Public policy news and updates for the philanthropic sector

May 30, 2025

What's Happening This Week...

• What We're Tracking
• Additional Updates
• Happening in the States
• News, Resources, and Events

What We're Tracking in DC

Budget Reconciliation Update

Last week, the House passed budget reconciliation legislation on a largely party line vote. The Senate is now considering its own budget reconciliation package, which may (or may not) be different from the House’s version—but the process and timeline remain unclear. The House budget reconciliation legislation includes several provisions that would impact philanthropy, including:

• Increased private foundation excise tax: Currently, all private foundations (other than exempt operating foundations) pay an excise tax of 1.39% of net investment income. The House-passed bill creates a tiered system, where the largest foundations would be subject to a tax of 10% of their net investment income.
• 1% floor for charitable contributions from corporations: Currently, corporations can deduct their charitable contributions from taxable income, up to 10% of their taxable income. This legislation creates a floor, meaning corporations must donate at least 1% of their taxable income before being eligible to receive a deduction.
• Unrelated Business Income Tax: Currently, nonprofits must pay a tax on income from activities that constitute an “unrelated trade or business.” This bill includes fringe benefits that nonprofits provide to employees (such as parking) as part of a nonprofit’s unrelated business taxable income.

The legislation also includes a modest charitable deduction for nonitemizers capped at $150 for single filers, $300 for joint filers, sunsetting at the end of 2028. This does not include contributions to donor-advised funds. Read a full summary of the provisions in the bill impacting philanthropy.

Retirement Fairness for Charities Act

The House Financial Services Committee voted to approve the bipartisan Retirement Fairness for Charities and Educational Institutions Act (H.R.1013/S.424).

The bill is led by Reps. Frank Lucas (R-OK), Josh Gottheimer (D-NJ), Bill Foster (D-IL), and Andy Barr (R-KY) in the House and Sens. Katie Britt (R-AL), Raphael Warnock (D-GA), Bill Cassidy (R-LA), and Gary Peters (D-MI) in the Senate. It would enhance investment options for 403(b) retirement plans, bringing the plans nonprofit employees are offered closer to parity with 401(k) retirement plans.

Additional Updates

• The Department of Justice recently announced the establishment of the Civil Rights Fraud Initiative in response to Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The initiative’s main focus is the False Claims Act (FCA) which is used to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights law. Most civil FCA cases are not initiated by the DOJ but instead by whistleblowers who then disclose their allegations to the DOJ. Learn more about the application of the FCA, via the Initiative.
• On June 4 at 2:00pm ET, the House Oversight Committee’s subcommittee on Delivering on Government Efficiency is hosting a hearing titled “Public Funds, Private Agendas: NGOs Gone Wild.” Tune in to the hearing online. Our team will watch the hearing and share relevant updates in the next edition of Snapshot.
  
  

Happening in the States

State Legislation Affecting Charitable Nonprofits

As state legislatures adjourn, bills are being considered until the final moments of session or post-session.

This month, Vermont’s governor signed a bill that expands access to unpaid family and medical leave and sets 12-week time limits for unpaid leave in any given year while the Virginia governor vetoed a bill to apply the Commonwealth’s Human Rights Act to all employers with more than five employees. Maryland enacted legislation establishing the Nonprofit Organizations Navigator to provide technical assistance to nonprofits applying for state grant programs, and a bill in Montana was enacted to create an interim committee to identify federal funding opportunities available to state, tribal, and local governments.

South Carolina’s legislature adjourned without enacting one of the most restrictive diversity, equity, and inclusion (DEI) bills – the Ending Illegal Discrimination and Restoring Merit-Based Opportunity Act. Named after the federal Executive Order from January, the bill underwent several iterations and would have redefined what constituted discrimination in the state and prohibited promoting DEI by the state, in education, or in hiring.

News & Resources

• The Cost of Taxing Philanthropy, Wall Street Journal
• 7 ways Republicans are split over Trump’s ‘big bill’, Washington Post
• Foundations of Regional Economic Transformation, Brookings Institution 

Keep in Touch!

Please feel free to reach out to any of us on the Government Relations Team with comments or concerns, or to share an issue, article, event, or op-ed you would like to see covered in a future Washington Snapshot.

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