CASE President and CEO Sue Cunningham:

The United States is fortunate to have a broad and diverse base of generous donors from across the political spectrum, all of whom share a belief in the transformative power of education. These donors demonstrate their commitment through charitable gifts that support students, teaching, and research at nonprofit schools, colleges, and universities across the country. Their philanthropic investment provides institutions with additional resources to fulfill their missions, particularly at a time when state and federal budgets are under strain. 

However, it seems that some are now looking to put this generosity at risk. The tax reconciliation proposal from the House Ways and Means Committee Republicans is a deeply concerning development.  By significantly increasing the current 1.4% tax on private college and university endowments to rates of 7%, 14%, and even 21%, the bill would impose a heavy burden on the very charitable contributions that fuel the success of the American higher education system. 

Rather than cutting taxes, House Republicans are proposing substantial tax increases on funds that overwhelmingly support students and life-changing and saving research, redirecting charitable dollars away from the original intent of donors, who wish to support higher education and foster opportunities for students. The proposed tax rates are nothing short of draconian and they will undoubtedly have a chilling effect on the invaluable philanthropic investment that has been vital in supporting American educational institutions, their students, and their contributions to society. 

The most recent CASE Insights on Voluntary Support of Education survey found that virtually half (48%) of all gifts to endowment are earmarked for donors for student financial aid. When adding gifts restricted for academic divisions and faculty and staff positions, the percentage of gifts to endowment underwriting the price of an education for students is 87.2%. 

We cannot, and must not, allow lawmakers to finance their tax bill at the expense of our future leaders, entrepreneurs, scientists, artists, teachers, researchers, healthcare professionals, and visionaries. Nor should they do so by undermining the funds that support life-changing and saving research. CASE strongly urges the House Ways and Means Committee to reject and withdraw the proposed increases to the endowment tax before the bill reaches the House floor. 

Instead of imposing burdens on charitable giving, the House Ways and Means Committee should encourage more Americans to contribute to support students, teaching, and research at educational institutions. We are pleased that the Committee included a restoration of a charitable deduction for non-itemizers, something that CASE has championed with many others across the charitable sector as an incentive for all Americans, regardless of income, to give to schools, colleges, universities, and other charitable organizations.

As the tax reconciliation bill continues its journey through the legislative process, CASE urges lawmakers to support policies that encourage giving and empower educational institutions to continue their critical  role in nation building through their vital mission of advancing education to transform lives and society.