Senator Promises Community-Foundation Leaders He Will Push for New Giving Incentives

Sen. Byron Dorgan, the lead sponsor of a bill to make it easier for people to donate money from their individual retirement accounts, told a conference of community foundations here that he would push to get the legislation passed quickly.

“I am determined to try to make this happen this year,” he said. “Predictability is important in public policy. Let’s put this in place for the long term so that donors can count on it and understand it.”

The legislation introduced by Senator Dorgan, Democrat of North Dakota, would make permanent an existing law — set to expire at the end of this year — that allows people age 70 1/2 to transfer money from their individual retirement accounts to a charity without paying taxes.

It would also lift a $100,000 cap and allow people at age 59 1/2 to put their IRA funds into charitable remainder trusts and other types of gifts that produce income for the donor for several years, with everything left eventually to charity. Most important to community foundations, it would also allow the money to go to donor-advised funds.

Speaking at the Council on Foundations annual conference for community foundations, Senator Dorgan said his legislation would cost about $3-billion over 10 years, a small amount given the good it would do. “We spend that in one week in Iraq right now,” he added.

He said money could be found to pay for the provisions by closing corporate tax loopholes — for example, those used by American companies to avoid paying U.S. income taxes by setting up shop in the Cayman Islands.

How such legislation will be received by other members of Congress is still unclear, however.

A top aide to a key House member, Rep. John Lewis — the Georgia Democrat who chairs the House Ways and Means oversight committee — told conference participants that his boss was not sure yet he would co-sponsor the bill.

“Congressman Lewis feels a greater responsibility, as the chairman of the oversight subcommittee, to thoroughly review the impacts of this expansion on current IRA law,” said Michael Collins, the congressman’s chief of staff. “So he has withheld sponsorship until he can completely review the impact of the law.”

Mr. Collins said some kind of legislation affecting IRA charitable rollovers, however, would probably be part of a tax package that the House will likely vote on this fall.

However, Dean Zerbe, the lead counsel for Sen. Charles E. Grassley, of Iowa — the senior Republican on the Senate Finance Committee — said the proposal could face tough going because of Congress’s vow to offset any tax cuts by finding ways to cut spending or taxes elsewhere.

“It’s very uncertain,” he said. “It’s possible, but I think it’s going to take a good effort to make it happen.” While many members of Congress praise the charitable world publicly, he said, “When it really gets to closed doors, the number of folks that really wave the flag for it are very limited.”

He said the “best prescription” for success would be for foundations to unite behind a package that would pair the IRA rollover with support for measures to crack down on charitable abuses, such as the proposals favored by Senator Grassley and others. Mr. Zerbe noted that the Internal Revenue Service had named abuse of donor-advised funds and supporting organizations — by people who shield their money from taxes without transferring it to charity — as one of its 2007 “Dirty Dozen” tax scams.

“We would like to be in a position where we can be comfortable that donor-advised funds have been cleaned up so we’re comfortable encouraging money to go to them,” he said.

Mr. Zerbe said the Council on Foundations should show more leadership in fighting such abuses. “The council needs to be engaged,” he said. “It cannot just whistle by the graveyard saying that’s fine.”

Steve Gunderson, president of the council, said at a later session that the council would work with Mr. Zerbe to answer the IRS’s concerns and find out what it can do to “allow us to put this discussion behind us and move forward.”