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| home > policy/legislation > through 2006 > comments from congress > Rep. Johnson letter to congress
Senator Santorum Statement Statement Mr. Chairman and members of the Committee, I want to take this opportunity to commend the efforts of charities throughout this country who work day in and day out to transform the lives of individuals, families, and communities. I believe strongly that the philanthropic, generous nature of Americans is a big part of what makes America a great nation. Neighbors helping neighbors, those blessed with financial resources and talents walking alongside and learning from the least of these in our communities. I recently introduced S.Con.Res. 15 which encourages Americans to increase their charitable giving. I have been working for several years with Senator Joe Lieberman and this Committee on a broad package of incentives to encourage charitable giving through the Charity Aid, Recovery, and Empowerment Act (CARE Act). The CARE Act includes incentives for non-itemizers, IRA charitable rollovers, food donation incentives, and corporate giving incentives. The CARE Act passed the Senate on April 9, 2003, by a vote of 95-5. The House of Representatives passed companion legislation, the Charitable Giving Act, H.R.7, on September 17, 2003, by a vote of 408-13. Tragically for those in need, the bill was chosen as the first bill to not be allowed to go to conference after passage by both chambers and thus prevented from becoming law in the last Congress. The CARE Act is currently included in S. 6 in the 109th Congress. The recently passed Senate Budget included an amendment which I offered to reflect our ongoing support for completing this important package. I look forward to passage of a similar bill by the House and its consideration by this Committee again and by the full Senate. Unfortunately, what brings us hear today is not incentives for charitable giving but a series of proposals which would collectively require the charitable community and charitable donors to bear a significant burden for dubious public benefit. Of course we want to discourage inappropriate behavior by those who may seek to abuse the public's trust. Included in the CARE Act-- with the help of the Chairman and this Committee--are several key provisions which encourage transparency, disclosure, accountability, and better coordination between state and federal authorities tasked with charitable oversight responsibilities. These proposals are the next logical step combined with appropriate enforcement efforts of existing laws. I also appreciate the work of the Independent Sector in their interim report and the Alliance for Charitable Reform in developing proposals which meet the goals of the Committee without unnecessarily burdening the important work of legitimate charities. Some of the Committee staff proposals and relevant Joint Committee on Taxation tax proposals target problem areas which are limited in scope and in nearly all cases inappropriate under current laws. As one illustration in the initial hearing that the Finance Committee had last summer on June 22, 2004, concerning areas of abuse one private group went through the transcript and found approximately 94 cited references to "abuses" in the charitable sector in the testimonies and written statements. All but two are addressed in current laws and regulations. Troubling for all aspects of the charitable community from social service organizations to volunteer firefighting departments are prescriptive proposals of charitable governance. These include the size of one's board to Sarbanes-Oxley corporate style self-dealing rules. The reality is that a "one size fits all" approach is not appropriate for the vast and diverse charitable sector in this country. There are more than 1.2 million charities in this country. Most charities are small, focus primarily on their mission, struggle with resources, and would find these requirements a distraction and burden imposed from Washington, D.C. Many do not know anything about these proposals and would not likely know much until after their adoption-- they are too busy feeding the hungry, mentoring children, helping the disabled, restoring ex-felons, rehabilitating drug addicts, teaching kids how to read, and serving the elderly. Clearly we should be capable in collaboration with the Executive Branch of more artful responses to these areas of concern, if necessary, rather than proposing elimination of legitimate incentives altogether. I recently asked Secretary Snow in a written question following a hearing whether it is necessary to consider sweeping changes in charitable governance and what evidence we have that this is problem area which cannot be adequately addressed by effective oversight and existing laws. In his response he mentioned the IRS' current review of compensation practices and procedures of 2000 charities- and said "although the results of the IRS audit initiatives may indicate the need for particular governance reforms, it is simply too soon to tell." Another problematic proposal is the elimination of fair market value deductions for the contribution of land to charities. The JCT report recommends that any donor receive only the basis for such a contribution. While I understand that their can be legitimate concern over excessive evaluations in some cases, clearly we don't have to effectively throw out this incentive altogether. This is no longer a reform but a tax increase and a barrier to charitable giving. We should instead be seeking narrowly targeted solutions for clearly demonstrated problems once the government has established that enforcement of current law alone is inadequate. Another proposal limits deductions of clothing and household items to an aggregate annual total of $500 per taxpayer. This appears to be an arbitrary number apparently intended to minimize inappropriate deductions. Yet the proposed solution would eliminate legitimate in kind contributions without providing any assessment of its impact on charitable giving and its impact on organizations which do great work-- like the Salvation Army and Goodwill-- but receive many of these in-kind contributions. As a final example, while a different category of charities- apparently because of a misunderstanding about the charitable nature of their activities and some limited abuses - I must add that I am deeply troubled by the Joint Tax Committee's proposal to impose taxes on fraternal benefit societies, reviving a proposal that was considered in the mid-1980's and rejected. These organizations are a major source for good in the United States, with 10 million members nationwide that devote themselves to fraternal, charitable, religious, and patriotic activities. The Joint Committee's proposal would extinguish these organizations and the good that they do at the very time that our society needs the private sector to step in and support our communities. As I mentioned recently in the Congressional Record, this is a proposal that clearly should be rejected once again. I appreciate the Chairman's commitment to ensuring the public trust and protecting the charitable community from abuse but we need to tread carefully before we would impose an added layer of burden on the social entrepreneurs helping those in need around the country. We also need to think twice before we send the message that those blessed with significant resources would be safer spending their money on yachts rather than helping improve their communities. Unintended consequences in this arena will have real world consequences in the lives of those in need. |
