Senators Fight To Save Tax Break For Newman's Own Foundation
Over the past 25 years, Newman's Own Foundation in Westport has donated $512 million to charities. But a provision in ongoing federal budget negotiations could force the nonprofit founded by actor Paul Newman to close its doors due to a disastrous tax.
U.S. Sens. Richard Blumenthal and Chris Murphy (D-Conn.) have written to Senate leaders for help for the nonprofit.
When Paul Newman died in 2008, ownership of the actor’s eponymous food company, Newman’s Own, was turned over to the nonprofit foundation. It donates 100 percent of its profits after taxes to charity.
Because of its unique structure, Newman’s Own is subject to a punitive provision in the tax code, which stipulates that private foundations are prohibited from owning more than 20 percent of for-profit companies for more than five years. The Internal Revenue Service has issued a delay to Newman’s Own Foundation in which they waived payment of the tax, but the final waiver expires in November.
“Urgent action is needed to preserve the work of Newman’s Own Foundation and similar philanthropic organizations, which have supported and sustained thousands of charities across the country and around the globe,” wrote Blumenthal and Murphy. “Philanthropic enterprises that innovate, create jobs, compete with other businesses, pay taxes, stimulate economic growth, and give back to society by supporting charity should not be penalized.”
In the letter, Blumenthal and Murphy urged Senate Leadership to include Section 8 of the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act in a budget framework produced by negotiations. This provision would amend the tax code to exempt private philanthropic foundations, such as Newman’s Own Foundation, from this specific tax, as long as all profits go to charity, the foundation is independently operated, and all ownership interests were acquired under the terms of a will or trust...