Government Update

Congress Returns from Recess, Fate of Charitable Package Uncertain

As lawmakers returned to Capitol Hill the first week of June, there was little progress reported on both the extenders package and its likely legislative vehicle, the pension reform bill. And there continues to be no formal agreement between Senate Finance Committee Chairman Charles Grassley (R-IA) and House Ways and Means Chairman Bill Thomas (R-CA) on whether the Senate's charitable package of reforms and incentives will be a part of the extenders package. Lack of progress on the pension reform bill is affecting negotiations on the contents of the extenders package. Until conferees come to a resolution on the pension bill, leaders will have little incentive to come to an agreement on the extenders package since both will likely move in tandem. Pension conferees are aiming to finish up work on the bill by the July 4 recess. If pension reform negotiations continue to drag, congressional leaders could attach the extenders package to another bill.

Though the Senate Finance Committee has significantly improved a number of its charitable reform provisions, the Council on Foundations continues to work with committee staff to revise a number of problematic provisions that remain in the package, including a provision creating special rules for gifts of illiquid assets to donoradvised funds. The Council's support or opposition to the Senate's charitable provisions will depend on whether those concerns are addressed.

The Council will continue to push for charitable reform proposals that balance efforts to curb abusive practices in the sector with the need to encourage charitable giving and grow philanthropy, as reflected in the Panel on the Nonprofit Sector's final report. For more information, visit the Council's Charitable Reform Resource Center (www.cof.org/government) or contact Luis Maldonado (maldl@cof.org, 202/467- 0394) or Brian Flahaven (flahb@cof.org, 202/467-0424).

Grassley Letter to IRS Calls for More Tax-Exempt Enforcement

In a June 1 letter to Internal Revenue Service (IRS) Chief Counsel Donald Korb, Senate Finance Committee Chairman Charles Grassley (R-IA) encourages the IRS to use its regulatory power "more frequently and expeditiously" to prevent abuse in tax-exempt entities. Chairman Grassley also asks the IRS to provide an update on its study of executive compensation at private foundations and public charities and to comment on whether the IRS is considering issues related to executive and trustee compensation.

In addition to compensation, the letter asks the IRS to respond to questions on tax-exempt organizations used for political purposes and nonprofit hospitals. The IRS has 30 days to provide the requested information.

Read Chairman Grassley's press release and letter to the IRS at http://finance.senate.gov/press/Gpress/2005/prg060106.pdf.