A bill (S.3881) has been introduced in the Senate to allow for the creation of pre-tax “personal philanthropy accounts”. Think of it as a 401(k) for your charitable donations. You get to put in a max of $15k pre-tax and the charities of your choice get the money. This is a better deal for the donor who is currently giving with post-tax dollars and could encourage an increase in giving fron individuals as well as employers through matching programs.
Sounds really cool, but I wonder when the charities actually get the dough. I can’t access my 401(k) account until I retire without paying huge early withdrawal penalties. Do charities have to wait as long as I do? I hope not, I’m only 25, retirement seems an awful way off.
Nonetheless, it sounds like a cool idea. Props to Sens. Isakson (R-GA) and Lautenberg (D-NJ) for sponsoring it. And thanks to PerryWasserman for finding out about it.
Technorati Tags:
donations, “personal philanthropy account”, S.3881
1 Comment so far
Leave a comment
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <pre> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
It’s similar to setting up a donor-advised fund, but with pre-tax dollars. Your concern about when a nonprofit would see the money is a valid one – there is no law about when money has to be donated from a DAF but the deduction is immediate. Hopefully the senators have thought about that issue so that this is not just a tax shelter but actually benefits charities in a timely fashion.
Comment by Archana September 30, 2006 @ 1:56 pm