Peters Introduces Legislation to Encourage Charitable Foundation Investments to Boost Economic Recovery
WASHINGTON, DC—U.S. Senator Gary Peters announced today that he joined Republican Senator Cory Gardner (CO) to introduce the Philanthropic Facilitation Act, legislation to streamline the approval process for charitable foundations to expand investments in local communities, increase economic development and create jobs. In Michigan, private organizations like the Kresge Foundation, Skillman Foundation, Max M. and Marjorie S. Fisher Family Foundation and W.K. Kellogg Foundation have helped boost economic recovery by providing financing, loans and grants to entrepreneurs and small businesses that grow local economies and revitalize communities.
“Charitable foundations are playing a significant role in the economic recovery of cities across Michigan by branching out into investment in economic development,” said Senator Peters. “This legislation will encourage philanthropic investments in our hardest hit urban and rural areas across the country to help organizations grow, create new jobs and continue giving back to our communities. I’m honored to work with Senator Gardner on this commonsense measure to help streamline the process for charitable foundations so they can expand the ways they serve our communities.”
“Encouraging investment in both rural and urban settings is vital to growing our economy and creating jobs. The Philanthropic Facilitation Act benefits rural economies in particular by cutting red tape and removing barriers between philanthropists and small businesses, ultimately leading to more job creation,” said Senator Gardner. "Private charities are more than willing to invest in and grow the economy but are too often deterred by government bureaucracy. Simply put, it’s often too hard for philanthropists to identify qualified recipients for their charitable dollars. This legislation is a common-sense solution that gets government out of the way and encourages more investment where it’s needed most."
The Philanthropic Facilitation Act simplifies and expedites the approval process to encourage charitable foundations to make Program-Related Investments (PRIs), which are investments in various organizations, including certain for-profit businesses undertaking activities consistent with charitable missions. The legislation creates a streamlined, voluntary application and approval process that must be reviewed by the Internal Revenue Service (IRS) within 120 days to determine if an applicant meets the standards for a PRI.
Under current law, private foundations are required to make charitable distributions to keep their tax-preferred status, which often come in the form of grants to nonprofit organizations. PRIs can also count toward a private foundation’s charitable distributions, but are rarely used due to a complicated and costly IRS approval process. A study from Stanford University found that applying for IRS approval for a PRI requires a $19,000 fee plus additional attorney costs, and can take months to review.
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