IIB
107TH CONGRESS
1ST SESSION
H. R. 7
IN THE SENATE OF THE UNITED STATES
JULY 19, 2001
Received; read twice and referred to the Committee on Finance
AN ACT
To provide incentives for charitable contributions by individ-
uals and businesses, to improve the effectiveness and
efficiency of government program delivery to individuals
and families in need, and to enhance the ability of low-
income Americans to gain financial security by building
assets.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Solutions Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title; table of contents.
TITLE I—CHARITABLE GIVING INCENTIVES PACKAGE
Sec. 101. Deduction for portion of charitable contributions to be allowed to in-
dividuals who do not itemize deductions.
Sec. 102. Tax-free distributions from individual retirement accounts for chari-
table purposes.
Sec. 103. Increase in cap on corporate charitable contributions.
Sec. 104. Charitable deduction for contributions of food inventory.
Sec. 105. Reform of excise tax on net investment income of private foundations.
Sec. 106. Excise tax on unrelated business taxable income of charitable remain-
der trusts.
Sec. 107. Expansion of charitable contribution allowed for scientific property
used for research and for computer technology and equipment
used for educational purposes.
Sec. 108. Adjustment to basis of S corporation stock for certain charitable con-
tributions.
TITLE II—EXPANSION OF CHARITABLE CHOICE
Sec. 201. Provision of assistance under government programs by religious and
community organizations.
TITLE III—INDIVIDUAL DEVELOPMENT ACCOUNTS
Sec. 301. Additional qualified entities eligible to conduct projects under the As-
sets for Independence Act.
Sec. 302. Increase in limitation on net worth.
Sec. 303. Change in limitation on deposits for an individual.
Sec. 304. Elimination of limitation on deposits for a household.
Sec. 305. Extension of program.
Sec. 306. Conforming amendments.
Sec. 307. Applicability.
TITLE IV—CHARITABLE DONATIONS LIABILITY REFORM FOR IN-
KIND CORPORATE CONTRIBUTIONS
Sec. 401. Charitable donations liability reform for in-kind corporate contribu-
tions.
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‘‘For taxable years
The applicable
beginning in:
amount is:
2002 and 2003 .............................................................
$25
2004, 2005, 2006 .........................................................
$50
2007, 2008, 2009 .........................................................
$75
2010 and thereafter .....................................................
$100.
In the case of a joint return, the applicable amount
is twice the applicable amount determined under the
preceding table.’’.
(b) DIRECT CHARITABLE DEDUCTION.—
(1) IN GENERAL.—Subsection (b) of section 63
of such Code is amended by striking ‘‘and’’ at the
end of paragraph (1), by striking the period at the
end of paragraph (2) and inserting ‘‘, and’’, and by
adding at the end thereof the following new para-
graph:
‘‘(3) the direct charitable deduction.’’.
(2) DEFINITION.—Section 63 of such Code is
amended by redesignating subsection (g) as sub-
section (h) and by inserting after subsection (f) the
following new subsection:
‘‘(g) DIRECT CHARITABLE DEDUCTION.—For pur-
poses of this section, the term ‘direct charitable deduction’
means that portion of the amount allowable under section
170(a) which is taken as a direct charitable deduction for
the taxable year under section 170(m).’’.
(3) CONFORMING AMENDMENT.—Subsection (d)
of section 63 of such Code is amended by striking
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‘‘and’’ at the end of paragraph (1), by striking the
period at the end of paragraph (2) and inserting ‘‘,
and’’, and by adding at the end thereof the following
new paragraph:
‘‘(3) the direct charitable deduction.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT 
ACCOUNTS 
FOR 
CHARITABLE
PURPOSES.
(a) IN GENERAL.—Subsection (d) of section 408 of
the Internal Revenue Code of 1986 (relating to individual
retirement accounts) is amended by adding at the end the
following new paragraph:
‘‘(8) DISTRIBUTIONS
FOR
CHARITABLE
PUR-
POSES.—
‘‘(A) IN GENERAL.—No amount shall be
includible in gross income by reason of a quali-
fied charitable distribution.
‘‘(B) QUALIFIED
CHARITABLE
DISTRIBU-
TION.—For purposes of this paragraph, the
term ‘qualified charitable distribution’ means
any distribution from an individual retirement
account—
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‘‘(i) which is made on or after the
date that the individual for whose benefit
the account is maintained has attained age
701⁄2, and
‘‘(ii) which is made directly by the
trustee—
‘‘(I) to an organization described
in section 170(c), or
‘‘(II) to a split-interest entity.
A distribution shall be treated as a qualified
charitable distribution only to the extent that
the distribution would be includible in gross in-
come without regard to subparagraph (A) and,
in the case of a distribution to a split-interest
entity, only if no person holds an income inter-
est in the amounts in the split-interest entity
attributable to such distribution other than one
or more of the following: the individual for
whose benefit such account is maintained, the
spouse of such individual, or any organization
described in section 170(c).
‘‘(C) CONTRIBUTIONS
MUST
BE
OTHER-
WISE
DEDUCTIBLE.—For purposes of this
paragraph—
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‘‘(i) DIRECT CONTRIBUTIONS.—A dis-
tribution to an organization described in
section 170(c) shall be treated as a quali-
fied charitable distribution only if a deduc-
tion for the entire distribution would be al-
lowable under section 170 (determined
without regard to subsection (b) thereof
and this paragraph).
‘‘(ii) SPLIT-INTEREST GIFTS.—A dis-
tribution to a split-interest entity shall be
treated as a qualified charitable distribu-
tion only if a deduction for the entire value
of the interest in the distribution for the
use of an organization described in section
170(c) would be allowable under section
170 (determined without regard to sub-
section (b) thereof and this paragraph).
‘‘(D) APPLICATION OF SECTION 72.—Not-
withstanding section 72, in determining the ex-
tent to which a distribution is a qualified chari-
table distribution, the entire amount of the dis-
tribution shall be treated as includible in gross
income without regard to subparagraph (A) to
the extent that such amount does not exceed
the aggregate amount which would be so includ-
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ible if all amounts were distributed from all in-
dividual retirement accounts otherwise taken
into account in determining the inclusion on
such distribution under section 72. Proper ad-
justments shall be made in applying section 72
to other distributions in such taxable year and
subsequent taxable years.
‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST
ENTITIES.—
‘‘(i) 
CHARITABLE
REMAINDER
TRUSTS.—Distributions made from an in-
dividual retirement account to a trust de-
scribed in subparagraph (G)(ii)(I) shall be
treated as income described in section
664(b)(1) except to the extent that the
beneficiary of the individual retirement ac-
count notifies the trustee of the trust of
the amount which is not allocable to in-
come under subparagraph (D).
‘‘(ii) POOLED
INCOME
FUNDS.—No
amount shall be includible in the gross in-
come of a pooled income fund (as defined
in subparagraph (G)(ii)(II)) by reason of a
qualified charitable distribution to such
fund.
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‘‘(iii) 
CHARITABLE
GIFT
ANNU-
ITIES.—Qualified charitable distributions
made for a charitable gift annuity shall not
be treated as an investment in the con-
tract.
‘‘(F) DENIAL
OF
DEDUCTION.—Qualified
charitable distributions shall not be taken into
account in determining the deduction under sec-
tion 170.
‘‘(G) SPLIT-INTEREST ENTITY DEFINED.—
For purposes of this paragraph, the term ‘split-
interest entity’ means—
‘‘(i) a charitable remainder annuity
trust or a charitable remainder unitrust
(as such terms are defined in section
664(d)),
‘‘(ii) a pooled income fund (as defined
in section 642(c)(5)), and
‘‘(iii) a charitable gift annuity (as de-
fined in section 501(m)(5)).’’.
(b) MODIFICATIONS RELATING TO INFORMATION RE-
TURNS BY CERTAIN TRUSTS.—
(1) RETURNS.—Section 6034 of such Code (re-
lating to returns by trusts described in section
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4947(a)(2) or claiming charitable deductions under
section 642(c)) is amended to read as follows:
‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION
4947(a)(2) OR CLAIMING CHARITABLE DEDUC-
TIONS UNDER SECTION 642(c).
‘‘(a) TRUSTS DESCRIBED IN SECTION 4947(a)(2).—
Every trust described in section 4947(a)(2) shall furnish
such information with respect to the taxable year as the
Secretary may by forms or regulations require.
‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION
UNDER SECTION 642(c).—
‘‘(1) IN GENERAL.—Every trust not required to
file a return under subsection (a) but claiming a
charitable, etc., deduction under section 642(c) for
the taxable year shall furnish such information with
respect to such taxable year as the Secretary may by
forms or regulations prescribe, including:
‘‘(A) the amount of the charitable, etc., de-
duction taken under section 642(c) within such
year,
‘‘(B) the amount paid out within such year
which represents amounts for which charitable,
etc., deductions under section 642(c) have been
taken in prior years,
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‘‘(C) the amount for which charitable, etc.,
deductions have been taken in prior years but
which has not been paid out at the beginning
of such year,
‘‘(D) the amount paid out of principal in
the current and prior years for charitable, etc.,
purposes,
‘‘(E) the total income of the trust within
such year and the expenses attributable thereto,
and
‘‘(F) a balance sheet showing the assets, li-
abilities, and net worth of the trust as of the
beginning of such year.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply in the case of a taxable year if all the net in-
come for such year, determined under the applicable
principles of the law of trusts, is required to be dis-
tributed currently to the beneficiaries. Paragraph (1)
shall not apply in the case of a trust described in
section 4947(a)(1).’’.
(2) INCREASE IN PENALTY RELATING TO FIL-
ING OF INFORMATION RETURN BY SPLIT-INTEREST
TRUSTS.—Paragraph (2) of section 6652(c) of such
Code (relating to returns by exempt organizations
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and by certain trusts) is amended by adding at the
end the following new subparagraph:
‘‘(C) SPLIT-INTEREST
TRUSTS.—In the
case of a trust which is required to file a return
under section 6034(a), subparagraphs (A) and
(B) of this paragraph shall not apply and para-
graph (1) shall apply in the same manner as if
such return were required under section 6033,
except that—
‘‘(i) the 5 percent limitation in the
second sentence of paragraph (1)(A) shall
not apply,
‘‘(ii) in the case of any trust with
gross income in excess of $250,000, the
first sentence of paragraph (1)(A) shall be
applied by substituting ‘$100’ for ‘$20’,
and the second sentence thereof shall be
applied by substituting ‘$50,000’ for
‘$10,000’, and
‘‘(iii) the third sentence of paragraph
(1)(A) shall be disregarded.
If the person required to file such return know-
ingly fails to file the return, such person shall
be personally liable for the penalty imposed
pursuant to this subparagraph.’’.
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(3) CONFIDENTIALITY
OF
NONCHARITABLE
BENEFICIARIES.—Subsection (b) of section 6104 of
such Code (relating to inspection of annual informa-
tion returns) is amended by adding at the end the
following new sentence: ‘‘In the case of a trust which
is required to file a return under section 6034(a),
this subsection shall not apply to information re-
garding beneficiaries which are not organizations de-
scribed in section 170(c).’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made by
subsection (a) shall apply to taxable years beginning
after December 31, 2001.
(2) SUBSECTION (b).—The amendments made
by subsection (b) shall apply to returns for taxable
years beginning after December 31, 2001.
SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE
CONTRIBUTIONS.
(a) IN GENERAL.—Paragraph (2) of section 170(b)
of the Internal Revenue Code of 1986 (relating to corpora-
tions) is amended by striking ‘‘10 percent’’ and inserting
‘‘the applicable percentage’’.
(b) APPLICABLE PERCENTAGE.—Subsection (b) of
section 170 of such Code is amended by adding at the
end the following new paragraph:
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‘‘(3) APPLICABLE PERCENTAGE DEFINED.—For
purposes of paragraph (2), the applicable percentage
shall be determined in accordance with the following
table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2002 through 2007 ......................................................
2008 .............................................................................
2009 .............................................................................
2010 and thereafter .....................................................
15.’’.
(c) CONFORMING AMENDMENTS.—
(1) Sections 512(b)(10) and 805(b)(2)(A) of
such Code are each amended by striking ‘‘10 per-
cent’’ each place it occurs and inserting ‘‘the appli-
cable 
percentage 
(determined 
under 
section
170(b)(3))’’.
(2) Sections 545(b)(2) and 556(b)(2) of such
Code are each amended by striking ‘‘10-percent limi-
tation’’ and inserting ‘‘applicable percentage limita-
tion’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS
OF FOOD INVENTORY.
(a) IN GENERAL.—Paragraph (3) of section 170(e)
of the Internal Revenue Code of 1986 (relating to special
rule for certain contributions of inventory and other prop-
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erty) is amended by redesignating subparagraph (C) as
subparagraph (D) and by inserting after subparagraph
(B) the following new subparagraph:
‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS
OF FOOD INVENTORY.—
‘‘(i) GENERAL RULE.—In the case of
a charitable contribution of food, this para-
graph shall be applied—
‘‘(I) without regard to whether
the contribution is made by a C cor-
poration, and
‘‘(II) only for food that is appar-
ently wholesome food.
‘‘(ii) DETERMINATION OF FAIR MAR-
KET VALUE.—In the case of a qualified
contribution of apparently wholesome food
to which this paragraph applies and which,
solely by reason of internal standards of
the taxpayer or lack of market, cannot or
will not be sold, the fair market value of
such food shall be determined by taking
into account the price at which the same
or similar food items are sold by the tax-
payer at the time of the contribution (or,
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if not so sold at such time, in the recent
past).
‘‘(iii) 
APPARENTLY
WHOLESOME
FOOD.—For purposes of this subpara-
graph, the term ‘apparently wholesome
food’ shall have the meaning given to such
term by section 22(b)(2) of the Bill Emer-
son Good Samaritan Food Donation Act
(42 U.S.C. 1791(b)(2)), as in effect on the
date of the enactment of this subpara-
graph.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 105. REFORM OF EXCISE TAX ON NET INVESTMENT IN-
COME OF PRIVATE FOUNDATIONS.
(a) IN GENERAL.—Subsection (a) of section 4940 of
the Internal Revenue Code of 1986 (relating to excise tax
based on investment income) is amended by striking ‘‘2
percent’’ and inserting ‘‘1 percent’’.
(b) REPEAL OF REDUCTION IN TAX WHERE PRI-
VATE FOUNDATION MEETS CERTAIN DISTRIBUTION RE-
QUIREMENTS.—Section 4940 of such Code is amended by
striking subsection (e).
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE
INCOME 
OF 
CHARITABLE 
REMAINDER
TRUSTS.
(a) IN GENERAL.—Subsection (c) of section 664 of
the Internal Revenue Code of 1986 (relating to exemption
from income taxes) is amended to read as follows:
‘‘(c) TAXATION OF TRUSTS.—
‘‘(1) INCOME TAX.—A charitable remainder an-
nuity trust and a charitable remainder unitrust
shall, for any taxable year, not be subject to any tax
imposed by this subtitle.
‘‘(2) EXCISE TAX.—
‘‘(A) IN GENERAL.—In the case of a chari-
table remainder annuity trust or a charitable
remainder unitrust that has unrelated business
taxable income (within the meaning of section
512, determined as if part III of subchapter F
applied to such trust) for a taxable year, there
is hereby imposed on such trust or unitrust an
excise tax equal to the amount of such unre-
lated business taxable income.
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‘‘(B) CERTAIN RULES TO APPLY.—The tax
imposed by subparagraph (A) shall be treated
as imposed by chapter 42 for purposes of this
title other than subchapter E of chapter 42.
‘‘(C) CHARACTER OF DISTRIBUTIONS AND
COORDINATION WITH DISTRIBUTION REQUIRE-
MENTS.—The amounts taken into account in
determining unrelated business taxable income
(as defined in subparagraph (A)) shall not be
taken into account for purposes of—
‘‘(i) subsection (b),
‘‘(ii) determining the value of trust
assets under subsection (d)(2), and
‘‘(iii) determining income under sub-
section (d)(3).
‘‘(D) TAX
COURT
PROCEEDINGS.—For
purposes of this paragraph, the references in
section 6212(c)(1) to section 4940 shall be
deemed to include references to this para-
graph.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
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SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION AL-
LOWED FOR SCIENTIFIC PROPERTY USED
FOR RESEARCH AND FOR COMPUTER TECH-
NOLOGY AND EQUIPMENT USED FOR EDU-
CATIONAL PURPOSES.
(a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—
Clause (ii) of section 170(e)(4)(B) of the Internal Revenue
Code of 1986 (defining qualified research contributions)
is amended by inserting ‘‘or assembled’’ after ‘‘con-
structed’’.
(b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR
EDUCATIONAL
PURPOSES.—Clause 
(ii) 
of 
section
170(e)(6)(B) of such Code is amended by inserting ‘‘or
assembled’’ after ‘‘constructed’’ and ‘‘or assembling’’ after
‘‘construction’’.
(c) CONFORMING AMENDMENT.—Subparagraph (D)
of section 170(e)(6) of such Code is amended by inserting
‘‘or assembled’’ after ‘‘constructed’’ and ‘‘or assembling’’
after ‘‘construction’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION
STOCK 
FOR 
CERTAIN 
CHARITABLE 
CON-
TRIBUTIONS.
(a) IN GENERAL.—Paragraph (1) of section 1367(a)
of such Code (relating to adjustments to basis of stock
of shareholders, etc.) is amended by striking ‘‘and’’ at the
end of subparagraph (B), by striking the period at the
end of subparagraph (C) and inserting ‘‘, and’’, and by
adding at the end the following new subparagraph:
‘‘(D) the excess of the amount of the
shareholder’s deduction for any charitable con-
tribution made by the S corporation over the
shareholder’s proportionate share of the ad-
justed basis of the property contributed.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2001.
TITLE II—EXPANSION OF
CHARITABLE CHOICE
SEC. 201. PROVISION OF ASSISTANCE UNDER GOVERN-
MENT PROGRAMS BY RELIGIOUS AND COM-
MUNITY ORGANIZATIONS.
Title XXIV of the Revised Statutes of the United
States is amended by inserting after section 1990 (42
U.S.C. 1994) the following:
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‘‘SEC. 1991. CHARITABLE CHOICE.
‘‘(a) SHORT TITLE.—This section may be cited as the
‘Charitable Choice Act of 2001’.
‘‘(b) PURPOSES.—The purposes of this section are—
‘‘(1) to enable assistance to be provided to indi-
viduals and families in need in the most effective
and efficient manner;
‘‘(2) to supplement the Nation’s social service
capacity by facilitating the entry of new, and the ex-
pansion of existing, efforts by religious and other
community organizations in the administration and
distribution of government assistance under the gov-
ernment programs described in subsection (c)(4);
‘‘(3) to prohibit discrimination against religious
organizations on the basis of religion in the adminis-
tration and distribution of government assistance
under such programs;
‘‘(4) to allow religious organizations to partici-
pate in the administration and distribution of such
assistance without impairing the religious character
and autonomy of such organizations; and
‘‘(5) to protect the religious freedom of individ-
uals and families in need who are eligible for govern-
ment assistance, including expanding the possibility
of their being able to choose to receive services from
a religious organization providing such assistance.
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‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED AS PRO-
VIDERS; DISCLAIMERS.—
‘‘(1) IN GENERAL.—
‘‘(A) INCLUSION.—For any program de-
scribed in paragraph (4) that is carried out by
the Federal Government, or by a State or local
government with Federal funds, the government
shall consider, on the same basis as other non-
governmental organizations, religious organiza-
tions to provide the assistance under the pro-
gram, and the program shall be implemented in
a manner that is consistent with the establish-
ment clause and the free exercise clause of the
first amendment to the Constitution.
‘‘(B) DISCRIMINATION PROHIBITED.—Nei-
ther the Federal Government, nor a State or
local government receiving funds under a pro-
gram described in paragraph (4), shall discrimi-
nate against an organization that provides as-
sistance under, or applies to provide assistance
under, such program on the basis that the orga-
nization is religious or has a religious character.
‘‘(2) FUNDS NOT AID TO RELIGION.—Federal,
State, or local government funds or other assistance
that is received by a religious organization for the
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provision of services under this section constitutes
aid to individuals and families in need, the ultimate
beneficiaries of such services, and not support for re-
ligion or the organization’s religious beliefs or prac-
tices. Notwithstanding the provisions in this para-
graph, title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d et seq.) shall apply to organizations
receiving assistance funded under any program de-
scribed in subsection (c)(4).
‘‘(3) FUNDS
NOT
ENDORSEMENT
OF
RELI-
GION.—The receipt by a religious organization of
Federal, State, or local government funds or other
assistance under this section is not an endorsement
by the government of religion or of the organiza-
tion’s religious beliefs or practices.
‘‘(4) PROGRAMS.—For purposes of this section,
a program is described in this paragraph—
‘‘(A) if it involves activities carried out
using Federal funds—
‘‘(i) related to the prevention and
treatment of juvenile delinquency and the
improvement of the juvenile justice system,
including programs funded under the Juve-
nile Justice and Delinquency Prevention
Act of 1974 (42 U.S.C. 5601 et seq.);
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‘‘(ii) related to the prevention of crime
and assistance to crime victims and offend-
ers’ families, including programs funded
under title I of the Omnibus Crime Control
and Safe Streets Act of 1968 (42 U.S.C.
3701 et seq.);
‘‘(iii) related to the provision of assist-
ance under Federal housing statutes, in-
cluding the Community Development Block
Grant Program established under title I of
the Housing and Community Development
Act of 1974 (42 U.S.C. 5301 et seq.);
‘‘(iv) under subtitle B or D of title I
of the Workforce Investment Act of 1998
(29 U.S.C. 2801 et seq.);
‘‘(v) under the Older Americans Act
of 1965 (42 U.S.C. 3001 et seq.);
‘‘(vi) related to the intervention in
and prevention of domestic violence, in-
cluding programs under the Child Abuse
Prevention and Treatment Act (42 U.S.C.
5101 et seq.) or the Family Violence Pre-
vention and Services Act (42 U.S.C. 10401
et seq.);
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‘‘(vii) related to hunger relief activi-
ties; or
‘‘(viii) under the Job Access and Re-
verse Commute grant program established
under section 3037 of the Federal Transit
Act of 1998 (49 U.S.C. 5309 note); or
‘‘(B)(i) if it involves activities to assist stu-
dents in obtaining the recognized equivalents of
secondary school diplomas and activities relat-
ing to nonschool hours programs, including pro-
grams under—
‘‘(I) chapter 3 of subtitle A of title II
of the Workforce Investment Act of 1998
(Public Law 105–220); or
‘‘(II) part I of title X of the Elemen-
tary and Secondary Education Act (20
U.S.C. 6301 et seq.); and
‘‘(ii) except as provided in subparagraph
(A) and clause (i), does not include activities
carried out under Federal programs providing
education to children eligible to attend elemen-
tary schools or secondary schools, as defined in
section 14101 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 8801).
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‘‘(d) ORGANIZATIONAL CHARACTER
AND AUTON-
OMY.—
‘‘(1) IN
GENERAL.—A religious organization
that provides assistance under a program described
in subsection (c)(4) shall have the right to retain its
autonomy from Federal, State, and local govern-
ments, including such organization’s control over the
definition, development, practice, and expression of
its religious beliefs.
‘‘(2) ADDITIONAL
SAFEGUARDS.—Neither the
Federal Government, nor a State or local govern-
ment with Federal funds, shall require a religious
organization, in order to be eligible to provide assist-
ance under a program described in subsection (c)(4),
to—
‘‘(A) alter its form of internal governance
or provisions in its charter documents; or
‘‘(B) remove religious art, icons, scripture,
or other symbols, or to change its name, be-
cause such symbols or names are of a religious
character.
‘‘(e) EMPLOYMENT PRACTICES.—A religious organi-
zation’s exemption provided under section 702 of the Civil
Rights Act of 1964 (42 U.S.C. 2000e–1) regarding em-
ployment practices shall not be affected by its participa-
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tion in, or receipt of funds from, programs described in
subsection (c)(4), and any provision in such programs that
is inconsistent with or would diminish the exercise of an
organization’s autonomy recognized in section 702 or in
this section shall have no effect. Nothing in this section
alters the duty of a religious organization to comply with
the nondiscrimination provisions of title VII of the Civil
Rights Act of 1964 in the use of funds from programs
described in subsection (c)(4).
‘‘(f) EFFECT ON OTHER LAWS.—Nothing in this sec-
tion shall alter the duty of a religious organization receiv-
ing assistance or providing services under any program de-
scribed in subsection (c)(4) to comply with the non-
discrimination provisions in title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d et seq.) (prohibiting discrimina-
tion on the basis of race, color, and national origin), title
IX of the Education Amendments of 1972 (20 U.S.C.
1681–1688) (prohibiting discrimination in education pro-
grams or activities on the basis of sex and visual impair-
ment), section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794) (prohibiting discrimination against otherwise
qualified disabled individuals), and the Age Discrimination
Act of 1975 (42 U.S.C. 6101–6107) (prohibiting discrimi-
nation on the basis of age).
‘‘(g) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—
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‘‘(1) IN GENERAL.—If an individual described
in paragraph (3) has an objection to the religious
character of the organization from which the indi-
vidual receives, or would receive, assistance funded
under any program described in subsection (c)(4),
the appropriate Federal, State, or local govern-
mental entity shall provide to such individual (if oth-
erwise eligible for such assistance) within a reason-
able period of time after the date of such objection,
assistance that—
‘‘(A) is an alternative that is accessible to
the individual and unobjectionable to the indi-
vidual on religious grounds; and
‘‘(B) has a value that is not less than the
value of the assistance that the individual would
have received from such organization.
‘‘(2) NOTICE.—The appropriate Federal, State,
or local governmental entity shall guarantee that no-
tice is provided to the individuals described in para-
graph (3) of the rights of such individuals under this
section.
‘‘(3) INDIVIDUAL
DESCRIBED.—An individual
described in this paragraph is an individual who re-
ceives or applies for assistance under a program de-
scribed in subsection (c)(4).
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‘‘(h) 
NONDISCRIMINATION
AGAINST
BENE-
FICIARIES.—
‘‘(1) 
GRANTS
AND
COOPERATIVE
AGREE-
MENTS.—A religious organization providing assist-
ance through a grant or cooperative agreement
under a program described in subsection (c)(4) shall
not discriminate in carrying out the program against
an individual described in subsection (g)(3) on the
basis of religion, a religious belief, or a refusal to
hold a religious belief.
‘‘(2) INDIRECT FORMS OF ASSISTANCE.—A reli-
gious organization providing assistance through a
voucher, certificate, or other form of indirect assist-
ance under a program described in subsection (c)(4)
shall not deny an individual described in subsection
(g)(3) admission into such program on the basis of
religion, a religious belief, or a refusal to hold a reli-
gious belief.
‘‘(i) ACCOUNTABILITY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), a religious organization pro-
viding assistance under any program described in
subsection (c)(4) shall be subject to the same regula-
tions as other nongovernmental organizations to ac-
count in accord with generally accepted accounting
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principles for the use of such funds and its perform-
ance of such programs.
‘‘(2) LIMITED AUDIT.—
‘‘(A) GRANTS AND COOPERATIVE AGREE-
MENTS.—A religious organization providing as-
sistance through a grant or cooperative agree-
ment under a program described in subsection
(c)(4) shall segregate government funds pro-
vided under such program into a separate ac-
count or accounts. Only the separate accounts
consisting of funds from the government shall
be subject to audit by the government.
‘‘(B) INDIRECT FORMS OF ASSISTANCE.—
A religious organization providing assistance
through a voucher, certificate, or other form of
indirect assistance under a program described
in subsection (c)(4) may segregate government
funds provided under such program into a sepa-
rate account or accounts. If such funds are so
segregated, then only the separate accounts
consisting of funds from the government shall
be subject to audit by the government.
‘‘(3) SELF
AUDIT.—A religious organization
providing services under any program described in
subsection (c)(4) shall conduct annually a self audit
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for compliance with its duties under this section and
submit a copy of the self audit to the appropriate
Federal, State, or local government agency, along
with a plan to timely correct variances, if any, iden-
tified in the self audit.
‘‘(j) LIMITATIONS ON USE OF FUNDS; VOLUNTARI-
NESS.—No funds provided through a grant or cooperative
agreement to a religious organization to provide assistance
under any program described in subsection (c)(4) shall be
expended for sectarian instruction, worship, or proselytiza-
tion. If the religious organization offers such an activity,
it shall be voluntary for the individuals receiving services
and offered separate from the program funded under sub-
section (c)(4). A certificate shall be separately signed by
religious organizations, and filed with the government
agency that disburses the funds, certifying that the orga-
nization is aware of and will comply with this subsection.
‘‘(k) EFFECT ON STATE AND LOCAL FUNDS.—If a
State or local government contributes State or local funds
to carry out a program described in subsection (c)(4), the
State or local government may segregate the State or local
funds from the Federal funds provided to carry out the
program or may commingle the State or local funds with
the Federal funds. If the State or local government com-
mingles the State or local funds, the provisions of this sec-
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tion shall apply to the commingled funds in the same man-
ner, and to the same extent, as the provisions apply to
the Federal funds.
‘‘(l) INDIRECT ASSISTANCE.—When consistent with
the purpose of a program described in subsection (c)(4),
the Secretary of the department administering the pro-
gram may direct the disbursement of some or all of the
funds, if determined by the Secretary to be feasible and
efficient, in the form of indirect assistance. For purposes
of this section, ‘indirect assistance’ constitutes assistance
in which an organization receiving funds through a vouch-
er, certificate, or other form of disbursement under this
section receives such funding only as a result of the private
choices of individual beneficiaries and no government en-
dorsement of any particular religion, or of religion gen-
erally, occurs.
‘‘(m) TREATMENT OF INTERMEDIATE GRANTORS.—
If a nongovernmental organization (referred to in this sub-
section as an ‘intermediate grantor’), acting under a grant
or other agreement with the Federal Government, or a
State or local government with Federal funds, is given the
authority under the agreement to select nongovernmental
organizations to provide assistance under the programs
described in subsection (c)(4), the intermediate grantor
shall have the same duties under this section as the gov-
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ernment when selecting or otherwise dealing with
subgrantors, but the intermediate grantor, if it is a reli-
gious organization, shall retain all other rights of a reli-
gious organization under this section.
‘‘(n) COMPLIANCE.—A party alleging that the rights
of the party under this section have been violated by a
State or local government may bring a civil action for in-
junctive relief pursuant to section 1979 against the State
official or local government agency that has allegedly com-
mitted such violation. A party alleging that the rights of
the party under this section have been violated by the Fed-
eral Government may bring a civil action for injunctive
relief in Federal district court against the official or gov-
ernment agency that has allegedly committed such viola-
tion.
‘‘(o) TRAINING AND TECHNICAL ASSISTANCE FOR
SMALL NONGOVERNMENTAL ORGANIZATIONS.—
‘‘(1) IN GENERAL.—From amounts made avail-
able to carry out the purposes of the Office of Jus-
tice Programs (including any component or unit
thereof, including the Office of Community Oriented
Policing Services), funds are authorized to provide
training and technical assistance, directly or through
grants or other arrangements, in procedures relating
to potential application and participation in pro-
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grams identified in subsection (c)(4) to small non-
governmental organizations, as determined by the
Attorney General, including religious organizations,
in an amount not to exceed $50 million annually.
‘‘(2) TYPES OF ASSISTANCE.—Such assistance
may include—
‘‘(A) assistance and information relative to
creating an organization described in section
501(c)(3) of the Internal Revenue Code of 1986
to operate identified programs;
‘‘(B) granting writing assistance which
may include workshops and reasonable guid-
ance;
‘‘(C) information and referrals to other
nongovernmental organizations that provide ex-
pertise in accounting, legal issues, tax issues,
program development, and a variety of other or-
ganizational areas; and
‘‘(D) information and guidance on how to
comply with Federal nondiscrimination provi-
sions including, but not limited to, title VI of
the Civil Rights Act of 1964 (42 U.S.C. 2000d
et seq.), title VII of the Civil Rights Act of
1964 (42 U.S.C. 2000e et seq.), the Fair Hous-
ing Act, as amended (42 U.S.C. 3601 et seq.),
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title IX of the Education Amendments of 1972
(20 U.S.C. 1681–1688), section 504 of the Re-
habilitation Act of 1973 (29 U.S.C. 694), and
the Age Discrimination Act of 1975 (42 U.S.C.
6101–6107).
‘‘(3) RESERVATION OF FUNDS.—An amount of
no less than $5,000,000 shall be reserved under this
section. Small nongovernmental organizations may
apply for these funds to be used for assistance in
providing full and equal integrated access to individ-
uals with disabilities in programs under this title.
‘‘(4) PRIORITY.—In giving out the assistance
described in this subsection, priority shall be given
to small nongovernmental organizations serving
urban and rural communities.’’.
TITLE III—INDIVIDUAL
DEVELOPMENT ACCOUNTS
SEC. 301. ADDITIONAL QUALIFIED ENTITIES ELIGIBLE TO
CONDUCT PROJECTS UNDER THE ASSETS
FOR INDEPENDENCE ACT.
Section 404(7)(A)(iii)(I)(aa) of the Assets for Inde-
pendence Act (42 U.S.C. 604 note) is amended to read
as follows:
‘‘(aa) a federally insured
credit union; or’’.
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SEC. 302. INCREASE IN LIMITATION ON NET WORTH.
Section 408(a)(2)(A) of the Assets for Independence
Act (42 U.S.C. 604 note) is amended by striking
‘‘$10,000’’ and inserting ‘‘$20,000’’.
SEC. 303. CHANGE IN LIMITATION ON DEPOSITS FOR AN IN-
DIVIDUAL.
Section 410(b) of the Assets for Independence Act
(42 U.S.C. 604 note) is amended to read as follows:
‘‘(b) LIMITATION
ON
DEPOSITS
FOR
AN
INDI-
VIDUAL.—Not more than $500 from a grant made under
section 406(b) shall be provided per year to any one indi-
vidual during the project.’’.
SEC. 304. ELIMINATION OF LIMITATION ON DEPOSITS FOR
A HOUSEHOLD.
Section 410 of the Assets for Independence Act (42
U.S.C. 604 note) is amended by striking subsection (c)
and redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
SEC. 305. EXTENSION OF PROGRAM.
Section 416 of the Assets for Independence Act (42
U.S.C. 604 note) is amended by striking ‘‘2001, 2002, and
2003’’ and inserting ‘‘and 2001, and $50,000,000 for each
of fiscal years 2002 through 2008’’.
SEC. 306. CONFORMING AMENDMENTS.
(a) AMENDMENTS TO TEXT.—The text of each of the
following provisions of the Assets for Independence Act
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(42 U.S.C. 604 note) is amended by striking ‘‘demonstra-
tion’’ each place it appears:
(1) Section 403.
(2) Section 404(2).
(3) Section 405(a).
(4) Section 405(b).
(5) Section 405(c).
(6) Section 405(d).
(7) Section 405(e).
(8) Section 405(g).
(9) Section 406(a).
(10) Section 406(b).
(11) Section 407(b)(1)(A).
(12) Section 407(c)(1)(A).
(13) Section 407(c)(1)(B).
(14) Section 407(c)(1)(C).
(15) Section 407(c)(1)(D).
(16) Section 407(d).
(17) Section 408(a).
(18) Section 408(b).
(19) Section 409.
(20) Section 410(e).
(21) Section 411.
(22) Section 412(a).
(23) Section 412(b)(2).
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(24) Section 412(c).
(25) Section 413(a).
(26) Section 413(b).
(27) Section 414(a).
(28) Section 414(b).
(29) Section 414(c).
(30) Section 414(d)(1).
(31) Section 414(d)(2).
(b) AMENDMENTS TO SUBSECTION HEADINGS.—The
heading of each of the following provisions of the Assets
for Independence Act (42 U.S.C. 604 note) is amended
by striking ‘‘DEMONSTRATION’’:
(1) Section 405(a).
(2) Section 406(a).
(3) Section 413(a).
(c) AMENDMENTS
TO SECTION HEADINGS.—The
headings of sections 406 and 411 of the Assets for Inde-
pendence Act (42 U.S.C. 604 note) are amended by strik-
ing ‘‘DEMONSTRATION’’.
SEC. 307. APPLICABILITY.
(a) IN GENERAL.—The amendments made by this
title shall apply to funds provided before, on or after the
date of the enactment of this Act.
(b) PRIOR AMENDMENTS.—The amendments made
by title VI of the Departments of Labor, Health and
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Human Services, and Education, and Related Agencies
Appropriations Act, 2001 (as enacted into law by Public
Law 106–554) shall apply to funds provided before, on
or after the date of the enactment of such Act.
TITLE IV—CHARITABLE DONA-
TIONS 
LIABILITY 
REFORM
FOR 
IN-KIND 
CORPORATE
CONTRIBUTIONS
SEC. 401. CHARITABLE DONATIONS LIABILITY REFORM
FOR IN-KIND CORPORATE CONTRIBUTIONS.
(a) DEFINITIONS.—For purposes of this section:
(1) AIRCRAFT.—The term ‘‘aircraft’’ has the
meaning provided that term in section 40102(6) of
title 49, United States Code.
(2) BUSINESS
ENTITY.—The term ‘‘business
entity’’ means a firm, corporation, association, part-
nership, consortium, joint venture, or other form of
enterprise.
(3) EQUIPMENT.—The term ‘‘equipment’’ in-
cludes mechanical equipment, electronic equipment,
and office equipment.
(4) FACILITY.—The term ‘‘facility’’ means any
real property, including any building, improvement,
or appurtenance.
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(5) GROSS
NEGLIGENCE.—The term ‘‘gross
negligence’’ means voluntary and conscious conduct
by a person with knowledge (at the time of the con-
duct) that the conduct is likely to be harmful to the
health or well-being of another person.
(6) INTENTIONAL
MISCONDUCT.—The term
‘‘intentional misconduct’’ means conduct by a person
with knowledge (at the time of the conduct) that the
conduct is harmful to the health or well-being of an-
other person.
(7) MOTOR VEHICLE.—The term ‘‘motor vehi-
cle’’ has the meaning provided that term in section
30102(6) of title 49, United States Code.
(8) NONPROFIT
ORGANIZATION.—The term
‘‘nonprofit organization’’ means—
(A) any organization described in section
501(c)(3) of the Internal Revenue Code of 1986
and exempt from tax under section 501(a) of
such Code; or
(B) any not-for-profit organization orga-
nized and conducted for public benefit and op-
erated primarily for charitable, civic, edu-
cational, religious, welfare, or health purposes.
(9) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
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Commonwealth of Puerto Rico, the Virgin Islands,
Guam, American Samoa, the Northern Mariana Is-
lands, any other territory or possession of the
United States, or any political subdivision of any
such State, territory, or possession.
(b) LIABILITY.—
(1) LIABILITY
OF
BUSINESS
ENTITIES
THAT
DONATE
EQUIPMENT
TO
NONPROFIT
ORGANIZA-
TIONS.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death that
results from the use of equipment donated by a
business entity to a nonprofit organization.
(B) APPLICATION.—This paragraph shall
apply with respect to civil liability under Fed-
eral and State law.
(2) LIABILITY
OF
BUSINESS
ENTITIES
PRO-
VIDING USE OF FACILITIES TO NONPROFIT ORGANI-
ZATIONS.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death oc-
curring at a facility of the business entity in
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connection with a use of such facility by a non-
profit organization, if—
(i) the use occurs outside of the scope
of business of the business entity;
(ii) such injury or death occurs during
a period that such facility is used by the
nonprofit organization; and
(iii) the business entity authorized the
use of such facility by the nonprofit orga-
nization.
(B) APPLICATION.—This paragraph shall
apply—
(i) with respect to civil liability under
Federal and State law; and
(ii) regardless of whether a nonprofit
organization pays for the use of a facility.
(3) LIABILITY
OF
BUSINESS
ENTITIES
PRO-
VIDING USE OF A MOTOR VEHICLE OR AIRCRAFT.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death oc-
curring as a result of the operation of aircraft
or a motor vehicle of a business entity loaned
to a nonprofit organization for use outside of
the scope of business of the business entity, if—
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(i) such injury or death occurs during
a period that such motor vehicle or aircraft
is used by a nonprofit organization; and
(ii) the business entity authorized the
use by the nonprofit organization of motor
vehicle or aircraft that resulted in the in-
jury or death.
(B) APPLICATION.—This paragraph shall
apply—
(i) with respect to civil liability under
Federal and State law; and
(ii) regardless of whether a nonprofit
organization pays for the use of the air-
craft or motor vehicle.
(c) EXCEPTIONS.—Subsection (b) shall not apply to
an injury or death that results from an act or omission
of a business entity that constitutes gross negligence or
intentional misconduct.
(d) SUPERSEDING PROVISION.—
(1) IN
GENERAL.—Subject to paragraph (2)
and subsection (e), this title preempts the laws of
any State to the extent that such laws are incon-
sistent with this title, except that this title shall not
preempt any State law that provides additional pro-
tection for a business entity for an injury or death
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described in a paragraph of subsection (b) with re-
spect to which the conditions specified in such para-
graph apply.
(2) LIMITATION.—Nothing in this title shall be
construed to supersede any Federal or State health
or safety law.
(e) ELECTION OF STATE REGARDING NONAPPLICA-
BILITY.—A provision of this title shall not apply to any
civil action in a State court against a business entity in
which all parties are citizens of the State if such State
enacts a statute—
(1) citing the authority of this section;
(2) declaring the election of such State that
such provision shall not apply to such civil action in
the State; and
(3) containing no other provisions.
(f) EFFECTIVE DATE.—This section shall apply to in-
juries (and deaths resulting therefrom) occurring on or
after the date of the enactment of this Act.
Passed the House of Representatives July 19, 2001.
Attest:
JEFF TRANDAHL,
Clerk.