Repeal the Tax on Foundations

To the Editor:

Leslie Lenkowsky (“Charities Should Support Bush Tax Cut,” March 8) mentions three Bush administration proposals of particular interest to charities: the nonitemizer deduction for charitable donations, tax-free donations of retirement savings, and state income-tax credits for donations to antipoverty groups.

Another proposal the White House should consider is repeal of the excise tax on private-foundation investment income, which would send millions of additional dollars each year directly into grants to charities. Because the excise tax paid acts as a credit against the minimum distribution that private foundations are required to make, the revenue would effectively be diverted from the tax coffers into the charitable stream.

An important note: There is no financial benefit for foundations in this. As was stated so well by Rep. Cliff Stearns, the Florida Republican who introduced H.R. 80, which would repeal the tax, “What we have is a private foundation making a charitable grant to the federal government every year.” It is time to end that.

Dorothy S. Ridings
President and CEO
Council on Foundations
Washington