Proposed Legislation Concerning Nonprofits and Foundations from the 110th Congress The arrival of the 110th Congress creates a new policy environment for substantive legislation on issues concerning the non-profit and philanthropic sector. The following bills reflect current legislation NCRP is following that could have a substantial impact on the non-profit and philanthropic sectors; NCRP believes that the legislation below is worthy of attention for both the sector and the American public. Included with the descriptions and sponsors of each piece of legislation is a brief statement regarding NCRP’s stance on the issue. Many of the bills featured below originate out of two key committees-the Senate Finance Committee and the House Ways and Means Committee. The chairman of the Senate Finance Committee is Sen. Max Baucus (D-Mont.), and the ranking member is Sen. Charles Grassley (R-Iowa). The chairman of the House Ways and Means Committee is Rep. Charlie Rangel (D-N.Y.), and the Ranking Member is Rep. Jim McCrery (R-La.). For a profile of the Senate Finance Committee and biographies of the senators serving on the committee, click here. For a profile of the House Ways and Means Committee and biographies of the representatives serving on the committee, click here. Bills on the Hill was last updated in August, 2007.

Tax Policies and Charitable Giving Tax policies can shape individual charitable giving, corporate philanthropy, and the structure of foundations. For example, tax exemptions, deductions and credits for donating to charity can be strong motivators for taxpayers to give to nonprofits and avoid paying higher taxes, especially taxpayers with high tax liabilities. At the same time, these tax incentives could result in a drain on total government revenues, exacerbating current government budget deficits and further shredding the social safety net that the government is obligated to provide its citizens. The tradeoff between what charities receive and what the government loses through these tax incentives must always be considered. And although tax cuts give taxpayers more after-tax income to donate to charity, it also reduces the price incentive to devote that money to philanthropy in the first place—i.e., tax cuts make it cheaper to keep your money (because you pay a lower tax on it). In economic terms, tax cuts almost always have a stronger price effect than income effect, so they almost always lead to lower charitable giving (as well as, obviously, lower revenues for the government). The following tax bills fall into two broad categories:  some that lower taxes in general (thus dissuading people to give to nonprofit organizations), and some that specifically provide tax deductions or credits to encourage and support specific philanthropic activities and causes. In the latter case, individuals and corporations can be convinced for economic reasons to pursue legislators’ pet projects rather than other causes that they may personally prefer or be more in need.

Bill & Sponsor	Description	Status	NCRP Position
Freedom Flat Tax Act of 2007: H.R. 1040. Rep. Michael Burgess (R-Texas)	Offers a radical 17 percent flat tax (with personal exemptions up to roughly double the poverty guidelines) and a similar tax on businesses and on employers’ non-cash compensation paid to employees; repeals estate and gift taxes; requires a supermajority to undo these changes.	Referred to the House Ways & Means and Rules Committees.	Opposed. Such a change would sharply reduce incentives for charitable giving by individuals and businesses without any compensatory gains to the portions of society most in need of aid from nonprofit organizations. It also would increase the already huge gaps between the rich and poor in this country.
Flat Tax Act of 2007: S. 1081. Sen. Arlen Specter (R-Pa.)	Discards the entire current tax system (including estate and gift taxes) in favor of a 20 percent flat tax (with personal exemptions for less than double the official poverty guidelines), with up to a $2500 deduction for charitable giving (including paying for a resident, non-dependent K-12 student to attend a private school), and deducts all interest on a taxpayer’s home.	Referred to the Senate Finance Committee.	Opposed. This measure is little better than H.R. 1040 in terms of incentives to donate to charity, especially since it takes out incentives for businesses to donate to nonprofits. It also would increase the already huge gaps between the rich and poor in this country and deprive the United States of hundreds of billions of dollars in tax revenue that could otherwise be used to meet critical public needs.
Death Tax Repeal Permanency Act of 2007: H.R. 2380. Rep. Kenny Hulshof (R-Mo.)	Permanently repeals the federal estate tax in 2011, allowing estates to be transferred as inheritance without any tax liability.	Referred to the House Ways and Means Committee.	Opposed. These proposals eliminate a powerful incentive for the wealthy to make charitable bequests; cost the government considerable tax revenue (an estimated $290 billion over the next decade); and represent yet another attempt to increase the already huge gaps between rich and poor in this country.
Personal Philanthropy Account Act of 2007: H.R. 2000. Rep. Nathan Deal (R-Ga.)	Creates personal donor-advised funds with a minimum payout of 5 percent of each year’s initial balance for funds more than $10,000; distributions count toward taxable gross income when they are made, but are deductible when given to tax-exempt organizations.  The bill allows individual accounts to be created with no oversight or regulation in place; the bill also provides a loophole of 10 percent of the annual distributions being able to go to “non-qualifying organizations” each year without any penalties.  Employers can contribute to these accounts without the payments counting as taxable employee compensation.	Referred to the House Ways and Means Committee.	Opposed. Our opposition to this legislation rests more with the tax breaks allotted to the contributor and the lack of openness or accountability rather than the actual practice of creating the accounts. With a complete lack of oversight or accountability measures in place to ensure the funds are dispersed in the most responsive way, the bill falls far short of ideal legislation concerning the need for more resources for the philanthropic sector.

Bill & Sponsor	Description	Status	NCRP Position
Honest Leadership and Open Government Act of 2007: H.R. 2316.     Rep. John Conyers (D-Mich.)	Amends the Lobbying Disclosure Act of 1995 and the rules of the U.S. House of Representatives pertaining to lobbying laws and regulations. Several provisions of the legislation would require lobbyists to expand their reporting of activities with members of Congress and would prohibit them from giving gifts or financing travel for members of Congress or their staff. Lobbyists would be required to submit quarterly reports detailing their activities and contributions, including donations to members of Congress and their charities.	Passed the House of Representatives on July 31st, 2007 and the Senate on August 2nd, 2007. The bill has been sent to President Bush for approval.	Support. Legislation dealing with the growing effect of lobbyists over Capitol Hill is long overdue, and this piece of legislation makes significant strides in the effort to curb the influence they yield over Washington. Although NCRP feels that the legislation could certainly be stronger in several key areas, NCRP believes that the bill is a major step forward and is a significant improvement to existing laws.
Corporate Charitable Disclosure Act of 2007: H.R. 1208.   Rep. Paul Gillmor (R-Ohio)	Requires corporations that issue securities to disclose their contributions to insider-affiliated charities. In addition, the bill requires corporations to annually declare their total giving to nonprofit organizations and the specifics of gifts larger than a certain threshold, to be established by the Securities and Exchange Commission.	Referred to the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.	Support. Corporations receive tax breaks for their philanthropic giving (not to mention positive publicity). In exchange, they should be required to disclose all gifts—cash, in-kind, etc.—that are made to nonprofit organizations, including the amount given, the organizations supported and any conflicts of interest. This information should be made available to the general public in an easily accessible format.
Public Good IRA Rollover Act of 2007: S. 819, H.R. 1419.     Sen. Byron Dorgan (D-N.D.); Rep. Earl Pomeroy (D-N.D.)	Would amend the existing IRA rollover scheduled to expire in December 2007, by making the rollover permanent and removing current restrictions on tax-exempt contributions to donor-advised funds, supporting organizations and private foundations. The current annual limit of $100,000 in donations would be removed and would allow IRA owners to make tax-deductible donations sooner.	Referred to the Senate Finance Committee and the House Ways and Means Committee.	NCRP is concerned with some of the provisions in the House and Senate bills. The current IRA rollover program, introduced in the Pension Protection Act of 2006, is scheduled to expire at the end of this year, and NCRP supports extending the provision in its current state. We are concerned with the efforts to extend the rollover program to include tax-exempt donations to donor-advised funds, supporting organizations and private foundations. NCRP believes that the best way to keep the rollover program responsive to the needs of the charitable community is to keep the restrictions on donor-advised funds, supporting organizations and private foundations in place, and to extend the program in its current form.