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28–740 PDF 2006

UNLOCKING CHARITABLE GIVING

HEARING

BEFORE THE

SUBCOMMITTEE ON RURAL ENTERPRISES, 

AGRICULTURE & TECHNOLOGY

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

WASHINGTON, DC, MAY 25, 2006

Serial No. 109–54

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON RURAL ENTERPRISES, AGRICULTURE AND 

TECHNOLOGY 

SAM GRAVES, Missouri, Chairman 

STEVE KING, Iowa 

ROSCOE BARTLETT, Maryland 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MARILYN MUSGRAVE, Colorado 

JOHN BARROW, Georgia 

TOM UDALL, New Mexico 

MICHAEL MICHAUD, Maine 

ED CASE, Hawaii 

RAU ́ L GRIJALVA, Arizona

PIPER LARGENT, Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Blunt, The Honorable Roy Blunt (MO-7), Majority Whip and Congressman, 

U.S. House of Representatives ............................................................................ 3

Lee, Mr. Benny, Chief Executive Officer, Top Innovations, Inc. ......................... 5

Halterman, Mr. Michael W., Chief Executive Officer, Catholic Charities of 

Kansas City—St. Joseph ..................................................................................... 6

Aviv, Ms. Diana, President and CEO, Independent Sector .................................. 7

Maehara, Ms. Paulette, President and CEO, Association of Fundraising Professionals ............................................................................................................... 9

APPENDIX

Opening statements: 

Graves, Hon. Sam ............................................................................................. 15

Prepared statements: 

Blunt, The Honorable Roy Blunt (MO-7), Majority Whip and Congressman, U.S. House of Representatives ........................................................... 16

Lee, Mr. Benny, Chief Executive Officer, Top Innovations, Inc. .................. 19

Halterman, Mr. Michael W., Chief Executive Officer, Catholic Charities 

of Kansas City—St. Joseph .......................................................................... 22

Aviv, Ms. Diana, President and CEO, Independent Sector .......................... 26

Maehara, Ms. Paulette, President and CEO, Association of Fundraising 

Professionals .................................................................................................. 29

(III) 

(1)

UNLOCKING CHARITABLE GIVING 

THURSDAY, MAY 25, 2006

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON RURAL ENTERPRISES, AGRICULTURE

AND TECHNOLOGY

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Subcommittee met, pursuant to call, at 9:45 a.m., in Room 

2360 Rayburn House Office Building, Hon. Sam Graves [Chairman 

of the Subcommittee] presiding. 

Present: Representatives Graves, Barrow. 

Chairman. GRAVES. I will call the hearing to order. 

And I would like to say good morning to everyone and welcome 

you to the Small Business Committee, the Subcommittee on Rural 

Enterprise, Agriculture, and Technology. Today’s hearing is entitled ‘‘Unlocking Charitable Giving,’’ and we are going to examine 

just what can be done to ease the burdens on people and businesses that wish to help their neighbors. 

Americans are the most generous people in the world and have 

shown time and time again their willingness to reach deep into 

their pockets to help those in need. Americans contributed large 

sums of money to people halfway across the world when the tsunami ripped through southeast Asia. In fact, private sector donations doubled—almost doubled—what our government contributed. 

The U.S. Government pledged $857 million, and at the same time 

U.S. private sector and corporate donations totaled almost $1-1/2 

billion. 

Americans again opened their pockets, their hearts, to the vic- tims of Hurricanes Katrina and Rita. Americans contributed $3.3 

billion to help friends and neighbors. That in itself is an astonishing amount, in my opinion. According to a February 27 Washington Post story, 54 percent of donations are controlled—or 54 

percent of the donations sent to those victims of Hurricanes 

Katrina and Rita were faith-based organizations. 

This hearing is going to specifically look at H.R. 3908, The Charitable Giving Act of 2005, which is introduced by Representative 

Blunt and Representative Ford. The Charitable Giving Act aims to 

leverage new support and resources for a broad range of community and faith-based groups from the private sector. Many of the 

charities that help those in need are, in fact, faith-based. Seventyfive percent of food pantries are religious organizations, 71 percent 

of food kitchens are faith-based, and 43 percent of shelters in this 

country are funded by faith-based providers. 

2

While Representative Blunt’s bill is a tax bill, it is in concert 

with the President’s faith-based and community initiative. H.R. 

3908 is designed to rally the armies of compassion, as our President likes to say. The bill provides tax incentives and other measures to encourage charitable giving by individuals and corporations. This bill would also allow the 86 million Americans who do 

not itemize on their tax returns the opportunity to deduct a portion 

of their charitable contributions. 

I would like to thank Representative Blunt for being here today 

and for introducing this legislation. I will now turn to Representative Barrow for his opening statement. 

[Chairman Graves’ opening statement may be found in the appendix.] 

Mr. BARROW. Thank you, Mr. Chairman. You know, we have had 

some tough times in America over the last five years, from the terrorist attacks on 9/11 to some of the worst hurricanes we have ever 

seen. But America is a great nation, because we rally together in 

the face of adversity, and the generosity of Americans all over is 

evidence of this. 

Charitable giving is essential to our economy and our welfare, 

and I am glad we are having this hearing to examine the current 

state of charitable giving. It is not only natural disasters and terrorist attacks that cause Americans to give to charities, organizations all around the world rally support for their causes, everything 

from curing cancer to educating children and fighting homelessness. 

Anybody who believes in these causes understands the importance of contributing to charitable causes. Small businesses are 

now exception. Eighty-five percent of small firms regularly donate 

money to charitable causes, and another two-thirds contribute services for free to community charities. These small businesses are 

making a good investment in their communities, and they know 

best what local charities are worth supporting. 

Our role in this Subcommittee is to see how these entrepreneurs 

are part of the charitable giving equation, and to make sure that 

America’s charitable infrastructure is effective and efficient. A 

working charitable system helps those most in need, while also allowing and even encouraging all of us to reach out to our neighbors. 

I want to thank Representative Blunt for his leadership on this 

issue and all the witnesses for coming in today. And I am glad to 

announce my intent to sign on as a co-sponsor of the Charitable 

Giving Act of 2005, and I am going to encourage all of my colleagues to do the same. Together we can ensure that our country 

is one of compassion and generosity. 

Thank you, Mr. Chairman. 

Chairman. GRAVES. Thanks, Representative. 

All the statements of the witnesses and the members will be 

placed in the record in their entirety. I want to say that and again 

thank you, Representative Blunt, for being here. I appreciate it and 

look forward to hearing your testimony. 

3

STATEMENT OF THE HONORABLE ROY BLUNT, 

CONGRESSMAN, U.S. HOUSE OF REPRESENTATIVES 

Mr. BLUNT. Thank you, Chairman. I am pleased to be here. Mr. 

Barrow, thank you for your comments, and thank you for joining 

us on this bill. 

Let me first of all give a little background. I do have a prepared 

statement and, as you suggested, Mr. Chairman, it will be in the 

record. 

My good friend Harold Ford and I introduced this legislation at 

the beginning of the last Congress. The House passed the legislation at the—I think it was near the end of that first year of our 

introduction of this bill. I was actually very optimistic at the time. 

The Senate had passed a bill, not quite as good I thought but a 

good enough bill that we could certainly go to conference and talk 

to our friends in the Senate. And that got caught up in a number 

of struggles internally in the Senate and between the House and 

the Senate. We never had a conference on that bill, and so my optimism at the time has to—has been tempered over time. 

I think it is sad that for three years now after the House passage 

this legislation has not moved forward. I was pleased when the 

Senate recently put most of the elements of our package in their 

tax bill for reasons of votes and limitations of how much we could 

do in the Reconciliation Act. That language wasn’t maintained in 

the Reconciliation Act that we recently passed, but still has an opportunity to be part of a following tax package, I hope it is, and 

hope that our negotiators can find a way to make that happen. 

Let me just hit two or three high points here of the legislation 

that Harold Ford and I introduced, and I would be glad to answer 

a few questions. I know you have got a great series of witnesses 

coming who are out there, both in the faith-based community and 

the charitable community generally every day. And something that 

you and Mr. Barrow and I all appreciate and understand is that 

money given to charities seems to go and obviously does go so 

much further than money given to government. 

So whatever the tax consequences of this bill might be, the good 

of the community is benefitted dramatically by those consequences. 

If you want to see a dollar really stretched, give it to a charity that 

is effectively doing what it does, combining that dollar with volunteer help, other kinds of contributions. And that is one reason that 

Harold Ford and I were so pleased to be able to introduce that and 

still continue to believe that this needs to become a part of our Tax 

Code. 

Two or three things I will mention. One, as you did, the nonitemizers, 86 million Americans, two-thirds of the people who pay 

taxes don’t itemize their taxes. And the person that gives generously to church and charity gets no more benefit for that generous 

effort they make than the person that lives next door that gives 

nothing to church and charity. And so this bill would allow individuals who give more than $250 to be able to have a deduction as 

a non-itemizer of up to $500. 

Couples would take a deduction of up to $1,000. It not only encourages charity, but it rewards those who give as opposed to those 

who don’t. They get to go beyond the standard deduction that every 

4

non-itemizer gets to a deduction that at least begins to reflect some 

of what they generously try to give. There are $2-1/2 trillion locked up in IRAs today. Many people 

don’t have in their IRA what they need from themselves. Others 

do—people who have got—who have for whatever reason made a 

good investment with their IRA, have other pensions and retirement benefits coming to them, and suddenly they realize that an 

awful lot of the wealth that they have accumulated is in this IRA 

that has significant negative consequences to try to give out of that 

IRA. 

Our legislation essentially removes those negative consequences. 

If you are a university president like I was the four years before 

I came to Congress, or if you are doing what many of the next witnesses are part of every day out there raising money, everybody 

has got a story of somebody who came and said, ‘‘Here is how I 

would like to give,’’ only to find out that the consequences of giving 

out of their IRA were so negative that they are not willing to do 

that once they really understand what is happening. 

This would remove those negative consequences, make that 

money in IRAs available for charitable giving, and have real impact 

to churches and charities who would like to have access to this 

money without tax penalties. We raised the cap on corporate charitable contributions from 10 percent of the company’s taxable income to 20 percent. That would be particularly helpful with small, 

privately held corporations that are intensely active in often a specific thing in their community, and would love to give 20 percent 

of their taxable income now, can only give 10 percent. 

We enhance deductions for food donations to where people who 

are not only—not only restaurants and grocers, but also farmers, 

ranchers, food producers could give money and would be encouraged to give food rather—in a way that they are not now. 

As I said, next to the family unit, the local church or charity is 

really the best equipped to assist those less fortunate, and we are 

continually—we want to look for ways to do that. I think our bill 

includes many of those ways, and I am hopeful that even this year 

we still have an opportunity to work with the Senate and see these 

provisions become part of the law. And I am grateful to you, Mr. 

Chairman, for wanting to focus on this, because it does have significant impact on businesses, big and small, and on the communities those businesses are in. 

[Congressman Blunt’s testimony may be found in the appendix.] 

Chairman. GRAVES. Thank you, Representative Blunt. I do have 

a question. I was curious, has there been any studies or estimates 

on what could happen to charitable contributions if we are able to 

implement— 

Mr. BLUNT. Well, there was a—on our bill obviously there was 

a scoring of the bill, which was the scoring, $12 billion was the 

scoring of the cost of the bill over three—over 10 years. 

So if that was the cost of the bill you would have to assume that 

something in the neighborhood of double that, more than double 

that, would have been the charitable impact. You know, I think 

this had a charitable impact of $25- to $30 billion of additional giving that would be there if, in fact, this bill would pass, at a cost—

no question-to the taxpayers or to the Treasury of money. 

5

But, again, I will go back to my initial comment that $30 billion would do so much more good, in my view, than $30 billion given 

to the government, let alone the $12 billion of tax incentives that 

the government would have to provide in order to put that money 

in the hands of the charitable community and serve a need in a 

more effective way than the government itself ever does. 

Chairman. GRAVES. There is no doubt that you could get triple 

the bang through private organizations than you could through the 

government. 

Mr. BLUNT. Right. 

Chairman. GRAVES. Representative Barrow. 

Mr. BARROW. Thank you, Mr. Blunt. 

Thank you for holding the hearing, and thank you for calling attention to this bill. And, again, we are actively talking both with 

the Senate and with the Ways and Means Committee right now 

about what we can do to include this as part of a further tax package this year. There is R&D extensions. There definitely will be one 

more tax package this year that, frankly, on our side of the building we believe easily gets 60 votes in the Senate. So it didn’t need 

to be part of Reconciliation. It becomes part of permanent tax law. 

I would really like to see all of these provisions, and certainly 

some of these provisions, have an opportunity to be part of that 

package, and your calling attention to it is very helpful to help 

make that happen. 

Mr. BLUNT. Thank you. 

Mr. BARROW. So thank you. 

Chairman. GRAVES. We will go ahead and seat the second panel 

and bring everyone up, and then I will introduce them as we move 

through. So come on forward. 

Today on our second panel we have Benny Lee, who is the CEO 

of Top Innovations, Incorporated, in Kansas City, Missouri; we 

have Michael Halterman, who is the Chief Executive Officer at 

Catholic Charities of Kansas City and St. Joe, based out of Kansas 

City; Diana Aviv, President and CEO, Independent Sector, in 

Washington, D.C.; and Paulette Maehara, President and CEO of 

the Association of Fundraising Professionals here in Washington, 

D.C. 

I appreciate everybody being here today, look forward to hearing 

your testimony. We will start with Benny. Thanks for coming in. 

STATEMENT OF BENNY LEE, TOP INNOVATIONS, INC. 

Mr. LEE. Good morning. Thank you, Mr. Chairman, Ranking 

Member Barrow, and members of this Subcommittee for inviting 

me to testify today. I am Benny Lee, Chief Executive Officer of Top 

Innovations, Incorporated, in Kansas City, Missouri. I also serve on 

the Board of Directors of the Greater Kansas City Chamber of 

Commerce, the Board of Directors of the Heart of America United 

Way, and the Board of Trustees of Park University. 

I also want to thank Tom Dugard from Heart of America United 

Way for being here to support me today. Tom’s hard work helps a 

lot of people in Kansas City and across the country. 

Kansas City welcomed me with open arms when I came to the 

United States many years ago. And one of my top priorities has 

been to give back to my community. Over the many years I have 

6

been involved with non-profit organizations, I have learned about 

the burdensome legal restrictions that discourage charitable giving 

by individuals and corporations. 

I am here today to testify about the importance of charitable contributions and how the Charitable Giving Act of 2005 can help 

more Americans help their own communities. I have seen first 

hand the positive impact charitable contributions can have for 

those in need. 

There are over 86 million Americans annually who file for the 

standard deduction on their federal income tax returns. Because 

they do not itemize, they receive no deduction for their charitable 

giving. While many of these 86 million donate to charity, they 

should receive a deduction for their contributions. 

As an entrepreneur, I also know the importance of the charitable 

donations by businesses. Currently, the cap on corporate contribution charitable deductions is limited to 10 percent of the taxable income. The Charitable Giving Act of 2005 would increase the cap to 

20 percent, promoting increased corporate support to faith-based 

and community organizations across America. 

In addition, this bill will encourage more Americans to donate 

food to the hungry and technology to those who want to learn but 

cannot afford to buy computers, for instance. We need to change 

our current system, because the non-profit sector can usually provide better, more cost-effective services than the public sector. 

At a regional level, Kansas City’s Heart of America United Way’s 

2-1-1 service began operations in March 2006 after more than three 

years of planning. The 2-1-1 is a central clearinghouse for those in 

need and for those individuals and organizations that want to volunteer their time, resources, and services in a 23-county area of 

Missouri and Kansas. 

With news of the 2-1-1 service spreading, the burden on the 9-

1-1 service infrastructure should be significantly reduced. 9-1-1 will 

be able to provide Missourians and Kansans with better, more efficient service for police and fire emergencies because of the work 2-

1-1 is doing. 

The 2-1-1 is operational 24 hours a day, seven days a week, and 

is staffed by a team of trained specialists. The 2-1-1 program demonstrates the kind of benefits that the public sector and non-profit 

sector can provide to their communities when working together. 

Americans are the most generous people in the world, but we can 

do more to encourage charitable giving. I urge Congress to pass 

H.R. 3908, The Charitable Giving Act of 2005. 

Thank you. 

[Mr. Lee’s testimony may be found in the appendix.] 

Chairman. GRAVES. Thanks, Benny. 

Next, we are going to hear from Mr. Halterman. Thanks for coming in. I appreciate it. Look forward to hearing your testimony. 

STATEMENT OF MICHAEL HALTERMAN, CATHOLIC CHARITIES 

OF KANSAS CITY—ST. JOSEPH 

Mr. HALTERMAN. Honored Representatives, I thank you for the 

opportunity to testify today regarding charitable giving. Twentythree percent of our agency’s current revenues come from chariVerDate 0ct 09 2002 22:47 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\HEARINGS\28740.TXT MIKE
7

table giving. Thus, the generosity of our donors assists our agency 

in fulfilling its mission. 

As partners with the government in meeting the needs of the 

poor and the vulnerable, we have strived to broaden our services 

in areas such as prison reentry, housing, senior care, child welfare, 

and many other much-needed services. We also have participated 

in serving evacuees from the recent hurricane disasters. 

As a leader of a faith-based organization, I believe government 

policy should encourage charitable giving, since non-profit and 

faith-based organizations fulfill a public role that would otherwise 

need to be met by our larger social structures, including the Federal Government and the state governments. It is imperative that 

the government continues to support including adequate funding 

for non-profit and faith-based organizations who serve the poor and 

the vulnerable. 

Faith-based providers’ religious or ethical tenets must be protected in order for such providers to continue to provide services in 

partnership with the government. This kind of protection has been 

recognized as necessary by the President’s Faith-Based Initiative. 

One of the most critical provisions of the Care Act of 2005 is the 

non-itemized deduction which would allow taxpayers who do not 

itemize to deduct their charitable contributions. 

It has been suggested to limit deductibility to contributions over 

$250 annually. I would suggest that even smaller contributions 

serve an important purpose. Faith-based and non-profit organizations will address the many needs of our society, but we cannot do 

more with less. With the moral scandal of so much poverty in the 

richest nation on Earth, we must continue to seek ways to increase 

charitable giving, but also provide adequate government funding to 

meet the needs of the poor and the vulnerable. 

Thank you. 

[Mr. Halterman’s testimony may be found in the appendix.] 

Chairman. GRAVES. Thank you, Mr. Halterman. 

Diana, thanks for being here today. 

STATEMENT OF DIANA AVIV, INDEPENDENT SECTOR 

Ms. AVIV. Thank you, Mr. Chairman. I come before you as President and CEO of Independent Sector, which is a national coalition 

of charities, foundations, and corporate giving philanthropy programs that collectively represent tens of thousands of non-profit 

groups across the nation. 

I am here as the Executive Director of the panel on the non-profit sector, which is a collaborative effort by a broad segment of charitable organizations which offered over 120 recommendations in its 

report to Congress on the charitable sector last summer for actions 

that we can take together to independently strengthen transparency, governance, and accountability of charities and foundations. 

The independent sector itself has worked for over 25 years to 

build ethical, effective organizations, and to encourage Americans 

to contribute time and financial resources to charitable organizations. We were active supporters of the Charitable Giving Act of 

2003, which passed Congress by an overwhelming margin, as you 

8

know, of 408 votes to 13, and we are proud to support the Charitable Giving Act of 2005. 

We thank Representatives Blunt and Ford for their leadership in 

sponsoring a strong package of tax incentives in both of these bills, 

and we are pleased that this Committee and the House of Representatives is seriously considering these important incentives 

this year. 

The tax incentives of the Charitable Giving Act would help 

Americans provide a more generous support to our nation’s charitable organizations. And I want to highlight two provisions in that 

bill that would give tremendous impact on the ability of America’s 

charitable non-profits to raise private funds to support the vital 

services they provide to communities throughout our country and 

around the world. 

The first provision, commonly known as the IRA Charitable Rollover, would, as you know, permit tax-free distributions from individual retirement accounts for charitable contributions. Due to the 

strong economy and stock market gains over the last several decades, many individuals have sufficient funds in their IRAs to retire 

and make contributions to their favorite charitable organizations. 

But under current law those individuals must include any withdrawals from their IRA in their taxable income, which may then 

be offset in part by a charitable contribution—by a charitable deduction. The size of the deduction—portion of a gift is limited by 

such restrictions as the percentage of adjusted gross income limitation on charitable deductions and the overall limitation on itemized 

deductions. As a result, very few individuals donate IRA funds to 

charity during their lifetimes. 

The Charitable Giving Act would remove those disincentives by 

permitting a taxpayer who has reached age 70-1/2 to exclude from 

his or her income any IRA funds withdrawn and transferred directly to a charity. This proposal is widely supported in the charitable community and could unlock substantial new resources to 

support charitable organizations and their community programs. 

Currently, about one-half of American households have IRA accounts, and the total value of these funds held in those accounts 

is approximately two and a half trillion dollars. If less than onehalf of one percent of those funds were donated to charity over the 

next two years, donations could rise by as much as $12.5 billion, 

and we believe a lot more than that would be donated. 

The second provision, commonly known as the non-itemizer deduction, would permit almost 85 million taxpayers who claim the 

standard deduction on the individual income tax returns to receive 

a deduction for a portion of their charitable contributions. Our nation’s Tax Code has been, and remains, a powerful tool available 

to demonstrate that we Americans highly value and support charitable giving. 

We believe that tax policy should strongly encourage giving by 

all Americans, not just by those taxpayers who itemize deductions 

on their annual income tax returns. 

Charitable giving decisions begin with a desire to help others or 

belief in the work of a particular charitable organization, and that 

that organization is making the world a better place. But research 

has shown that tax incentives can strongly influence when and how 

9

much we give. This new provision will encourage non-itemizers 

who already give to increase their donations, and it will provide an 

added push for those who don’t yet make contributions to support 

the organizations that serve their communities. 

House and Senate conferees are currently considering adopting a 

package of tax provisions as part of a broader tax package—of tax 

law changes that could be included with other legislation now moving through Congress. That package includes a number of giving 

incentives included in the Charitable Giving Act, as well as tax reforms which reflect in large part the recommendations of the panel 

in the non-profit sector to close tax loopholes that have permitted 

abuse of charitable resources. 

I strongly encourage members of this committee to support the 

adoption both of the critical tax incentives of the Charitable Giving 

Act and the consensus tax reforms, which will discourage wrongdoers from taking improper advantage of our charitable sector for 

personal gain without harming the independence of charitable organizations that is so critical to their ability to contribute to the 

well-being of society. 

Thank you so much for your time. 

[Ms. Aviv’s testimony may be found in the appendix.] 

Chairman. GRAVES. Thank you, Ms. Aviv. 

Ms. Maehara? 

STATEMENT OF PAULETTE MAEHARA, ASSOCIATION OF 

FUNDRAISING PROFESSIONALS 

Ms. MAEHARA. Thank you, and good morning. I am Paulette 

Maehara. I am the President and CEO of the Association of Fundraising Professionals. AFP’s considerable expertise in the legislative field is really based on our combined experience of our 27,000 

members across North America and around the world, including 

800 in Missouri. 

I want to thank Congressmen Blunt and Ford for their continued 

perseverance on this issue, and, Congressman Graves, I thank you 

for your leadership in this area as well. 

We have over 180 chapters located in almost every state and 

metropolitan area, as well as internationally. Our members raise 

funds for a variety of different types of charities, some of which you 

have already heard from today. And we cover almost every conceivable issue, such as education, health care, religion, environment, 

just to name a few. 

In the State of Missouri alone, we have four chapters with 800 

members, representing organizations like the University of Missouri, Make A Wish Foundation, the Springfield Family YMCA, 

and the Archdiocese of St. Louis. These groups can all benefit from 

the provisions that are found in this bill, particularly the IRA rollover provision, which you have already heard some of the comments about. 

AFP members are required annually to sign our code of ethics 

and our standards of professional practice, which were developed in 

1964. The code of ethics is widely recognized in the sector as the 

leading guide to best practices in fundraising. The code is unique, 

because it is the only code in the fundraising profession that is enforced. 

10

This background I think is cited only to emphasize the importance that AFP members place on ethical fundraising practices. 

Provisions in the Charitable Act would create powerful new giving incentives that would greatly impact many organizations. 

Measures such as the IRA rollover and the enhanced deductions for 

contributions are all vital to our community. The charitable sector 

has experienced unprecedented growth over the last few years. 

With this increase in the number of charities comes a proportionate 

increase in competition for charitable dollars. 

Because of this intense competition for charitable dollars, overall 

giving has not kept pace with the growth in the sector. At the same 

time the demands on charities and charitable programs are increasing, government cutbacks have compelled charities to fill the 

gap when it comes to servicing the disadvantaged. 

The extra funding that H.R. 3908 would create, especially in this 

time of heightened demand on the limited pool of charitable dollars, would be considerable. 

I want to focus just briefly on two things. In AFP’s view, the 

most important and probably the most powerful provision is the 

IRA rollover. Currently, individuals may withdraw funds from a 

traditional IRA rollover without incurring any early withdrawal 

penalty, once they reach the age of 59-1/2, although these withdrawals will be taxed as ordinary income. 

Under the so-called minimum distribution rules, an individual 

must begin making withdrawals by April 1st following the year in 

which he or she turns 70-1/2. In either case, when a donor withdraws an IRA and funds it to a charitable gift, he or she will pay 

income tax on that withdrawal, and although it is offset to some 

degree by a charitable deduction. 

As a consequence, as you have heard, few people make contributions from their IRA rollover—from their IRA funds. And we have 

lots of examples that we could cite, but it is certainly an inhibitor 

to giving IRA funds. If the IRA rollover provision were enacted, the 

donor who would reach a defined age would be allowed to take a 

charitable contribution if they give funds from their IRA. 

I want to emphasize that IRA rollovers would encourage charitable contributions of excess dollars, and many, many Americans 

do have additional dollars in their IRA. We estimate about $2-1/2 

trillion. Interesting that all of our numbers are the same. And we 

also believe that it would increase giving by billions of dollars annually. 

I want to just touch briefly on the University of Missouri, who 

is right now conducting a campaign for faculty, staff, and retirees. 

The IRA rollover would be a tremendous asset for the University 

of Missouri. And like many universities across the nation, the 

funds that have traditionally supported higher education are no 

longer there. In fact, today state appropriations provide only onefifth of Mizu’s total budget. Student fees contribute about 15 percent, and private gifts make up the difference. So private gifts become extremely important. 

And just to touch briefly on the proposal that would allow individuals to not itemize their deductions, as written the non-itemizer 

would have to exceed the floor in order to claim a deduction. LegisVerDate 0ct 09 2002 22:47 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 G:\HEARINGS\28740.TXT MIKE
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lation was also proposed this year that would impose a minimum 

donation floor on both itemizers and non-itemizers. 

AFP strongly opposes the application of any floor to charitable 

contributions for—and regardless of whether they itemize or they 

do not itemize. Such a policy change would be unprecedented and 

would essentially comprise a new tax on charitable donors who feel 

that they must meet those threshold requirements. 

I appreciate the opportunity to come before you today and share 

some of these thoughts, and I particularly appreciate the support 

you have given. 

Thank you. 

[Ms. Maehara’s testimony may be found in the appendix.] 

Chairman. GRAVES. Thank you. Ms. Maehara alluded to it, but 

the three biggest items in this bill you have are being able to obviously deduct as a non-itemizer the IRA provision, and then also increasing corporate donations from 10 to 20. You alluded to the rollover—or the IRA as being the most important part of that. 

I am throwing this out to everyone. What do you think would be 

the most important? What would generate the most donations or 

charitable giving, if we only had one or possibly two of these provisions instead of all of them? Because so many times in bills you 

end up compromising, and you lose some of your provisions, but I’d 

be curious to hear what everybody thinks would be the most important component of that. 

Ms. AVIV. Mr. Chairman, may I suggest that there are several 

ways to look at that. One way is to say only support one provision. 

Another one is to take a number of provisions and see how they 

might be adjusted so that there are different audiences that benefit, because in the case of the IRA rollover the organizations, the 

charities that are able to tap into that, and the donors who are able 

to benefit from that, are different from the audiences or the donors 

who give to the non-itemizer. 

And the problem is that if we want—or the challenge is that if 

we want to encourage charitable giving across our society, we don’t 

want to limit it only to those who have enough in their IRA rollover, in their IRA account that they can rollover some of that 

money because they are fortunate enough and wealthy enough to 

do that. 

The value of the non-itemizer is that it gets at much smaller donors as well and allows them to participate and encourages them 

to participate more. So I would hate to rob Peter to pay Paul, and 

I think that there’s a way to do both. And if it has to be more modest, then we can look at that, but I would suggest to you that it 

is not an either/or proposition necessarily. 

Chairman. GRAVES. Anyone else? 

Mr. HALTERMAN. I would just say that I would agree with her. 

The needs are greater than the dollars out there. And whatever 

can be done, no matter if it is the IRA rollover or the contributions, 

I would like to see as many of the provisions as possible. 

Ms. MAEHARA. And, Mr. Chairman, we would agree with that. I 

mean, obviously, we would like to have both. And as Diana has 

pointed out, if there is a way to compromise in some of those, we 

would certainly want to have that dialogue. And so if—you know, 

our desire would be to see both happen. 

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Chairman. GRAVES. Okay. 

Mr. LEE. Mr. Chairman, also, as we all know, every year the contribution is more than $240 billion. Seventy-five percent comes 

from small individuals, and that is—will disappear from the, you 

know, deductible—you know, standard deduction will be not shown, 

and that is the area we need to encourage people to contribute. 

Chairman. GRAVES. Thank you all. Does anybody see any opposition to this? Any of you, do you see any opposition coming from 

local communities or nationwide or organized opposition? 

Ms. AVIV. I think our local communities are upset that we 

haven’t been able to get this done sooner. It seems to them like a 

no-brainer, and that seems like a silly thing to say, because we 

know how things happen. But our communities are—we have had 

no opposition on these issues. 

I think the big question that has been asked from time to time 

is the cost of these provisions relative to the money that it will generate. You know, that was the question that you asked Mr. Blunt 

in the previous panel. And I think that we have got strong estimates, but in the end we will have to see whether our estimates 

turn out to be true. But that is the only question. 

From our communities, the more resources we can generate and 

the more we can stimulate giving, the better off they believe they 

will be. 

Ms. MAEHARA. I would certainly concur with that, and I think 

the only other point I would add is that the considerable growth 

of the sector has far outstripped the ability for philanthropic dollars to fill those gaps. And so anything we can do to add to that—

and our membership across the United States is totally in support 

of this. And as Diana said, we would like to see this get done sooner. 

Mr. HALTERMAN. If you look at the donations for the hurricanes, 

just in our diocese of Kansas City-St. Joseph, we brought in almost 

$600,000. Some of that was used locally, and some of it was sent 

to Catholic Charities USA for the affected areas. 

I don’t think there would be opposition. I think the American 

people want to help other people. 

Mr. LEE. As we all know, the only consequence is reduce of revenue. However, if we can increase the contribution and the contribution is used on public sector, and public sector usually can 

function much efficiently, as we all know, than the government. So 

that is—there is a balance, and then eventually the contribution 

will be more than the consequence of the tax revenue. 

Ms. MAEHARA. Just one other thing I would like to add. I think 

the other issue that is on the table are some of the reform issues 

that have come forward. And so there are concerns related to those, 

at least some of those reform issues, so on the concern side that 

would be a concern, depending on what some of those reforms 

were. So— 

Chairman. GRAVES. Okay. Do you all see any—the generosity of 

the American public just astounds me every time. And, you know, 

we continue to see disasters, and we end up throwing—the government ends up throwing a lot of money at some of these things. 

Hurricanes—both of the hurricanes always come to mind. And 

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there is always, you know, the inefficiency of the way government 

works. 

And I have heard stories. We had a lot of folks from my district 

go down and try to help out and were either turned away or 

weren’t able to—weren’t utilized, you know, in their area. And the 

amount of money that goes in so many cases unaccounted for 

through the government sector is just unbelievable, and I believe 

the private sector is definitely—you know, does so much better job, 

because, you know, you are paying a lot closer attention. You have 

to stretch those dollars a lot farther. 

But do you see any—in the aftermath of like some of the problems we had with Hurricanes Katrina and Rita, do you see any disillusioned contributors out there, donors out there, that just back 

away and aren’t interested anymore? And we had this even—you 

know, it might even be touched on, too, because we had the tsunami and a lot of people donated to that. And then, bam, right 

after that we had the hurricanes that came along. I don’t know if 

people were tapped out or a little disillusioned. 

But do you see a little bit of that, or does the generosity just continue to flow through? 

Mr. HALTERMAN. We have not seen any change. In fact, at our 

agency, even with the hurricanes and the tsunami and all of that, 

our charitable giving has went up. I think a lot of charitable giving 

is a local thing. I mean, people choose a specific program or a specific agency, or whatever, and I have not seen it go down at our 

agency. 

Even the United Way, and I think he could talk more about this, 

we have been able to hit the goals that have been set by the Board 

of Directors there in the local area. 

Ms. MAEHARA. There has been a lot of conversation about donor 

fatigue. And every year AFP does a survey of our members, asking 

them to compare their fundraising results from one year to the 

next. In our survey results that we did just for 2005, what we 

found is that 76 percent of our members are raising the same or 

more than they did in prior year. 

And over 80-some odd percent of them are meeting their campaign goals, so it is certainly consistent with what Michael has 

said. 

Ms. AVIV. Mr. Chairman, what we also found is that people tend, 

in the case of crisis, to dig deeper into their pockets and add additional rather than to take the same amount and redirect it just to 

the emergency. What we also know, in coming back to the incentives, is that if there are additional incentives people will then even 

give more. 

Mr. LEE. The 2-1-1 really demonstrates the—in hurricane in 

Florida, I think it covered like—almost like 65 percent or 70 percent of the area. So it is really very, very useful, but that is the 

way to promote 2-1-1. 

Mr. HALTERMAN. Mr. Chairman, I would also like to add that 

charitable giving is not just an urban approach. It is—our charitable giving in our rural areas, because of some of our programs 

and emphasis on rural community development, has increased our 

giving in the rural areas, which is surprising because the rural 

areas have not seen the economic boom that urban areas have. 

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Chairman. GRAVES. Well, again, it never ceases to amaze me, the 

generosity of the American public. And the purpose of this hearing 

is to try to bring some more attention to 3908 to push it along. We 

are going to try to give as much support as we possibly can to Representatives Blunt and Ford and continue to try to get this done. 

We are very optimistic that we can hopefully get it done this 

year on the tax bill. I think it would have a tremendous impact if 

you all testified on charitable giving in the United States, and it 

is just going to provide that many more opportunities. And, again, 

I think the private sector can do a lot better job than the government can when it comes to directing the resources that need to be 

directed. 

I want to thank everybody for coming today and appreciate it. 

This is, again, very important. It provides more attention and obviously more support towards this bill. You served a great purpose 

today, and I thank you for coming in. 

[Whereupon, at 10:33 a.m., the Subcommittee was adjourned.]

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