Senate Committee Blocks Morrell Bill to Encourage Charitable Giving

Proposal would have provided tax credits for qualifying donations
Wednesday, May 7, 2014

SACRAMENTO – Today, Democrats on the Senate Governance and Finance Committee killed legislation authored by Senator Mike Morrell, R-Rancho Cucamonga, which would have created a new state tax credit program for individuals who make monetary contributions to qualified charities.

“I’m disappointed that this committee failed to pass my measure,” said Morrell. “Despite the significant financial challenges many charities and nonprofits have faced since the start of the recession, they continue to do amazing work in our communities. My bill would have helped them continue their missions, while also providing relief to taxpayers who choose to generously give their hard-earned money to these groups.”

Senate Bill 1378 is modeled after an Arizona program that incentivizes charitable giving by offering dollar-for-dollar tax credits to individuals who donate to certain nonprofits.  Organizations in Arizona that qualified for the state’s 2014 program include chapters of the Boys & Girls Clubs, Habitat for Humanity, Goodwill, Ronald McDonald House Charities, and local food banks.

To be considered a qualified charity by the California Franchise Tax Board under Senate Bill 1378, the group would have to be a 501(c)(3) nonprofit that spends at least 50 percent of its budget on individuals who receive CalWORKS benefits, are low-income individuals whose household income is less than 150 percent of the federal poverty level, or are chronically ill or physically disabled children. Individuals would be eligible for credits up to $250 and joint filers would be eligible for credits up to $500.

“During these hard economic times, Californians have had to make tough decisions about how they spend their money, and that has often meant cutting back on giving,” continued Morrell. “What today’s vote signals is that members of the majority party would rather see those dollars keep flowing to government programs like high-speed rail than to charities helping the neediest in our society, like children with physical disabilities and families in extreme poverty.”

Senate Bill 1378 failed passage in the Senate Governance and Finance Committee by a vote of 2-4.