What the New Charities Law Means For You
On Aug. 17, 2006, President Bush signed into law a bill that will impact grantmakers and donors.
The new charitable provisions, part of the Pension Protection Act of 2006 (H.R. 4), include the
first comprehensive regulation of donor-advised funds, as well as reforms or incentives that will
affect private foundations, supporting organizations and individual donors.
Other Provisions
Other key provisions in the new charities law:
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Increased fines and penalties: The new law doubles fines and penalty excise taxes for violations by private foundations and their managers, and doubles the dollar cap (to $20,000) for penalty excise taxes that can be imposed on managers of public charities for excess benefit transactions.
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Study of donor-advised funds and supporting organizations: The new law calls for the Treasury Secretary to conduct a year-long study of donor-advised funds and supporting organizations to determine if any other requirements (such as payout) are needed.
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Public disclosure of UBIT Returns: The current public inspection and disclosure requirements for Forms 990 and 990-PF have been extended to apply to UBIT returns (generally Form 990-T) for both private foundations and public charities.
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Business donations of food and books: In 2006 and 2007, businesses of any type can obtain a larger charitable contribution deduction for qualified food inventory donations to tax-exempt organizations, and C corporations can obtain a larger deduction for book inventory donations to elementary or secondary schools — if the books are used in the school's educational programs.
This information was made possible by the Forum of Regional Associations of
Grantmakers and its members, with valuable technical assistance provided by
Andras Kosaras, Council on Foundations.
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