GOP Senators Block Foundation Tax Increase in Trump Bill \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Two Republican senators helped block a 600% tax increase on major foundation endowments in President Trump’s latest tax-and-spending bill. Conservative philanthropic groups and nonprofit advocates pushed back, successfully lobbying for the exemption. Meanwhile, the bill raises taxes on university endowments and imposes new charitable giving rules.
Quick Looks
- Trump’s spending law omits steep tax hike on foundations
- Proposed 10% tax on large endowments blocked by GOP
- Senators Todd Young and James Lankford led opposition
- Conservative donors, nonprofits lobbied to protect philanthropic funding
- Tax hikes still apply to wealthy university endowments
- Trump admin split over taxing progressive-aligned philanthropy
- New rules: caps on itemized deductions, corporate giving minimum
- $1,000 charitable deduction added for individuals, $2,000 for couples
- 27% corporate giving threshold may deter donations
- Nonprofits warn safety net cuts will strain philanthropy sector
Deep Look
In a major win for philanthropic organizations, two Republican senators—Todd Young of Indiana and James Lankford of Oklahoma—joined forces with a bipartisan network of nonprofits and conservative donors to block a proposed 600% increase in taxes on the investment earnings of the wealthiest private foundations. The move came as part of President Donald Trump’s sweeping tax-and-spending package, signed into law on July 4.
The blocked provision would have raised the excise tax on foundations with over $5 billion in assets from 1.39% to 10%—a drastic increase aimed at a handful of influential institutions. Though the Trump administration pushed for the tax hike as part of a broader effort to rein in elite progressive organizations, the measure was ultimately removed from the final version of the bill, thanks to an intense lobbying campaign and behind-the-scenes persuasion.
“I do have to say that this took some persuasion,” Senator Young told the Associated Press. Young consulted with leaders from a dozen foundations in Indiana, including the Lilly Endowment, one of the nation’s wealthiest philanthropic institutions, with nearly $80 billion in assets. Though he didn’t name specific individuals, Young said it became clear that such a tax would hinder philanthropic efforts in local communities.
Senator Lankford, though not available for comment, was credited alongside Young for spearheading the effort within the GOP. Their efforts reflected growing internal division within the Trump coalition—between those who support the independence of private philanthropy and others, like Vice President JD Vance, who believe major foundations have become vehicles for liberal activism.
In a 2021 speech at the Claremont Institute, Vance criticized foundations supporting movements like Black Lives Matter, accusing them of “investing in racial division.” He called for stripping nonprofits of special tax privileges if they promote what he termed “woke” ideologies.
President Trump has generally backed Vance’s viewpoint. Early in his second term, Trump signed an executive order directing the Attorney General to investigate foundations, universities, and corporations for possible civil rights violations. While no formal investigations have been announced, the rhetoric has added pressure on the philanthropic sector.
Still, conservative philanthropic groups, such as the Philanthropy Roundtable, successfully rallied lawmakers against the foundation tax. In a letter to Senate Majority Leader John Thune and Finance Chair Mike Crapo, the group warned that siphoning charitable funds for government use “is antithetical to conservative values.”
Meanwhile, the legislation still includes provisions that impact nonprofits. A new charitable deduction of up to $1,000 per individual and $2,000 per couple is now available to all tax filers, a move expected to boost small-scale giving. However, a cap on itemized deductions for high-income donors has drawn criticism from advocacy groups, who argue it could reduce large donations.
More controversially, the law also requires corporations to donate at least 1% of their taxable income before qualifying for charitable tax benefits. Since many companies fall below that threshold, philanthropy leaders fear the provision may discourage corporate giving altogether.
Organizations like the United Philanthropy Forum, a coalition of regional philanthropic associations, say the new rules—and broader cuts to social programs—will strain the nonprofit sector further. “This is an all-hands-on-deck moment,” said Matthew L. Evans, the forum’s vice president of advocacy. “These policies will hit vulnerable communities first, and hard.”
The Forum joined nearly 3,000 nonprofit organizations in signing a letter to Congress opposing multiple provisions in the bill. While advocates managed to protect foundations from major taxation, they’re now bracing for the fallout from social spending cuts—cuts that disproportionately affect programs related to health care, education, and food access, areas where philanthropic dollars are often concentrated.
Kyle Caldwell, head of the Council of Michigan Foundations, said nonprofit demand is already surging. “The systems designed to support the most vulnerable are now being slashed,” he said. “Philanthropy can’t replace the government, but it will be expected to do more with less.”
Despite concerns, Senator Young defended the final law. “What we have found is that when the economy grows, people give more because they have more to give,” he said.
For now, major foundations can breathe a sigh of relief. But with Trump’s administration still eyeing nonprofit regulation—and conservative lawmakers like Vance pushing for broader reforms—the battle over the future of philanthropy in America is far from over.
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