Charitable reform and giving legislation is moving piecemeal in both the House and Senate, focusing on specific abuses of the sector and charitable giving incentives in the wake of Hurricanes Katrina and Rita. In an Oct. 24 speech delivered to Independent Sector's 25th Anniversary Conference, Senate Finance Committee Chairman Charles Grassley (R-IA) explained the importance of "reform and oversight" of the sector to "safeguard the donors and taxpayers." He went on to say he would have liked a complete reform package to have been ready this fall, but "(Hurricane) Katrina has affected this and many other plans." Nonetheless, Grassley made clear that he will not give up his quest to bring greater accountability to the nonprofit sector, emphasizing that he is taking the "long view" on the issue. Grassley noted that reforms he is considering focus on "better transparency and improving board governance, particularly on self-dealing and high salaries." He also highlighted three types of abuses he will target:

• Abuses with donor-advised funds, supporting organizations, and nonprofit credit counseling services (The abuses of concern in these institutions were not specified.);
• Abuses involving non-cash donations, such facade easements and other real estate transactions;
• Abusive transactions, such as those dealing with "life insurance and corporate tax shelters."

Grassley acknowledged that his reforms have met with some resistance, from both the nonprofit sector and within Congress. A number of charities have discouraged reform and found a partner in Sen. Rick Santorum (R-PA), a member of the Senate Finance Committee. These critics have raised concerns that enforcement of current laws is inadequate, and thus passage of new laws may not be the best solution. Instead, they emphasize providing adequate resources to ensure enforcement of existing laws. They have also expressed concern over the impact of reform proposals on smaller nonprofits. Santorum has advocated for passage of his legislation to encourage charitable giving. That bill, the CARE Act, includes a non-itemizer deduction for charitable giving, an ability to rollover Individual Retirement Accounts to a charity, and other incentives. The non-itemizer, however, has not been universally embraced, particularly in the House. In his speech, Grassley noted the importance of providing charitable incentives, and emphasized his role in enacting temporary incentives in recent Hurricane Katrina legislation. Most of these incentives expire at the end of the year. Grassley hopes to include some nonprofit reforms or incentives in the upcoming reconciliation bill in the Senate. The House, however, has no such plans, making it uncertain whether such legislation will be part of any final package. Grassley indicated there would be a second, broader phase of reforms that will be addressed in 2006. The details of these reforms remain unclear. House Action The House has not taken Grassley's active approach to nonprofit oversight and reform. Instead, the House seems more focused on addressing specific abuses by certain types of nonprofits. In the post-Katrina environment, the House seems more focused on fraud by charities. H.R. 3675, the American Spirit Fraud Prevention Act, which would double the amount of fines that could be levied against individuals or groups that commit certain types of fraud during national emergencies, passed 399-to-3 on Oct. 25. Introduced by Rep. Charlie Bass (R-NH), H.R. 3675 would enable the Federal Trade Commission to double penalties -- up to $22,000 -- for individuals or organizations committing fraudulent acts. The bill was previously passed by the House in the 107th and the 108th Congresses, but died each time in the Senate. It was originally introduced in response to reports of deceptive charity solicitations following the Sept. 11 terrorist attacks. Unfortunately, the generosity exhibited in the aftermath of Hurricane Katrina has spawned a similar wave of dishonest fundraising schemes and fraudulent solicitations.