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Senator Santorum Scores Legislative Victory for Charitable Giving
Senate Passed 10 provisions from Senator Santorum’s CARE Act
August 4, 2006
Washington, D.C. - U.S. Senator Rick Santorum (R-PA), Chairman of the Senate Republican Conference, today announced that ten provisions from his CARE (Charity, Aid, Recovery and Empowerment) Act – S. 1780 – passed the Senate as part of H.R. 4, the Pension Protection Act. Senator Santorum has worked for seven years and four Congresses to enact meaningful incentives that will help provide the funds needed to support our local charities. During this time, others have tried to limit donations to charities or restrict the types of donations, but Senator Santorum has fought to prevent the documented areas of abuses while ensuring that there were no unintended consequences for our nation’s nonprofit sector.
“While I did not get all of the incentives we have been fighting for, I am glad to announce that we have passed eleven provisions of my CARE Act,” said Senator Santorum. “These provisions will provide new resources for our colleges and universities, food for our homeless shelters and food banks, and funds to preserve our open spaces. These incentives are incredibly important to organizations that will be receiving these donations, but even more so for the people that these nonprofits serve in our communities.”
H.R. 4 includes the following charitable incentives:
• Donations from individual retirement accounts for charitable purposes – Allows individuals to donate up to $100,000 from a traditional individual retirement account (IRA) or a Roth IRA to charity without paying income tax on the distributions. To qualify for this provision, the charitable donation must be made to a public charity.
• Modification of charitable deduction for contributions of food inventories – Provides incentives for businesses and farmers to donate their food inventory to charity. The provision allows donations from all trades and businesses and the deduction is equal to the lesser of (i) the taxpayer’s basis plus one-half of the difference between fair market value and basis, or (ii) twice the taxpayer’s basis in the contributed inventory.
• Modification of charitable deduction for contributions of book inventories -- Extends the current law provision that adds public schools to the list of eligible recipients of donations of qualified book inventory by certain corporations.
• Modifications to encourage contributions of capital gain real property made for conservation purposes – Provides land-rich, but cash poor families an opportunity to donate land for conservation purposes by increasing the charitable deduction limit from 30 percent of adjusted gross income to 50 percent if the donation does not prevent the use of the land for farming or ranching purposes. The charitable deduction limit is increased to 100 percent of adjusted gross income for eligible farmers and ranchers. Additionally, the provision allows a taxpayer to carry forward the deduction for 15 years in certain circumstances.
• Adjustment to basis of S corporation stock for certain charitable contributions – Levels the playing field for the donation of stock by small businesses by clearly defining the applicable deduction with regard to the donation of stock of an S corporation as a charitable contribution.
• Extension of enhanced deduction for inventory to include public schools – Extends the enhanced deduction for inventory property to donations to public schools.
Each of these provisions are effective for two years through 2007.
Senator Santorum has been a champion of the charitable and nonprofit sector. His CARE Act is included in the Senate Anti-Poverty Agenda, and is the culmination of charitable incentive bills dating back to the 106th Congress.
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