection
    Program loans, Employee Retention Tax Credits, enhanced charitable
    giving incentives, and other forms of governmental assistance have
    helped to see theatres through the first 2 years of the pandemic.
    However, most forms of federal relief expired at the end of 2021, and
    the need for help persists.

    Theatres and the wider nonprofit sector will be essential contributors
    to our nation's recovery from the pandemic and must be supported by
    federal policies that restore and further strengthen the sector
    nationwide. Theatre Communications Group is partnered with the National
    Council of Nonprofits, Independent Sector, and the Charitable Giving
    Coalition in support of comprehensive policy action to increase support
    for the nation's charitable sector, and we support the written
    recommendations submitted to this committee by those organizations. We
    urge the Committee to lead Congressional action on policies that are
    urgently needed, and to seek partnership with the nonprofit sector to
    ensure that long-term federal leadership proactively supports our
    nation's charitable and philanthropic sectors.

    This Committee can support the following action on active proposals
    related to tax policy and the nonprofit sector:

          Increase charitable giving by reinstating and making permanent
    the above-the-line, universal charitable deduction. Federal COVID-19
    Relief recognized how important giving incentives are by including in
    the CARES Act a $300 ``universal charitable deduction'' available to
    all taxpayers and extending that provision in the COVID-19 Economic
    Relief Bill along with allowing up to a $600 deduction for joint filers
    in 2021. Expanding and making this provision permanent will grow the
    capacity of the nonprofit arts sector to support communities. While the
    initial impulse to give comes from the heart, studies have repeatedly
    shown that charitable giving incentives have a significant impact on
    how much and when donors contribute.

          Reinstate the ability for individuals who itemize on their taxes
    to deduct up to 100% of their adjusted gross income for charitable
    contributions, and the ability of corporations to deduct up to 25% of
    taxable income.

          Enact the Legacy IRA Act, which would expand the Charitable IRA
    Rollover to treat donations made by retirees to gift annuity programs
    as pre-tax income.

          Reinstate the Employee Retention Tax Credit for the fourth
    quarter of 2021 and extend its duration, modifying nonprofit
    eligibility beyond the current ``gross receipts'' test. Theatres are
    among the many nonprofit employers that have been counting on quarter
    four 2021 access to the ERTC to support the decisions they made to
    bring employees back on the payroll and increase operating capacity to
    serve their communities.

          Enact the Artist-Museum Partnership Act, which would encourage
    new gifts by living playwrights, including original manuscripts, set
    designs, and other original materials. For theatre artists considering
    whether to contribute their works and archives to a charitable
    organization or to make them available to private collectors, the
    ability to take a fair-market value tax deduction may be the key
    incentive that allows the artist to contribute their work to a
    nonprofit cultural organization.

          Enact the Performing Artist Tax Parity Act of 2021, which would
    reinstate deductions for unreimbursed employee business expenses.
    Across occupations, comprehensive tax reform passed into law in 2017
    eliminated the opportunity to deduct unreimbursed employee business
    expenses that exceed 2% of adjusted gross income. For theatre artists
    this means that the costs of travel to auditions or a travel agent and
    other expenses essential to employment are no longer tax-deductible.

          Support dedicated relief resources for nonprofit organizations
    and their workforce, as proposed in the WORK Now Act.

    On behalf of the over 700 Member Theatres and affiliate organizations
    and over 7,000 Individual Members across the nation, Theatre
    Communications Group is deeply grateful for the leadership from this
    Committee to examine ways that the federal government can support our
    nation's nonprofit sector. Enhanced federal incentives for charitable
    giving and leadership to support the strength and growth of nonprofit
    organizations, will support theatres' workers, operating costs, and
    mission-critical activity. Thank you for this opportunity to share ways
    in which this Committee and the broader federal government can increase
    support for the nonprofit sector.

                                     ______

                           United Philanthropy Forum

                        1020 19th Street, NW, Suite 360

                              Washington, DC 20036

                                 (888) 391-3235

                                @unitedphilforum

                        https://www.unitedphilforum.org/

    On behalf of United Philanthropy Forum (the Forum), a membership
    organization of over 90 regional and national philanthropy-serving
    organizations or PSOs, we thank you for your support shown to the
    philanthropic and charitable sector during the COVID-19 pandemic. As
    the largest and most diverse network in American philanthropy, United
    Philanthropy Forum holds a unique position in the social sector to help
    increase philanthropy's impact in communities across the country. Our
    members, who represent more than 7,000 foundations and other funders,
    work to make philanthropy better. Through our members and their
    networks, we reach almost every state and district, promoting a
    courageous philanthropic sector that catalyzes a just and equitable
    society where all can participate and prosper.

    We appreciate the opportunity to highlight the value of the nonprofit
    sector and our recommendations on policies that encourages charitable
    giving.

     Extraordinary Response of Philanthropy Associations and Networks to
                        COVID-19

    As we mark the 2-year anniversary of the COVID-19 pandemic, it seems an
    appropriate moment to share how philanthropy-serving organizations
    (PSOs)--the regional and national philanthropy associations and
    networks that comprise the United Philanthropy Forum network \1\--have
    responded to the crisis. In short, the response has been extraordinary.
    ---------------------------------------------------------------------------
        \1\ https://www.unitedphilforum.org/members.

    Over the past 2 years, regional and national PSOs have acted in truly
    astounding ways to ensure that philanthropy was being as effective and
    impactful as possible in helping our communities tackle a global health
    pandemic, demonstrating a powerful level of nimbleness, adaptability
    and flexibility. PSOs quickly engaged in new public-private
    partnerships, led and managed new collaborative funds, advocated for
    philanthropy and nonprofits in COVID-19 legislation, provided a strong
    voice of accountability to push philanthropy to respond to the pandemic
    ---------------------------------------------------------------------------
    in the most equitable ways possible and much more.

    A new Forum report, The COVID-19 Crucible,\2\ details PSOs' response to
    the pandemic and offers lessons for the field to inform how we respond
    to future crises. The Forum uses ``PSO'' as something of a catch-all
    term to describe a diverse and dynamic group of philanthropy
    associations and networks that bring funders together with a focus on a
    geographic region, funding issue, identity/population group or
    philanthropic practice. The report offers many examples of PSOs' COVID-
    19 response efforts; here's a sampling:
    ---------------------------------------------------------------------------
        \2\ https://www.unitedphilforum.org/resources/covid-19-crucible.

          ABFE held funder briefings on COVID-19 relief for Black
    businesses and focused its annual conference, which shifted to virtual,
    on a range of critical challenges facing Black communities amid the
    pandemic, including redlining, the racial wealth divide, and ensuring
    ---------------------------------------------------------------------------
    relief efforts reach Black communities.

          Minnesota Council on Foundations moved quickly to establish the
    Minnesota Disaster Recovery Fund, partnering with the Saint Paul &
    Minnesota Foundation to raise and distribute more than $11 million to
    more than 1,700 nonprofit organizations and more than 3,000 small
    businesses.

          Philanthropy Northwest, in partnership with the state of
    Washington and major food banks in the state, established the WA Food
    Fund to respond to the growing food crisis as a result of COVID-19. The
    fund raised more than $14 million from 60 philanthropic institutions
    and 9,000 individual donors.

          Philanthropy Ohio partnered with the Ohio Department of
    Education to establish the Collaborative Fund for Educating Remotely
    and Transforming Schools. The fund supported projects to help schools
    in the state improve remote education practices and in particular
    address inequitable circumstances related to remote education during
    the COVID-19 crisis.

    The list goes on and on and on. The report identifies some key
    learnings that have implications for the broader philanthropy sector.
    Many of the learnings relate to trends that were already happening pre-
    COVID but were greatly accelerated during the pandemic: PSOs have
    become more transformative and less transactional; PSOs are placing a
    more central focus on racial equity and on holding the field
    accountable on equity issues; PSOs are displaying new kinds of bold
    leadership in partnerships with government and the private sector; PSOs
    have a renewed focus on networks, as the pandemic was a case study in
    the power of networks in responding to a crisis--and the need to build
    those networks in advance. Philanthropic leaders are grateful for the
    partnership of government, nonprofit, and business partners over the
    past 2 years.

     Need for Charitable Giving Will Continue Beyond Pandemic

    The Forum urges Congress to immediately reinstate and expand the
    temporary universal charitable giving deduction that expired at the end
    of 2021. This charitable deduction to non-itemizers at $300 for
    individual and $600 for couples filing jointly along with the
    suspension of adjusted gross income (AGI) limitations for cash gifts
    and increase in limitation for corporate gifts were all valuable to
    incentivizing giving behaviors.

    Longer-term, the Forum supports the bipartisan Universal Giving
    Pandemic Response and Recovery Act (S.618). If enacted, this
    legislation will further incentivize all taxpayers to give to charity--
    regardless of their income or whether they itemize--helping to spur
    even more giving as communities continue to fight and recover from
    COVID-19 and its economic effects.

    The charitable deduction is good tax policy--it encourages individuals
    to give away more of their income, devoting it to their community's
    needs rather than their own. A simple calculation shows that those in
    need receive $2.50 in benefit for every $1 of tax benefit. This is an
    impressive return on investment.

    This legislation will democratize giving by further incentivizing all
    American taxpayers--regardless of their income--to give to charity,
    thereby ensuring that our country retains a strong and independent
    civil society. Additionally, it will provide needed resources for
    charitable and faith-based organizations to continue providing vital
    services to families, workers, and communities, especially those
    critically impacted by the ongoing pandemic.

    The Forum is also proud to join the chorus of 60 national charities
    which support the bipartisan Legacy IRA Act (S. 243). The Legacy IRA
    Act will encourage more charitable giving by enabling seniors to make
    contributions from their individual retirement accounts (IRA) to
    charities through life-income plans. Seniors are a key demographic as
    they typically make up more than 40 percent of the donor base for
    charities. This is an expansion of the existing Charitable IRA Rollover
    provision, which is the fastest growing area of philanthropy. The
    Legacy IRA Act would expand this giving incentive to more middle-income
    seniors. A modified version of the Legacy IRA Act was passed by the
    House of Representatives on March 29, 2022 as part of the ``Securing a
    Strong Retirement Act'' (SECURE Act 2.0), and we urge the Senate
    Finance Committee to include S. 243 in its version of this retirement
    package.

    The Forum joins with many others in the nonprofit community in urging
    Congress to immediately reinstate the temporary universal charitable
    deduction, pass the Legacy IRA Act, and pass the Universal Giving
    Pandemic Response and Recovery Act. We stand ready to be of help should
    you have additional questions about these requests. Please feel free to
    contact Matthew L. Evans, Senior Policy Director, at United
    Philanthropy Forum at matthew@unitedphilforum.org.

                                     ______

                                   United Way
    March 16, 2022

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance

    Dear Chairman Wyden and Ranking Member Crapo:

    We the undersigned United Ways request that the Senate Finance
    Committee vote to approve legislation to expand and extend charitable
    giving tax incentives for tens of millions of Americans who give to
    charities every year. We specifically support the Universal Giving
    Pandemic Response and Recovery Act (S. 618 Coons/Lankford), which would
    allow the overwhelming majority of taxpayers to claim a deduction for
    income they give back to their communities and people in need.

    We deeply appreciate your inclusion of a $300 deduction in the CARES
    Act and your subsequent expansion of that deduction for 2021. However,
    that deduction has expired and now most Americans who donate their
    hard-earned income must pay taxes on that donated income.

    United Way is fortunate to have a number of wealthy supporters who make
    very generous donations that have real impact in communities across the
    United States. Those donors are able to give more because they do not
    pay taxes on those donations, because of the charitable deduction.
    However, there is no reason for different tax treatment for millions of
    donations from low- or middle-income people. In many cases, these
    donors must make difficult financial decisions and sacrifice to donate
    to their local charity or church, yet our current tax policy requires
    them to pay taxes on money they donate. This is simply unfair.

    To be clear, tax policy is very rarely the main reason Americans give
    to charity. People give for altruistic reasons. But tax policy
    influences behavior. Our tax laws are full of policies designed to
    drive behaviors deemed favorable for our society, like home ownership
    and business investment. What could be better than Congress sending a
    bipartisan message to everyone that giving is a core American value?

    We urge the Committee to act as soon as possible to approve S.618/
    H.R.1704. And we request that a retroactive nonitemizer deduction be
    included in any legislative vehicle possible before the end of the
    year.

    Sincerely,

    Alabama

    Walter Hill              Jackie Wuska             Shannon Jenkins
    Chief Executive Officer  President and CEO        President and CEO
    Wiregrass United Way     United Way of West       United Way of East
                              Alabama                  Central Alabama

    Becky Goff               Kathleen Ross            Valerie Burrage
    Executive Director       President and CEO        Executive Director
    United Way of Cullman    United Way of Morgan     North Talladega County
     County                   County

    Carrie Thomas            Jannah M. Bailey         Jill Chenoweth
    Executive Director       President/CEO            President and CEO
    United Way of Marshall   The River Region United  United Way of
     County                   Way                      Southwest Alabama

    Becky Booker             Jennifer McNulty
    Executive Director       CEO
    United Ways of Alabama   United Way of Northwest
                              Alabama

    Alaska

    Clark Halvorson
    CEO
    United Way of Anchorage

    Arkansas

    Kristy Williams          Nan Tucker               Jennifer Boyett
    Executive Director       Executive Director       Executive Director
     River Valley United     United Way of White      United Way of Central
     Way                      County                   Arkansas

    Arizona

    Shelley Griffin          Laura Mike               Tony Penn
    Vice President,          Executive Director       President and CEO
     Information Technology
    Valley of the Sun        United Way of Navajo     United Way of Tucson
     United Way               Nation                   and Southern Arizona

    Allen Villalobos
    Chief Executive Officer
    United Way of Pinal
     County

    California
    Rosemary Caso            Keristofer Seryani       Kristen Birtwhistle
    Executive Director       President/CEO            President and CEO
    United Way of Tulare     United Way of            United Way of San
     County                   Stanislaus County        Joaquin County

    Pete Manzo               Ken Wuytens              Mari Perez-Dowling
    President and CEO        Executive Director       President and CEO
    United Ways of           United Way of Imperial   United Way of Kern
     California               County                   County

    Lisa Wright              Gwen Rodgers             Bob Harlan
    President                President                Executive Director
    Inland Southern          Arrowhead United Way     Yuba-Sutter-Colusa
     California United Way                             United Way

    Michelle Murphy          Lisa G. Carreno          Lindsay Fox
    Director, Public         President and CEO        President and CEO
     Affairs
    Orange County United     United Way of the Wine   United Way Fresno and
     Way                      Country                  Madera Counties

    Rick London              Kevin Zwick              Bob Harlan
    CEO                      CEO                      Executive Director
    United Way of San Luis   United Way Bay Area      Yuba-Sutter-Colusa
     Obispo County                                     United Way

    Colorado

    Cindy Aubrey             Kate Nowak               Roweena Naidoo
    President and CEO        Executive Director       Vice President, Policy
                                                       and Impact Investing
    Pikes Peak United Way    Routt County United Way  Mile High United Way

    Connecticut

    Gary Johnson             David Rabin              Isabel Almeida
    President and CEO        CEO                      President
    United Way of Milford    United Way of Greenwich  United Way of Western
                                                       Connecticut

    Jack Eisenmann           Dina Sears-Graves        Jeff Kimball
    Executive Director       President and CEO        CEO
    United Way of            United Way of            United Way Coastal
     Southington              Southeastern             Fairfield County
                              Connecticut

    Kristen Jacoby           Lisa Tepper Bates        David R. Kennedy
    CPO                      President and CEO        Interim President and
                                                       CEO
    United Way of Greater    United Way of            Valley United Way
     Waterbury                Connecticut

    Eric Harrison            Jennifer Heath
    President and CEO        President and CEO
    United Way of Central    United Way of Greater
     and Northeastern         New Haven
     Connecticut

    Delaware

    Michelle Taylor
    President and Chief
     Executive Officer
    United Way of Delaware

    District of Columbia

    Rosie Allen-Herring
    President and CEO
    United Way of the
     National Capital Area

    Florida

    Gina Littleton           Jennifer Anchors         Amber Miller
    Interim President        Executive Director       President and CEO
    United Way of Northwest  United Way of Suwannee   United Way of North
     Florida                  Valley                   Central Florida

    Carol G. Houwaart-Diez   Ted Granger              Monica Wofford
    President and CEO        CEO                      CEO
    United Way of Martin     United Way of Florida    United Way of Lake and
     County                                            Sumter Counties

    Robert Rains             Maureen Mercho           Jeff Hayward
    President                Chief Development        President and CEO
                              Officer
    United Way of Brevard    United Way of Northeast  Heart of Florida
     County                   Florida                  United Way

    Kathleen Cannon          Michelle Braun           Angie B. Walasek
    President and CEO        President and CEO        CEO
    United Way of Broward    United Way of Northeast  United Way of Hernando
     County                   Florida                  County

    Laura P Gilliam          Joe Zubizarreta
    President/CEO            Interim President and
                              CEO
    United Way of West       United Way Miami
     Florida

    Georgia

    Patty Youngblood         Rebecca Cannady          Brynn Grant
    President and CEO        Executive Director       President and CEO
    United Way of West       United Way of Thomas     United Way of the
     Georgia, Inc.            County                   Coastal Empire

    George McCanless         Ruth M. Goode            Justin Callaway
    President and CEO        Executive Director       President and CEO
    United Way of Central    United Way of Forsyth    United Way of Coastal
     Georgia                  County, Inc.             Georgia

    Milton J. Little, Jr.    Jennifer Latour          Ben Moser
    President and CEO        Executive Director       President and CEO
    United Way of Greater    United Way of Gordon     United Way of the
     Atlanta                  County                   Chattahoochee Valley

    Brittany Burnett         Michael Smith            Candice Holcomb
    President and CEO        CEO                      Executive Director
    United Way of the CSRA   Greater Valdosta         Habersham County
                                                       United Way

    Lorie Autry              Amanda Burt
    Executive Director       President
    United Way of Screven    United Way of Northwest
     County                   Georgia

    Hawaii

    Nicholas Winfrey         John Fink
    President and CPO        President/CEO
    Maui United Way and      Aloha United Way
     Hawaii State
     Association

    Idaho

    Mark Tuckermark          Jim Cooper               Bill Maikranz
    Executive Director       President and CEO        President and CEO
    United Way of North      United Ways of the       United Way of South
     Idaho                    Pacific Northwest        Central Idaho

    Illinois

    Deborah Howard           Patricia Becker          Natalie Wellen
    Executive Director       Administrative Director  Executive Director
    United Way of            United Way of Logan      United Way of South
     Livingston County        County                   Central Illinois

    Keri Olson               Kamala L. Martinez       Susan Grey
    CEO                      President and CEO        President and CEO
    United Way of Whitside   United Way of Will       United Way of
     County                   County                   Champaign County

    Sean Garrett             Kennedy Polanski         John Kelker
    President and CEO        Executive Director       President
    United Way of Metro      United Way of Coles      United Way of Central
     Chicago                  County                   Illinois

    Deborah Rudel            Linda Blair              Debbie Bogle
    CEO                      Executive Director       President
    Fox Valley United Way    Kewanee Area United Way  United Way of Decatur
                                                       and Mid-Illinois

    Antoinette G Hayden      Connie Kraft             Laun Dunn
    Executive Director       Executive Director       Executive Director
    United Way of Southern   United Way of Northwest  United Way of Knox
     Illinois                 Illinois                 County

    Indiana

    Jennifer Million         Pamela Beckford          Alicia Hazelwood
    Interim CEO              President and CEO        Executive Director
    United Way of Greater    United Way of Wells      United Way of Grant
     Lafayette                County                   County

    Ann Murtlow              Richard Payonk           Rene Gellerman
    President and CEO        Executive Director       President and CEO
    United Way of Central    United Way of the        United Way Quad Cities
     Indiana                  Wabash Valley

    Sheila Coffin            William Rieth            Jane Ann Runyon
    Executive Director       President/CEO            Executive Director
    Jefferson County United  Crossroads United Way    United Way of Jay
     Way, Inc.                                         County

    Amy Canterbury           Mark Stewart             Chris Armstrong
    President and CEO        President                Executive Director
    United Way of            United Way of            United Way of Cass
     Southwestern Indiana     Bartholomew County       County

    Peggy Scott              Karli Armstrong
    Director of Cass County  Impact and Marketing
     Reading Railroad         Manager
    United Way of Cass        United Way of Cass
     County                   County

    Iowa

    Rene Gellerman           Ali Wilson               Shane J. Orr
    President and CEO        Executive Director       Executive Director
    United Way Quad Cities   United Way of Wapello    United Way of
                              County                   Muscatine

    Kendra Sorensen          Jen Arends               Kristin Roberts
    Executive Director       CEO                      President and CEO
    Marshalltown Area        United Way of North      United Way of East
     United Way               Central Iowa             Central Iowa

    Karen Siefken            Michella Friesen         Heather Hennings
    Executive Director       Executive Director       President
    United Way of the Great  United Way of Mahaska    United Way of
     River Region             County                   Siouxland

    Jean Kresse              Jessica Lowe Vokes
    President and CEO        Executive Director
    Story County             United Way of Jasper
                              County

    Kansas

    Jessica Lehnherr         Lisa Gleason             Mickey Edwards
    CEO/President            Executive Director       CEO
    United Way of Greater    United Way of Reno       United Way of the
     Topeka                   County                   Flint Hills

    Gayle Ausmus
    Executive Director/CEO
    United Way of Dodge
     City

    Kentucky

    Paul McCreary            Paula Yevincy            Adria Johnson
    President                President and CEO        President and CEO
    United Way of Calloway   United Way of the Ohio   Metro United Way
     County                   Valley

    Timothy Johnson          Kevin Middleton
    President and Chief      President
     Executive Officer
    United Way of the        United Way of Kentucky
     Bluegrass

    Louisiana

    LaToria Thomas           Michael Williamson       Artis Williams
    President and CEO        CEO                      Executive Director
    United Way of Northwest  United Way of Southeast  St. John United Way
     Louisiana                Louisiana

    George Bell              Sarah Berthelot          Janet S. Durden
    President and CEO        President and CEO        President
    Capital Area United Way  Louisiana Association    United Way of
                              of United Ways           Northeast Louisiana

    Denise Durel             Michelle Purl
    President and CEO        CEO
    United Way of Southwest  United Way of Central
     Louisiana                Louisiana

    Maine

    Liz Cotter Schlax        Sarah Duncan             Shirar Pattersone
    President and CEO        Executive Director       President and CEO
    United Way of Southern   United Way of Aroostook  United Way of Eastern
     Maine                                             Maine

    Lisa Park Laflin         Barbara Reinertsen
    Executive Director       Executive Director
    United Way of the Tri-   United Way of Mid Coast
     Valley Area              Maine

    Maryland

    Ken Oldham               Michele Walker           Rosie Allen-Herring
    President and CEO        Executive Director       President and CEO
    United Way of Frederick  County United Way, Inc.  United Way of the
     County                                            National Capital Area

    Franklyn Baker           Sandra Early
    President and Chief      Executive Director
     Executive Officer
    United Way of Central    United Way of Queen
     Maryland                 Anne's County

    Massachusetts

    Dennis P. Carman         Tim Garvin               Christa Collier
    President and CEO        President and CEO        Executive Director
    United Way of Greater    United Way of Central    Northern Berkshire
     Plymouth County          Massachusetts            United Way
     Massachusetts

    Carrie Thomas            John Bidwell             Bob Giannino
    Executive Director       Executive Director       Ansin President and
                                                       CEO
    United Way of Marshall   United Way of the        United Way of
     County                   Franklin and Hampshire   Massachusetts Bay and
                              Region                   Merrimack Valley

    Michelle N. Hantman      Tom Bernard              Mark Skala
    President and CEO        President and CEO        President/CEO
    United Way of Greater    Berkshire United Way     Cape and Islands
     New Bedford                                       United Way

    Michigan

    Christine J Robere       Chris Sargent            Connie L. Carroll
    President CEO            President and CEO        Executive Director
    United Way of the        United Way of the        United Way of Monroe/
     Lakeshore                Battle Creek and         Lenawee Counties
                              Kalamazoo Region

    Michelle Van Dyke        Audra Davis              Terri Legg
    President and CEO        President and CEO        Executive Director
    Heart of West Michigan   United Way of Saginaw    United Way Montcalm-
     United Way               County                   Ionia Counties

    James Gaskin             Joseph W. Gentry         Pam Smith
    CEO                      Executive Director       CEO
    United Way of Genesee    United Way of Northeast  United Way of
     County                   Michigan                 Washtenaw County

    Kimberly Hebberd         Darienne Driver Hudson,  Teresa Kmetz
                              Ed.D.
    Executive Director       President and CEO        President and CEO
    United Way of Lapeer     United Way for           Capital Area United
     County                   Southeastern Michigan    Way

    Julie Mallard            Brent Gillette
    Executive Director       Executive Director
    United Way of Delta      United Way of St. Clair
     County                   County

    Minnesota

    Erin Haag                Annette Duncan           John A. Wilgers
    Executive Director       President                President and CEO
    United Way of Freeborn   United Way of Steele     Greater Twin Cities
     County                   County                   United Way

    Elizabeth Child          Jerome Ferson            Doris Pagelkopf
    Executive Director       President                Executive Director
    Rice County Area United  United Way of Olmsted    United Ways of
     Way                      County                   Minnesota

    Sarah Buhs               Meghann Boser            Debra Siemsen
    Executive Director       Executive Director       CEO
    United Way of Carlton    Morrison County United   United Way of McLeod
     County                   Way                      County

    Erin Shay                Denae Alamano
    Executive Director       Executive Director
    United Way of            United Way of Bemidji
     Northeastern Minnesota   Area

    Mississippi

    Tee McCovey              Tracie Fowler            Ira E. Murray, Ph.D.
    President and CEO        CEO                      President and CEO
    United Way for Jackson   United Way of Southeast  United Way of the
     and George Counties      Mississippi              Capital Area

    Missouri

    Vander H. Corliss        Greg Burris              Ted Frushour
    CFO                      President and CEO        President
    United Way of Greater    United Way of the        United Way of
     St. Louis, Inc.          Ozarks                   Northeast Missouri

    Chris Rosson             Michelle D. Tucker
    President and CEO        President and CEO
    United Way of Greater    United Way of Greater
     Kansas City              St. Louis

    Montana

    Danica Jamison           Susan Hay Patrick        Roxanna S. Parker
    President and CEO        CEO                      Executive Director
    Greater Gallatin United  United Way of Missoula   Northwest Montana
     Way                      County                   United Way

    Gary Owen                Emily McVey              Beth Storey
    President                Executive Director       Executive Director
    United Way of Cascade    United Way of the Lewis  United Way of
     County                   and Clark Area           Beaverhead County

    Kim Lewis
    CEO
    United Way of
     Yellowstone County

    Nebraska

    Karen Rathke             Shawna Forsberg          Karen Benzel
    President and CPO        President and CEO        Executive Director
    Heartland United Way     United Way of the        United Way of Western
                              Midlands                 Nebraska

    Nevada

    Julian High              Michael Brazier
    President and CEO        CEO and President
    United Way of Southern   United Way of Northern
     Nevada                   Nevada and the Sierra

    New Hampshire

    Patrick Tufts            Liz LaRose               Michael Apfelberg
    President and CEO        President                President
    Granite United Way       Monadnock United Way     United Way of Greater
                                                       Nashua

    New Jersey

    Daniel Altilio           Kiran Handa-Gaudioso     Michael Gower
    President                CEO                      Executive Director
    United Way of Hudson     United Way of Northern   United Way of
     County                   New Jersey               Gloucester County,
                                                       Inc.

    Tom Toronto              Gloria Aftanski          James Horne
    President                President, CEO           President
    Bergen County's United   United Way of Central    United Way of Greater
     Way                      Jersey                   Union County

    New Mexico

    Becca Titus              Rodney Prunty
    CEO/President            President and CEO
    United Way of Lea        United Way of Central
     County                   New Mexico

    New York

    Marilyn Smith            Tom Gabriel              Patrick Dewine
    Executive Secretary      President and CEO        Executive Director
    United Way of Northern   United Way of            United Way of Greater
     Yates County             Westchester              Oswego County

    James L. Cox             Elizabeth Monaco         Elizabeth Monaco
    President and Chief      Executive Director       Executive Director
     Executive Officer
    United Way of Northern   Chenango United Way      United Way of Delaware
     New York                                          and Otsego Counties

    Jeannie Montano          Adam Dolce               James A. Brown
    President and CEO        Executive Director       President and CEO
    United Way of the        United Way of Northern   United Way of Tompkins
     Dutchess-Orange Region   Chautauqua County        County

    Amy Rohler               Fred Quist               Jaime Saunders
    Executive Director       Director                 President and CEO
    United Way of Southern   United Way of            United Way of Greater
     Chautauqua County        Montgomery County,       Rochester and the
                              Inc.                     Finger Lakes

    Jerome Singletary        Peter Gannon             Nancy Kern Eaton
    Community Outreach and   President and CEO        President
     Advocacy Manager
    United Way of Buffalo    United Way of the        United Way of Central
     and Erie County          Greater Capital Region   New York, Inc.

    North Carolina

    Denise Cumbee Long       Kristie Hege             Kendra K. Martin
    Executive Director       President                Executive Director
    United Way of Henderson  United Way of Davidson   United Way of Lee
     County                   County                   County

    Tate Johnson             Heidi Norwick            Brett Eckerman
    Executive Director       President                Executive Director
    Lumber River United Way  United Way of Alamance   United Way of Iredell
                              County                   County

    Bill Blake               Dan Leroy                Raquel Painter
    Executive Director       President and CEO        President
    Albemarle Area United    United Way of Asheville  United Way of Onslow
     Way                      and Buncombe County      County

    Cynthia Smith Gordineer  Maureen Schwind          Laura Marx
    President and CEO        Executive Director       President and CEO
    United Way of Forsyth    Burke County United Way  United Way of North
     County                                            Carolina

    Chuck Taylor             Rebecca Hall
    Executive Director       Executive Director
    United Way of Davie      High Country United Way
     County

    North Dakota

    Rich Berg                Heather Novak            Nichole De Leon
    Executive Director       Executive Director       Executive Director
    Souris Valley United     United Way of Grand      United Way of
     Way                      Forks, East Grand        Dickinson
                              Forks and Area

    Karla Isley              Richard Berg
    President and CEO        Executive Director
    United Way of Cass-Clay  Souris Valley United
                              Way

    Ohio

    Katie M Koglman          Scott Barr               Ryan Aroney
    CEO                      President and CEO        President and CEO
    United Way of Wayne and  Shelby County United     United Way of Greater
     Holmes                   Way                      Lorain County

    Marynell Townsend        Kari Steele              August A. Napoli
    Executive Director       Executive Director       President and CEO
    United Way of Guernsey,  Tiffin-Seneca United     United Way of Greater
     Monroe, and Noble        Way                      Cleveland
     Counties

    Moira Weir               Amber Wertman            Kelly Brenneman
    President/CEO            Executive Director       Executive Director
    Greater Cincinnati       United Way of North      United Way of Knox
                              Central Ohio, Inc.       County Ohio

    James Mullen             Kelly Brenneman          Maria Heege
    President and CEO        Executive Director       President and CEO
    United Way of Summit     United Way of Knox       United Way of Greater
     and Medina               County                   Stark County

    Lisa Courtice            George W. S. Hays        Stacy Decicco
    President and CEO        Executive Director       Executive Director
    United Way of Central    United Way Services of   UW Alliance of the MOV
     Ohio                     Northern Columbiana
                              County

    Dawn Cazzolli            Kerry Pedraza            Vicki Smith
    Executive Director       Executive Director       Executive Director
    Orrville Area United     United Way of Clark,     United Way of Van Wert
     Way                      Champaign and Madison    County
                              Counties

    Laura Rauch              Jan Fuetter              J. Thomas Maultsby
    Executive Director       Executive Director       President and CEO
    United Way of Jefferson  United Way of Putnam     United way of the
     County                   County                   Greater Dayton Area

    Michele Daniels          Corinne Bix              Meg Deedrick
    Executive Director       Director                 Executive Director
    United Way of Hardin     United Way of Union      United Way of
     County                   County                   Muskingum, Perry, and
                                                       Morgan Counties

    Stacy Schiemann          Thomas Mack              Judy Walters
    Executive Director       Executive Director       Volunteer
    United Way of Ashland    United Way of Henry      United Way of Gallia
     County                   County                   County

    Ginny Pasha
    President
    United Way of Trumbull
     County

    Oklahoma

    Daren Wilson             Debby Hampton            Alison Anthony
    President CEO            President and CEO        President and CEO
    United Way of Norman     United Way of Central    Tulsa Area United Way
                              Oklahoma

    Ruth Cavins              Oriana McElwee           Daela Echols
    Executive Director       Executive Director       Executive Director
    United Way of Payne      Ada Regional United      United Way of South
     County                   Way, Inc.                Central Oklahoma

    Oregon

    Noreen J. Dunnells       Jim Cooper               Ms. Dee Anne Everson
    President and CEO        President and CEO        CEO/Executive Director
    United Way of Lane       United Ways of the       United Way of Jackson
     County                   Pacific Northwest        County

    Margaret Magruder        Ken Wilhelm              Melissa Busch
    Commissioner             Executive Director       Registered Nurse
    United Way of Columbia   United Way of Central    United Way of Columbia
                              Oregon                   County

    Claire Catt              Blake A. Pang            Tony Erickson
    Executive Director       President and CEO        COO
    United Way of Columbia   United Way of Linn,      United Way of Columbia
     County                   Benton and Lincoln       County
                              Counties

    Pennsylvania

    Laurie Root              Michael J. Rubino        Gary Drapek
    President and CEO        Executive Director       President
    United Way of Erie       Beaver County            United Way of
     County                                            Lackawanna and Wayne
                                                       Counties

    William M. Jones         Benjamin Green           Jennifer Dippold
    President and CEO        Executive Director       Executive Director
    United Way of Wyoming    Clinton County United    St. Marys Area United
     Valley                   Way of PA                Way

    Phillip Sparacella       Michael B. Tukeva        Amy Foley
    President and CEO        President/CEO            Executive Director
    United Way of Mon        Pocono Mountains United  Grove City Area United
     Valley                   Way                      Way

    Carrie H. Freeman        Kenneth Hunt             Ronald Frick
    CEO                      Executive Director       President
    United Way of Southern   United Way Boyertown     Lycoming County United
     Chester County           Area                     Way

    Bobbi Watt Geer          MaChal Forbes            John ``Herm'' Suplizio
    President and CEO        Executive Director       Executive Director
    United Way of            Greene County United     DuBois Area United Way
     Southwestern PA          Way

    David Lewis              Karen Struble Myers      Adrienne Mael
    President                President and CEO        President/CEO
    United Way of the        United Way of the        United Way of Columbia
     Greater Lehigh Valley    Laurel Highlands         and Montour Counties
                                                       and Greater
                                                       Susquehanna Valley
                                                       United Way

    Kevin M Ressler          Kristen Rotz             Christopher Saello
    President and CEO        President                President and CEO
    United Way of Lancaster  United Way of            United Way of Chester
     County                   Pennsylvania             County

    Timothy B. Fatzinger
    President and CEO
    United Way of the
     Capital Region

    Rhode Island

    Cortney Nicolato
    President and CEO
    United Way of Rhode
     Island

    South Carolina

    Marisiel Losa            Meghan Barp              Paige Stephenson
    President and CEO        President and CEO        President/CEO
    United Way of the        United Way of            United Way of the
     Lakelands                Greenville County        Piedmont

    Danny DuBose             Joann DeLong             Dale Douthat
    Executive Director       Executive Director       President and CEO
    United Way of            United Way of            United Way of the
     Darlington               Hartsville               Lowcountry

    Blakely Roof             Carol E. Burdette        Mindy Popovich
    President and CEO        CEO                      President
    United Way of Horry      United Way of Anderson   United Way of Sumter,
     County                   County                   Clarendon and Lee
                                                       Counties

    Chloe Knight Tonney      LaShauna D Harrison      Rebecca Melton
    President and CEO        Chief Executive Officer  President
    Trident United Way       United Way of Oconee     United Way of York
                              County, Inc.             County

    Meghan Barp              Naomi Lett
    President and CEO        President and CEO
    United Way of            United Way Association
     Greenville County        of South Carolina

    South Dakota

    Carm Roster              Laura L. Hoiten          Jamie Toennies
    Administrative           Executive Director       Executive Director
     Assistant
    Mitchell United Way      Watertown Area United    United Way of the
                              Way                      Black Hills

    Jamie Toennies
    Executive Director
    United Way of the Black
     Hills

    Tennessee

    Mary Graham              Amy Harper               Kenneth S. Robinson
    President                Executive Director       President and CEO
    United Ways of           United Way of Sevier     United Way of the Mid-
     Tennessee                County                   South

    Matt Marshall            Paige Zabo               Danelle Glasscock
    President/CEO            President/CEO            Executive Director
    United Way of West       United Way of McMinn     United Way of Greater
     Tennessee                and Meigs Counties       Kingsport

    Lisa Cofer               Matt Ryerson             Mary Graham
    Executive Director       CEO                      President
    United Way of Bristol    United Way of Greater    United Ways of
                              Knoxville                Tennessee

    Valerie Guzman
    CEO/Executive Director
    United Way of the
     Greater Clarksville
     Region

    Texas

    Lisa Scroggins           Kilena Underwood         Jamie Johnson
    Executive Director       Executive Director       CEO
    Erath County United Way  Henderson County United  United Way of Mid and
                              Way                      South Jefferson
                                                       County

    Stephanie Chandler,      Andrea Grangruth         Traci Wickett
     M.Ed., MBA
    President and CEO        Executive Director       President and CEO
    United Way of Grayson    Cooke County United Way  United Way of Southern
     County                                            Cameron County

    Jamie McNulty            Lindsey White            Maureen McAllister
    Executive Director       Executive Director       President and CEO
    United Way of West       United Way of Galveston  United Way of Orange
     Ellis County                                      County

    Leah M. King             Rev. Dr. Evan M. Dolive  Jenna Haviland-Alesna
    President and CEO        Executive Director       Executive Director
    Tarrant County           Greater Longview United  United Way of Brazoria
                              Way                      County

    Roxanne Saldana Jones    Gary Ashcraft            Deb Helm
    Interim President and    President/CEO            Executive Director
     CEO
    United Ways of Texas     Nacogdoches Area United  United Way of Kaufman
                              Way                      County

    Tracey P Lopez           Christopher F. Martin    Barbara Tucker
    CEO/Executive Director   President and CEO        Executive Director
    United Way of Rusk       United Way of San        United Way of Palo
     County                   Antonio and Bexar        Pinto County, Inc.
                              County

    Utah

    Bill Crim                Bill Hulterstrom         James A Birman Jr.
    President and CEO        President and CEO        Executive Director
    United Way of Salt Lake  United Way of Central    Cache Valley
                              and Southern Utah

    Tim Jackson
    President and CEO
    United Way of Northern
     Utah

    Vermont

    Helena Van Voorst        Jesse Bridges            Ruben R. Garza
    Executive Director       CEO                      Executive Director
    United Way of Addison    United Way of Northwest  United Way of Windham
     County                   Vermont                  County

    Clarissa French
    Co-Executive Director
    United Way of Lamoille
     County

    Virginia

    Ravi Respeto             James Taylor             Lisa Cofer
    President and CEO        President and CEO        Executive Director
    United Way of Greater    United Way of Greater    United Way of Bristol
     Charlottesville          Richmond and
                              Petersburg

    Rosie Allen-Herring      Abigail Hamilton
    President and CEO        President and CEO
    United Way of the        United Way of Roanoke
     National Capital Area    Valley

    Washington

    Jim Cooper               Eric Fejeran             Dona Ponepinto
    President and CEO        Executive Director       President and CEO
    United Ways of the       United Way of Whitman    United Way of Pierce
     Pacific Northwest        County                   County

    Carl Borg                Terry Cox                Kelley McDonald
    President/CEO            Acting CEO and           Executive Director
                              President
    United Way of Kitsap     United Way of Snohomish  United Way of Grays
     County                   County                   Harbor serving Grays
                                                       Harbor and Pacific
                                                       Counties

    Chris Wells              Ted Jackson              Angela Heinlen
    Executive Director       Executive Director       Manager of Marketing
                                                       and Data
    United Way of Thurston   United Way of Mason      United Way of Cowlitz
     County                   County                   and Wahkiakum
                                                       Counties

    Robert Hanny             Gordon McHenry, Jr.      William T. Morrissey
    Core Services Director/  President and CEO        President
     United Way Board
     Member
    United Way of Grays      United Way King County   United Way of San Juan
     Harbor                                            County

    Lynn Green               Jennifer Durney          Kristi Birkeland
    United Way Board         Board Member             President/CEO
     Secretary
    United Way of Grays      United Way of Grays      United Way of Whatcom
     Harbor                   Harbor                   County

    West Virginia

    Rebecca Sias             Brett White              Carol H. Bailey
    Executive Director       CEO                      Executive Director
    United Way of Gilmer,    Tygart Valley United     United Way of the
     Lewis and Upshur         Way                      River Cities

    Margaret O'Neal          Stacy Decicco            Trena Dacal
    President                Executive Director       Executive Director
    United Way of Central    UW Alliance of the MOV   United Way of Southern
     West Virginia                                     West Virginia

    Penny Porter
    CEO
    United Way of the
     Eastern Panhandle

    Wisconsin

    Alexa Haigh              Harper Mruk              Amy Lindner
    President and CEO        Executive Director       President and CEO
    United Way of Racine     United Way of Dodge      United Way of Greater
     County                   County                   Milwaukee and
                                                       Waukesha County

    Charlene Mouille         Amber Kilawee            Mary Fanning-Penny
    Executive Director       Executive Director       President and CEO
    United Way of Wisconsin  Fond du Lac Area United  United Way Blackhawk
                              Way                      Region

    Nancy Schultz            Carolynn Friesch         Barbara Bates-Nelson
    Executive Director       CEO                      Executive Director
    United Way of Shawano    United Way of Kenosha    United Way of Northern
     County                   County                   Ozaukee

    Jeff Sargent             Ashley Winch             Robyn Davis
    Executive Director/CEO   Executive Director       President and CEO
    United Way of Marathon   Marshfield Area United   Brown County United
     County                   Way                      Way

    Amy Kohnle               Joe Marquardt            Tari Jahns
    CEO                      Chairman                 CEO
    United Way of Door       New London               United Way of South
     County                                            Wood and Adams
                                                       Counties

    Tammy Dunn               Andrew Neborak           Jennifer Thatcher
    Executive Director       Executive Director       Executive Director
    United Way of Walworth   United Way of the        United Way of Dunn
     County                   Greater Chippewa         County
                              Valley

    Kate Baer                Megan Hartwick           Mary Kay Wolf
    Executive Director       Executive Director       Executive Director
    United Way of Sheboygan  United Way of Jefferson  Great Rivers United
     County                   and North Walworth       Way
                              Counties

    Kris Schmidt             Renee Moe                Natasha Khan
    Treasurer                President and CEO        Operations Coordinator
    Clark County United Way  United Way of Dane       United Way Manitowoc
                              County                   County

    Susan Wilcox
    Executive Director
    United Way of Portage
     County

    Wyoming

    Evelyn Edson             Kelly Frink              Anna Wilcox
    Executive Director       Executive Director       Executive Director
    United Way of Albany     United Way of Southwest  United Way of Natrona
     County                   Wyoming                  County

                                     ______

                              Vanguard Charitable

                                 P.O. Box 9509

                             Warwick, RI 02889-9509

                                  888-383-4483

                     rebecca_moffett@vanguardcharitable.org

                    Statement of Rebecca Moffett, President

    On behalf of Vanguard Charitable, thank you for the opportunity to
    submit this statement for the record in follow up to the Senate
    Committee on Finance's hearing on ``Charitable Giving Trends in the
    Nonprofit Sector.'' We appreciate the Committee for its leadership on
    this important subject.

    At Vanguard Charitable, a sponsor of donor-advised funds (DAF), we are
    avid proponents of ways to increase charitable giving and strengthen
    the nonprofit sector and the countless communities it supports,
    including encouraging individuals to give in all its many forms--
    monetary donations, volunteering of one's time and talents, and active
    civic participation. We firmly believe that the more people who are
    encouraged and able to give, the better off our communities will be.
    Our comments in this testimony will be focused on a donor-advised
    fund's role in enabling this.

    Vanguard Charitable has the distinct privilege of serving as one of the
    largest grantmakers in the United States, providing much-needed
    financial support to hundreds of thousands of unique charities at the
    recommendation of our more than 25,000 generous donors. Since we were
    founded by Vanguard 25 years ago as a 501(c)(3) public charity and
    donor-advised fund, we have granted more than $13 billion to charitable
    organizations. In 2021 alone, we granted $1.78 billion, an 8% increase
    on top of a record year of giving in 2020 (increasing by 25% over 2019)
    in the wake of the COVID-19 pandemic.

    These billions of dollars represent significant resources for
    hardworking nonprofits across the country and around the world who
    provide food for the hungry, healthcare for the ill, educational
    opportunities for our children, protection of the environment, support
    for cultural institutions, and more. Importantly, these dollars are
    available and ready to be called to action no matter the external or
    economic conditions.

    This is the story of donor-advised funds' role in the charitable
    sector. In a normal year, they are strong charitable engines that spur
    generous donations and help power philanthropy. But when the
    unthinkable happens, they are also equipped with a special gear. In the
    past few years alone, we've seen our donors respond meaningfully with
    grants to 501(c)(3) public charities in the wake of hurricanes in the
    U.S. and abroad, wildfires in the western U.S. and Australia, an
    earthquake in Puerto Rico, a brutal winter storm in Texas, an explosion
    in Beirut, and now a humanitarian disaster in Ukraine, just to name a
    few.

    Notably, DAFs do not solely help respond to disasters. Evidence shows
    they can also be a stabilizing force to the philanthropic world during
    economic downturns.\1\ Because DAF donors have already designated the
    funds in their DAF for charity, they can respond more easily than other
    sources of giving, which tend to dry up during recessions. It's this
    upfront commitment to charity--not just to giving, but to long-term,
    sustainable support--that sets DAFs and their donors apart.
    ---------------------------------------------------------------------------
        \1\ Heist, H. D., Vance-McMullen, D. Understanding donor-advised
    funds: How grants flow during recessions, https://www.sp2.upenn.edu/wp-
    content/uploads/2019/02/Heist-Vance-McMullen_Understanding-Donor-
    Advised-Funds_working-paper-002.pdf.

    One of the unique features of DAFs is their ability to grow funds,
    creating additional dedicated charitable resources. Our donors choose
    from Vanguard Charitable's diversified lineup of high-quality, low-cost
    investment options, which have driven tremendous returns on charitable
    investments in recent years. One study concluded that DAFs created more
    than $5 billion in new charitable dollars from 2015-2019 due to their
    ability to grow charitable investments tax-free.\2\
    ---------------------------------------------------------------------------
        \2\ Husock, H. Appreciation in Donor-Advised Funds: An Analysis of
    Major Sponsors. American Enterprise Institute, https://www.aei.org/
    research-products/report/appreciation-in-donor-advised-funds-an-
    analysis-of-major-sponsors/.

    Not only is the donor-advised fund innately built to drive significant
    charitable giving, it also enables effective and compliant giving,
    ensuring every donated dollar will be used for charitable purposes.
    This is especially critical in the wake of disasters or unplanned needs
    when rapid but responsible movement of charitable dollars is sorely
    needed. Our due diligence practices help counter the bad actors that
    often attempt to solicit funds from unsuspecting and well-intentioned
    donors, and they also ensure our donors are giving in compliance with
    sanctions or international granting rules--something the average donor
    may find challenging to navigate. We have seen both these examples come
    to light in the wake of the Ukraine humanitarian crisis: Vanguard
    Charitable provided our donors with a list of reputable and carefully
    vetted organizations that are getting funds directly to those in need,
    minimizing the need for any review the individual donor may need to do
    to ensure compliance with international law or quality of the recipient
    charity. We also got the money out the door quickly; as of this
    writing, Vanguard Charitable donors granted more than 4,300 times,
    ---------------------------------------------------------------------------
    totaling nearly $37 million.

    Our strong compliance and granting history is informed by the rules
    governing all 501(c)(3) public charities and donor-advised funds. The
    Pension Protection Act enacted several provisions to further define
    donor-advised funds and regulate our grantmaking and due diligence
    practices, thereby penalizing any would-be improper behavior by DAFs or
    our donors. Also, Vanguard Charitable, like many of our peer
    grantmakers, has a minimum account activity policy to ensure active
    granting by all of our donors.

    Vanguard Charitable believes in making every dollar that comes into our
    donor-
    advised fund even stronger and more effective as it moves to the end
    charitable recipient. The donor-advised fund's combination of dollars
    ``at-the-ready'' that are available for ongoing needs over time--all
    while granting with the highest level of compliance and due diligence--
    makes the tool a formidable and necessary sustaining force in the
    giving landscape. At Vanguard Charitable, we build on that by looking
    ahead to the future of giving and considering the tools and resources
    we can provide to donors to help them make well-informed and effective
    giving decisions. The many resources we provide include:

          Compiling lists of credible, effective disaster relief
    organizations to help donors give immediately in the wake of great
    need.
          Investing in technology that enables money to get to charities
    faster.
          Connecting donors with experts and leaders at many of the
    nonprofit organizations they support to hear firsthand about their
    missions.
          Encouraging unrestricted giving to enable charities to use
    donations for the greatest need.
          Developing innovative and modern giving tools, such as the
    Nonprofit Aid Visualizer, a mapping solution that helps donors find
    charities in their local communities who are fighting the hunger and
    homelessness crises.

    As the Committee looks ahead, I respectfully ask you to consider how to
    encourage greater charitable giving and support the variety of tools,
    like donor-advised funds, that bolster each dollar individuals invest
    in the philanthropic sector.

    If I can be a resource to the Committee as it considers its next steps
    or address any questions, please reach out. Vanguard Charitable and
    donor-advised funds broadly have a history of making a significant
    impact on communities all over the globe, in times of great need and
    when other charitable sources may be less available. We hope to
    continue to serve this critical role for our neighbors.

                                     ______

                                YMCA of the USA

                              101 N. Wacker Drive

                               Chicago, IL 60606

                                 P 800-872-9622

                                 F 312-977-9063

                             https://www.ymca.org/

    March 14, 2022

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    Dear Chairman Wyden, Ranking Member Crapo and Senate Finance Committee
    Members:

    I respectfully submit this letter on behalf of the nation's 2,600
    YMCAs, which serve 10,000 communities across the nation. We urge you to
    support for enactment two bipartisan bills that will address
    significant revenue losses and workforce shortages in the nonprofit
    sector: the Universal Giving Pandemic Response and Recovery Act
    (UGPRRA), S. 618/H.R. 1704, and the Employee Retention Tax Credit
    Reinstatement Act, S. 3625/H.R. 6161. These bipartisan bills are
    critical to YMCAs and other nonprofit organizations and will help us
    continue to provide critically needed services in communities as they
    work to overcome ongoing challenges related to the COVID-19 pandemic.

    Throughout the pandemic, Ys across the country have provided emergency
    services for communities in need, including childcare for health care
    workers and first responders, food for kids without access to school
    meals, safe and enriching virtual learning spaces, shelter for
    marginalized populations and outreach to isolated seniors. Ys also have
    been providing holistic health and wellness support for all ages.

    Before and throughout this pandemic, the Y has been a leading nonprofit
    committed to strengthening community by empowering young people,
    improving the health and well-being of people of all ages and inspiring
    positive action in and across communities. This action includes
    fostering a culture of giving through volunteerism and local
    fundraising efforts, which are critical to ensuring YMCAs have the
    capacity to meet the need for services in communities. YMCAs
    collaborate with a diverse group of partners in the private and public
    sectors, as well as individual donors at all levels. Fundraising is
    challenging for certain, and Ys and other nonprofits need every tool we
    can get to help bolster these efforts, including tax policies that
    encourage giving.

    We urge you to enact the Universal Giving Pandemic Response and
    Recovery Act (UGPRRA), S. 618/H.R. 1704, led by a bipartisan, bicameral
    group of lawmakers, including Senators. James Lankford (R-OK), Chris
    Coons (D-DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC),
    Amy Klobuchar (D-MN), Susan Collins (R-ME) and Catherine Cortez Masto
    (D-NV). UGPRRA would increase the cap on the temporary universal
    charitable deduction from $300/$600 to one-third of the standard
    deduction--and would extend the availability of the deduction through
    2022. Increasing charitable contributions is a key factor in addressing
    both the increased costs related to the higher demand for services as
    well as operational setbacks due to significant revenue losses
    experienced by many nonprofits.

    An above the line ``universal'' charitable deduction would incentivize
    all American taxpayers--regardless of income--to give to charity,
    thereby ensuring that our country retains a strong and independent
    civil society. In 2020, Congress enacted a temporary nonitemizer
    deduction on charitable donations in the CARES Act. It included a $300
    cap for individuals and a $600 cap for couples. This marked the first
    time in thirty years that all taxpayers were able to claim a deduction
    on at least part of their charitable giving, regardless of whether they
    itemized. The Fundraising Effectiveness Project's fourth quarter report
    for 2020 shows a 15.3 percent uptick in donations of less than $250,
    which outpaced the increase in larger donations. Additionally, there
    was an estimated 28 percent increase in gifts of $300 on December 31,
    2021--the exact amount of the universal charitable deduction. While we
    know there are many factors that contribute to increased donations, one
    factor was likely the availability of the charitable deduction to
    nonitemizers. Unfortunately, that deduction expired at the end of 2021.

    As noted, UGPRA would raise the $300/$600 cap to roughly $4,000 for
    individuals/$8,000 for couples and extend the availability of the
    deduction to the 2022 tax year, helping to spur more giving as
    communities continue to recover from COVID-19 and its economic effects.
    It also would provide needed resources for charitable and faith-based
    organizations to continue providing vital services to families, workers
    and communities, especially those most severely affected by the ongoing
    pandemic. Additionally, we are urging Congress to extend two additional
    disaster-relief giving incentives that expired on December 31, 2021--
    the provision permitting individuals who itemize to deduct charitable
    donations up to 100 percent of their adjusted gross income and the
    measure allowing corporations to deduct charitable donations up to 25
    percent of taxable income.

    Over the past several months, there has been much discussion about the
    negative impacts on nonprofit organizations due to the early
    termination of the Employee Retention Tax Credit (ERTC). The ERTC was
    instrumental in helping nonprofits like the Y retain staff who deliver
    essential services in their communities. We urge you to prioritize
    passage of the Employee Retention Tax Credit Reinstatement Act (S.
    3625/H.R. 6161). This bipartisan legislation reinstates the ERTC
    through the end of calendar year 2021, as Congress intended, to help
    struggling nonprofits who were counting on the ERTC to pay their
    employees through the end of the year. For YMCAs across America, the
    elimination of ERTC for the fourth quarter of 2021 cuts $60M-$100M of
    expected operating funds that already were budgeted to keep critical
    staff on the payroll to continue meeting vital community needs. Please
    pass the Employee Retention Tax Credit Reinstatement Act.

    Thank you for the opportunity to submit this letter and for your
    support of the YMCA. We greatly appreciate your consideration to
    support the provisions outlined here to enhance charitable giving and
    to further support nonprofits as we continue to recover from the
    pandemic while also continuing to serve our communities.

    Sincerely,

    Suzanne McCormick
    President and CEO

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