[Congressional Record Volume 141, Number 165 (Tuesday, October 24, 1995)]
[Extensions of Remarks]
[Pages E2024-E2025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      CHARITABLE GIFT ANNUITY ACT

                                 ______


                           HON. HENRY J. HYDE

                              of illinois

                    in the house of representatives

                        Tuesday, October 24, 1995

  Mr. HYDE. Mr. Speaker, today I am introducing the Charitable Gift 
Annuity Antitrust 

[[Page E 2025]]
Relief Act of 1995 (H.R. 2525), legislation which grants antitrust 
protection to a charitable organization which issues gift annuities in 
accordance with the provisions of the Internal Revenue Code.
  Charitable giving through gift annuities is currently under attack. 
For example, a Federal lawsuit in Texas alleges that charities are 
price fixing when they choose to offer the same annuity rates to their 
donors. A motion for class certification is pending which, if granted, 
would add as defendants virtually every charity in America. Regardless 
of the outcome of the suit, there is no denying that it has had and 
will continue to have a chilling effect on gift giving and that it is 
consuming financial resources which would otherwise be allocated to 
charitable missions.
  Charitable giving has evolved well beyond the days when we simply put 
money in the collection plate or gave away our used clothes. There are 
now many innovative ways in which a donor can benefit a charity with a 
gift and himself with a charitable deduction. One increasingly popular 
mechanism is through a charitable gift annuity, which allows a person 
to give a chunk of money but obtain an income stream from it while 
alive, and also claim an immediate tax deduction. These gift annuities 
are attractive to both sides of the transaction: the donor still gets 
the income produced by his capital, and the charity gets immediate 
control over the entire amount of the donation.
  Of course, the operative word here is ``gift.'' Gift annuities are 
not intended to maximize the value of the lifetime income stream, as 
one would through a commercial annuity. Rather, they are intended 
primarily to result in a donation to the chosen charity. In order to 
accomplish this, the rate of return paid to the donor is intentionally 
set at a level which will allow the charity to retain a substantial 
portion of the value of the donation.
  Our goal should be to encourage gift giving through legitimate means, 
and particularly through instruments which the IRS approves and 
regulates. Gift annuities carry this imprimatur. Allowing litigants to 
use antitrust law as an impediment to these beneficial activities 
should not be countenanced where, as here, there is no detriment 
associated with the conduct. In the first instance, it is a misnomer to 
use the term ``price'' to describe the selection of an annuity rate: an 
annuity rate merely determines the portion of the donation to be 
returned to the donor, and the portion the charity will retain. Second, 
the fundraising activities of charitable organizations are not trade or 
commerce, an essential predicate for establishing the application of 
our antitrust laws. Moreover, it is difficult to see what 
anticompetitive effect the supposed setting of prices has in a context 
where the decision to give is motivated not by price but by interest in 
and commitment to a charitable mission.
  H.R. 2525 would make clear that the conduct alleged in these lawsuits 
would not be considered illegal under the antitrust laws. The 
protection it provides is narrowly tailored to cover only those 
activities required to market and create a gift annuity. I urge my 
colleagues to support this legislation so as to eliminate further 
frivolous lawsuits and barriers to charitable giving.
  If you would like to cosponsor this measure, please call Diana 
Schacht on extension 53951.

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