Gardner, Peters Introduce Legislation to Encourage Rural & Urban Investment
Washington, D.C. – U.S. Senators Cory Gardner (R-CO) and Gary Peters (D-MI) reintroduced the Philanthropic Facilitation Act (PFA) to reform the approval process for charitable investments, so organizations can more easily invest in community improvement and job creation, boosting economic growth in both rural and urban areas.
“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 across Colorado where it’s needed most.”
“Charitable foundations across Michigan are playing critical roles in supporting local economic development,” said Senator Peters. “I am pleased to partner with Senator Gardner on this bipartisan legislation that would encourage further investment in underserved rural and urban communities by streamlining the process for charitable organizations to grow, create jobs and continue to give back to these communities.”
Current law stipulates that private foundations must make a certain amount of charitable distributions in order to keep their tax-preferred status. Commonly, those distributions come in the form of grants to not-for-profit organizations. Program-Related Investments (PRIs), which are investments in for-profit companies undertaking a charitable activity, can also count towards a private foundation’s annual charitable distributions, but are often ignored due to a confusing certification process.
This legislation introduced by Gardner and Peters streamlines the process for Internal Revenue Service (IRS) rulings on whether a loan or an investment by a philanthropic organization can be considered a PRI, and therefore count towards yearly charitable distributions. This legislation makes it easier for organizations to invest in a given entity by simplifying the process and forcing the IRS to make a decision within 120 days.
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