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Human Services--Federal Issues


BILL SUMMARY: THE CHARITY, AID,RECOVERY AND EMPOWERMENT (CARE) ACT OF 2003 (S.272)

Latest Activity:Reported out of the Senate Finance Committee; Scheduled for floor consideration on Tuesday and Wednesday April 8^th & 9^th, 2003

Sponsors: Senator Rick Santorum (R-PA) & Senator Joe Lieberman (D-CT)

The CARE Act of 2003, S. 272, is a bipartisan piece of legislation based on the President's faith based initiative which is aimed at improving charitable giving and aiding organizations that serve the needy. The CARE Act includes an increase in Title XX/ Social Services Block Grant (SSBG) funds that has been long sought after by NCSL and would restore SSBG funding to the authorized level established in 1996 when the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was signed into law.

Title I - Charitable Giving Incentives (Tax Changes)

Title I of this legislation establishes and modifies a number of provisions in tax law aimed at creating increased incentives for charitable giving by both individuals and corporations. The bill creates a charitable tax deduction for individual tax payers who do not itemize on their tax return. Individual taxpayers will be eligible for an above-the line tax deduction of up to $250 ($500 for couples) for charitable contributions in excess of $250 ($500 for couples). In addition the bill would allow IRA holder to make charitable contributions from their accounts. Other changes to the tax code include; an enhanced charitable deduction for donations of food and books to charitable organizations, expansion of incentives for S corporations to increase corporate charitable giving; expansion of charitable contributions for scientific property used for research and for computer technology and equipment used for educational purposes; enhanced deduction for charitable contributions of literary, musical, artistic, and scholarly compositions; and modifications to encourage contribution of property for conservation purposes.

Title II of this legislation modifies and expands federal reporting and disclosure requirements applicable to tax-exempt organizations. In addition it provides for expanded penalties for improper filings and allows for the suspension of tax-exempt status of terrorist organizations.

Of particular interest to states is Section 205 of this title, "Disclosure to State officials of proposed actions related to section 501(c) organizations." Section 205 modifies the provisions pertaining to information the Secretary of Treasury may disclose upon written request by an appropriate State officer regarding 501 (c)(3) organizations in order to administer State laws regulating such organizations. Under this section the Secretary may disclose; (1) a notice of proposed refusal to recognize and organization as a section 501 (c)(3) organization; (2) a notice of proposed revocation of tax-exemption of a section 501 (c)(3) organization; (3) the issuance of a proposed deficiency of tax imposed under section 507, chapter 41, or chapter 42; (4) the names, addresses, and taxpayer identification numbers of organizations that have applied for recognition as 501 (c)(3) organizations; and (5) return and return information of organizations with respect to which information has been disclosed under (1) through (4) above. For the purpose of these requests, the appropriate State officer is the State attorney general or other state official responsible for overseeing 501(c)(3) organizations.

In addition, Section 205 provides that upon written request by an appropriate State officer, the Secretary may make available for inspection or disclosure returns and return information of an organization described in section 501(c)(2) (certain title holding companies), 501(c)(4) (certain social welfare organizations), 501(c)(6) (certain business leagues and similar organizations), 501(c)(7) (certain recreational clubs), 501(c)(8) (certain fraternal organizations), 501(c)(10) (certain domestic fraternal organizations operating under the lodge system), and 501(c)(13) (certain cemetery companies). For the purposes of disclosures regarding these organizations the appropriate State officer means the State attorney general or the head of the designated agency responsible for overseeing the solicitation of funds for charitable purposes of such organizations.

Title III of the legislation establishes a expedited review process for 501(c)(3) applications of organizations that are organized and operated for the primary purpose of providing social services. Modifications to the existing procedure would waive the application fee for qualified organizations applying for tax exempt status. This would enable smaller faith based organizations to become 501(c)(3) organizations.

Title IV of the legislation includes $1.375 billion in new Social Services Block Grant (SSBG) money to states over a two-year period. The SSBG would be funded at $1.975 billion in FY 2003 and $2.8 billion in FY 2004. This provision of the bill would restore SSBG funding to the authorized level established in 1996 when the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was signed into law. Attached is a chart which shows how much SSBG funding each state would receive over the next two years, in addition to their present grants, through the added funding in this title. In addition this section of the legislation would restore the authority of states to transfer up to 10% of their TANF block grant into the SSBG for a fiscal year.

Title V of the legislation, the "Savings for Working Families Act of 2003", establishes a program to expand access to Individual Development Accounts (IDAs). IDAs are matched savings accounts for low-income working families who are trying to save to purchase a first house, to pay for post-secondary education or training or to start a small-business. The bill provides for a tax credit for an eligible entity administering an IDA and is only available to a maximum of 300,000 accounts. The bill also requires the Treasury Department to report to Congress on the effectiveness of the program.

Title VI of the legislation authorizes the appropriation of funds to the Secretary of Treasury for the administration of exempt organizations by the IRS and implementation of Section 527. The bill authorizes $80 million for each fiscal year to carry out the administration of exempt organizations. In addition, $3 million is authorized to implement Section 527.

Title VII of the legislation authorizes a Compassion Capitol Fund to be administered by four agencies. The fund will be used to provide grants through the Department of Health and Human Services (HHS), the Corporation for National and Community Services, the Department of Justice, and the Department of Housing and Urban Development (HUD) to aid small community and faith-based organizations in partnering with government. The grants provided by the Compassion Capitol Fund, regardless of agency administering the fund, shall: provide technical assistance for community based organizations; information and assistance on capacity building; provide information on and assistance in identifying and using best practices; provide information on and assistance in using regional intermediary organizations; provide assistance in replicating social service programs of demonstrated effectiveness; and encourage research on the best practices of social service organizations. (Note: For the purposes of the Compassion Capitol Fund a small organization is one with no more than 6 full time employees and a current annual budget of less than $450,000.)

Under Section 701 specific provisions are made to allow the Secretary of HHS to award grants or enter into cooperative agreements with States and political subdivisions of States to provide seed money to establish State and local offices of faith-based and community initiatives and to provide technical assistance in administering this Act. Sections 702, 703, and 704 allow for a State, or political subdivision to apply for a grant under this title from the Corporation for National and Community Services, the Department of Justice or the Department of Housing and Urban Development. The legislation does not limit the number of grants a State, or political subdivision may receive under any section of this bill thought it does limit those received by community based organizations in an effort to widely distribute limited resources.

The bill requires coordination of activities by the Secretary of Health & Human Services, the Corporation for National and Community Service, the Attorney General, and the Secretary of Housing and Urban Development in order to ensure nonduplication of activities and equitable distribution or resources under this title.

Removed by sponsors prior to floor consideration. (**See "Activity Post Committee Consideration of the Bill" for further information.**)

Under Title IX, the Runaway and Homeless Youth Act (42 U.S.C. 5714-2) would be amended to allow for grants to maternity group homes to be a permissible use of funds. The legislation authorizes $33 million for fiscal year 2003 and such sums as may be necessary for fiscal year 2004. The legislation also requires a biennial report to congress, by the Secretary of HHS, of evaluations of the maternity group homes that are supported by the grants.

On March 27, 2002, Senator Santorum announced at a press conference that Title VIII "Equal Treatment for Nongovernmental Providers" was being removed from the legislation in order to obtain a unanimous consent agreement on the bill. A unanimous consent agreement would provide for structured consideration of the bill on the Senate floor.

Title VIII of the legislation would have established limitations on what could be required of a nongovernmental organization involved in the provision of social services. This title was often referred to as the faith-based or charitable-choice provision of the bill, and included NCSL-sought compliance language that required all disputes with a State to be filed in the State court of general jurisdiction.

Prepared by: Tamra Spielvogel