Nonprofit Charitable Giving Incentives

Background on Charitable Giving Advocacy

Charitable Giving Incentives

Many performing arts organizations are classified as 501(c)(3) tax-exempt organizations just like thousands of other nonprofits in education, human services, and the full array of organizations. Without this exemption and the deductibility of private donations, nonprofit performing arts organizations and many other charitable organizations will now be unable to serve community needs.

Talking Points

• Charitable giving incentives are an investment in the public good. These incentives encourage donors to give more, benefitting millions of people who access services provided by nonprofit arts organizations.

• Approximately 40% of nonprofit performing arts organizations’ revenue comes from  comes from charitable giving. This support is vital as ticket sales alone do not cover the costs of artistic presentations and educational and community programming.

IRA Charitable Rollover

The IRA Rollover allows donors age 70 ½ and older to make tax-free charitable gifts directly from their Individual Retirement Account (IRA) funds to charitable organizations. Donors may give up to $100,000. Known as an “extender,” Congress has been extending this tax incentive on a year-by-year basis, resulting in uncertainty for both donors and charities.

In December 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act making the IRA Charitable Rollover a permanent charitable giving incentive along with other tax extenders. President Obama signed the PATH Act into law on December 18, 2015.

Artists Fair Market Deduction

The artist fair market deduction bill, also known as the Artist Museum Partnership Act, would allow artists to take a fair-market value deduction for works donated to nonprofit institutions. Currently, artists (including writers, musicians, visual artists, and scholars) only receive a deduction based on the cost of materials even though posthumous donations of the very same work are eligible for a fair-market deduction.