President Donald Trump swept into office this spring with a vision that stood in stark contrast with the prior administration’s tax-and-spend regime: rein in federal government, restore local control, and empower ordinary people to create upward mobility for themselves, their families, and their communities.
Congress has been working for months to craft a budget to achieve the president’s agenda. Many Republicans claim it’s a solid piece of conservative legislation that will make good on Trump’s promise. But there’s a fly in their ointment.
A proposal in the House’s original “one big, beautiful bill” would raise taxes by over 600% on private foundations that not only support local charities but also support Trump’s goals and are vital allies in his effort to rein in wasteful spending. Ostensibly, this tax, albeit a progressive one, is intended to raise revenue. But it smacks of political motivation.
Thankfully, the provision was excluded from the Senate Finance Committee text, in a win for communities across the country. We need to ensure the excise tax on private foundations is not added back in during negotiations ahead of the July 4 deadline. This harmful provision would mean less money to support food banks, houses of faith, veterans, disaster relief, and rural healthcare.
Targeting private foundations to fill the government’s coffers or worse is a bad precedent. It will chill private contributions into charities, which support everything from soup kitchens to scientific research. More importantly, it is chilling to civil society, and it will hurt conservative charitable organizations just as badly as Republicans’ perceived nemeses.
I would know. As CEO of DonorsTrust, I lead a team that protects the charitable intent of conservative and libertarian donors. Our mission is to ensure their dollars go to organizations that reflect their values, including the strongly held belief in limited government.
DonorsTrust feels so strongly about the independence of private philanthropy that we grant to charities on the condition that they are funded primarily by nongovernmental entities and do not actively advocate to expand the size and scope of government. We believe it is the domain of neighbors and communities to help one another when times get tough and the job of the government to get out of the way of people doing exactly that.
Charitable giving, whether by an individual or a foundation, embodies a core American value: the freedom to support the causes we care about, be they local, religious, educational, or cultural, without permission from Washington. People have deep personal connections with the institutions they support, not because they are state-directed, but because they reflect their individual values. Most importantly, they can choose the organizations and causes that matter to them, even when those conflict with one another.
The charitable deduction is unique. It’s an acknowledgement that individual people, not government bureaucrats, are best equipped, and, in fact, most morally responsible, for taking care of those around them. Money, time, and possessions that citizens “give away” in helping their fellow citizens shouldn’t be subject to the greedy hands of Washington.
Sadly, the charitable tax increase in the One Big Beautiful Bill Act seems to be nothing more than a money grab and political axe-grinding, which threatens to mow down honest, conservative-aligned organizations in the crossfire.
Conservatives were rightly outraged when the IRS under the Obama administration targeted right-leaning nonprofit organizations. So why adopt their tactics, especially when it marshals the federal government against the goodwill of ordinary people? We are witnessing the Right take a page from the Left’s playbook, and it’s beginning to resemble a junior high playground.
This retribution cloaked in tax code would open the door to retaliation against faith-based charities, private foundations, and think tanks that dare to challenge the prevailing ideology. As the Wall Street Journal editorial board cautioned, “A Democratic President could declare a think tank that opposes its climate or transgender bathroom rules to be acting contrary to ‘established public policy.’”
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A tax increase on charities isn’t limited-government conservatism. Using government muscle to “change the behavior” of private foundations is an improper use of policy. Is there a need for a serious conversation about reforming the institutions of philanthropy? Yes, but that’s best done by those of us who exist within that space.
Targeting foundations through America’s purse strings, whether from the Right or Left, is an affront to the pluralism and freedom that make our civil society uniquely American. Conservatives should know better. After all, Trump promised to empower our communities, not burden them with more government intervention. We applaud the Senate for taking this positive step forward and urge the provision be kept out of the bill as it moves forward and is considered on the floor ahead of the July 4 deadline.
Lawson Bader is the president and CEO of DonorsTrust.