Working with Government

Networking for Success: Building Networks Is Essential to Investment in Social Impact Bonds

council-webteam — Tue, 04 Mar 2014 15:14:20 +0000

Networking for Success: Building Networks Is Essential to Investment in Social Impact Bonds council-webteam Tue, 03/04/2014 - 10:14

Networking for Success: Building Networks Is Essential to Investment in Social Impact Bonds

Working in collaboration with the Center for American Progress, the Council co-hosted conversations among foundations, community development financial institutions, and investment firms about social impact bonds and Pay for Success. Out of these conversations, two issue briefs were created:

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Potential Implications of Funding Protest Activities

MatthewCain — Fri, 26 Sep 2025 13:59:01 +0000

Potential Implications of Funding Protest Activities MatthewCain Fri, 09/26/2025 - 09:59

Potential Implications of Funding Protest Activities

Developed for the Council on Foundations by Christopher J. Armstrong, Partner at Holland & Knight

The Current Environment

Foundations are under increasing political scrutiny regarding their relationships with organizations that have engaged in protests, especially in situations where protestors are alleged to have engaged in violence or other illegal activities. This sharpened focus on the funding sources of protests may lead to increasing oversight of foundations or the tax-exempt sector generally and organizations perceived as left-leaning entities specifically.

Comments made by political leaders suggest a growing interest in undertaking investigations and other actions against not only certain parts of the tax-exempt sector, but also directly on entities such as foundations that provide funding. There is significant risk that members of the Council on Foundations may be subject to this scrutiny in the weeks and months ahead and should consider how funders may be implicated by the actions – real or perceived – of those they have funded.

Potential Actions Ahead

Because of the attention being paid to entities providing funding to certain tax-exempt groups, it is important for foundations to consider the variety of ways (none mutually exclusive) that this scrutiny might arise. Due to the political nature of this rising attention, as well as the power congressional committees have to launch investigations, there is not a predicable standard by which an organization is safe from being the subject of an investigation on these issues. Therefore, foundations who have supported groups that are themselves disfavored or might be associated with (correctly or incorrectly) violent protests will carry risk of themselves being subject to action.

Potential actions include:

Congressional Investigations
- Congressional investigations are perhaps the hardest to predict and prepare for, given the wide leeway congressional committees enjoy to launch investigations when and against whom the chair deems appropriate. Most congressional committees have many tools with which to conduct investigations, including voluntary information requests, the power to issue subpoenas for records and testimony, conduct depositions or transcribed interviews, hold public hearings, hold parties in civil or criminal contempt, and refer matters to the executive branch for additional action. Yet the most often used – and effective – tool is the ability to sway the court of public opinion through press releases, the use of traditional and social media, and the microphones of committee members.
Department of Justice Action
- The Department of Justice can launch an investigation in several ways and across several types of investigations, including general criminal investigations related to violations of federal law, civil investigations (regarding civil rights and fraud against the government), or civil or criminal litigation by the Tax Division concerning tax law. How DOJ will scrutinize foundations remains to be seen but based on the Administration’s public statements and recent actions, the most likely avenues are claims of funding illegal DEI practices, aiding the violation of immigration laws, or support for organizations involved in protests (especially if violent behavior occurred at the protest, whether the organization is involved or not).
Internal Revenue Service Action
- The Internal Revenue Service (IRS) could review an organization’s tax-exempt status, though such reviews typically begin with an audit, which legally and historically are not conducted publicly. Confidentiality aside, there are several ways the government attack tax-exempt status after an audit, such as:
  1. While 26 U.S.C. 7217 prohibits Executive Branch influence over taxpayer audits and investigations, there is an exemption for the Secretary of the Treasury to provide a written request to the IRS to take action “as a consequence of the implementation of a change in tax policy.”1
  2. Accusations of funding terrorist groups that are on a U.S. sanctions list or funding illegal activities or activities that promote or incite violence.
  3. Accusations of not serving a public purpose and having purposes and activities that are contrary to established public policy.2
  4. Accusations of impermissible use of funds for non-charitable purposes, or to fund “illegal” activity. The standard is generally that violation of constitutionally valid laws is inconsistent with exemption under section 501(c)(3). The IRS seems to weigh whether the illegal activities are substantial both in quantity and quality.

Relevant claims that the activities of charitable organizations are “illegal” may involve DEI, immigration, lobbying activity, and that participation in planned demonstrations that violate laws and ordinances may not be considered tax exempt, particularly if the charity encourages its participants to ignore or violate such laws and ordinances.

Considerationsp

Foundations providing general operating support or specific project support for organizations should review the Council’s guidance on expenditure responsibility3 and speak with their counsel to understand any specific risks. Given the current political environment, it is important to keep in mind that perception – not strict adherence to laws and regulations – will likely guide which organizations are targeted for scrutiny in this environment. Should a foundation be aware (or become aware) that its funding went to an organization that was involved in overt partisan political activity, protests that may have included violent actions, aid to undocumented individuals in crossing the border or evading law enforcement, or other activities bearing political or legal risk, it will be important to work with counsel to review documentation of relevant pre-grant inquiries, the written grant agreement, and documentation of its ongoing monitoring and reporting to determine what further actions may be necessary.

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Expanded Legal Support - Center for Community Foundations

MatthewCain — Wed, 25 Jun 2025 17:14:45 +0000

Expanded Legal Support - Center for Community Foundations MatthewCain Wed, 06/25/2025 - 13:14

After listening, research, and consultation with the field, the Council on Foundations is expanding legal support to help community foundations prepare for—and respond to—threats that could shape the future of the sector.

The resources presented on this page provide additional analysis, guidance, and tools to help organizations prepare for potential new scrutiny.

Legal Support Resources

View Additional Legal Support Resources for Community Foundations

Community Foundation Legal Support Fund

We are working in consultation with field leaders, legal experts, and sector partners to ensure the field is prepared in the face of escalating scrutiny and potential legal action.

While many community foundations are navigating similar challenges, their capacity to respond varies widely. We heard clearly that smaller or rural organizations often lack access to legal counsel and the infrastructure needed to act quickly and confidently.

The Community Foundation Legal Support Fund provides financial assistance to defray the legal expenses associated with challenges facing community foundations and other grantmakers when pursuing their missions, serving their communities.

Through an open application process, eligible organizations can request funding to help offset the cost of responding to the threat of litigation, audits, or investigations—particularly in cases that have the potential to shape the broader legal landscape for the community foundation field.

Learn more about the Community Foundation Legal Support Fund

Financial support for the CFLSF is received from philanthropic grants and voluntary contributions. The capacity of the fund to assist applicants is limited by the amount of contributions received. These resources will help ensure that all community foundations, regardless of size or geography, can access the support they need when it matters most.

Already, more than 30 community foundations have contributed resources to this initiative, and you’re welcome to join them. Reach out to development@cof.org to learn more about supporting this work – grants of all sizes are welcome!

For more information about the Legal Support Fund, reach out to info@cflegalsupportfund.org.

Explore the Community Foundation Legal Support Fund

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Responding to a Congressional Inquiry

MatthewCain — Tue, 24 Jun 2025 16:57:18 +0000

Responding to a Congressional Inquiry MatthewCain Tue, 06/24/2025 - 12:57

Responding to a Congressional Inquiry

Developed for the Council on Foundations by Christopher J. Armstrong, Partner at Holland & Knight

Congress’s power to conduct inquiries, including information requests, the issuance of subpoenas, and public hearings has long been recognized by the courts as part of Congress’s power to legislate. To legislate in an informed way, Congress necessarily has the power to find facts. However, there are limitations on this power. Congressional committees may only investigate subjects within that committee’s jurisdiction, and in furtherance of potential legislation rather than, for instance, criminal investigations. Constitutional privileges, such as the right against self-incrimination, also apply in a congressional investigation.

Requests for Information

Information requests are a common way for congressional committees to conduct oversight. Congressional oversight activities fall upon a spectrum of actions, including:

Voluntary information requests;
Requests for records;
Subpoenas for existing records, which can be enforced by a Committee and full House vote for civil or criminal contempt;
Voluntary requests or subpoenas for transcribed interviews; and
Voluntary requests or subpoenas for testimony at a public hearing.

Nearly every authorizing committee in Congress has the authority to issue subpoenas for records or testimony, though the rules differ among committees. Most commonly, House Committees provide the power to the Chair at their sole discretion. In the Senate, it is more common for committee rules to require either the consent of the Ranking Member or a majority vote by the Committee.

Subpoenas for records typically only follow negotiations between the Committee and the party who has received a voluntary request that they have declined to answer. Still, subpoenas against private parties are relatively rare. Whether they are issued, or enforced via a contempt vote, depend heavily on the political salience of the matter in question, the political advantage to the committee undertaking the investigation, and other factors. Most typically, these matters are resolved by negotiation or waning interest by the committee.

Factors and Actions to Consider Upon Receiving a Request by a Congressional Committee

Response Team: Upon receiving a request by a congressional committee, or beforehand if you have a reasonably expectation of receiving one, the first step should be to assemble your response team. This may include senor leadership, in-house counsel, outside counsel, government relations professionals, subject matter experts, communications professionals, and information technology professionals in the case of document collection and production. The organization’s response, and any document searches or production should be conducted by counsel and with appropriate steps to protect privilege.
Acknowledging Receipt: It is customary to acknowledge receipt within days of receiving a congressional request. Doing so does not commit the organization to a particular set of actions but simply acknowledges that the request was received.
Aligning leadership, your board, and key stakeholders: The organization’s response team should discuss and arrive on a planned course of action, whether that be to fully comply with the request, provide a limited response, or decline or fight the request. It is also worth considering informing key stakeholders, such as significant grant recipients, donors, and key partners of the request and framing it in the way that best suits the needs of the organization.
Negotiation with Committee Staff: Congressional requests are often negotiable. Matters such as response deadlines, the scope of the information requested, the relevant time periods for the information requested, and other matters are commonly subject to negotiation to better provide the committee with relevant information, reduce the burden on the organization, and protect against the public disclosure of sensitive information
Identify Friends: Through government relations professional, the response team, and other partners, identify members on the committee or other members of congress who may be allies. Congressional allies can provide a good source of guidance, intelligence, and other information that can be helpful in the inquiry.
Manage Your Communications: Avoid letting the congressional investigators tell the whole story. The organization should communicate with staff, key stakeholders, and media to tell its own story and manage public perception of the inquiry. Realize that the investigators will also seek outside communication, so consider balancing acknowledgement of the inquiry in a way that will not conflict with any response to Congress.
Document Collection and Production: Upon receipt of an information request, regardless of how the organization will approach its response, it is advisable to put in place a litigation hold on all relevant records that may be responsive to the request. Doing so prevents future claims that the organization destroyed documents relevant to the congressional inquiry and does not dictate which records will or will not be produced.
Assume Produced Information and Documents will Become Public: Once information is produced to Congress, consider those records or information to be the property of the committee. No prior agreements or claims of confidentiality will protect the information from being disclosed to the media, included in a committee report, or other public release.

Subpoena Considerations

While most committees have the power to issue subpoenas for existing records and testimony (but not the creation of new documents), their use against private parties is relatively rare. More often, they are threatened as a means to force production of responsive information. A common notion in congressional investigations is that the most powerful subpoena is one that is threatened but not issued. Given the relative rarity of congressional subpoenas against private parties, their issuance is often news-worthy and can result in negative media attention. Their issuance also requires committee time and resources, which may not always be available. Finally, once issued, enforcing a subpoena requires not only the committee’s time and resources, but that of the full House or Senate. As with other issues describe above, a threatened subpoena is also a catalyst for further negotiation.

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Permissible Exempt Purposes Under 501(c)(3)

brandon.cox@cof.org — Tue, 20 May 2025 15:21:10 +0000

Permissible Exempt Purposes Under 501(c)(3) brandon.cox@cof.org Tue, 05/20/2025 - 11:21

Permissible Exempt Purposes Under 501(c)(3)

This page outlines the range of purposes that qualify an organization for tax exemption under section 501(c)(3) of the Internal Revenue Code. It explains how the IRS and courts interpret key terms — especially "charitable" — and how those interpretations shape eligibility.

Permissible Exempt Purposes Under 501(c)(3)

The Tax Code under section 501(c)(3) provides tax exemption for organizations that are organized and operated exclusively for certain purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.

The specific meanings of those terms are further clarified in the Treasury Regulations, with much of the focus on the definition of the word charitable. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; and promotion of social welfare (lessening neighborhood tensions, eliminating prejudice and discrimination, defending human and civil rights secured by law, and combating community deterioration and juvenile delinquency).

These concepts are further expanded upon and defined through numerous IRS rulings and court decisions going back decades. The Tax Court of the United States found“ charity in its narrow sense includes only gratuities bestowed upon the needy or for the relief of suffering—in its broader meaning, charity is not so limited but also embraces any benevolent or philanthropic objective not prohibited by law or public policy which tends to advance the well-doing and wellbeing of man.”

Relief of the poor, the distressed, or the underprivileged
Advancement of religion
Advancement of education or science
Erecting or maintaining public buildings, monuments, or works
Lessening the burdens of government
Promotion of social welfare

Charitability of Climate-Related Activities
Charitability of Diversity, Equity and Inclusion (DEI) Activities
Charitability of International Grantmaking

Relief of the poor, the distressed, or the underprivileged

Assistance to individuals who are needy, meaning that they lack the necessities of life, involving physical, mental, or emotional well-being, because of poverty or temporary distress. This can include assistance to low-income individuals and those suffering from temporary hardship or who are the victims of a disaster. It can also include assistance to the elderly, sick, or disabled persons. The individual recipients of assistance must be members of a charitable class, and selection of recipients must be made pursuant to an objective, nondiscriminatory basis related to the purposes for which the assistance is being provided.

Advancement of religion

Because of the First Amendment, the government cannot establish a narrow definition of religion. Generally, the IRS will look at 1) whether the particular beliefs of the organization are truly and sincerely held, and 2) whether the practices and rituals associated with those beliefs are legal and consistent with public policy (i.e., no exemption for sects practicing ritual illegal drug use). The public policy test also resulted in a loss of exemption for Bob Jones University due to its prohibition on interracial relationships between students, even though it claimed that policy was based on sincerely held religious beliefs.

Advancement of education or science

Often furthered through educational scholarships to help individuals obtain an education or through grants to organizations that advance the arts, humanities, and sciences. Although courts and the IRS have clearly established that a school with racially discriminatory admissions policies cannot qualify for tax-exempt status, the IRS has also ruled that “[a] policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance will not constitute discrimination on the basis of race when the purpose and effect is to promote the establishment and maintenance of that school's racially nondiscriminatory policy as to students.”

Erecting or maintaining public buildings, monuments, or works

Providing parks and recreational facilities is not a charitable activity in and of itself. It is charitable only if it provides a community-wide benefit. Organizations whose activities are exclusionary or discriminatory will not be deemed to be operating in the public interest and do not qualify for tax exemption. This function is almost always used in conjunction with lessening the burdens of government, suggesting that these public buildings, monuments, or works are understood to be government-owned facilities. It is unlikely to be the sole justification for exemption, absent some connection to government.

Conservation organizations could potentially fall under this justification as long as their efforts in conserving environmentally significant lands benefit the entire community. Activities directed at combating climate change have been approved under the same rationale as conservation organizations, and similarly, their activities must provide a “direct environmental benefit to the public” rather than environmental benefits that are “incidental and tangential.”

Lessening the burdens of government

There needs to be some objective manifestation by the governmental unit that it considers activities of the organization to be its burden. This is not generally a justification that an organization can simply claim for itself without any involvement on the part of the governmental unit. The organization must demonstrate that a governmental unit considers the organization to be acting on the government’s behalf, thereby actually freeing up government assets that would otherwise have to be devoted to that particular activity. The fact that an organization is engaged in an activity that is sometimes undertaken by the government is insufficient to establish the governmental burden.

This category of activities includes:

Lessening neighborhood tensions
Eliminating prejudice and discrimination
Defending human and civil rights secured by law, and
Combatting community deterioration and juvenile delinquency.

Rulings on these charitable justifications have resulted in approvals for organizations focused on nondiscrimination in housing availability, equal access to job opportunities, stimulating economic development in high density urban areas by low-income minority and disadvantaged groups, and preventing physical blight in economically depressed neighborhoods. It is worth noting that many of these IRS rulings date from the mid-1960s through the early 1980s.

Charitability of Climate-Related Activities

Many charitable organizations, including grantmaking organizations, are engaging in climate-related work as part of their charitable mission. For some, their “climate-related work” includes conservation, reduction of greenhouse gas emissions, transition to “clean” or less polluting energy sources, ameliorating harm caused by climate/energy-related accidents (ex., oil spills), among other activities. While the Tax Code does not explicitly name “climate” as a charitable activity, many organizations have found ways to include this work with their charitable missions.

Most of the guidance around environmental activities was issued in the late 1960s and early to mid-1970s. Over the past fifty years, significant developments have occurred in scientific research and understanding of climate change. Many charitable organizations tie their climate-related activities and goals to other charitable purposes, like education. In addition, some climate-related grantmaking has extrapolated private letter rulings and exemption denials or hired legal counsel to guide their work.

Over the past 30 years, the IRS has granted tax-exempt status to many organizations working on climate change and fossil fuel reduction, particularly when tied to education or conservation. The IRS approved organizations that engage in the following:

An organization formed to buy and maintain forest land as a “sanctuary for wild birds and animals” and would make it open to the public for educational purposes;
An organization formed to “preserve and improve a lake used extensively as a public recreational facility” (the charitable activity being cleaning the water in the lake and allowing for recreational use of the lake);
An organization formed to preserve the natural environment by “buying ‘ecologically significant undeveloped land’ and maintaining the land” (the charitable activity being preserving the land for future generations so they can access the natural environment).

However, an exemption is often denied when the private benefit is too significant or the public benefit is too limited.

In addition, under Section 170(h)(4)(A), a contribution that is made for any one of the following four conservation purposes qualifies for a charitable deduction: “(i) the preservation of land areas for outdoor recreation by, or the education of, the general public; (ii) the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem; (iii) the preservation of open space (including farmland and forest land) where such preservation is-- (I) for the scenic enjoyment of the general public, or (II) pursuant to a clearly delineated federal, state, or local governmental conservation policy, and will yield a significant public benefit, or (iv) the preservation of an historically important area or a certified historic structure.”

Charitability of Diversity, Equity and Inclusion (DEI) Activities

Eliminating prejudice and discrimination is one of the activities described in the definition of "charitable" in the Treasury Regulations interpreting Section 501(c)(3) of the Tax Code. Accordingly, in granting tax exemptions to organizations engaged in these activities, the IRS has supported efforts to lessen prejudice and discrimination or provide support to underrepresented individuals or groups.

In addition, regulations relating to private foundation scholarships still include an example that approves a program that solely provides funding to members of a certain ethnic minority (Treas. Reg. § 53.4945-4(b)(5) Example 2).

The IRS has offered specific guidance to specific organizations that qualify as charitable and tax-exempt, including organizations with the missions listed below (note that much of this guidance dates to the 1960s and 1970s but continues to be highlighted in recent IRS publications):

Investigates causes of community tension, discrimination, physical deterioration, and juvenile delinquency, disseminates its findings, and attempts to educate the public.
Investigates the existence of discrimination and seeks compliance with applicable laws.
Studies employment conditions and informs the public on the advantages of non-discriminatory hiring.
Promotes racial integration in housing by educating the public about integrated housing
Educates the public about integrated housing and constructs new housing to reduce racial and ethnic imbalances.
Seeks to eliminate discrimination against minorities seeking employment in construction by recruiting, educating, and counseling workers.
Provides support to businesses in low-income, minority communities for the relief of poverty, the elimination of prejudice, the lessening of neighborhood tensions, and the combating of community deterioration in certain economically depressed areas, even though its program of financial assistance and other aid may go towards businesses that themselves may not qualify as charitable.

Charitability of International Grantmaking

Foreign Grantmaking Generally

The Tax Code and regulations that govern charitable contributions and the activities and purposes of tax-exempt organizations fully support the ability of U.S.-based exempt organizations to make charitable grants to foreign charities and other entities. The list of charitable purposes enumerated under section 501(c)(3) and section 170(c)(2)(B) does not distinguish between charitable activities or beneficiaries located within the US and those located in foreign countries.

While charitable contributions cannot be deducted for direct contributions to foreign organizations, the regulations under section 170 make it clear that a charitable deduction is allowed for contributions made to domestic charities “even though all, or some portion, of the funds of the organization may be used in foreign countries for charitable or educational purposes.”

IRS guidance regarding the deductibility of such contributions has focused on whether the US entity has sufficient discretion and control over the contribution, and, in the case of private foundations, whether certain procedures are in place to ensure the grant funds are used for exclusively charitable purposes.

Discretion and Control

Two examples of situations where a domestic organization demonstrates sufficient discretion and control over a charitable contribution that is ultimately used to fund activities carried out in a foreign country are:

The domestic organization is the “real beneficiary” of the contribution, but the domestic organization subsequently makes grants to a foreign charity for purposes that it has reviewed and determined to be in furtherance of its own exempt purposes. The grants are funded by the domestic organization’s general funds, and although that organization may generally solicit from the public, no specific funds are raised for the foreign grants.
A domestic charity solicits for a specific project of a foreign counterpart organization, but the domestic charity’s board has taken steps to review the project before approving any funding and continues monitoring the grantee’s use of all grant funds to ensure adherence to the domestic charity’s goals. Although the funds are earmarked for a foreign project, the domestic charity demonstrates sufficient control before solicitation, such that the domestic organization still has control and discretion over the use of the contributions.

Regulatory Provisions

Additional regulations address foreign grantmaking and provide less burdensome procedures in some circumstances.

Equivalency Determinations: If a private foundation makes a good faith determination that a foreign grantee organization is equivalent to a U.S. public charity then expenditure responsibility is not required. The regulations provide a safe harbor for the good-faith determination if the organization received written advice from a qualified tax practitioner that shows that the organization would likely qualify as a public charity or operating foundation.
Grants to a foreign governments or international organizations: A grant to a foreign government or its agencies, or to an international organization designated as such by Executive Order, may be treated by the grantor as a grant made to a public charity even if the grantee is not described in section 501(c)(3).

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One, Big, Beautiful Bill Frequently Asked Questions

kayla.roberson@cof.org — Mon, 19 May 2025 14:35:13 +0000

One, Big, Beautiful Bill Frequently Asked Questions kayla.roberson… Mon, 05/19/2025 - 10:35

One, Big, Beautiful Bill Frequently Asked Questions

As the One, Big, Beautiful bill containing the many Republican priorities moves through Congress under the reconciliation process, this page aims to answer frequently asked questions regarding the bill's key provisions impacting the philanthropic sector and charitable giving.

This page will be updated regularly as the legislation moves through the legislative process. View a full summary of the bill. For the most up to date information, join our Public Policy Action Network and sign up for Washington Snapshot to receive regular policy updates and stay engaged.

Last Updated on May 19, 2025.

Related Organizations

Assets of related organizations are aggregated with the assets of a private foundation for purposes of determining the applicable excise tax rate. Under the proposed legislation, a related organization is an organization (a) that controls or is controlled by the private foundation or (b) is controlled by one or more persons that also control the private foundation. This could apply to a large variety of tax-exempt and non-tax-exempt entities.

Corporations and Corporate Foundations:

The general assets of corporations which have affiliated private foundations are unlikely to be included in a private foundation’s asset calculation. Unless the related organization is controlled by the private foundation in question, only assets of the related organization which are “intended or available for the use or benefit” of the private foundation will be aggregated under this provision. Most private corporate foundations do not control the company that established them, and the company’s general assets are not likely to be considered intended or available for use by the private foundation unless or until the company contributes any of its assets to the private foundation.

Public Charities, Community Foundations, and Donor-Advised Funds:

It is unlikely that a community foundation or other public charity—even those which have received support from a private foundation—would be considered a related organization of a private foundation unless the public charity and private foundation are controlled by the same people. The mere presence of a board member of a private foundation on the board of a community foundation should not mean that it is a related organization. There would likely need to be significant overlap of the organizations’ boards so that the private foundation board members constitute a majority of the community foundation’s board and effectively control its actions.
Assets in donor-advised funds that were established and/or advised by private foundations would not likely be aggregated with the private foundation’s assets because donor-advised funds are not legally controlled by the private foundation. Rather, the assets held in donor-advised funds are the legal property of the sponsoring public charity and under the control of that public charity.

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One, Big, Beautiful Bill: Impact on Philanthropy

kayla.roberson@cof.org — Mon, 12 May 2025 14:43:41 +0000

One, Big, Beautiful Bill: Impact on Philanthropy kayla.roberson… Mon, 05/12/2025 - 10:43

One, Big, Beautiful Bill: Impact on Philanthropy

Last updated: July 8, 2025.

H.R.1 is now federal law; here's the final bill text.

With many of the provisions in the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) expiring at the end of 2025, the 119th Congress passed legislation through the reconciliation process that extends several TCJA provisions and includes many of the Republican majority's priorities. Read more about the budget reconciliation process.

Here's how it happened:

On Monday, May 12, the House Committee on Ways and Means released the Amendment in the Nature of a Substitute, which contains key tax provisions. The Committee marked up the legislation on May 13 and approved it on party lines on May 14 with no amendments. On May 19, the House Committee on Rules released amended text, and on May 22, the House passed the bill.

On June 16, the Senate Finance Committee released text of the tax provisions of the larger budget reconciliation package, and on June 28, the Senate Budget Committee released amended text for the full budget reconciliation bill. The Senate passed the bill on July 1, with three Republicans voting against and Vice President J.D. Vance breaking the 50-50 tie. The House then passed the legislation without changes, and President Trump signed it into law on July 4.

The Joint Committee on Taxation (JCT) released estimates of the budgetary effects of the House legislation as well as estimates of the budgetary impact of the Senate bill. Note that JCT's estimates for some Senate provisions are significantly different from their estimates for the House versions; this is for a variety of reasons, most importantly that the Senate uses a current policy baseline while the House uses a current law baseline. Read more about what that means and why it matters.

Below, find our summary of the provisions impacting philanthropy. We will continue to update this page as we learn more about provisions that impact the sector. Join our Public Policy Action Network and sign up for Washington Snapshot to receive regular policy updates and stay engaged.

Additional resources on the 2025 Budget Reconciliation bill:

Private Foundations

Excise tax on net investment income
Excess business holdings of private foundations

Corporate Grantmakers

Floor on charitable contributions from corporations

Individual Giving Incentives

Charitable deduction for itemizers
Charitable deduction for nonitemizers
Standard deduction
Charitable contributions to scholarship-granting organizations

All 501(c)3 Organizations, Including Foundations and Nonprofits

Recission of tax-exempt status for nonprofits supporting terrorism
Excess compensation for nonprofit executives
Changes to Unrelated Business Income Tax
Money Accounts for Growth and Advancement

Other Provisions of Note

Excise tax on investment income of colleges and universities

Private foundations

Excise tax on net investment income

What the President signed into law: The final bill did not include a House-passed provision to increase the excise tax.

Excess business holdings of private foundations

What the President signed into law: The final bill did not include a House-passed provision that would have amended excess business holdings of private foundations.

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Networking for Success: Building Networks Is Essential to Investment in Social Impact Bonds

Networking for Success: Building Networks Is Essential to Investment in Social Impact Bonds

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​​Potential Implications of Funding Protest Activities​

​​Potential Implications of Funding Protest Activities​

The Current Environment

Potential Actions Ahead

Considerationsp

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Expanded Legal Support - Center for Community Foundations

Expanded Legal Support

Legal Support Resources

Community Foundation Legal Support Fund

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Responding to a Congressional Inquiry

Responding to a Congressional Inquiry

Developed for the Council on Foundations by Christopher J. Armstrong, Partner at Holland & Knight

Requests for Information

Factors and Actions to Consider Upon Receiving a Request by a Congressional Committee

Subpoena Considerations

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Related Events

Related Resources

Permissible Exempt Purposes Under 501(c)(3)

Permissible Exempt Purposes Under 501(c)(3)

Permissible Exempt Purposes Under 501(c)(3)

Relief of the poor, the distressed, or the underprivileged

Advancement of religion

Advancement of education or science

Erecting or maintaining public buildings, monuments, or works

Lessening the burdens of government

Promotion of social welfare

Charitability of Climate-Related Activities

Charitability of Diversity, Equity and Inclusion (DEI) Activities

Charitability of International Grantmaking

Questions?

One, Big, Beautiful Bill Frequently Asked Questions

One, Big, Beautiful Bill Frequently Asked Questions

Related Organizations

Corporations and Corporate Foundations:

Public Charities, Community Foundations, and Donor-Advised Funds:

Questions?

One, Big, Beautiful Bill: Impact on Philanthropy

One, Big, Beautiful Bill: Impact on Philanthropy

Private foundations

Excise tax on net investment income

Excess business holdings of private foundations

Corporate grantmakers

Floor on charitable contributions from corporations

Individual giving

Changes to charitable deduction for itemizers

Charitable deduction for nonitemizers

Standard deduction

Charitable contributions to scholarship-granting organizations

All 501(c)(3) organizations

Recission of tax-exempt status for nonprofits supporting terrorism

Excess Compensation for Nonprofit Executives

Changes to Unrelated Business Income Tax (UBIT)

Money Account for Growth and Advancement (Trump Account)

Other Provisions of Note

Excise tax on investment income of colleges and universities

Questions?

Self-Defense Communications Regarding the Section 4940 Excise Tax on Net Investment Income

Self-Defense Communications Regarding the Section 4940 Excise Tax on Net Investment Income

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Executive Orders & Actions We Are Monitoring

Executive Orders & Actions We Are Monitoring

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Executive Orders

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Other Executive Actions

Guidance on Executive Order Designating English as Official Language of the United States

Equal Employment Opportunity Commission Guidance on Title VII Compliance for DEI Programs

Memorandum Initiating Federal Financial Assistance Pause

Background Resources

Potential Implications of Funding Protest Activities

Potential Implications of Funding Protest Activities