WASHINGTON, Feb. 3, 2016 - Embedded in the monstrous budget bill
Congress hammered out late last year is a tweak in tax laws that few noticed
but is surely a big hit among agricultural scientists and those who fund them.
Called the Charitable
Agricultural Research Act (CARA), it defines an “agricultural research
organization” (ARO) as a public charity and approves a 50 percent tax deduction
for donations that support them.
Though Congress has hiked agricultural
research funding for 2016, the increases in public funding have slowed
substantially through several decades. One long-term
study says the increase in total U.S. private and public spending
for agricultural research, which averaged 3.8 percent a year from 1953 to 1970,
for example, tumbled to just 1.2 percent annually from 1990 to through 2009,
the latest years reported.
Meanwhile, state funding of state agricultural experiment
stations (SAES) has plunged, too: from 69 percent of their total support in
1970 to just 38 percent in 2009. (Note, however, that SAES funding from industry,
self-generated and miscellaneous sources has risen over the decades – to 23.7
percent of the total in 2009.)
“We really do understand, not only from our own researchers,
but also from many of our peer institutions, the struggle that they have with
public funding,” said Steve Rhines, vice president and general counsel for the Samuel Roberts Noble Foundation and a key
ramrod for securing the tax change. The CARA provisions are closely modeled
after a tax break Congress created in the 1950s for medical research
organizations (MROs).
Like the MROs, a newly permitted ARO is likely to be
established with a big bequest from a family or other entity wanting to support
agricultural research. There is now a scarcity of such institutions that
receive public support for ag research, Rhines says. They include the link Boyce Thomson Institute, linked to Cornell
University in New York, for example, and the Donald Danforth Plant Science Center
in Missouri.
Securing Internal Revenue Service approval as an ARO starts
with three qualifiers: First, it must itself conduct agricultural research;
spend minimum portions of its funding for research as a four-year annual
average; and collaborate on its research work with a land grant university or
other agricultural college.
About 200 MROs have sprung up since Congress approved their
tax break. The U.S. won’t soon host such a big number of AROs, Rhines said, but
just a handful of new AROs in the years ahead could contribute immensely to
critical research.
Rhines said an ARO is intended to give potential donors one
new avenue for contributing. Alumni of agricultural colleges are the most
typical supporters of ag research, and they usually give to their own alma
maters. But “there are all different
types of donors,” he said. “There are private foundations who like to define a
challenge… then turn to a research entity to tackle it.” Or, for example,
others, “who not only want to define the problem, but define how it is
tackled.”
R. Thomas Van Arsdall, executive director for the National
Coalition for Food and Agricultural Research, agrees with that outlook on donors.
“I’d assume that the AROs would have quite a bit of autonomy,” so a donor can
match up priorities with the research focus of an ARO. He thinks that CARA,
which is projected by the Congressional Budget Office to cost the U.S. Treasury
about $2 million to $4 million a year in lost revenue, may generate tens of
millions of dollars for agricultural research.
The timeline for gaining IRS’ OK on new AROs or contributing
to them is not clear. Rhines notes that Congress declared the provisions in
force when the law was passed in December. Also, Congress told the IRS to write
rules for AROs much as it has for MROs, so the agency will not have new legal
ground to plow in writing ARO guidance into tax rules. So it’s possible IRS
rules could appear this year or next. He said anyone could start putting
together an ARO now and apply to IRS for approval, but it’s not likely that
many will do that.
#30
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