Philanthropy Protection Act of 1995

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Philanthropy 
Protection Act of 1995''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Investment Company Act of 1940.
Sec. 3. Amendment to the Securities Act of 1933.
Sec. 4. Amendments to the Securities Exchange Act of 1934.
Sec. 5. Amendment of the Investment Advisers Act of 1940.
Sec. 6. Protection of philanthropy under State law.
Sec. 7. Effective dates and applicability.

SEC. 2. AMENDMENTS TO THE INVESTMENT COMPANY ACT OF 1940.

    (a) Exemption.--Section 3(c)(10) of the Investment Company Act of 
1940 (15 U.S.C. 80a-3(c)(10)) is amended to read as follows:
        ``(10)(A) Any company organized and operated exclusively for 
    religious, educational, benevolent, fraternal, charitable, or 
    reformatory purposes--
            ``(i) no part of the net earnings of which inures to the 
        benefit of any private shareholder or individual; or
            ``(ii) which is or maintains a fund described in 
        subparagraph (B).
        ``(B) For the purposes of subparagraph (A)(ii), a fund is 
    described in this subparagraph if such fund is a pooled income 
    fund, collective trust fund, collective investment fund, or similar 
    fund maintained by a charitable organization exclusively for the 
    collective investment and reinvestment of one or more of the 
    following:
            ``(i) assets of the general endowment fund or other funds 
        of one or more charitable organizations;
            ``(ii) assets of a pooled income fund;
            ``(iii) assets contributed to a charitable organization in 
        exchange for the issuance of charitable gift annuities;
            ``(iv) assets of a charitable remainder trust or of any 
        other trust, the remainder interests of which are irrevocably 
        dedicated to any charitable organization;
            ``(v) assets of a charitable lead trust;
            ``(vi) assets of a trust, the remainder interests of which 
        are revocably dedicated to or for the benefit of 1 or more 
        charitable organizations, if the ability to revoke the 
        dedication is limited to circumstances involving--
                ``(I) an adverse change in the financial circumstances 
            of a settlor or an income beneficiary of the trust;
                ``(II) a change in the identity of the charitable 
            organization or organizations having the remainder 
            interest, provided that the new beneficiary is also a 
            charitable organization; or
                ``(III) both the changes described in subclauses (I) 
            and (II);
            ``(vii) assets of a trust not described in clauses (i) 
        through (v), the remainder interests of which are revocably 
        dedicated to a charitable organization, subject to subparagraph 
        (C); or
            ``(viii) such assets as the Commission may prescribe by 
        rule, regulation, or order in accordance with section 6(c).
        ``(C) A fund that contains assets described in clause (vii) of 
    subparagraph (B) shall be excluded from the definition of an 
    investment company for a period of 3 years after the date of 
    enactment of this subparagraph, but only if--
            ``(i) such assets were contributed before the date which is 
        60 days after the date of enactment of this subparagraph; and
            ``(ii) such assets are commingled in the fund with assets 
        described in one or more of clauses (i) through (vi) and (viii) 
        of subparagraph (B).
        ``(D) For purposes of this paragraph--
            ``(i) a trust or fund is `maintained' by a charitable 
        organization if the organization serves as a trustee or 
        administrator of the trust or fund or has the power to remove 
        the trustees or administrators of the trust or fund and to 
        designate new trustees or administrators;
            ``(ii) the term `pooled income fund' has the same meaning 
        as in section 642(c)(5) of the Internal Revenue Code of 1986;
            ``(iii) the term `charitable organization' means an 
        organization described in paragraphs (1) through (5) of section 
        170(c) or section 501(c)(3) of the Internal Revenue Code of 
        1986;
            ``(iv) the term `charitable lead trust' means a trust 
        described in section 170(f)(2)(B), 2055(e)(2)(B), or 
        2522(c)(2)(B) of the Internal Revenue Code of 1986;
            ``(v) the term `charitable remainder trust' means a 
        charitable remainder annuity trust or a charitable remainder 
        unitrust, as those terms are defined in section 664(d) of the 
        Internal Revenue Code of 1986; and
            ``(vi) the term `charitable gift annuity' means an annuity 
        issued by a charitable organization that is described in 
        section 501(m)(5) of the Internal Revenue Code of 1986.''.
    (b) Disclosure by Exempt Charitable Organizations.--Section 7 of 
the Investment Company Act of 1940 (15 U.S.C. 80a-7) is amended by 
adding at the end the following new subsection:
    ``(e) Disclosure by Exempt Charitable Organizations.--Each fund 
that is excluded from the definition of an investment company under 
section 3(c)(10)(B) of this Act shall provide, to each donor to such 
fund, at the time of the donation or within 90 days after the date of 
enactment of this subsection, whichever is later, written information 
describing the material terms of the operation of such fund.''.

SEC. 3. AMENDMENT TO THE SECURITIES ACT OF 1933.

    Section 3(a)(4) of the Securities Act of 1933 (15 U.S.C. 77c(a)(4)) 
is amended by inserting after the semicolon at the end the following: 
``or any security of a fund that is excluded from the definition of an 
investment company under section 3(c)(10)(B) of the Investment Company 
Act of 1940;''.

SEC. 4. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

    (a) Exempted Securities.--Section 3(a)(12)(A) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)) is amended--
        (1) in clause (iv) by striking ``and'' at the end;
        (2) by redesignating clause (v) as clause (vi); and
        (3) by inserting after clause (iv) the following new clause:
            ``(v) any security issued by or any interest or 
        participation in any pooled income fund, collective trust fund, 
        collective investment fund, or similar fund that is excluded 
        from the definition of an investment company under section 
        3(c)(10)(B) of the Investment Company Act of 1940; and''.
    (b) Exemption From Broker-Dealer Provisions.--Section 3 of such Act 
(15 U.S.C. 78c) is amended by adding at the end the following new 
subsection:
    ``(e) Charitable Organizations.--
        ``(1) Exemption.--Notwithstanding any other provision of this 
    title, but subject to paragraph (2) of this subsection, a 
    charitable organization, as defined in section 3(c)(10)(D) of the 
    Investment Company Act of 1940, or any trustee, director, officer, 
    employee, or volunteer of such a charitable organization acting 
    within the scope of such person's employment or duties with such 
    organization, shall not be deemed to be a `broker', `dealer', 
    `municipal securities broker', `municipal securities dealer', 
    `government securities broker', or `government securities dealer' 
    for purposes of this title solely because such organization or 
    person buys, holds, sells, or trades in securities for its own 
    account in its capacity as trustee or administrator of, or 
    otherwise on behalf of or for the account of--
            ``(A) such a charitable organization;
            ``(B) a fund that is excluded from the definition of an 
        investment company under section 3(c)(10)(B) of the Investment 
        Company Act of 1940; or
            ``(C) a trust or other donative instrument described in 
        section 3(c)(10)(B) of the Investment Company Act of 1940, or 
        the settlors (or potential settlors) or beneficiaries of any 
        such trust or other instrument.
        ``(2) Limitation on compensation.--The exemption provided under 
    paragraph (1) shall not be available to any charitable 
    organization, or any trustee, director, officer, employee, or 
    volunteer of such a charitable organization, unless each person 
    who, on or after 90 days after the date of enactment of this 
    subsection, solicits donations on behalf of such charitable 
    organization from any donor to a fund that is excluded from the 
    definition of an investment company under section 3(c)(10)(B) of 
    the Investment Company Act of 1940, is either a volunteer or is 
    engaged in the overall fund raising activities of a charitable 
    organization and receives no commission or other special 
    compensation based on the number or the value of donations 
    collected for the fund.''.
    (d) Conforming Amendment.--Section 12(g)(2)(D) of such Act (15 
U.S.C. 78l(g)(2)(D)) is amended by inserting before the period ``; or 
any security of a fund that is excluded from the definition of an 
investment company under section 3(c)(10)(B) of the Investment Company 
Act of 1940''.

SEC. 5. AMENDMENT OF THE INVESTMENT ADVISERS ACT OF 1940.

    Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-3(b)) is amended--
        (1) by striking ``or'' at the end of paragraph (2);
        (2) by striking the period at the end of paragraph (3) and 
    inserting ``; or''; and
        (3) by adding at the end the following new paragraph:
        ``(4) any investment adviser that is a charitable organization, 
    as defined in section 3(c)(10)(D) of the Investment Company Act of 
    1940, or is a trustee, director, officer, employee, or volunteer of 
    such a charitable organization acting within the scope of such 
    person's employment or duties with such organization, whose advice, 
    analyses, or reports are provided only to one or more of the 
    following:
            ``(A) any such charitable organization;
            ``(B) a fund that is excluded from the definition of an 
        investment company under section 3(c)(10)(B) of the Investment 
        Company Act of 1940; or
            ``(C) a trust or other donative instrument described in 
        section 3(c)(10)(B) of the Investment Company Act of 1940, or 
        the trustees, administrators, settlors (or potential settlors), 
        or beneficiaries of any such trust or other instrument.''.

SEC. 6. PROTECTION OF PHILANTHROPY UNDER STATE LAW.

    (a) Registration Requirements.--A security issued by or any 
interest or participation in any pooled income fund, collective trust 
fund, collective investment fund, or similar fund that is excluded from 
the definition of an investment company under section 3(c)(10)(B) of 
the Investment Company Act of 1940, and the offer or sale thereof, 
shall be exempt from any statute or regulation of a State that requires 
registration or qualification of securities.
    (b) Treatment of Charitable Organizations.--No charitable 
organization, or any trustee, director, officer, employee, or volunteer 
of a charitable organization acting within the scope of such person's 
employment or duties, shall be required to register as, or be subject 
to regulation as, a dealer, broker, agent, or investment adviser under 
the securities laws of any State because such organization or person 
buys, holds, sells, or trades in securities for its own account in its 
capacity as trustee or administrator of, or otherwise on behalf of or 
for the account of one or more of the following:
        (1) a charitable organization;
        (2) a fund that is excluded from the definition of an 
    investment company under section 3(c)(10)(B) of the Investment 
    Company Act of 1940; or
        (3) a trust or other donative instrument described in section 
    3(c)(10)(B) of the Investment Company Act of 1940, or the settlors 
    (or potential settlors) or beneficiaries of any such trusts or 
    other instruments.
    (c) State Action.--Notwithstanding subsections (a) and (b), during 
the 3-year period beginning on the date of enactment of this Act, a 
State may enact a statute that specifically refers to this section and 
provides prospectively that this section shall not preempt the laws of 
that State referred to in this section.
    (d) Definitions.--For purposes of this section--
        (1) the term ``charitable organization'' means an organization 
    described in paragraphs (1) through (5) of section 170(c) or 
    section 501(c)(3) of the Internal Revenue Code of 1986;
        (2) the term ``security'' has the same meaning as in section 3 
    of the Securities Exchange Act of 1934; and
        (3) the term ``State'' means each of the several States of the 
    United States, the District of Columbia, the Commonwealth of Puerto 
    Rico, the Virgin Islands, Guam, American Samoa, and the 
    Commonwealth of the Northern Mariana Islands.

SEC. 7. EFFECTIVE DATES AND APPLICABILITY.

    This Act and the amendments made by this Act shall apply in all 
administrative and judicial actions pending on or commenced after the 
date of enactment of this Act, as a defense to any claim that any 
person, security, interest, or participation of the type described in 
this Act and the amendments made by this Act is subject to the 
provisions of the Securities Act of 1933, the Securities Exchange Act 
of 1934, the Investment Company Act of 1940, or the Investment Advisers 
Act of 1940, or any State statute or regulation preempted as provided 
in section 6 of this Act, except as otherwise specifically provided in 
such Acts or State law.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.

Summary: Philanthropy Protection Act of 1995 - Exempts from the jurisdiction of the Investment Company Act of 1940, the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940 any security issued by or any interest or participation in any pooled income fund, collective trust fund, collective investment fund, or similar fund maintained by a charitable organization exclusively for the collective investment and reinvestment of certain assets.  Includes among such assets those of:  (1) a charitable remainder trust or of any other trust the remainder interests of which are irrevocably dedicated to any charitable organization; (2) a trust the remainder interests of which are revocably dedicated to a charitable organization, subject to specified conditions; or (3) a trust the remainder interests of which are revocably dedicated to, or for the benefit of, one or more charitable organizations, if the ability to revoke is limited to specified circumstances.  Deems such a charitable income fund, in specified circumstances, not to be an investment company under the Investment Company Act of 1940. Amends the Investment Company Act of 1940 to set forth disclosure requirements for exempt charitable organizations. Amends the Securities Exchange Act of 1934 to require solicitors of funds for such exempt charitable organizations to be volunteers or to be engaged in overall fund-raising activities of the organization but receiving no commission or other special compensation based on the amount of donations collected. Exempts such charitable organizations from State regulation in general, and such securities from State registration or qualification requirements in particular. Permits a State to enact a statute that specifically refers to this Act and provides prospectively that it does not preempt the laws of such State.