A Community Conversation: Philanthropy’s Role and What’s Ahead

Note: This is an op-ed from Linda Speed, CFSI President and CEO.

At the Community Foundation of Southern Indiana, we’re proud to serve as a connector – linking people who care with causes that matter. Whether it’s helping families recover from crisis, supporting local nonprofits, or investing in long-term community development, philanthropy plays a quiet but steady role in shaping life in Clark and Floyd counties.

That’s why we’re watching developments in Washington carefully. The tax legislation recently passed by the U.S. House includes several provisions that could change the landscape for charitable giving – in ways both helpful and concerning.

On the positive side, the bill reinstates a charitable deduction for taxpayers who do not itemize. For communities like ours, where many residents take the standard deduction, this could encourage more people to support local organizations. We welcome that step.

At the same time, other provisions raise questions:

• One would impose a tiered excise tax on foundation investment income, increasing the tax rate as much as 619% for certain foundations.
• Another would introduce a 1% floor on charitable corporate deductions, allowing only contributions above that threshold to be deducted and potentially discouraging small business charitable donations.
• A third would impose the unrelated business income tax (UBIT) more widely which will increase the administrative burden on all nonprofits.

Each of these changes could affect how – and how much – foundations and corporate partners are able to invest back into the places we call home. The excise tax alone is projected to redirect more than $200 million from charities to the federal government.

At the Community Foundation of Southern Indiana, we have long supported efforts that strengthen quality of life across our region. Our Community Needs Assessment identified key issues shaping the future of our counties and continues to guide strategic grantmaking. Through our Quality of Place program, we’ve invested in initiatives that enhance livability and pride – like new playgrounds, green spaces, and downtown revitalization efforts that bring people together and energize our communities.

We’ve also seen the power of philanthropy in addressing challenges like addiction recovery and housing insecurity. Recent support for the Homeless Coalition of Southern Indiana’s White Flag Shelter helped provide emergency winter housing for those in crisis. Our Affordable Housing Study has brought new focus to regional affordability needs, and a recent grant to Serenity House is helping develop a long-term recovery complex for residents overcoming addiction.

Our efforts are not about politics, and neither are our current concerns.  Both are about staying focused on what works for our communities.

No single piece of legislation will solve or disrupt philanthropy – but tax policy does influence giving behavior. It matters whether those policies make it easier or harder for people and businesses to contribute to the causes they care about.

We’re grateful for the attention being paid to charitable giving in the legislative process and hopeful that the final Senate version will continue to support a strong philanthropic sector. In the meantime, we’re committed to sharing what we know and listening to our partners across the region.