It’s caucus season, which means Iowans won’t be experiencing any shortage of campaign promises, handshakes, and waving flags over the next few weeks. While Iowans debate the issues and decide their choices for the Democratic and Republican presidential nominees, we thought it would be an opportune time to remind you of important philanthropic legislation that passed late in 2015.
While it may have been lost between holiday celebrations and end of the year campaigns, the Protecting Americans from Tax Hikes (PATH) Act of 2015 contained a number of provisions that are important for nonprofits.
Perhaps the most relevant and important aspect of the bill allows those who are 70½ or older to make a distribution of up to $100,000 directly from their retirement account to a charity without treating it as taxable income. Although the provision was previously in place, PATH made it permanent, decreasing uncertainty for nonprofits. As an organization, you should consider segmenting donors over 70½ and creating unique messaging to raise awareness about how these donors can take advantage of this giving opportunity.
Some tax incentives for donors of land were also made permanent as part of PATH. This provision allows gifts of land to reduce a donor’s adjusted gross income by up to 50 percent. In addition, any remaining value beyond the 50 percent can be carried over and applied against adjusted gross income for up to 15 years.
Because these types of gifts can be complex, it’s always best to encourage donors to seek the advice of their accountants, wealth advisors, and attorneys. Oftentimes these parties may become directly involved in gift discussions.
Although PATH was generally good news for donors and nonprofits, there were some issues that were left unresolved. These included excise tax issues tied to foundation investment gains, and the inclusion of donor advised funds as the eligible recipients of IRA rollovers.
Charitable tax deductions likely won’t carry the importance of foreign policy or the economy in the minds of voters, but keeping up to date on these issues is important to ensure nonprofits are effectively communicating to their donors.
AMPERAGE Fundraising Advisers is a full-service fundraising company whose mission is to move the needle for our clients. For more information on Amperage Fundraising Advisers or to make a recommendation for a future blog post, contact us today!