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Philanthropic Facilitation Act will encourage rural investment

The Philanthropic Facilitation Act (PFA) was introduced by Sens. Cory Gardner (R-CO) and Gary Peters (D-MI) on Wednesday to encourage rural investment.

The PFA would reform the charitable investments approval process to allow philanthropic organizations to more easily invest in community improvement and job creation while boosting both rural and urban economic growth.

“Encouraging investment in both rural and urban settings is vital to growing our economy and creating jobs,” Gardner said. “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. 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 where it’s needed most.”

Private foundations are required by current law to make a certain level of charitable distributions to keep their tax-preferred status. Those distributions are often made as grants to not-for-profit organizations. Program-Related Investments (PRIs) – investments in for-profit companies undertaking a charitable activity – may also count for annual charitable distributions but many times are overlooked because of a confusing certification process.

The PFA, however, would streamline the IRS rulings process on determining if a loan or investment can be considered a PRI and count toward yearly charitable distributions, making it easier for organizations to invest and requiring an IRS decision within 120 days.

“Charitable foundations are playing a significant role in the economic recovery of cities across Michigan by branching out into investment in economic development,” Peters said. “This legislation will encourage philanthropic investments in our hardest hit urban and rural areas across the country to help organizations grow, create new jobs and continue giving back to our communities. I’m honored to work with Senator Gardner on this commonsense measure to help streamline the process for charitable foundations so they can expand the ways they serve our communities.”

Ripon Advance News Service

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