HQ Team
May 19, 2025: US President Donald Trump’s plan to raise taxes on private philanthropic foundations will harm charities’ efforts to provide education, shelter, and food to the country’s poor, experts said.
The administration proposes to increase the excise tax on all charitable foundations from 1.39%, which is currently applicable to foundations with zero to $50 million in assets.
The tax on organisations with more than $250 million in assets may rise to 2.78%, and those between $350 million and $5 billion to 5%.
The administration is proposing a tax of 10% for foundations with more than $5 billion in assets.
A majority of the 2017 provisions in the Tax Cuts and Jobs Act expire in 2025. The Congress is crafting tax legislation through the reconciliation process that will extend the Act and include the Republican majority’s priorities.
‘One big, beautiful bill’
Trump described the legislation as the “one big, beautiful bill.” The bill would also slash billions of dollars for Medicaid and food stamps to help pay for trillions in tax and spending cuts.
While the bulk of the bill is concentrated on domestic tax issues touching health care, family support, and energy, a group of other provisions impact the philanthropic sector.
Lawmakers on the House Ways and Means Committee last week retained the provisions focused on non-profits and foundations, with their portion of the bill passing along party lines.
The House Budget Committee will now present it to the full House of Representatives for a vote.
“We know that economic prosperity fuels American generosity, and there are thousands of charitable foundations that have been putting Americans first for generations,” said Philanthropy Roundtable President & CEO Christie Herrera.
‘Out-of-control spending’
“The government simply does not know how to invest these dollars better than the hardworking, generous Americans who earned them,” she said in a statement.
“Allowing the IRS to snatch charitable dollars out of communities and the hands of Americans in need, and instead, funnel those dollars to the US Treasury to pay for Uncle Sam’s out-of-control spending habit is not something that advocates of limited government and individual freedom should get behind.”
The United States is cutting its aid budgets to the World Health Organization, USAID and other research and health bodies.
Last week, billionaire Bill Gates said he will donate more than $200 billion over the next two decades to prevent newborn child and maternal deaths, combat infectious diseases, Alzheimer’s, and close down the Gates Foundation on December 31, 2045.
“And no philanthropic organisation—even one the size of the Gates Foundation—can make up the gulf in funding that’s emerging right now,” he wrote on Gates Notes: ‘Last Chapter.’
‘Devastating’
The planned tax raises on foundations would reduce the resources available for effective charitable groups advancing liberty, opportunity and personal responsibility, harming Americans in every state, Roundtable President Herrera said.
“It means fewer dollars for educational opportunities for low-income students, groups focused on preventing veteran suicide, foster care organisations that help keep families together, food banks, homeless shelters, disaster relief organisations, faith-based charities, and many other critical programs and services in communities big and small.
“This is devastating for charitable giving and the millions of Americans who rely on it—and who will be hit the hardest.”
‘Future crises’
Philanthropy Roundtable, a community of hundreds of charitable donors around the US, stated that the consequences of higher taxes will be “disastrous.”
Kathleen Enright, President and CEO of the Council on Foundations, opposed the proposed tax increase on private foundations, arguing that the move will hit charitable organisations — from food pantries to disaster relief groups.
“Ultimately, this tax will hurt those who can least afford it: the people and places that rely on charitable support to weather today’s challenges and prepare for tomorrow.
“That’s because aggressively taxing charitable foundations doesn’t just restrict today’s giving — it also reduces the resources available to support local organisations through future crises,” she said.
