After months of wrangling between the House, Senate and White House, a compromise on the Administration's Faith-Based Initiative has been reached. The CARE act of 2002 (S. 1924) was introduced on February 8, and contains several major provisions.
These provisions include:
- Tax incentives for giving,
- Provisions for equal treatment of nongovernmental organizations that apply for federal grants,
- Fast-track processing by the IRS of applications for 501(c)(3) status by small organizations applying for federal funds, and
- Funding for six new programs.
The main tax provisions of the bill include lowering foundation excise taxes, direct tax-free donations to charities from Individual Retirement Accounts for individuals over 67 years old, a higher corporate donation ceiling, and a charitable contribution tax deduction of up to $400 ($800 for couples) for non-itemizers. Most of the tax provisions are only in effect for FY2002-2003, so they officially cost somewhere between $11-13 billion, but could be drastically more expensive if extended. While these provisions would have been a nice giving incentive in better times, the money the Treasury loses because of them may hurt the charitable community in the long run (see related article).
The bill does not include the controversial "charitable choice" provisions that passed in the House version (H.R. 7). The House bill would allow churches using federal money to discriminate in hiring and exempt churches from some government regulation.
Read OMB Watch's full analysis of the bill.