The Chronicle of Philanthropy (November 23, 2006) reported that with the next Congress, charities "are far less likely to face new regulations that govern their operations – and they will also have a tougher time persuading Congress to pass any new incentives to stimulate charitable giving." This widely-held opinion was also expressed by many of the speakers at the recent Western Conference on Tax Exempt Organizations.
One particularly significant change will be the change in leadership of the Senate Finance Committee. Sen. Max Baucus (D-Mont.) is expected to succeed Sen. Charles E. Grassley (R-Io.) as Chairman of the committee, which oversees the IRS. While Senators Grassley and Baucus worked together on much of the charitable reform legislation of the past two years, Sen. Baucus appears to have different priorities from Sen. Grassley. According to Diana Aviv, President of Independent Sector, "Senator Baucus doesn’t see reform of the nonprofit sector as top on his agenda at all." In The Nonprofit Times (Nov. 6, 2006), Perry Wasserman, managing director of 501(c) Strategies, opines that we should expect "the same focus, less intensity." It is expected that one area of reform that Baucus may focus on is nonprofit lobbying.
Leadership of the House Ways and Means Committee will also change. Charles Rangel (D-N.Y.) is expected to succeed Bill Thomas (R-Calif.). Rangel is considered to be much more supportive of the nonprofit sector and the rationale for the charitable tax exemption. While under Thomas’ leadership, the Ways and Means Committee questioned the rationale for granting exempt status, it is now unlikely that the committee will continue this pursuit.
The following is a summary of the list published by The Chronicle of five issues of interest to charities and how they are expected to fare under the new Congress:
- Federal Spending. The new Congress is expected to be more receptive to federal spending to charities.
- Charitable Tax Incentives. No additional tax incentives are expected with the federal budget deficit expected to top $339 billion next year. However, charities are hopeful to extend certain temporary incentives, such as the IRA rollover.
- Estate Tax. A permanent repeal is unlikely with Republicans in the minority.
- New Standards of Tax Exemption. Rangel and Baucus both said that they are more interested in extending health coverage to all needy Americans than in tightening the rules of tax-exempt status for hospitals.
- Nonprofit Management. Independent Sector hopes that it will win support for legislation requiring all charities to file their federal informational tax returns electronically, which would result in greater transparency and accountability to the public.