[Congressional Record Volume 141, Number 165 (Tuesday, October 24, 1995)]
[Extensions of Remarks]
[Pages E2006-E2007]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THE PHILANTHROPY PROTECTION ACT OF 1995

                                 ______


                            HON. JACK FIELDS

                                of texas

                    in the house of representatives

                        Tuesday, October 24, 1995

  Mr. FIELDS of Texas. Mr. Speaker, the funding of hospitals, 
universities, scholarships, churches, and other organizations that help 
the needy are under attack. A Federal lawsuit filed in Wichita Falls, 
TX, is threatening the funding of thousands of these institutions, 
based, in part, on a misguided argument that the charitable donation 
programs that they maintain violate the Federal securities laws.
  The charitable donation programs that are under attack are maintained 
by organizations like the Red Cross, the Salvation Army, the Boy 
Scouts, the Southern Baptist Foundation, and universities all across 
the country--including my alma mater, Baylor University. These programs 
have been operated since the 1830's, when the American Bible Society 
entered into the first planned giving arrangement. They have been a 
keystone of charitable giving in this country.
  Charitable gift annuities and charitable trusts make it possible for 
donors to make a gift to a charity--while receiving some of the 
investment income produced by that gift. The purpose of these programs 
is simple: they provide a flexible way to help people help others. The 
people who donate to charities through charitable giving programs such 
as these are helping to feed an clothe the less fortunate, vaccinate 
children, care for the sick, and provide education for those who could 
not otherwise afford it. Every citizen in this country is better off 
for the hard work of these organizations.
  Imagine the Oklahoma bombing tragedy without the American Red Cross. 
Imagine your own local church or your alma mater closing its doors in 
financial ruin. It sounds unthinkable, but these are very real 
possibilities.
  The lawsuit in Texas alleges that the charitable trust program 
operated by the Lutheran Foundation violates the Federal securities 
laws. This is a flagrant misapplication of the law. The plaintiff in 
that suit is seeking to have that gift revoked. The plaintiff in the 
suit is not the donor who gave the donation--rather, she is an heir of 
the donor. Guess where that money will go if it is revoked--right to 
the plaintiff--and her lawyer.
  Other plaintiff's lawyers are looking at this suit as a huge business 
opportunity. The judge has been asked to make the suit a class action--
which would pave the way for copycat suits against every charitable 
organization in the country that operates a charitable annuity or 
charitable trust donation program.
  Some organizations have already stopped accepting gifts through their 
charitable donation pools for fear a class action will send that money 
right back out the door--into the pockets of plaintiffs and their 
lawyers.
  This abuse of our legal system must be stopped. And today I, together 
with Chairman Bliley, am introducing a bill to do exactly that--and 
make sure that charities and universities and religious organizations 
will not be vulnerable to further attack.
  The Philanthropy Protection Act of 1995 will amend the Federal 
securities laws to clarify that the provisions of those laws are meant 
to apply to investment in our capital markets, not to gift-giving. A 
person seeking to get the best possible return on this investment will 
go to a brokerage house--not to church.
  This legislation is another step forward in our efforts to rid our 
legal system of needless, expensive, and harmful abuses. The people who 
give to churches, schools, hospitals, and other worthy causes should 
not be foiled in their generous efforts to help. At the same time, they 
should be protected against fraud--and this legislation does exactly 
that. It does not exempt charities or those who seek donations to 
charities from the anti-fraud protections of the Federal securities 
laws.
  This summer Senator Kay Bailey Hutchison and Senator Chris Dodd 
introduced similar legislation to protect our country's charitable 
organizations. Governor Bush, of Texas, signed into law a provision 
that was passed unanimously by both houses of the Texas legislature to 
accomplish the same goal. And today, Chairman Henry Hyde, of the House 
Judiciary Committee, has introduced a bill to prevent the 
misapplication of the Federal antitrust laws to these charitable 
efforts.
  In this good company, I hope my colleagues in the House will joint 
Chairman Bliley and me in this important bipartisan effort to protect 

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charitable giving in the United States. Those of us who believe in and 
support the work of charitable organizations located in my home State 
of Texas and throughout our country have an obligation to do what we 
can to help--not hinder--their efforts.

                          ____________________