Trump Bill divide: Conservatives split on taxing private foundations
The battle over tax provisions in Trump’s “Big Beautiful Bill” has split conservatives on whether increasing taxes on private foundations is in the public interest.
The final reconciliation package passed by the House on July 3rd adopted the Senate position, and did not include any changes to the private foundation excise tax, a victory for large foundations.
Earlier in the process, as reported in the Washington Times, the conservative Philanthropy Roundtable – which often disagrees with mainstream foundation groups – has unexpectedly shown up in sync with the Council of Foundations and other “philanthropy support organizations” (PSOs).
The Washington Times reports that the Roundtable sent a letter to Senate leaders saying that the proposed increased tax on foundation assets “contradicts” conservative goals and the goal shared with the Trump administration of reducing government.
According to the conservative paper, “Tax writers on the House Ways and Means Committee said the tax increase was designed not just as a revenue raiser to offset other tax cuts in the bill, but also to encourage foundations to spend more of their money.”
At the same time, Oklahoma Republican Congressman Kevin Hern supported the increase in taxes on foundations. Echoing themes from the Philanthropy Project, Hern argued , “If you’re going to hold onto the money, why shouldn’t you be taxed like other companies that make money? “I’m sure there are people that don’t like it, but our deal is: Deploy the money.”
Another advocate for increased foundation giving is Arizona Republican Congressman David Schweikert: “If it’s a charitable foundation, maybe the money should be being spent on charitable [causes] instead of the foundation acting like a hedge fund . . . They’re participating in the markets like they’re a hedge fund since they don’t have the tax exposure.”
While some House members see low foundation activity as a problem, their version provides little incentive to increase payout, and leaves transfers to DAFs an easy workaround.
When it comes to philanthropic reform, neither Republicans nor Democrats have lined up along party lines, nor along conventional conservative/liberal lines. For the most part Congress has shown little interest in changing current arrangements for regulation of philanthropy, perhaps until now. Regrettably the changes in this bill make no sense. Our tag line for the Philanthropy Project – Charitable funds should benefit the public – should be something that unites people across these divides, but this legislation does none of that.