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Legislative Update: Finance Committee Presses Forward with Reforms

(May 9, 2005) The Senate Finance Committee is now seeking to attach its proposed charitable reforms to completely unrelated legislation.

Dean Zerbe, staff director of the Finance Committee, warned the audience during the Panel on the Nonprofit Sector's April 19th field hearing in Washington, DC, that Congress might use some of the committee's charitable reform proposals to pay for other unrelated programs.

The vehicle donation and intellectual property provisions were added to last year's Foreign Sales Corporation bill as amendments (and subsequently signed into law), so Congress could easily employ the same strategy with the noncash gift deduction reform (limiting deductions for non-cash donations such as clothing and household items to $500 annually and changing the valuation of many noncash gifts to the lesser of two values--fair market value or the donor's basis in the property) and the other proposals floated by the Senate Finance Committee.

It is rumored that Congress was considering attaching the noncash gift deduction proposal to the transportation reauthorization bill it is currently debating. While it appears that Congress has backed off from that strategy for the moment, AFP is troubled that this provision was even contemplated as an amendment to a completely unrelated bill.

Sources on Capitol Hill have also indicated that the Senate Finance Committee's proposed charitable reforms may be delayed past Memorial Day. However, that should not give the fundraising profession and the charitable sector any reason to breathe a sigh of relief. AFP understands that even if the reforms are not passed by Memorial Day, Senator Grassley will want to move them no later than this summer!

Please Contact Your Members of Congress

The sector is on the clock! These proposed reforms could be added as amendments to any bill at any time. Congress must hear from AFP members and others in the sector now. Congress needs to know that many of these reforms are ill-advised and that it is fundamentally wrong to enact them simply to pay for other programs unrelated to charity.

If you have not called or written to your Members of Congress yet to voice your concerns about the proposed reforms, AFP urges you to do so now. You still have time to weigh in. AFP has provided a draft letter and contact information for your Members of Congress here:

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If you have already called and sent letters, please encourage others, including your organization's senior leadership, board of directors and major donors and volunteers to do the same.

Author of the CARE Act Urges Action

During the Panel on the Nonprofit Sector's May 6th field hearing in Philadelphia, Pa., one of the speakers noted that Senator Santorum, author of the CARE Act, had told him that the charitable sector needed to make more calls and send more letters to their Senators as soon as possible. The speaker also commented that Santorum acknowledged that Senator Grassley wants to add the proposed reforms to the CARE Act--a potentially disastrous situation for the charitable sector.

What's Next?

AFP has learned that the Senate Finance Committee will hold a June 7th hearing on property/conservation easement reforms. This schedule reflects the committee's efforts to press forward and have the Senate pass the reforms by this summer.

Noncash Gift Coalition Meets to Discuss Strategy

The Noncash Gift Coalition, formed by AFP, the American Association of Museums and several other organizations will hold its second meeting today, Monday, May 9. The group will discuss its legislative and grassroots strategies. AFP will keep members apprised of the coalition's efforts.

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