Bipartisan support helps foundations avoid tax increase in new Trump legislation

THALIA BEATY

Wed, Jul 16, 2025, 8:02 AM 5 min read

Two Republican senators and a broad bipartisan coalition of funders and nonprofits prevented a 600% increase in taxes levied on the endowments of the largest private foundations as part of President Donald Trump’s the tax and spending legislation.

Thanks to their support, when Trump signed the bill into law on July 4, taxes went up on the endowments of the largest universities, but not on the endowments of philanthropic foundations.

“I do have to say that this took some persuasion,” said Sen. Todd Young of Indiana in an interview with The Associated Press. The other champion was Sen. James Lankford of Oklahoma, who did not respond to an interview request.

Together, they advocated to remove the provision which, at the high end, would levy a tax of 10% on the investment earnings of foundations with more than $5 billion in assets, up from the current rate of 1.39%.

The move reveals both the power of philanthropic groups, especially conservative ones, to sway legislators and a split in the administration's coalition between those who want to protect the independence of private philanthropy and those who think the sector supports resistance to the president's agenda.

Backing of Republican senators and conservative groups was key

Young said he spoke with leaders or representatives of a dozen foundations in his state to understand what it would mean to increase these taxes on foundation endowments.

Though Young didn't name any specific leaders, Indiana is home to numerous major foundations — including one of America's largest foundations, the Lilly Endowment, which holds shares in the pharmaceutical company Eli Lilly and reported assets of almost $80 billion at the end of last year. The Associated Press receives funding from the Lilly Endowment for its coverage of philanthropy and religion.

Young said many in the Republican caucus appreciate the value of the investments private foundations make in their communities.

“Let’s be honest here. The target of this excise tax increase was not the vast majority of private foundations. It was a handful of large foundations that are nationally known that have been accused of embracing and perpetuating certain woke policies and agendas,” Young said.

While he didn't specify the specific foundations, Young was tapping into a critique of large progressive foundations brought by politicians like Vice President JD Vance. In a 2021 speech at the conservative think tank The Claremont Institute, Vance attacked foundations who fund movements for social justice and characterized their support for Black Lives Matter groups as “investing in racial division.”