Senate Approves New Measure on Tax Incentives to Encourage Donations

By ELIZABETH SCHWINN

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The U.S. Senate approved late last week a measure designed to help relief groups raise more money for Hurricane Katrina recovery efforts and to stimulate giving to charities of all kinds.

The measure, approved Thursday night, is part of a tax-relief package for Hurricane Katrina survivors that was previously passed by the House of Representatives. It includes provisions aimed at encouraging charitable giving over the next few months.

The bill, HR 3768, was the second charitable-relief measure the Senate approved last week. The latest version lacks two key provisions the Senate had included in its earlier measure, thus reducing conflicts between the two chambers' bills.

One of those provisions would have allowed people age 70 and a half and older to donate money from their individual retirement accounts to a charitable organization without paying any taxes on the sums they contributed. The other would have allowed the Internal Revenue Service to disclose to state charity officials information on groups whose tax-exempt status has been denied or revoked, as well as other actions it may be taking to punish groups for wrongdoing.

Fund raisers have long sought the retirement-account provision, and state attorneys general have been pressing Congress to pass the IRS provision. But to speed the process of sending the hurricane-relief legislation to the president, the Senate did not insist on provisions that had not been included in legislation passed by the House.

The bill agreed to by the Senate would:

• Increase the value of the deduction that corporations can take when they contribute food or books.

• Increase the amount charity volunteers can write off when they use their own cars for charity business. Volunteers would be allowed to write off 34 cents a mile, instead of the 14 cents a mile they are now allowed to deduct.

• Raise the maximum percentage of income that people and corporations can deduct each year for their charitable contributions. Individuals would be allowed to write off up to 100 percent of income for the 2005 tax year, compared with the 50-percent ceiling now in place; corporations could deduct up to 100 percent of taxable income in 2005, up from 10 percent.

Those provisions -- which would expire January 1 -- would in most cases apply to any charitable donations, not just gifts related to Hurricane Katrina.

The House must now approve the Senate's version of the measure because the Senate made some minor changes; it is expected to vote on the measure on Tuesday.

Elizabeth Schwinn is a staff writer at The Chronicle of Philanthropy.

• Bush Proposes Hurricane-Relief Package That Would Help Displaced Students and the Colleges That Have Taken Them In (9/16/2005)

• House and Senate Pass Separate Bills Offering Tax Breaks for Donations to Colleges and Charities (9/16/2005)

• Higher-Education Officials and Senate Aides Discuss Colleges' Relief Needs (9/14/2005)

• House Approves Bill That Would Allow Students Displaced by Hurricane to Keep All Federal Grant Aid (9/9/2005)

• House-Passed Bill Would Let Displaced Students Keep Pell Grants; Debate Looms Over Other Relief Measures (9/8/2005)

• Education Department Eases Rules for Colleges Accepting Students From Hurricane Region (9/6/2005)