Preparing for a Game-Changing Era
February 6, 2017
NACUBO is responding to proposals to enact new endowment taxes or payout mandates and dramatically alter the charitable giving landscape. These are just some of the many ideas policymakers have floated that could change the way colleges and universities deliver services and meet their educational missions.
Through the year, NACUBO plans to offer new resources to help you illustrate how federal policy changes might impact institutions of higher education. Our first set of talking points focuses on charitable giving and endowments. We also have collected a library of resources that help explain college and university endowments.
In December, Rep. Tom Reed (R-NY) issued a white paper calling for college endowments to dedicate gains specifically to students from middle and working class families. While draft legislation has yet to be revealed, Reed is already reaching out to student organizations for endorsement of his plans.
On the campaign trail, President Donald Trump offered ideas on how to make colleges more affordable, pressuring institutions with large endowments to spend more on students. Trump’s tax reform plan also appeared to include a cap on all deductions—including the charitable deduction.
Speaker Paul Ryan (R-WI) and Ways and Means Chairman Kevin Brady (R-TX), eager to pass a tax overhaul this year, released a tax reform blueprint last year aimed at simplifying the tax code that did not eliminate the charitable deduction but could significantly limit the number of taxpayers that are eligible. Ryan continues to be optimistic about passing tax reform legislation in the House of Representatives by August.
The Washington landscape under the Trump administration, however, is unpredictable. What starts as efforts to enact a sweeping tax package could result in legislation that only contains certain elements of Ryan’s plans.
Reed’s white paper proposes mandatory minimum payout requirements, specifically targeted at financial aid, for endowments above certain thresholds. In 2014, draft legislation proposed an excise tax based on student FTEs. The same draft legislation called for a 2 percent "floor" on charitable deductions, meaning a taxpayer would have to contribute at least 2 percent of their income to charity in order to claim a deduction and would have limited appreciated property gifts to cost basis.
What can business officers do?
NACUBO encourages campus business officers to consider:
- Meeting with your communications and government relations teams to discuss these and other issues of concern related to federal policies.
- Writing an op-ed piece for publication in your student, local, or regional newspaper.
- Asking your campus president if he or she needs any talking points on these issues for his or her next visit to Capitol Hill. (Many will visit Washington in the coming weeks.)
- Visiting with your local editorial board or with national news outlets when next in Washington.
- Developing a website, blog, or Twitter campaign that communicates the value your endowment and charitable giving provide to the campus community.
- Inviting a member of congress or their staff to meet with you (and your foundation and development officials) on campus during the next recess, February 20-24.
This year’s NACUBO-Commonfund Study of Endowments demonstrated that in FY16, despite losing ground, because of the way endowments are managed for the long-term, colleges and universities were still able to robustly support student aid and other endeavors. This is a strong and powerful story, deserving of attention. It is essential to help the public and policymakers understand the value of planning and managing financial gifts for the long-term so that institutions of higher education can carry out their missions long into the future.
Protect Giving Coalition Hosts Advocacy Day
The Charitable Giving Coalition is organizing a “100-Years of Giving DC Fly-In” on Thursday, February 16. Individuals will have the opportunity to meet with policymakers and their staff on Capitol Hill to advocate for maintaining the full value of the charitable deduction, as well as its possible expansion. There is no cost to attend the event, but participants are responsible for their own travel to Washington, DC and accommodations, if needed. College and university business officers who are interested in participating should contact Liz Clark, NACUBO’s director of federal affairs, immediately. The registration deadline is Wednesday, February 8.
Please note that this is not a NACUBO event. While colleges and universities may participate, they will be joining other charitable and volunteer organizations specifically to advocate for the full value of the charitable deduction, as well as its possible expansion. The Charitable Giving Coalition will recommend:
“Instead of enacting changes that would curtail the charitable deduction, lawmakers should strive to enhance and expand it. Our tax code is the most powerful tool available to send the message that Americans strongly support charitable giving. Regardless of their income level, taxpayers who receive a deduction for their contributions give more to charities than those that do not receive a deduction.
An above-the-line, or universal, charitable deduction would expand the deduction to all taxpayers and exclude all charitable gifts from taxation. It can increase giving in both dollars and number of new donors; increase fairness by treating all taxpayers’ charitable contributions equally under the tax code; and provide modest tax relief for low- and middle-income taxpayers.”
Director, Federal Affairs
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