[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2519 Reported in House (RH)]
Union Calendar No. 178
104th CONGRESS
1st Session
H. R. 2519
[Report No. 104-333]
_______________________________________________________________________
A BILL
To facilitate contributions to charitable organizations by codifying
certain exemptions from the Federal securities laws, and for other
purposes.
_______________________________________________________________________
November 10, 1995
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
Union Calendar No. 178
104th CONGRESS
1st Session
H. R. 2519
[Report No. 104-333]
To facilitate contributions to charitable organizations by codifying
certain exemptions from the Federal securities laws, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 24, 1995
Mr. Fields of Texas (for himself, Mr. Bliley, Mr. Burr, Mr. Dingell,
Mr. Edwards, Mr. Frisa, and Mr. Markey) introduced the following bill;
which was referred to the Committee on Commerce
November 10, 1995
Additional sponsors:
Mr. Bryant of Texas, Mr. Gillmor, Mr. Hall of Texas, Mr. Hutchinson,
Mr. Inglis of South Carolina, Mr. Oxley, Mr. Smith of Texas, Mr. Barton
of Texas, Mr. Bentsen, Mr. Lewis of Georgia, Mr. Brewster, Mr.
McDermott, Mr. Ramstad, Mr. Hastert, Mr. Funderburk, Mr. Emerson, Mr.
Cramer, Mr. Quillen, Mr. Stump, and Ms. Woolsey
November 10, 1995
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on October
24, 1995]
_______________________________________________________________________
A BILL
To facilitate contributions to charitable organizations by codifying
certain exemptions from the Federal securities laws, and for other
purposes.
Be it enacted by the Senate and House of Representatives 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 ``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 not described in clauses
(i) through (v), the remainder interests of which are
revocably dedicated to a charitable organization,
subject to subparagraph (C); or
``(vii) such assets (including assets revocably
dedicated to a charitable organization) 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 (vi)
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
(v) 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 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.