[Congressional Record Volume 141, Number 188 (Tuesday, November 28, 1995)]
[Extensions of Remarks]
[Page E2240]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            IN SUPPORT OF CHARITABLE GIFT ANNUITY RELIEF ACT

                                 ______


                        HON. RICHARD A. GEPHARDT

                              of missouri

                    in the house of representatives

                       Tuesday, November 28, 1995

  Mr. GEPHARDT. Mr. Speaker, I rise today in support of H.R. 2525, the 
Charitable Gift Annuity Relief Act, and H.R. 2519, the Philanthropy 
Protection Act. These proposals will provide needed clarity to our 
securities and antitrust laws, and their relation to gift annuities, 
one of the oldest and most common fundraising methods used by charities 
throughout the United States.
  Presently, one isolated lawsuit in Texas against a charity has been 
broadened to a class-action suit that has certified over 2,000 
nonprofit defendants nationwide. Without this legislation, these 
nonprofit organizations are vulnerable to lawsuits based on a perceived 
violation of Federal antitrust and securities laws. This litigation, 
and the range of nonprofit defendants involved in the lawsuit, 
underscores the need to draw a distinction between annuity arrangements 
offered by commercial entities and those offered by charities.
  St. Louis University is one of these charitable organizations. 
Planned giving programs, such as charitable gift annuities, account for 
roughly 50 percent of its fundraising efforts. The pending lawsuit has 
jeopardized its ability to offer potential donors these types of 
programs. Other nonprofit organizations are alarmed as to how they will 
fund their programs in the future. In addition to S.L.U., the Salvation 
Army of St. Louis, The Boys and Girls Town of Missouri, and the 
Cardinal Glennon Children's Hospital are just a few of the nonprofit 
groups in my district affected by this issue. The legal defense fees 
for the defendants in the pending suit is over $1 million a month, 
draining charities of precious dollars that could be used to meet their 
worthy goals.
  Mr. Speaker, the donors who enter into charitable gift annuities do 
not act to make a profitable return on an investment. Rather, they are 
acting because they support the mission of the charity, and donate 
their money to that end. I am concerned with cuts in Federal spending 
that threaten the ability of our Nation's nonprofit organizations to 
continue their philanthropic programs. We should not compound their 
situation by failing to respond to the legal vulnerability they face 
under laws intended to regulate commercial securities. This 
legislation, supported by the Securities and Exchange Commission, will 
protect charities from securities and antitrust-based lawsuits, and 
allow them to raise funds in the years to come. I strongly urge passage 
of these bills.

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