Federal Budget and Tax Policy
Forefront advocates for federal protection of, and investment in, the nonprofit sector and the communities we serve through the Congressional budget process. This includes both spending and tax policy. Federal tax and budget policy impacts the State of Illinois' budget and the charitable sector in Illinois in several ways.
- State Revenue: Illinois' income tax collections are derived from federal adjusted gross income (AGI). So, if the federal government cuts taxes, which shrinks the AGI of many filers, the state will automatically be taxing fewer dollars, unless it proactively decouples from the federal changes.
- State Spending: If the federal government cuts funding for programs that State agencies administer (often by contracting with charitable nonprofits to deliver services), the State must raise revenue to backfill those cuts, and/or make difficult decisions about reducing or eliminating key programs.
- Fairness for Nonprofit Employers: Nonprofits employ 11% of the private sector workforce in Illinois. Yet, many federal tax credits and tax deductions made available to private sector employers through income tax filings are unavailable to nonprofit employers, because nonprofit employers do not pay income tax (e.g., Childcare, Work Opportunity, Paid Family and Medical Leave, Indian Employment, Pension Start Up, and Disabled Access tax credits.) Nonprofit employers do, however, pay payroll taxes. By creating similar benefits through payroll taxes, nonprofit employers would be treated more fairly. Read more details in the summary papers from National Council of Nonprofits and Independent Sector.
Priority Legislation
- SUPPORT - Workforce Development Through Charitable Loan Repayment (H.R.7594): Charitable loan repayment should receive the same tax treatment as traditional scholarships. "Post-graduation scholarship grants," (aka charitable loan repayment) are currently subject to federal income tax, whereas charitable scholarships received while someone is in school are not. In both cases, funds are used to pay or repay the same type of expenses: tuition, books, and other fees related to higher education. This bill would re-classify post-graduation scholarships as a charitable activity and exclude them from an individual’s federally taxable income. The concept is supported by the Council on Foundations and the Alliance of Illinois Community Foundations. Download a Fact Sheet. Ask Congress to pass this bill. Sign the joint letter.
- SUPPORT - Small Nonprofit Retirement Security Act (H.R. 4548/S. 2365): Workers shouldn't have to choose between working at a mission-focused organization and securing their own retirement. This legislation extends the tax credit currently available to small businesses when they start a retirement plan for their workers to small nonprofits. This will incentivize nonprofit employers to establish retirement plans for their employees. Tell your legislators to cosponsor the Small Nonprofit Retirement Security Act.
- SUPPORT - Streamlining Federal Grants Act (S.3709): This bill will improve the effectiveness and performance of federal grants and cooperative agreements, simplify application and reporting requirements, and facilitate greater coordination among federal agencies responsible for delivering services to the public. It establishes a Cross-Agency Grants Council and requires federal agencies to consult with charitable nonprofits. Forefront supported prior versions of this bipartisan bill, as well (H.R. 5934/S. 2286 from the 118th Congress). A companion House bill is expected soon for the 119th Congress. See fact sheet.
- SUPPORT - Retirement Fairness for Charities and Educational Institutions Act (H.R. 1013/S.424): Allows 403(b) retirement plans (i.e., retirement plans designed for certain employees of public schools, charities, and churches) to invest in collective investment trusts, which are a group of pooled investment assets held by a bank or trust company, and in insurance company separate accounts.
- SUPPORT - Volunteer Mileage Rate (H.R. 1582/S. 1177): Each year, the IRS is permitted to make adjustments to the federal business mileage rate. In contrast, the IRS rate for volunteer mileage (i.e., for volunteers who drive their vehicles on behalf of charitable nonprofits to transport property or individuals) is fixed in statute at 14 cents/mile and has not been adjusted for over 25 years. Under this proposal, the charitable mileage rate would be equalized with the business rate. This proposal is supported by Independent Sector, National Association of Towns and Townships, National Council of Nonprofits, plus this initial list of organizations (this is expected to grow). See news release from the sponsor during the 118th Congress. Download a Fact Sheet (from 118th Congress; will be updated).
- Support - Charity Parity Act (H.R. 8783/S. 4511): Allows senior citizens to make qualified charitable distributions directly from their 401(k) and 403(b) retirement accounts to the causes of their choice without issue. Read the press release from the introduction of the bill.
- OPPOSE - Equal Representation Act (H.R.151): Forefront strongly opposes this and any other legislation that would add a citizenship question to the Census 2030 form. See more information about Census 2030 efforts below.
- OPPOSE - So-Called Anti-Terror Legislation (H.R. 6800 / S. 3554): Forefront and all of our key national partner organizations strongly oppose this legislation which amends the Internal Revenue Code of 1986 by granting unilateral powers to Treasury to revoke an organization’s tax-exempt status of organizations it deems to be "terrorist supporting." This is are-introduction of H.R.9495 from a previous Congress.
- OPPOSE - Safeguard American Voter Eligibility Act (As of 2/11/26, this is S.1383 - formerly H.R.7296/S.128): Forefront's opposition to this bill is grounded in our democratic values; the provisions of the bill undermine participation in elections in multiple ways. For more information, see the testimony Forefront submitted in 2025 related to an earlier version of this proposal. Forefront joins its national partners in opposing the SAVE Act, and conversely, supporting other legislation that expands and protects the right to vote and the protections for democratic elections in our country. We envision a society in which all people have representation, and we believe that a healthy social impact sector is fundamental to a healthy democracy. We support civic engagement, voting rights, open elections, accountable and ethical government, a full Census count, greater connectivity, and civil dialogue. To this end, we supported the John Lewis Voting Rights Advancement Act (HR 4 and HR 5746 in the 117th Congress), and will continue to support similar legislation if reintroduced in the future. We remain deeply concerned about attempts to curtail voting rights and will vigorously oppose any attempt to repeal the Voting Rights Act of 1965.
- MONITOR - The IRA Charitable Rollover Facilitation and Enhancement Act (H.R.2891 / S.3975): Forefront is monitoring legislation that would allow senior citizens 70 1/2 years and older to make qualified charitable distributions from an IRA to a donor advised fund (DAF). This amends a current restriction in federal tax code that prohibits individuals from using an IRA charitable rollover to contribute to a DAF. The intent of this legislation is to allow seniors to give to the charities of their choosing with a single gift. We will continue to watch this legislation to see how the requirements would be implemented, and how the funds to DAFs would then get to nonprofits.
Pending Legislation / Watch List
- SUPPORT - Congressional Community Foundation Caucus: Representatives Gabe Amo (RI-01) and Brian Fitzpatrick (PA-01) launched this bipartisan caucus to create a dedicated space in Congress for lawmakers to learn about the work of community foundations and better understand the critical role they play in communities across the country. This caucus offers an opportunity to elevate community foundations as trusted, locally rooted partners and ensure federal policymakers are informed about how the work of community foundations strengthens communities nationwide.
- SUPPORT - Nonprofit Property Protection Act: Nonprofits may experience increasing difficulty affording, retaining, and procuring property and liability insurance due to the perception of increased risk by insurers. This effort would aim to support nonprofit insurability. See H.R.4523 from the 116th Congress and related fact sheet and draft and more info. This bill has not yet been reintroduced in the 119th Congress.
- SUPPORT - Freedom to Give Act (#s pending): Led by United Philanthropy Forum, this legislation will codify the right of foundations to invest in causes that support their mission. This bill has not yet been introduced in the 119th Congress.
- OPPOSE - Repeal of Johnson Amendment. Forefront will strongly oppose any attempts to repeal or dilute the Johnson Amendment via rule, legislation, or executive order. Read more about the history of this issue, and why it matters here.
