	Introduction

Historically, the value of tax benefits for charitable contributions and organizations was estimated to be around $100 billion per year. Although revisions to the treatment of charitable contributions and tax-exempt organizations that receive these contributions have been made in recent years, a number of issues remain unresolved. A number of provisions related to charitable contributions have been enacted on a temporary basis as part of the "tax extenders," including an individual retirement account (IRA) rollover, liberalized treatment of certain gifts of inventory, and some other provisions. In addition to addressing the issues mentioned above, this report discusses the current tax benefits for tax-exempt and charitable organizations, reviews legislative changes that have taken place in recent years, and discusses potential future legislative issues. All of these types of asset accumulating institutions have been the subject of legislative interest. This is more than three times as large as the revenue loss for charitable donations to all educational institutions, which was approximately $7 billion in 2007. When President George W. Bush first proposed extending the deduction for charitable contributions to non-itemizers in 2001 no restrictions were imposed. The Pension Protection Act ( P.L. 109-280 with a $100,000 annual limit. P.L. 112-240 . They are significant in value, however. Restrictions on Tax-Exempt Organizations

A few provisions were enacted during the 108 th Congress that applied to tax-exempt organizations, but most provisions were enacted in the 109 th Congress, primarily in the Pension Protection Act in 2006. President's Obama's budgets have proposed to limit the value of itemized deductions, including charitable contributions, to 28%. Limits on itemized deductions may be considered as part of income tax reforms. In 2010, a number of small tax-exempt organizations had their tax-exempt status revoked after failing to meet information reporting requirements enacted as part of the Pension Protection Act. The Extenders

 Table 1 reports the expected revenue cost of extending each of the charitable provisions contained in the American Taxpayer Relief Act of 2012 ( P.L. Nonprofit Hospitals

The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) imposed a number of new requirements on 501(c)(3) tax-exempt hospitals. As indicated above, prior to the financial crises and subsequent recession, the benefit of exempting endowment income of colleges and universities from taxes was estimated at around $25 billion. The Treasury was directed to study specific issues: whether deductions for contributions to donor-advised funds and supporting organizations are appropriate given the use of the assets or benefits to the donor, whether donor-advised funds should have a distribution requirement, whether the retention of rights by donors means that the gift is not completed, and whether these issues apply to other charities or charitable donors.
Prior to the financial crises and subsequent recession, the value of tax benefits for charitable contributions and organizations was estimated to be around $100 billion per year. About half of this cost arose from the deductions for charitable contributions with the other half from exemptions of earnings of nonprofits. In 2010, the deduction for charitable contributions resulted in an estimated $40 billion in federal revenue losses. On average, endowment investments in 2009 experienced losses, meaning that the federal government did not lose revenues from exempting asset returns from taxation. By 2011, these returns on endowments almost recovered to their prior levels, although they fell to approximately zero for 2012. Over the longer run, however, they are likely to earn a substantial return.
This report provides an overview of recent changes affecting tax-exempt and charitable organizations, while also discussing issues that may be of legislative interest in the future. The Pension Protection Act (P.L. 109-280) included a number of restrictions related to charitable contributions as well as restrictions on tax-exempt organizations. These changes are briefly surveyed.
In addition to changes regarding the treatment of charitable contributions and tax-exempt organizations that have been made in recent years, several issues may be considered in future legislation. A number of provisions related to charitable contributions were extended temporarily as part of the tax extenders in the American Taxpayer Relief Act of 2012 (P.L. 112-240). Most of the charitable extenders were contained in legislation first introduced in 2001. Some provisions were enacted temporarily in 2005; further provisions and extensions occurred in 2006, in the Pension Protection Act. These extenders include an individual retirement account (IRA) rollover, liberalized treatment of gifts of food inventory and conservation property, and two more technical provisions.
Limitations on itemized deductions have been proposed as part of the Fiscal Commission's recommendation. President Obama's budgets have proposed limiting itemized deductions' value, including charitable contributions, to 28%. Other types of limits may be considered as part of tax reform.
The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), in response to concerns regarding charity care and community benefits provided by tax-exempt hospitals, imposed new regulations.
Other issues that may arise reflect concerns about donor-advised funds and supporting organizations and educational institutions' endowments. For donor-advised funds and supporting organizations, the main issue is whether and how minimum distribution requirements should be imposed, alongside other new regulations. The decline in educational institutions' endowments had raised concerns that such declines may lead to tuition increases, although these assets have largely recovered. New reporting requirements for small tax-exempt organizations, enacted under the Pension Protection Act (P.L. 109-280) may cause a number of noncompliant tax-exempt entities to lose their tax-exempt status.