Signifigant Changes To Federal Nonprofit Tax Policy May Be A Reality This Year

According to an article in The Chronicle of Philanthropy, Congress is proposing changes in the tax code that could significantly affect nonprofits. Harold Hancock, tax counsel for the House Ways and Means Committee, says changes could include compensation caps for nonprofit executives, a requirement that donor-advised funds distribute their assets to charities within five years, and tighter limits on using the charitable tax deduction. The proposal that has generated the most criticism is the five year spend-down for donor-advised gifts.

What reasons would congress have for imposing such a requirement on donor-advised gifts? As a practical matter, how might the spend-down function? What effect might it have on charitable giving?

DAB