All right, welcome everyone to our surprise May Washington update. We are going to kick off in just a minute here with Brian I just wanted to go through a couple housekeeping notes, we are recording this so for those of you with colleagues who were not able to attend live we will be sharing out the recording to all registrants afterwards. We do also have another webinar coming up another Washington update on June 6 and I'll drop that link into the chat so if you want to register for that one as well. We'll have more updates then. And with that, I'm going to hand it over to Brian Flavin to kick us off. Thanks Christy and hello everybody thanks for joining us. As Christy said on this special edition I guess it's a special edition of the Washington update webinar. Really really pleased to have you with us. For those of you don't know I'm Brian Flavin Vice President of Strategic Partnerships at CASE. I oversee all of our global advocacy efforts and have certainly been following and watching everything happening on Capitol Hill. Grateful you're with us. We're going to cover quite a bit in a short amount of time. The one thing I want to make sure that we leave plenty of time for is your questions. So you can as the presentation goes on I'm going to try to go through the presentation pretty straight pretty much straight through. But then leave a good 15-20 minutes at the end for questions. Please do put your questions in the Q&A tab as you have them so that we make sure we get to them. And any questions that I'm not able to get to during today's presentation I'll work to provide some answers via our CASE advocacy online community which I'll share how you can join that if you're not already a member of that once we're done. So let me share my screen with you all and we'll get we'll go ahead and get started and walk through the bill. So this is we're really going to focus today just to clarify on the tax bill that it's worked its way or is working its way through the House of US House of Representatives this week and next and give you a sense of what's in the bill where the bill sits. I'll start really by sharing some context, a bit about where we're at, why this bill is put together the way it's put together. We'll explain the process behind it. We'll talk through the key tax provisions that were included in the bill that that was passed by the Ways and Means Committee this week. And then we'll talk a little bit about what you can do and of course take your questions so lots to cover in a short amount of time. So this week has been very much focused on what the administration and Congress, Republicans in the administration and Congress have called the one big beautiful bill, which is their budget reconciliation package. They've put this bill together because there are a couple things motivating putting such a large bill together and something that will push a lot of the president's agenda and also congressional Republican agenda through into enactment this year. One of the main reasons is that the Tax Cuts and Jobs Act, the last time President Trump was president, Republicans passed the Tax Cuts and Jobs Act, the last comprehensive tax reform bill. And that bill also used a process called reconciliation, which I'm going to talk about in a second. But in order to make the numbers work and to use those rules, they made the corporate rate reduction permanent down to 21%. But all of the individual tax rates and tax cuts in that bill expired as of December 31, 2025. They picked that date because it was the longest out they could make the tax cut, put the tax cuts in the tax code and also make the math work in terms of what they could pass in budget reconciliation back in 2017. So we knew going into this year, regardless of how the election turned out, that tax reform was going to be on the agenda because those tax cuts and those provisions are all expiring at the end of the year. And what happens if Congress doesn't do anything this year? So all the marginal tax rate cuts that happened in 2017 would increase. So the top tax rate, which is now 37%, would jump up to 39.6%. The standard deduction threshold, which was doubled, would be halved and go back down. The state and local tax deduction, which has a cap of $10,000 right now, that cap would be lifted entirely. And there are a number of other individual tax provisions that would expire at the end of this year. It is clearly a priority of both President Trump and congressional Republicans to extend the tax cuts. After all, the Tax Cuts and Jobs Act was one of the signature legislative achievements of President Trump's first term. And so certainly President Trump and congressional Republicans do not want to see those tax cuts expire. They want to pass, they want to extend those tax cuts, but they also want to do some other things as part of tax reform as well. So it certainly is a priority of the president, priority of congressional Republicans. And also, and I don't want to confuse you all because we're going to talk a minute about why even though this issue generally pursuing tax reform unifies Republicans, and that's certainly true, Republicans, particularly Republicans on Capitol Hill and the president, have talked a lot about tax cuts and cutting taxes. That's something that does unify Republicans generally. There are aspects of this bill that are not unifying Republicans. And we'll talk about why that makes a difference here in a second. But it certainly is a priority for the president, priority for congressional Republicans. And with this kind of ticking deadline happening at the end of this year, also a time imperative to do this, this bill so that they can extend those tax cuts. So that's really what's motivating this bill. They're using a process called reconciliation, and it can be a little confusing and I'm not going to go into the nitty gritty details of all the rules around budget reconciliation. The most important thing to know are the things that I put on this slide. One is it's tied to the budget resolution. So Congress has to, they don't have to pass, but typically the House and Senate pass a budget resolution each year. They agree on an overall budget resolution for the fiscal year. Both the House and the Senate have agreed to a budget resolution this year. It usually works, they only usually agree to a budget resolution when you have the same party in control of each chamber. So in this instance, Republicans, as you can see in that second bullet, the Republican majority in the Senate is 53-47, in the House it's 220-215, so they do have majorities in both houses. Why in the budget resolution, they include what they call reconciliation instructions. So they've tasked various committees of the House and Senate to come up with savings or add or tax cuts, extensions, all of those pieces and pull that all together in what they call a budget reconciliation package. So by passing the budget resolution, they unlock the budget reconciliation process. Why is that important? Well, to move anything up on Capitol Hill, you need a majority in the House and you need 60 votes in the Senate, so more than a majority in the Senate, or if the other party blocks you, procedurally you can't get to a final vote on a bill. What reconciliation does, if you follow certain budget rules, you can use reconciliation to pass bills and you only need a majority in the Senate, so they only need 51 senators to agree to move it forward. And because Republicans have a majority in the Senate and the House, that's a huge, huge advantage for any party who is in power that has both the Senate, the House, and the White House. If you remember back in the Biden administration, the first two years of the Biden administration, Democrats used this same procedure of budget reconciliation to pass the Inflation Reduction Act and also some pandemic relief legislation right when President Biden took office. So it's used by both parties. It allows you to have a bill that's partisan. So when you use budget reconciliation, you're not anticipating working with the other party at all on the bill. You can pass a partisan bill. So Democrats, while they're in committee meetings, while they're going to certainly vote on everything, no Democrats are going to support this bill at the end of the day. So Republicans, to get this through, have to rely on Republicans to pass their big budget reconciliation package. There's something in the Senate called the Byrd Rule, which will come into play once the Senate gets this bill from the House. The Byrd Rule essentially says that anything in budget reconciliation, any provision has to have an effect on the budget, has to be germane to the budget. So you can't try to tackle other policy changes or policy interests through budget reconciliation if they don't have an impact on the budget. So what will happen is the House will pass, at some point, likely pass its budget reconciliation package. It'll go over to the Senate. The Senate will make some changes. And then the Senate will have to work through a process with the Senate parliamentarian to figure out, can all these provisions stay, or are some of them going to have to go, be booted out of the bill because they're not germane? So that's called the, and again, this is an inside the beltway term, the Byrd Bath, that will happen over in the Senate. So it is important to note that you can't just put anything you want in reconciliation. It has to have an effect on the budget. And there is a role for the Senate parliamentarian in determining whether the aspects, the pieces that are in the bill are germane when it goes over to the Senate. Of course, this is being pushed a lot as part of reconciliation is about extending the tax cuts. But there also is a lot of interest by by congressional Republicans in making sure there are significant spending cuts as well as part of reconciliation. And we'll talk about that in a second. And the only last little point I want to make is I mentioned that the Biden administration used this. I mentioned this was used in the Tax Cuts and Jobs Act back in 2017. It's being used now. Reconciliation is really how Congress passes big pieces of legislation now. You don't see a lot of big comprehensive bills with strong bipartisan support moving very far through Congress these days, you really big major policy changes are happening more and more through reconciliation. So we're likely to see more of this, particularly again, when you have a house in the Senate and the White House of the same party like we do now. So earlier this week, this is in the middle here is a picture of Chairman Jason Smith, Republican from Missouri. He's the chair of the Ways and Means Committee. The Ways and Means Committee took up the first took up the the tax reconciliation part of the big budget reconciliation bill. And that's really what we're here to talk about today is really the Ways and Means Committee's work, what they've introduced and what the committee ultimately ended up passing very early on Wednesday morning. They started the markup at 230 p.m. Eastern on Tuesday, and they ended the markup. They went straight through and it just after 8 a.m. Eastern on Wednesday morning. So it was a long, long, long Ways and Means Committee markup. They ended up asking a lot of questions of some of the nonpartisan experts of like the Joint Committee on Taxation, which determines how much different provisions cost the federal budget or add revenue to the federal budget. But they spent also time taking up lots of Democratic amendments, which will not be a surprise to all of you, given that Republicans have a majority on the Ways and Means Committee. All of them went down. So essentially, the committee worked through a markup to get this through the committee. And now the next stage is really going to the floor. But there's a couple of steps that have to happen before this bill goes to the floor. And that's where I want to walk you through what what really happens with budget reconciliation. The actual title of the bill and how congressional Republicans and the administration are referring to this bill is the one big, beautiful bill. So it is it is more than just the tax, a piece of it. There are some spending cut pieces and other also other spending increase pieces that are part of this. I'll just give you a couple examples. So on tax in the House, in the House budget resolution, in the House reconciliation instructions, the bill can be can cost overall can have $4.5 trillion in tax cuts. So it can it can cost $4.5 trillion. But the Republicans in the House have to find $2 trillion in spending cuts to offset that actually up to $2.5 trillion. They're likely to find closer to $2 trillion when all is said and done. So it's not the cuts that they're finding aren't paying for the entire bill, but they have to find significant savings. And that's where these other committees come in. So on the energy, so they can find some of that with tax, and we'll talk about how they've raised revenue in tax here in a second. But they also with the Energy and Commerce Committee, and this has gotten a lot of play in the media, if you've been following things, the Energy and Commerce Committee has to find $880 billion. And it's really there's only one place to look for it, and that's Medicaid. So there's been a lot of focus on the Medicaid cuts that Republicans are proposing as a part of this bill, again, to help offset the tax cut extensions on the education side. And this really does impact particularly colleges and universities, but also schools to an extent. There were some significant cuts that have been proposed around student loan, Pell Grant eligibility, a lot of pieces so that the Education and Workforce Committee could come up with their $330 billion worth of cuts, again, going towards that $2 trillion in spending cuts. This overall package has to has to adhere to. So going through this process, we start with the budget resolution, which, again, passed both the House and the Senate that gave each of these committees their instructions. Each committee, including the Ways and Means Committee, which is the part of this bill we'll talk about today, had markups over the past couple of weeks. They've passed each of their pieces through each of the committees. And so now the Budget Committee is taking that up. And they actually had a meeting today to take up this bill and to pass it out of the Budget Committee so that it can be prepared to go to the House floor. It did not. The Budget Committee took this up this morning, but there were four Republicans who voted against the bill and committee. So right now, the bill itself, even though it's gone through markups and gone through committees, is stalled at the Budget Committee. They're going to take it up again next week. Their goal is to try to pass this bill through the House by the end of next week. The more time it takes to get this through the Budget Committee, the harder that timeline is going to be to adhere to that timeline. After once they get through the Budget Committee, then it will go to the House floor and they'll consider it. And again, if Republicans are going to need every one of their members to pass this, they have, as I said, 220 to 215 majority. They can they can only afford to lose right now due to some vacancies. They can lose three members at most. So if four House Republicans come out and say we're not we're not going to vote for this bill, the bill doesn't go anywhere because, again, you're not going to get any Democratic votes. Assuming they're able to get those votes in the House, the bill would then move over to the Senate. And at that point, the Senate will make some changes to the overall bill. They'll have their own you know, each of their committees have also been working on how they would like the bill to see. I mentioned the birdbath before. So once the Senate committees make their changes to the bill as it's come over from the House, it'll go through the parliamentarian process. They'll take the things out that are not germane. The Senate will then take it to the floor. They'll consider likely pass it again. They'll need all at least 51 Republicans, at least 50 Republicans, because the vice president most likely would vote for the tiebreaker. So they can only lose really three Republicans, actually four they could lose potentially on the Senate side. So they could actually three. So they could still pass it with if they lose three Republican senators. Assuming they pass it, it then goes back to the House. And that's, again, going to be a tight vote because they're going to have to pass whatever the Senate came up with unless they want to send it back over to the Senate. I can tell you right now they're not going to want to do that again. So it's going to come back to the House. They're going to have to try to get that through the House again with those tight margins. And their goal overall, Republican leadership and the White House, is to have this bill to President Trump by July 4th. One, that is a very, very, as you can tell already, a very ambitious timeline. And we've already hit a snag with the Budget Committee today. And the fact that the Republicans on the House side were unable to get it through the Budget Committee. You know, even though, as I said, the idea of cutting taxes unifies Republicans, how you do it and what the spending package looks like is caused a lot of angst within the House Republican conference and particularly between what you would call more traditional House conservatives, the more conservative side of the House, and House moderate Republicans. Moderate Republicans have been concerned about, and I'm speaking very generally, have been concerned about the level and the size of Medicaid cuts. There's a contingent of New York Republicans who want to see changes to the state and local tax deduction and see that cap lifted significantly as a part of their bid to get something through and included in this bill. And so right now, the House and House GOP leadership are struggling to get everybody on the same page and to agree to this bill. And again, they can only lose three votes. So when they get this, if they can get this through the Budget Committee, and as I said, it's not gotten through the Budget Committee today, they'll have to they'll take it to the floor and they're going to have the same math they're going to have to do. They're going to have to get through a very, very tight majority, which gives us some time to hopefully change and push for changes in this bill and also gives us some time to prepare and work on the Senate strategy as well to get some changes in this bill moving forward. So a lot, a lot of moving parts. The one other time sensitive issue that is important to remember is that this bill also includes a raising of the debt ceiling. So the U.S. borrowing authority will expire, according to the to the Treasury Department, sometime in August. The Republicans have included at the very least a four trillion dollar increase in the debt ceiling as a part of this reconciliation bill. But the Treasury secretary said you have to pass this in July in order for the government in the country to avoid defaults in the middle of August. So that also is pressuring them to come to a deal and come to something on this bill. So we'll have to see how that all the politics play out. I think at the end of the day, we'll have to see if this bill is obviously going to go through a lot of changes and we're going to walk through the bill as it stands now in the House. At the end of the day, though, I think there's going to be so much political pressure on Republicans and particularly on the White House that they're going to want to do. They're going to want to do whatever they can do to pass a bill. They may have to change it significantly, may have to scale it back, but they're going to want to pass a bill. So ultimately, a lot of what we're talking about are going to be in play for a while over the next one or two months. So we even though they're going to run into the hiccups and they've run into one today at the Budget Committee, our assumption right now is that we need to take these provisions very seriously. There's a good chance they'll make it into law. So we need to work to mitigate them, to get them withdrawn, to do whatever we can do to make this bill much better for schools, colleges, universities. So that just hopefully sets a little bit of context. What I want to do now is go through the tax reconciliation part of this bill. And that's the bill that went through the Ways and Means Committee this week. And it's the one we're going to spend our time on today. When we meet for the next Washington Update webinar on June 6, I'll do a more detailed dive in some of the other pieces of the budget reconciliation bill, just so you have a sense of some of those other major changes. But for today, we really want to focus in on the House tax bill, because that's the one that has had the most impact and the most focus this week. First of all, it does, the bill, not surprisingly, does extend the Tax Cuts and Jobs Act individual tax cuts. So that means all the individual rates are made permanent so they would not expire again. They would stay at the rates they are now. And I just put the individual rate marginal tax rate brackets there for your information. There is also making a doubling of the standard deduction permanent up to $15,000 for individuals, $30,000 for joint filers, and a short-term increase in the standard deduction threshold just for 2025 to 2028 as well. So an enhanced deduction. So what that means is less, we already have a situation where about 93 percent of Americans are non-itemizers. That percentage will likely increase with the passage of this bill. And we'll talk about what the implications for that for charitable giving as we go on today. On the estate tax, the estate tax exemption would be permanently increased to $15 million. It would be indexed for inflation. Right now, it's about $13 million. So it'd be $15 million for individuals, $30 million for joint estates. So a very, very high exemption level. How does that impact charitable giving? Well, if you look at the estate tax and the presence of an estate tax, both the rate and exemption level impact the how attractive charitable bequest is, leaving money to charity. So you get back under the exemption level. So the higher the exemption level, the less the incentive to give to charity through bequests. Now, there's an argument that some would say that the presence of an estate tax dampens charitable giving overall anyway, but certainly if you look at the data, the estate, the presence of the estate tax does incentivize giving. So if you make the estate tax less, you make it more generous, that means there's less of a charitable giving incentive tied to that. Also, when you look at the individual rates, as individual rates go down right now, they're currently at these levels. So we wouldn't expect to see any decline in the incentive to give to charity based on the changes in the individual tax rates. With the doubling the standard deduction, clearly with more folks taking the standard deduction, you'll have a lowering of those who itemize, which means that only taxpayers who itemize can benefit and can deduct charitable gifts. So that would mean less, but we'll talk about something that they included in this bill to mitigate that in a second. All right, let's go through each provision individually. And I'm gonna walk through these. And of course, again, as you have questions, ask them and we'll take as many of those questions after we get through each of these different provisions. So we're gonna start with probably the biggest headline in terms of a provision that directly affects colleges and universities. And this is a college and university provision. I'm gonna try with each of these provisions to talk about which types of institutions, whether it's independent schools, college universities, these apply to. This applies to college universities and in particular, private colleges and universities. This is an expansion of the current 1.4% tax on net investment income for private colleges and university endowments. And it is on net investment income. So it actually is on income beyond the endowment, the endowment's included, but also other net investment income as well. It is again, only private college universities with more than 500 tuition paying students and more than 50% of your tuition paying students are located in the US. There is an exemption for qualified religious institutions. So religious institutions have gotten an exemption in this. And the tax itself starts at the same rate that it started at back when it was enacted in 2017, which was $500,000 per student. So if your endowment value, if you take your total endowment and you divide it by the number of students you have, if it's over $500,000, you're subject to the tax. What this bill does is a significant, I would say massive tax hike on those endowments. So again, everybody who's above 500, every private college university with endowments right now above 500,000 per student pay 1.4% net investment income tax. Under this bill, that would still be the case for those between 500 and 750,000 per student. But as you go up from 750,000 to 1.25 million per student, it's 7%. Tax goes up again from 1.25 million per student to 2 million per student, goes up to 14%. And then goes up entirely to the corporate rate actually for those endowments that are 2 million per student or above. So a significant, significant increase in the endowment tax. Interestingly for how big and how much these rates increase, if you look at the overall revenue that's gained as a part of this bill, and this is a revenue raising provision to help pay for the other parts of the bill, it only raises about $6 billion over 10 years. So it's not a huge revenue raiser even with these rates going so high. But as you can imagine, and certainly we a case, we've been opposed to the endowment tax since it was put in place back in 2017, and certainly are very, very concerned about the endowment tax and these significant massive increases in the tax overall. We put out in our president CEO, Sue Cunningham, put out a statement upon passage or a consideration of this bill when it was released, saying that we would ask that the committee withdraw this provision, frankly, withdraw the tax entirely, but certainly withdraw this increase in the tax. Essentially saying that this bill and these taxes, because most endowment resources, first of all, are charitable, but they go to support students and student financial aid, you're essentially raising this revenue, take diverting revenue away from that charitable purpose and balancing and essentially paying for the rest of this bill on the backs of students, which we think is bad policy, and certainly bad policy when it comes to what we view as taxing generosity as well. Even for institutions that are not subject to this tax, the fact that there's gonna be such a high endowment tax out there might send a signal or discourage donors from giving to endowment in the first place, which of course would be the worst of all worlds that comes from this. So we are concerned about the chilling effect it'll have, we're concerned about the bottom line impact it'll have, going from 1.4% to 21% tax is a massive, massive increase and will certainly have implications and mean less funds available for student financial aid, research and academic programs. So very concerned about this proposal. Again, we'll talk at the end about some things that we can do and what CASE is doing about it. So the endowment tax, again, private colleges, universities, a significant hike. Let's talk about one positive thing that was in the bill that is certainly good news and relates to one of the issues I talked about right at the top, which is essentially the doubling of the standard deduction threshold and making that more generous. Right now in current law, there is no deduction for non-itemizers. So if you're an American taxpayer and you're paying your taxes and you wanna give to charity, you certainly can and most people do, but you can't deduct any of that from your taxes. What this bill would do was put a very modest charitable deduction for non-itemizers in the code for four tax years. So tax year 2025 through 2028. The deduction would be up to $150 for individuals, $300 for joint filers. So again, very, very modest charitable deduction for non-itemizers, but certainly better than $0 in terms of the deduction. Deduction for contributions for donor advice funds would not be permitted. So non-itemizers couldn't deduct any gifts they would give to donor advised funds. That's just a continuing issue, a continuing concern that particularly lawmakers on the Ways and Means and Senate Finance Committee have around donor advised funds, which is why they've kept that prohibition in. The revenue loss, because this would be a revenue loss provision because you're providing a tax incentive, is $7 billion over 10 years. So not a huge revenue loss. And it's applicable to all schools, colleges, universities, frankly, all charitable 501c3 organizations. We're, again, pleased to see this as a part of the bill. We're hoping this is the starting point and certainly are gonna be working with the House and the Senate to make this more robust as the bill goes through. But I will say having something in the code, a charitable deduction from the outset in this bill is a good sign that we're gonna have something at the end of the day in this bill that will essentially make sure that we have a charitable deduction for those 93% of Americans who right now don't have a charitable deduction because they're non-itemizers. Some good news on that front for particularly a priority we've had at CASE working with our colleagues in the Charitable Giving Coalition. Now, this is a very obscure provision that was included, but is certainly something that could have an impact on charitable giving. And we're looking to see what the actual impact could be a little more closely. Right now, back in the Tax Cuts and Jobs Act, there used to be, and I'm not gonna get into the details, there used to be a limitation on itemized deductions called the PEAS limitation that was a, frankly, a backdoor way to raise taxes on high-income taxpayers. The Ways and Means Committee did not bring back the PEAS limitation, but instead decided to add this new limitation on the tax benefit of itemized deductions. And as you can see, what it does is for those taxpayers who are above the 37% tax bracket, so that highest tax bracket, any income above that 37% bracket, those taxpayers, their itemized deductions, so that means their charitable, mortgage interest, state, local, all their itemized deduction together have to be, you take 2 37ths of that, and again, written in a way to make it as obscure as possible, 2 37ths of that amount, and you have to subtract that from your total itemized deductions, so you don't get to deduct that amount. What it, to simplify it, what it is effectively is a 35% cap on the value of itemized deductions for high-income taxpayers. So if you're, any gifts that you give above, and you're in that higher tax bracket, that extra dollar that you give will be limited to, even though you would save typically 37 cents on the dollar for that giving, you'd only save 35 cents per dollar for that giving. The revenue that is raised by this is a significant 41 billion. Again, this is on all itemized deductions, so not just charitable deduction, but also the state and local tax and mortgage interest. What concerns us about this, there's two kind of competing issues here. One is, are donors really gonna notice this when they're making their decisions around giving? And this would affect major high-income donors. The reality is they're probably not gonna be doing this math in their head as they make their donations and their giving, but it certainly will have an impact on the value of deductions that they have over time. The concerning part about it, potentially, is that of the three itemized deductions, charitable, mortgage interest, and state and local, the charitable is the most discretionary of those deductions. So if it's gonna eat into your giving in any way, if it does have an impact on giving, it would likely impact the, how much you decide to give to charity, you know you're gonna take it, you'll not get as much benefit as you give more. We always oppose caps and limitations on the charitable deduction. And frankly, because the folks who lose out with that are those who benefit from those gifts from high-income taxpayers. So that's our students and those served by our institutions. So we're working to see, to get a better sense of what the impact of this provision would be, how significant it would be, whether it would impact giving decisions. And so we're watching this provision closely, but it is a backdoor way to raise revenue on high-income taxpayers and something that was not in the TCJA, but something we're certainly watching. We certainly don't wanna create a precedent of capping or limiting the value of itemized deductions for high-income taxpayers. So we're watching that very carefully. Moving on, for corporate charitable contributions, there is now in law, no current floor on those contributions. What this bill would do, it adds a 1% floor on corporate charitable contributions. So essentially that means for a corporation to be able to deduct the charitable gifts that they make, they have to exceed a threshold of 1% of their corporate taxable income. If they give below that amount, they can't deduct any of that for purposes of giving to charity. So the idea behind a floor is to try to incentivize donors, in this case, a corporation to give more because you need to, in order to deduct any amounts you have to give above a threshold. But this certainly is a revenue raising provision that as you can see raises $17 billion over 10 years. Curious when we get to Q&A, whether anybody has thoughts on this floor on corporate charitable contributions. There is currently no floor on charitable contributions for individuals. So this would only apply to corporate charitable contributions in the bill. This applies to schools, particularly elementary and secondary schools. And so independent schools as well, but it's a little bit tricky. So I'm gonna explain it. The house bill includes a tax credit for contributions to what they call scholarship granting organizations. And there's some definitions on what a scholarship granting organization is. The tax credit available to taxpayers would be, could be at most $5,000, as you can see there. And it would be a tax credit that they could use to apply to their taxable income. What is interesting about this is it's a tax credit for giving to scholarship granting organizations. It's not permitted for contributions given directly to schools themselves. And I think that's really important. So it is really to charities that exist to provide scholarships for schools. It is a revenue loss of $20 billion. So it is a significant cost, but it's certainly been a priority of the Trump administration and a number of Hill Republicans who wanted to find additional ways to incentivize giving, particularly scholarships for private school education. So we're looking at that provision as well. It's a little convoluted because again, the contributions have to go to a scholarship granting organization. If the money goes directly to the school itself and the school issues a scholarship, they're not considered that for purposes of the bill. So just a provision that certainly our school's members should be aware of that's in the bill. Moving on to a couple of more very interesting and certainly challenging provisions, but ones that will have certain implications on institutions and particularly advancement offices. So this is what the house bill does here is it adds a tax on name and logo royalties that an institution receives. And the best example I have in advancement to share this is right now, if you're an alum, let's just use an alumni association example. If you're an alumni association, and you have an agreement with a bank to share the alumni association's logo or the institution's logo with a credit card, you essentially create an affinity credit card program. Any income you get back from that agreement from the bank is not taxable. That's under current law. What this bill would do is it would subject those payments to the unrelated business income tax, which is 21%, same as the corporate rate. So essentially that money that you're getting back, you'd have to, 20% of that would be taxed or you'd have to take off 20% off of whatever it is. You'd have to take off 20% off of whatever money you got back from that agreement. So certainly a significant tax increase on those royalties. The revenue raised from this is $4 billion and this would be applicable to all schools, college universities, actually to all tax exempt organizations. There are a number of other organizations that are concerned about this in addition to educational institutions. I know from talking with, I was on a call earlier this week with the National Association of College University Business Officers. They know that this provision could mean a significant tax increase particularly on colleges and universities. So we're certainly watching this provision. We've been opposed to this in the past and certainly because it increases the cost of doing business for college universities would be opposed and we'll work with the community in opposition to this. But you should certainly be aware if you have those affinity, if you have agreements where you license name and logo, whether you're alumni association, a foundation or the institution itself, that those could be potentially now subject to tax if this bill gets enacted as it is. Another somewhat difficult provision to explain but certainly has an impact on institutional budgets and also on if you have a separate, if you're particularly a public college university has a separate foundation or a separate alumni association. There are right now, if you provide any transportation fringe benefits as a tax exempt organization, those benefits, how much you pay to provide those benefits to your employees are exempt from the unrelated business income tax. In this bill, those would no longer be exempt. So any money that you pay out to provide your employees parking or transit subsidies, that money, even though it's a very odd tax because it's being taxed on money you're paying out to support your employees. But needless to say, any of that money that you're using to pay out that would be subject now again to the UBIT. It would be subject to the 21% tax. So a significant tax increase on those benefits that you're applying to employees. I also know from a, depending on how you, for those institutions that have lots of parking, trying to determine which parking and what aspect of parking you provide is employee benefit versus just general public benefit is an incredibly complicated exercise. So if this bill does pass, it's gonna be very, very difficult to figure out and to figure out what essentially what this number is for a lot of institutions, but also what the tax liability will be. So our hope is again, working with our partners that we can get this out of the bill. There is an exemption in this for churches. This was actually proposed back in 2017 and was booted. And also I should mention the name and logo royalty thing was proposed back in 2017 and didn't make it in the final bill. A lot of that had to do with a lot of the coalition and partnerships and a lot of churches and others who weighed in because they'd be subject to this as well. In this instance, the Ways and Means Committee took out churches from this provision. So there's still gonna be a lot of other tax exempt organizations and colleagues besides schools, colleges, universities, they'll wanna see this eliminated from the bill. So we're certainly working to oppose this inclusion of this in the final bill. But this raises about $3 billion according to the committee. On executive compensation, there is also an expansion of excess compensation on again, on employees at tax exempt organizations. So this is a provision that would apply to schools, colleges, universities, most likely more colleges and universities in this instance because of the number of employees and also the compensation. Right now under current law, and this was put in place back in the Tax Cuts and Jobs Act, tax exempt organizations have to pay an excise tax on the excess compensation above a million dollars paid out to the top five employees, but it's only those top five employees. So whatever they make above a million dollars, you have to take that amount, take the unrelated business income tax rate, the corporate tax rate, 21%, apply that and then you pay that back and you have to pay that each year. What this bill does is it expands this beyond the top five highest paid employees to any employee at a tax exempt organization that makes over a million dollars. And I should also mention the definitions, I don't get into the specifics here, but the definitions also include benefits and parachute payments and all those other pieces as well in that calculation of compensation. So this would be an increase particularly for those institutions that have employees that make over a million dollars and that would raise $4 billion. So again, a bill that raises taxes on tax exempt organizations. What I will say is my understanding is that this provision itself would actually treat tax exempt organizations less favorably than corporate, these publicly traded corporations which have to do this for their top 10 employees. So certainly one of the arguments back to Congress is gonna be why are you disadvantaging tax exempt organizations versus corporate organizations? Wouldn't you wanna make sure at least the unrelated business income tax exists to create a level playing field between the corporate side and the nonprofit side? So wouldn't you wanna make sure that organizations and companies were being treated equal? But certainly another area where the committee has looked to raise revenue. There's also a tax on research income and this again will most likely apply more to college universities, but it applies to all tax exempt organizations. But right now, if you get income from research, any income that's generated and you keep that in let's say it's private research, that income is exempt from the unrelated business income tax. Now, any non-public research that's conducted that leads to income, that income would be subject to the unrelated business income tax under the bill. Interestingly, the revenue impact that the joint committee found was negligible here, but it would apply to all tax exempt organizations. Another way that the committee is trying to raise revenue off of tax exempt organizations. I wanna mention two other provisions of interest that do directly kind of impact us, but maybe in a bit of a different way. One of those is like the college university endowment tax, which was hiked significantly. The committee decided, the Ways and Means Committee of Republicans decided to increase the net investment income tax on private foundations as well. So right now, private foundations have to pay a 1.4% excise tax on net investment income each year. Under the bill, they've created a tiered structure similar to the private college university tiered structure. But in this instance, I believe it goes from 5% and then 10% and subjects those, the net investment income, those income returns each year from investments to tax. So it goes from 1.4% to 5% or 10%, depending on the size of your private foundation endowment. I wanna make it clear, this is a tax that is subject to, that private foundations have to pay. So those are public charities defined as private foundations. This does not impact college university foundations, which I know a lot of our public college universities have. So those separate 501c3 foundations are not organized as private foundations under 501c3. You're organized as public charities, even though you have foundation in the name. So those college university foundations would not be subject to this excise tax. So I think that's important when you think about whether this would apply to colleges and universities in any way or not, or college university foundations. As you can imagine, the private foundation world in particular is certainly mobilized and active and working, is gonna be very active in trying to get this provision removed. So like we are trying to get the college university endowment provision removed from the bill, arguing of course, that this is a tax on charitable resources. The other important provision to watch is there's a provision around the termination of tax exempt status of terrorist supporting organizations. This provision is in the bill. The concern around it is the discretion that it gives the government and particularly the secretary of treasury to define what a terrorist supporting organization is. And it's almost a unilateral definition with not a lot of ability to appeal. There is some ability to appeal, but the revocation of tax exempt status happens immediately upon the secretary's determination. Why does this have us concerned? Well, this applies to all tax exempt organizations. So that would include colleges and universities. We know that there's been a lot of criticism from lawmakers and the administration about activities that are happening on college campuses and protests and some of the protests around the Israel-Hamas war last year and some of those protests and protests that are continuing. There's certainly concern that the administration could decide to, could take the tack and go to a university and say, because you're allowing protests on campus, we're gonna determine and declare you a terrorist supporting organization for purposes of this. And that would mean a revocation of tax exempt status and create a lot of harm and challenge to our institutions. I will say that broadly the charitable sector and a lot of our other charitable sector organizations like independent sector, the council on foundations and others have already put out a statement opposing this. This also doesn't raise a lot of revenue. So there is a question that if this does remain in the house bill, whether it would remain in the bill in the Senate, because it might get stricken because it is not, does not raise any revenue for budget purposes. So remember the Byrd rule I talked about before, it might get pulled out of the bill because of the Byrd rule. But having said that, a troubling provision, certainly one that we'd wanna work with the Hill to make sure that there's plenty of protections in place around this designation and that it doesn't really increase the ability for anybody to just declare automatically that there's an institution as terror supporting without a significant amount of evidence and due process involved. So we're watching that provision very closely as well. So let's talk a little bit about strategy before we jump into our Q&A here in a second. So this, I like to think about what do we have going for us with this bill? What do we have going against us? I've went through the originally all of the tax provisions. There's a lot of challenging provisions, a few positive provisions, but I would say on balance, a lot of challenging provisions in this. So lots of things that we wanna try to change and push back on. So if you think about it from that perspective, what do we have going against us as educational institutions? Well, there's certainly a public perception issue that we have and a view that there's now a partisan divide, particularly as it relates to colleges and universities and how both Republicans and Democrats view colleges and universities. If you look at public polling, there's certainly a divide there. So a lot of the reasons why Republicans have been so focused on colleges and universities, particularly those more high profile colleges and universities, private colleges and universities is because they see a political advantage in going after those institutions. So that's a challenge when we're going up to the hill and encouraging Republicans to ratchet down the endowment tax or take it out entirely. So we have to be mindful of that. The whole big, beautiful bill, the one big, beautiful bill strategy also is a challenge because as you can imagine, we went through just the tax provisions that affect colleges and universities and schools. There are a lot of provisions that affect almost every part of the economy in this bill. So that means that lawmakers are getting lobbied and getting advocating and getting their attention pulled in lots of different directions. So there's a lot of voices and a lot of noise around this bill. And there's gonna be a lot of effort because we're a small part of a bigger bill, it's gonna be harder for us to get the noise and focus on our particular concerns about the bill or the things that we'd like to see expanded in the bill. So that certainly causes a concern. And also time, I mentioned that there's a tight timeframe here. They wanna get this through by the August recess at the latest because of the debt ceiling and also because of the fact that all the tax cuts expire at the end of the year. So it's gonna move very, very fast. And when it moves fast, that makes it challenging. What do we have going for us? Well, I mentioned slim majorities in Congress. We have an example today with the House Budget Committee that even though Republicans control the House, they have such a slim majority and there are such divides on what conclude in this bill that getting it through the House and getting it through the Senate are gonna be challenges. So that provides opportunity. It slows the timeline down a bit, provides opportunity for us to make some noise around the issues that are most critical that ones that we want changed. We have great partners and we have great coalition partners on a lot of these issues. I mentioned a lot of the issues that cross not only schools, colleges, universities, but also the tax exempt sector as a whole. So we're gonna be working with those other parts of the sector and other coalitions to get these things through. And we've had past experience where that's been successful. The logo and royalty tax, which I talked about was booted back in 2017 because we were able to work across coalition of charitable organizations from Sesame Street to the Farm Bureau, to institutions, college universities, we were able to work together and got that booted out of the bill. So hopefully we can work together again on that. And that is an advantage. The other thing that we have in our favor is an untapped resource, which I'm gonna talk about in a second, which are our alumni and other key third party validator supporters who can speak on our behalf. And I think that's one area where we really wanna focus as we push back on a lot of these provisions. This is just an example of a coalition. I mentioned the charitable deduction for non-itemizers, CASE has been a leader and focused on as a part of the charitable giving coalition. This has been a seven year effort to get a charitable deduction for non-itemizers into the tax code. So even though it's very modest, the fact that we're able to work together and make this happen right from the outset in this bill is a huge tribute to being able to work in coalition and work together. And that's how we wanna approach this with our partners. So here's the part where we talk about what you can do. The QR code here actually takes you to the CASE Advocacy Network. Hopefully most of you are already a part of our CASE Advocacy Network, which is our online community where we provide up-to-date frequent updates on what's happening on Capitol Hill and at least weekly updates on what's happening on Capitol Hill that impacts colleges and universities and schools. So please, if you're not a part of that, do that. It's really important right now to stay informed. We also have our US Federal Policy Tracker, which tracks executive orders, policies, bills, all the things that are affecting educational institutions up on Capitol Hill. I've been doing and joining a lot of organizations and institutions, joining advancement leadership teams, joining full departments, providing updates just like the one I just did, taking questions. So we offer CASE leader briefings to members. So if you're interested in that, reach out to me directly. I have my contact information at the end. Happy to talk with you about what that would entail, but that's also another way where we can be helpful at CASE and keep you informed. And also some of your volunteer leaders informed as well. Really, really important right now, your government relations staff is certainly aware of this. If you have government relations staff, or if you have outside government relations representation, make sure they're aware of these tax issues and particularly the issues that affect advancement. We walked through a bunch of them today. Just make sure they're aware of those, share the talking points that we have here at CASE, share this presentation, make sure they're aware and make sure your government relations colleagues are aware so that as they're talking about this bill up on Capitol Hill, they're talking about how it would impact your institution, how it would impact charitable giving, how it would impact engagement, how it would impact the bottom line of your organization as well. And then the final piece, and what I wanna spend a little bit of time on is leveraging your alumni. We've been very big proponents of alumni advocacy here at CASE, and I'm excited that we are launching a new effort to help really encourage institutions, colleges, universities in particular, but also you can see some resources that certainly be open to independent schools as well to focus on how our alumni can support and champion higher ed during these times. We've created a website that you can find if you follow the QR code I have up on the screen right now. On the CASE website, a page called alumni for higher ed, the whole purpose of this is to encourage institutions to empower their alumni, to speak on behalf of college universities and higher education, and also to speak out when we have these types of legislative things happening up on Capitol Hill, find ways and find some tools and resources that you can use as you craft your own messages out to your alumni community. I know that not all institutions activate their alumni for advocacy purposes, so you can use the tools as much as you want, but the whole purpose of these tools and these goals of this site is to provide resources that you can tailor, you can use directly, you can use however to interact and to be a part and to weigh in and encourage your alumni to weigh in on these issues. And as I said earlier, we need as many voices as possible, not only just our own voices here in the educational space, talking about the value of what our institutions do and the importance of supporting them and not doing things that will make achieving our mission that much more difficult. So excited to talk more about the Alumni for Higher Ed initiative. This is a work in progress, we put it up very quickly, so we're refining it as we speak, and we'll continue to put updates in there. If you go on the page now, you'll be able to see some ways that you can encourage alumni to take action around the endowment tax, around the charitable deduction for non-itemizers. We're gonna add other pieces to this as other pieces of bills work through Congress. So really, really excited to launch this and announce this and eager to get some feedback and hopefully, you'll find this to be a helpful resource moving forward. So really, really excited to introduce this initiative and another way that you can be helpful in this whole effort. So here's my contact information. I'm gonna pause, I'm gonna stop sharing just for the time being. Actually, I'll keep this up because that way you'll have my contact information, but really wanna open it up and see if we got some questions in the last 10 minutes or so that we have. But Christy, do we have some questions? We do, we have lots. So for those of you who put them into the chat, if you don't mind just putting them over into the Q&A box, what happens is as more people send them in the chat, they just get bumped back and it's hard to scroll through and make sure we're not missing them. So I don't think we'll get through them all because I think we already have like 20 or so questions between the two, but we'll get through as many as we can. And then Brian, if you said you were willing to answer them in the advocacy network. Yeah, what we're gonna do is, I mentioned the case advocacy online community. We'll take any questions we're unable to answer here. We will post the question and I'll post a short answer to that in the online community. And I'll try to do that either today or tomorrow at the latest so that you have your answers. So we'll get to as many of these as we can now and get to as many of them over the next day or so. So thank you for all the questions. Then we won't miss any in the chat because I'll download that after the fact as well. So first one that came in, someone asked, related to the scholarship granting organization, they are a foundation supporting a public university. Would they be eligible as a scholarship granting organization? This would only go to elementary or secondary education. So if they're a foundation that's supporting a college or university, in most instances, they're supporting the college university. So any scholarships they're managing or gifts they're getting are going to the benefit of that public college university. So this credit would not apply to scholarships that relate to college universities. So they wouldn't be a qualified supporting, grant supporting organization for purposes of the bill. It only relates to those organizations that exist to raise scholarships for elementary and secondary schools. So that would not apply there. Great, thank you. Someone asked, applying UBIT to trademark royalty income would be a huge hit on unrestricted revenue for their already modest foundation budget. Does this provision have a lot of traction? Do you have any thoughts about whether this will move forward or not? Good question, it's in the bill. So that's always a concern when it's in the bill. We do have a lot of allies, as I said, and there was, this was in the initial bill back in 2017 as well, and was essentially because of all the noise that was raised and the advocacy, they pulled it. So we have a track record of having this pulled in the past. We're gonna have to work hard again to get this out of the bill, but I certainly know that there's a lot of different coalitions. And in fact, we're a case as a part of the Community Impact Coalition, that the ASAE, the American Society of Association Executives has put together that's more cross-cutting across the tax exempt sector. And I know this is one of their priority issues to get booted from the bill. So we're gonna certainly work hard to get this out of the bill, and we understand it will have significant implications, particularly for those of you who have separate foundations and alumni associations, not to mention institutions generally, it's gonna have an impact on your budget. So we're certainly aware and happy to follow up if there are specific ways that we can be helpful. Great. So someone asked if these provisions were to pass, has CASE considered recommended contingencies for schools and universities to limit the impact on them? Yeah, that's a good question. I think we'll have to see. We're so early in the process and this is the start. I tried to walk through with you the whole stages of this process. There's a good chance, in fact, there's a 99.9% chance this bill will look different by the time it eventually reaches final enactment, if it reaches final enactment. So it's hard to say right now how we could propose contingencies. I think right now it's about how do we do as much to advocate as much as possible to improve this bill for colleges and universities to get the more damaging pieces of it out or to mitigate those more damaging pieces. And that's where I think a lot of energy and focus should be in the short term. For most of the provisions, they would not take effect until the next tax year, so January 1st. So there is a little bit of time if they pass the bill in the summer to make plans for contingencies. But you can imagine, a good example is on the endowment tax. You can imagine we are making the case up on Capitol Hill that at a time when federal government is freezing grants and cutting grants, that also putting such a high tax on endowments and discouraging philanthropy at a time like this is not a good move. It kind of piles on to the financial strain that institutions are facing. So I think we'll have to have more conversations around contingencies as we see what inevitably comes out of this bill, but it's a good question. Great, and what I'm hearing is join the advocacy networks that you can get involved and try to stop some of this. So someone asked related to the royalties questions for university logo tax, would state license plate royalties be included? Ooh, that's a good question. If it's any royalty money that goes back to the institution. So if you're working with the state and the state is directly paying the institution, my sense would be yes, but what I would say is we have to look a little bit more closely at that because there could be some, because it's essentially state to state transfer, there could be some exemption I'm not thinking of in the code, but we can certainly look at that. But my assumption would be any royalty you're receiving, regardless of where it's coming from would be subject to the tax under the bill. All right, so someone else asked excise tax on excessive compensation. Will this include multiple million dollar salaries of coaches paid through a private athlete foundation, not the university or fund, not the university? Yeah, the answer to that is yes. And they've done a better job. When they first issued this back in 2017, they actually had a massive loophole that essentially excluded a lot of those positions from public, at public colleges and universities. As of now, they've closed that loophole. So they would be subject and you'll notice it's on the tax exempt organization is paying. So it's not just on college universities, it's on tax exempted organizations writ large. So if the compensation is being paid out of another 501C3, that 501C3 would have to pay the tax. The organization pays the excess tax, not the employee. So the coach would make the money, but the coach isn't paying the tax. You're paying the tax as the organization. So whether it's through the organization, whether it's through the foundation, whether it's through another organization, that somebody would have to pay the tax and that excess compensation. Perfect, there are a few people asking for links too. Just so everybody knows, I did put a link to the event page, which has all of those individual links that Brian mentioned and I will include them also in a follow up email when we share out the recording afterwards. So someone else had asked earlier, you mentioned there were proposed changes to Pell Grants. Could you expand on that a little? What is proposed and what implications it would have? Sure, the biggest, so this is part of the, I mentioned that there's a bunch of bills that are coming together that are, that essentially what today was about was the budget committee trying to pull all these together and put the big, beautiful bill together into one big bill that would then go to the house floor. One of the sections of this bill came from the Ed and Workforce Committee. We didn't walk through that today. I'll do a more detailed walkthrough of those provisions on June 6th. But in that committee where they were charged with finding a $330 billion worth of cost savings, one of the ways they found cost savings is by reducing, I should say increasing the number of credit hours you have to take for Pell eligibility. So to be full-time Pell eligible, you'd have to take, I think it's 15 credit hours now up from I think 12. And they also, that increases also for part-time Pell eligibility. So what that means is, if you're a student that's Pell eligible and you are taking a certain number of credit hours because you're working one or two other jobs or you have family commitments, now you'll have to add another class that could really push a lot of people out from Pell eligibility if they can't make that extra credit work, credit hours work. So again, it is a provision that is, that would negatively impact those students who are trying to balance all of those. And certainly students that from a country's perspective, we wanna make sure we're trying to stay in getting their post-secondary education or credential. So that's a very shorthand of it. We have on the alumni for higher ed page, we're gonna be, we'll start to include some resources on that issue. And as I said, on June 6th, we'll walk through it a little more closely, but it's certainly an issue that we're watching very carefully and one that would impact more of the student facing side than the institution side. All right. Someone asked if you could define a little bit more what a religious organization would be, what would qualify? I might take that one in the online advocacy network. There is a specific definition that's in the bill and it's pretty specific. So I will, if it's okay, I'll take that question. I'll put that in the advocacy network because I don't wanna get it wrong. And there's like two or three prongs that allow you to be considered a qualified religious institution. All right. We'll share that language out. I think we're almost out of time here. So last one that I think will be a little bit quicker. Will the transportation fringe benefit be charged to the institution or the employees? Institution. So the institution pays the tax on any amount they pay out to help their employees. Again, it's kind of a weird way of thinking about a tax because you're taxing a benefit that you're providing to your employees. But this was another provision that was, as I said earlier, was included initially in 2017, but it had so much blowback that it got pulled out. So again, another provision. And as I mentioned, it's just gonna be very complicated for institutions to figure out in addition to costly. So we're certainly gonna advocate along with other, in some of the coalitions that we're a part of and with other colleague associations to try to get that out of the bill. But it would be on the organization, the institution itself. All right. Thank you so much, Brian. Thank you everyone else for joining us. We appreciate you giving us your time on a Friday afternoon. I will share out all of the links and the recording for everybody. And please join that advocacy network. Brian does the updates. That's the best way to get them right into your inbox if you want those as well so you don't have to keep checking back. So with that, have a wonderful weekend. Thank you, Brian. And we'll see you guys all next time. Thank you everybody. Appreciate your attention and time.

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