Congress Passes Significant Legislation Impacting Charities: The Pension Protection Act of 2006

On Friday, August 3rd, Congress passed the Pension Protection Act of 2006 ("PPA"). The President is expected to sign the PPA into law shortly.Within this Act are a number of long anticipated charitable reform measures that are intended to curb philanthropic abuses. However, as with any piece of legislation, there are broad, unintended consequences.
 
We are currently working with our clients to address the impact of the PPA on their operations. Across the nonprofit sector,  the PPA's impact will be varied. The administrative burdens of community foundations and some private foundations will increase as a result of the PPA's provisions regarding donor advised funds and supporting organizations.  Organizations reporting unrelated business income must now adapt to new rules requiring public disclosure of the Form 990-T. Organizations that interact with a number of donors will benefit from the long awaited provision permitting tax-free distributions to charities from one's IRA, but also will likely need to adapt their practices regarding substantiation of gifts.
 
Go here for a summary of the PPA. Many of the provisions of the PPA will be applicable on the date the President signs it into law (as he is expected to do). A few provisions will be retroactive from July 25, 2006.
 
We will be providing more detailed guidance in a future e-newsletter.  Please contact Marilee Springer or Jeff Lozer if you would like to discuss how the Act will impact your charity's activities.