The House of Representatives last month passed its version of a bill (HR 7) designed to increase charitable contributions, but without a provision that would change the way foundations count administrative costs toward their annual giving requirement.
The House bill originally included a measure to exclude administrative costs from counting toward a foundation’s charitable donations. Foundations must contribute 5 percent of their assets annually to retain their tax-exempt status.
The provision, which was modified by the House Ways and Means Committee, could have made an additional $3.2 billion available from foundations for charity, according to the National Committee for Responsive Philanthropy (NCRP).
But the new, modified provision, which bill sponsors defended as a compromise, would establish lists of administrative expenses that can and cannot be counted toward the 5 percent requirement.
“The committee adopted a complicated substitute version of the measure, advanced by the foundation industry trade association, that opens more loopholes than it closes and may actually reduce the amount of foundation grant dollars that go to charity,” the NCRP said.
Several foundations – including the Robert Wood Johnson, Ford, and William and Flora Hewlett foundations – hired former U.S. Rep. Bill Paxon, a Republican from New York, to lobby against the original provision. Paxon is a lobbyist with Akin, Gump, Strauss, Hauer and Feld in Washington.
The changes would benefit foundations, as well as the organizations that receive their grants, said Dorothy S. Ridings, president and CEO of the Council on Foundations. Administrative costs include public outreach, due diligence and preparing reports, as well as salaries and rent, she said.
“A lot of members of Congress did not recognize that” originally, Ridings said. She said the council worked with Paxon to help educate members about the provision, but did not contribute to his lobbying fees.
Had the provision remain unchanged, Ridings said, some foundations would have seen their spending increase beyond their ability to generate interest on their endowments, threatening their survival.
The bill would allow taxpayers who do not itemize on their tax returns to deduct $250 in charitable contributions; provide incentives for individuals to make tax-free donations from Independent Retirement Accounts; and establish a compassion capital fund of $150 million a year to provide technical and capacity-building assistance for small charities and faith-based organizations.
The House bill would also reduce the excise tax foundations pay on their investment dividends from 2 percent to 1 percent. And it would allow federal funds under the Runaway and Homeless Youth Act to be used to support maternity group homes.
The Senate passed a similar bill (S 476) in April. The two bills must be reconciled in a House-Senate conference committee.
The House bill was silent on one of the key provisions of the Bush administration’s charitable choice push: increasing the number of social services that faith- and religious-based organizations can provide using federal grants.
Late last month the Bush administration took action on its own to further its faith-based initiative. The departments of Labor and Education announced proposals to open more grants programs to religious organizations, including programs involving community technology centers, mentoring, drop-out prevention and job training.
Tired of waiting for the Department of Labor (DOL) to implement new rules to protect young workers, the Child Labor Coalition helped draft legislation introduced late last month that would change the nation’s child labor laws.
The bill, introduced Sept. 23 by Rep. Tom Lantos (D-Calif.), would implement the recommendations contained in a report by the National Institute of Occupational Safety and Health (NIOSH). The report was released by the DOL in July 2002, but the department has not acted on the recommendations. (“Ban Youth From Dangerous Jobs, Report Urges,” Sept. 2002.)
“Congress has been slow to act on child labor,” said coalition coordinator Darlene Adkins. “I think it’s a perception problem: ‘Work is good, work keeps youth out of trouble.’ Work is good, work is positive, but it has to be safe.”
The NIOSH report recommended adding 17 new jobs to be considered as hazardous occupations. (Workers under 18 cannot perform jobs defined as hazardous.)
The legislation would also remove exceptions to child labor laws for the agricultural industry, Adkins said. Youth need to be at least 16 to perform agricultural jobs classified as hazardous occupations.
Youth labor advocates were also watching as the House and Senate prepared to negotiate differences in their bills to fund the departments of Labor, Health and Human Services and Education. The Senate version includes a provision that would prohibit the DOL from implementing new rules that would affect which workers qualify for overtime pay.
Federal law requires employers to pay time-and-a-half for overtime work, but provides narrow exceptions for certain classes of workers, such as executive, administrative and professional employees. DOL proposed broadening the exemptions, making overtime pay mandatory for fewer workers.
When the new regulations were proposed in April, professionals in the youth service field were unclear about the impacts on themselves and their agencies. (“Will New Labor Rules Mean Bigger Paychecks?” May 2003). If the Senate position stands, they might not find out.