[Congressional Record Volume 141, Number 188 (Tuesday, November 28, 1995)]
[House]
[Pages H13670-H13677]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  PHILANTHROPY PROTECTION ACT OF 1995

  The Clerk called the bill (H.R. 2519) to facilitate contributions to 
charitable organizations by codifying certain exemptions from the 
Federal securities laws, and for other purposes.
  The Clerk read the bill, as follows:

                               H.R. 2519

       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.''.

[[Page H 13671]]


     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.


     Amendment in the Nature of a Substitute Offered by Mr. BLILEY

  Mr. BLILEY. Mr. Speaker, pursuant to clause 4, rule VIII of the rules 
of the House, I offer an amendment in the nature of a substitute.
  The Clerk read as follows:

       Amendment in the nature of a substitute offered by Mr. 
     Bliley:
       Strike all after the enacting clause and insert the 
     following:

     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, the remainder interests of which 
     are revocably dedicated to or for the benefit of 1 or more 
     charitable organizations, if the ability to revoke the 
     dedication is limited to circumstances involving--
       ``(I) an adverse change in the financial circumstances of a 
     settlor or an income beneficiary of the trust;
       ``(II) a change in the identity of the charitable 
     organization or organizations having the remainder interest, 
     provided that the new beneficiary is also a charitable 
     organization; or
       ``(III) both the changes described in subclauses (I) and 
     (II);

[[Page H 13672]]

       ``(vii) 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
       ``(viii) such assets 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 (vii) 
     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 (vi) and 
     (viii) 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 the 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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 

[[Page H 13673]]
  Virginia [Mr. Bliley] will be recognized for 30 minutes, and the 
gentleman from Massachusetts [Mr. Markey] will be recognized for 30 
minutes.
  The Chair recognizes the gentleman from Virginia [Mr. Bliley].
  Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. BLILEY asked and was given permission to revise and extend his 
remarks.)
  Mr. BLILEY. Mr. Speaker, I rise in strong support of H.R. 2519, the 
Philanthropy Foundation Act of 1995.
  Mr. Speaker, the far-reaching, bipartisan support of the legislation 
before this body today underscores the importance of the Philanthropy 
Protection Act of 1995 to our Nation's charitable organizations and the 
many people they serve.
  While the genesis of this legislation is in a misguided lawsuit 
pending in Texas, the impact of that lawsuit has already been felt 
across the country--from Georgetown University to the Salvation Army. 
Universities, hospitals, religious groups, and other philanthropic 
organizations that exist to help others have been forced to cut back 
their planned giving programs as a result of that lawsuit.
  The impact is especially devastating at this time of year--when 
charitable organizations normally receive a significant portion of 
their funding through yearend gifts.
  While charitable income funds permit donors to contribute assets and 
receive income from the investment of those assets, there is a vital 
distinction between a charitable income fund and an investment company. 
That distinction is the intent of the contributors to the fund. A 
person who invests money in an investment company has one primary goal: 
to make money. A person who contributes through a charitable income 
fund also has one primary goal: to give money away. These different 
goals mandate regulation that recognizes the distinction between the 
two.
  The Philanthropic Protection Act will make it clear that charitable 
income funds are not investment vehicles. But the act will not open any 
loopholes for those who would dress up a fraudulent scheme in 
benevolent clothing. The antifraud provisions of the Federal securities 
laws will continue to apply to charitable organizations and income 
funds--so that criminals who create Ponzi schemes like the new era 
fraud will continue to be prosecuted.

  The amendment in the nature of a substitute that I have offered 
clarifies and makes more efficient the exemption from the Federal 
securities laws that this legislation provides.
  The amendment adds two additional categories of revocable assets to 
the types of assets that exempt charitable income funds may hold under 
this legislation.
  The Securities and Exchange Commission staff has expressed concern in 
the past that a person who donates revocable assets may not have 
donative intent, but, rather, the intent of an investor.
  However, under certain circumstances, the donative intent of donors 
who give revocable gifts is reasonably certain. The amendment 
prescribes two circumstances in which the donative intent of a donor is 
not put into doubt by a gift's revocability.
  This amendment will make compliance with the terms of the 
legislation's exemptions less costly to charitable organizations and 
the Securities and Exchange Commission by eliminating the need for the 
Commission to promulgate a rule or process an exemptive application to 
address situations where there really is no question as to donative 
intent of a donor.
  This act is one component of a twofold legislative effort by the 
Commerce Committee and the Judiciary Committee, and I applaud Judiciary 
Committee Chairman Hyde for introducing H.R. 2525, The Charitable Gift 
Annuity Antitrust Relief Act of 1995, to complete this effort.
  The Judiciary Committee's legislation correctly excludes the 
application of its terms to the prohibition in section 5 of the Federal 
Trade Commission Act against deceptive acts or practices, That 
prohibition lies within the exclusive jurisdiction of the Commerce 
Committee.
  For the same reasons we have maintained the applicability of the 
antifraud provisions of the securities laws in the Philanthropy 
Protection Act of 1995, the Federal and State laws that prohibit 
deceptive acts or practices should continue to protect charitable 
organizations and the donors who contribute to them.
  However, the use of joint annuity rates by charitable organizations 
is not, in and of itself, a deceptive act or practice for purposes of 
the Federal Trade Commission Act and similar State statutes. It has 
been brought to my attention that plaintiffs have sought to use 
consumer protection statutes similar to the deceptive acts or practices 
prohibition of the Federal Trade Commission Act to attack antitrust 
conduct where antitrust remedies are not available. At least one State 
supreme court has dismissed such a case, refusing to reward creative 
pleading at the expense of consistent application of legal principles.
  The Federal Trade Commission Act is not intended to serve as a back 
door through which plaintiffs may seek to revoke charitable 
donations by disguising antitrust allegations as consumer protection 
claims.

  I would like to take a few moments to thank Congressman Fields for 
bringing this legislation to the attention of the committee. I also 
would like to thank ranking members Congressman Dingell and Congressman 
Markey for their hard work and cosponsorship of this legislation.
  I also commend you, Mr. Speaker, for your work in bringing the 
Corrections Calendar to fruition to enable this Congress to consider 
matters such as the Philanthropy Protection Act of 1995 on this 
streamlined and expedited basis. Congresswoman Vucanovitch should also 
be recognized for her excellent work in making the Corrections Calendar 
such a success.
  Finally, I would like to thank Linda Dallas Rich, Steve Cope, and 
Brian McCullough of our staff for their diligent and excellent work on 
this initiative.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MARKEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of H.R. 2519, the Philanthropy 
Protection Act of 1995. I am very pleased to have cosponsored the 
legislation, along with the gentleman from Texas [Mr. Fields], the 
gentleman from Virginia [Mr. Bliley], the gentleman from Michigan [Mr. 
Dingell], and I want to compliment at this time the gentleman from 
Illinois [Mr. Hyde] and the gentleman from Michigan [Mr. Conyers] for 
their work on the companion piece of legislation which is moving 
through the House this afternoon on the same subject.
  Mr. Speaker, H.R. 2519 clarifies the exemptions provided in the 
Federal securities laws for charitable organizations. Under existing 
law, companies organized exclusively for religious, educational, 
benevolent, fraternal, or charitable purposes traditionally have been 
exempted from the registration and reporting requirements established 
for investment companies, investment advisers, and issuers of 
securities. These exemptions have reflected a longstanding 
congressional intent that such organizations should not be asked to 
comply with the comprehensive scheme of investor protection regulations 
designed to protect investors in the securities of for-profit 
corporations.
  Over the years, the SEC staff has issued a series of interpretive no-
action letters that have spelled out the precise contours of these 
exemptions, thereby giving assurances to the charitable community that 
their fundraising activities would not result in any SEC enforcement 
action being brought against them. This arrangement worked quite well 
until very recently, when a class action lawsuit filed in the State of 
Texas placed a cloud of uncertainty over the exempt status of 
charitable donation funds.
  This lawsuit has alleged that the charitable donation funds 
maintained by the defendants are operating illegally as unregistered 
investment companies and that the gift annuities offered by these 
charities are illegal unregistered securities. While there is good 
reason to believe that this lawsuit ultimately would not prevail on the 
merits, its very existence has created great uncertainty, confusion, 
and concern within the philanthropic community.

[[Page H 13674]]

  At the subcommittee's hearing last month, we heard testimony from 
several charitable and educational organizations, including the 
Massachusetts General Hospital, that the lawsuit in Texas has already 
had a chilling effect upon its donations. We also heard from the 
president of the Boston-based National Council of Planned Giving that 
this lawsuit was having an adverse impact on charities throughout New 
England.
  H.R. 2519 would eliminate the legal uncertainties raised by the Texas 
lawsuit by writing into the statute the longstanding SEC staff 
interpretive report of the nature and scope of the charitable 
organization exemptions. To ensure that the exemptions in the bill 
would not provide a loophole that would permit fraudulent activity, the 
legislation provides that the antifraud provisions of the Federal and 
State securities laws apply to charitable donation pools and the 
organizations that operate them.
  Again, I am pleased to be a cosponsor of this bipartisan consensus 
piece of legislation. I applaud the gentleman from Texas [Mr. Fields] 
and the gentleman from Virginia [Mr. Bliley] for their expeditious 
bringing of the legislation to the floor before the end of the year 
when so many Americans make their decisions as to whether or not they 
are going to be making large charitable donations.
  Mr. Speaker, I include for the Record an editorial in this matter 
which recently appeared in the Boston Globe.
  The document referred to is as follows:

                 [From the Boston Globe, Oct. 16, 1995]

                        An Uncharitable Lawsuit

       Federal Judge Joe Kendall has a choice to make. Sitting in 
     his Dallas chambers, he will soon decide whether to expose 
     America's charitable institutions to an ignoble lawsuit that 
     could cost them billions of dollars.
       In 1988, Louise Peter, now 90, of Wichita Falls, Texas, 
     gave her $800,000 estate to the Lutheran Foundation in an 
     arrangement known as a charitable gift annuity. At regular 
     intervals the foundation pays Peter a certain sum based upon 
     the value of her donation. In return, the charity keeps the 
     Peter fortune upon her death.
       The annuities make sense. Donors minimize taxes and are 
     able to enjoy their philanthropy while still alive. 
     Charities, whose burdens burgeon with each pass of 
     Washington's budget buzzsaw, enjoy greater and more 
     consistent revenue.
       The only people who have reason to feel less than happy 
     about the annuities are some of the would-be heirs who are 
     passed over. The family of Louise Peter wants her money.
       Peter's grandniece, Dorothy Ozee, sued the Lutheran 
     Foundation for issuing the annuity without an insurance 
     license and for administering the Peter estate without 
     license as a trust company, Ozee also accused the foundation 
     of breaking federal antitrust laws by following the payout 
     recommendations of the nonprofit American Council on Gift 
     Annuities. Judge Kendall's preliminary ruling favored the 
     greedy niece. Now he has to rule on her petition to make the 
     lawsuit a class action against almost the entirety of 
     America's philanthropic community. If the class is certified 
     and the suit succeeds, the charities may be required to 
     return billions in contributions plus treble damages.
       That is absurd. Charitable gift annuities have represented 
     a legitimate way to help others for more than 100 years. 
     Congress should quickly follow the Texas Legislature's lead 
     and reiterate that the regulations in question were never 
     meant to apply to charities. Judge Kendall's duty is to put 
     an end to Ozee's bitter agenda of revenge.

  Mr. DINGELL. Mr. Speaker, I am pleased to be an original cosponsor of 
H.R. 2519, the Philanthropy Protection Act of 1995, and I rise in 
support of the bill. I commend the chairman of the subcommittee, Mr. 
Fields, for his strong leadership in introducing this bill and 
shepherding it through the hearing and markup process so promptly. I 
also commend the chairman of the Commerce Committee, Mr. Bliley, for 
bringing this legislation to the House floor today. I want to thank 
both gentlemen for the bipartisan and cooperative manner in which this 
bill has been handled by you and your able staff.
  Time is of the essence. As spelled out in our committee's report 
(104-333) on this bill, abusive litigation currently pending in Texas 
poses a grave threat to numerous charitable organizations who have been 
appropriately operating in compliance with the terms and conditions of 
no-action letters granted by the Securities and Exchange Commission. 
H.R. 2519 is part of a twofold legislative effort that includes H.R. 
2525, the Charitable Gift Annuity Antitrust Relief Act of 1995, which 
has been reported to the House by the Judiciary Committee. This 
combined legislation will eliminate the bases for antitrust and 
securities law claims against charitable organizations who make 
legitimate use of joint annuity rates.
  With respect to matters under the Commerce Committee's jurisdiction, 
H.R. 2519 would codify current SEC practice under the Federal 
securities laws and confirm Congress' intent--that the Federal 
securities laws apply to investments in securities, not to gift giving. 
Members should note that this bill does not affect the reach or scope 
of the antifraud provisions of the Federal securities laws and that 
those laws would continue to prohibit ``Ponzi'' schemes and any other 
frauds perpetrated under the guise of charitable activity. In other 
words, H.R. 2519 will not cut back in any way the authority or ability 
of the SEC to prosecute to the fullest extent activity such as that 
widely reported earlier this year in connection with the Foundation For 
New Era Philanthropy.
  Finally, the Federal Trade Commission Act is not intended to serve as 
a back door through which plaintiffs may seek to revoke charitable 
donations by disguising antitrust allegations as consumer protection 
claims.
  In closing, I believe that this bill strikes an appropriate balance 
between protecting investors and consumers and facilitating the ability 
of philanthropic entities to manage their donations.
  Mr. BLILEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Texas [Mr. Fields], chairman of the Subcommittee on 
Telecommunications and Finance of the Committee on Commerce.
  (Mr. FIELDS of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. FIELDS of Texas. Mr. Speaker, the goals of the Philanthropy 
Protection Act of 1995 before this body today echo the spirit of this 
season. This legislation will ensure that Americans may continue to 
help one another not just at holiday time, but throughout the year 
through gifts to charitable income funds.
  We have all seen examples of the extraordinary work philanthropic 
organizations do. We must not allow ourselves to take this good work 
for granted. The funding that is provided through charitable income 
funds is essential to institutions like my alma mater, Baylor 
University--not just for providing scholarships, but for paying the 
bills to keep its doors open. Hospitals need the funding provided by 
charitable income funds not only to provide care for the sick, but also 
to conduct research to keep future generations healthy. Many other 
organizations rely on charitable income funds as a key element of their 
planned giving programs.
  But right now many of these organizations are being forced to spend 
their resources on legal fees rather than the people who need their 
help.
  The lawsuit in Texas that has given rise to the immediate need for 
this legislation alleges that charitable income funds are illegally 
unregistered investment companies. But the Investment Company Act of 
1940, the Securities Act of 1933, the Securities Exchange Act of 1934, 
and the Investment Advisers Act of 1940 were adopted to regulate 
investment activity--not gift-giving.
  Charitable gift annuities, charitable lead trusts, and other 
charitable income funds permit donors to structure gifts to suit their 
financial capabilities. These planned giving vehicles permit every 
person--not just the wealthy--to make a significant donation to an 
organization he wishes to support.

  At the same time, it is important to note that this legislation will 
not affect the reach or scope of laws that guard against securities 
fraud--because charitable organizations and the people who give to them 
should be protected from disreputable people who prey on good will.
  I want to emphasize my agreement with the point made by Chairman 
Bliley regarding the Charitable Gift Annuity Antitrust Relief Act of 
1995, introduced by Judiciary Committee Chairman Hyde and numerous 
distinguished cosponsors. That legislation, together with the Commerce 
Committee's Philanthropy Protection Act, will eliminate the basis for 
antitrust and securities law claims against charitable organizations 
that legitimately use joint annuity rates.
  The exemption the Judiciary Committee's bill provides from Federal 
antitrust law should not be vitiated by a clever lawyer who couches an 
antitrust claim as a deceptive trade practice claim under section 5 of 
the Federal Trade Commission Act or any similar State law. The Texas 
Supreme Court, in Abbott Laboratories versus Crystal Segura, threw out 
a claim that used exactly this tactic. The Federal Trade Commission 
Act's prohibition 

[[Page H 13675]]
against deceptive trade practices does not extend to antitrust claims, 
regardless of how those claims are manipulated.
  I thank Chairman Bliley for cosponsoring this legislation and 
shepherding it through the Commerce Committee so expeditiously. I also 
thank Congressman Dingell for joining the bipartisan effort, as well as 
my good friend, Congressman Ed Markey. I also want to thank the many 
other distinguished cosponsors of this legislation--the legislation's 
popularity speaks highly of its significance to all Americans.
  I also would like to commend you, Mr. Speaker, for creating the 
Corrections Calendar. The expedited fashion in which the Corrections 
Calendar has enabled this legislation to receive the consideration of 
this body is invaluable to the thousands of charitable organizations 
that are waiting with baited breath for the threat to their funding to 
go away. I thank Congresswoman Barbara Vucanovich for her excellent 
work in developing this important new tool, which will be invaluable to 
this Congress as we seek to accomplish our goals as efficiently and 
effectively as possible.

                              {time}  1445

  Finally, I want to thank our staff, Linda Dallas Rich, Steve Cope, 
and Brian McCullough, for their dedication and hard work on this 
initiative.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MARKEY. Mr. Speaker, I yield 5 minutes to the gentleman from 
California [Mr. Waxman].
  Mr. WAXMAN. Mr. Speaker, I am a member of the Corrections Day 
Advisory Group, and I support this bill that is before us today and the 
other bills that are going to be considered on the Corrections 
Calendar.
  I last spoke about the corrections day on the House floor in June 
when we considered setting up a correction day. At that time, I raised 
the concern that the calendar would become a fast track for special 
interests to stop regulations to protect public health and the 
environment. Today, I am here to say that this has not happened and to 
commend the corrections day process.
  The guidelines we developed for the Corrections Day Advisory 
Committee say that a corrections bill should address laws and 
regulations that are ambiguous, arbitrary, or ludicrous. The bill 
should be noncontroversial and have broad bipartisan support. The idea 
was to provide a forum for correcting silly, burdensome regulations 
that might not otherwise get the attention they deserve.
  The Chair of the advisory group is the gentlewoman from Nevada [Mrs. 
Vucanovich]. Under her leadership, we have been learning how to apply 
these guidelines to the many bills that come before the Corrections Day 
Advisory Group.
  The advisory group in general, and Chairman Vucanovich in particular, 
has been doing an excellent job in managing this Corrections Calendar. 
We have truly been identifying needless, burdensome regulations that 
can be corrected on the Corrections Calendar without controversy and 
with broad bipartisan support. At the same time, we have been rejecting 
bills that do not meet the corrections day criteria because they are 
controversial or address significant policy issues that should be 
considered under regular legislative procedures.
  There are many examples of worthwhile corrections day bills that the 
House has enacted or is considering. The bill before us right now is an 
excellent example. Earlier this month, we passed a corrections bill 
that eliminated a duplicative reporting requirement relating to cardiac 
pacemakers, the Committee on Commerce reported a corrections bill that 
eliminates duplicative warning notices for products containing 
saccharin, and I hope we will also be able to deal with the issue of 
ride-sharing under the Clean Air Act in a way that meets the criteria 
of the Corrections Calendar.
  I am particularly pleased to report that the existence of this 
Corrections Calendar has persuaded agencies to correct problems on 
their own. Let me give an example.
  In September, the gentleman from Iowa [Mr. Nussle] brought a bill to 
the advisory committee that addressed a technical problem in the Clean 
Air Act. The problem was that the grain elevators that operate 
seasonally were being treated by air pollution regulators as if they 
were operated year round. The result was that these elevators might be 
classified as a major pollution source subject to permitting 
requirements.
  Congresswoman Vucanovich and I wrote the EPA Administrator Carol 
Browner about the issue, informing her that this appeared to be a 
candidate for the Corrections Calendar. The Administrator investigated 
the issue, agreed that there was a problem that needed correcting, and 
promised to issue new guidelines correcting the grain elevator problem.
  On November 14, the EPA fulfilled its commitment and issued the new 
guideline. The National Feed and Grain Association commended EPA on 
this action and estimated that the savings would be $10 to $20 million 
annually.
  In closing, I particularly want to commend the gentlewoman from 
Nevada [Mrs. Vucanovich]. When the Corrections Day Advisory Committee 
first met, she said she wanted to feel her way step-by-step in 
establishing fair and appropriate procedures for Corrections Day. She 
has done an excellent job feeling her way. Speaking as one who 
initially had doubts about how the Corrections Day process would be 
handled, I am pleased to be able to say that it has been handled very 
fairly and productively under the leadership of the gentlewoman from 
Nevada [Mrs. Vucanovich].
  The bill that is before us right now and the other bills on the 
calendar today under this procedure deserve the support of Members of 
the House. I hope that the Corrections Day Advisory Committee will 
present other worthwhile measures for the House to consider and to pass 
through this expedited procedure.
  Mr. Speaker, I thank the gentleman from Massachusetts [Mr. Markey] 
for giving me this opportunity to address this subject.
  Mr. FIELDS of Texas. Mr. Speaker, I yield 5 minutes to the 
gentlewoman from Nevada [Mrs. Vucanovich].
  Mrs. VUCANOVICH. Mr. Speaker, I thank the gentleman for yielding me 
this time. I would also like to thank the gentleman from California 
[Mr. Waxman] for the nice comments that he made just a few minutes ago.
  Mr. Speaker, I rise today in support of H.R. 2519 and H.R. 2525, 
which address a critical need of the charitable community.
  When we were working to establish corrections day we included in our 
definition of a corrections bill matters relating to court decisions. 
There was some discussion about the need for corrections day to deal 
with court decisions, and a general concern that we were designing a 
system to override, in a capricious way, all decisions we didn't agree 
with. At the time, it was difficult to cite an example of the type of 
case we had in mind. Now, here today we have the perfect example.
  A court in Texas is considering Richie versus American Council on 
Gift Annuities in which it is alleged that the use of the same annuity 
rate by the various charities constitutes price fixing, and is thus a 
violation of the antitrust laws. This case has been certified as a 
class action suit greatly expanding its potential impact on the 
charitable community.
  I think this is a clear example of a court case and possible decision 
that will have serious harmful impact. There is no evidence that this 
system of fixing annuity rates among charities causes any harm, in 
fact, the fixing of rates insures that giving decisions are made based 
on the merits of the charity rather than on the merits of the 
investment.

  The House should put a stop to this misguided effort immediately, and 
I hope the other body will take up this legislation without delay.
  Before I end today I would like to say a few words about corrections 
day in general and the progress we are making in perfecting the 
corrections process.
  Last week this House passed a bill sponsored by Mr. Waxman and me to 
delete the heart pacemaker registry. As most Members know, Mr. Waxman 
and I seldom find ourselves on the same side of any issue. Despite our 
different outlooks, I must say that we have worked together very well 
over the last several months in getting corrections day to fulfill its 
purpose.

[[Page H 13676]]

  We have a very good group of people on our advisory group, who have 
been toiling away in anonymity and not always with much appreciation. 
The 12 of us, Mr. Zeliff, Mr. McIntosh, Mr. Solomon, Mr. Dreier, Mr. 
Johnson, Mr. Ehrlich, Mr. Waxman, Mr. Collin Peterson, Mr. Condit, Ms. 
Rivers, and Mr. Becerra have been meeting regularly since mid-July. 
During these months we have listened to many Members of Congress 
present their proposals for corrections day and worked diligently to 
get a flow of bills to the floor. I'm proud to say that we have made 
great progress.

  Today marks the 5th corrections day. The House has passed a total of 
seven bills under this procedure and today we will pass bills eight and 
nine. One bill, the Edible Oil Regulatory Reform Act, has been signed 
into law by the President.
  An additional benefit to this process has been the attention 
corrections day has brought to the regulatory process. We have found 
that by our advisory group looking into an issue we may be able to 
resolve the differences between the Federal agency and the constituent 
who is having a problem. As an example, Mr. Waxman mentioned our 
intervention on behalf of Congressman Nussle and his constituents 
resulted in a positive resolution of a problem between the grain 
elevator operators and the EPA.
  In a time when the media is characterizing this institution as 
gridlocked, and the public view is that we are unable to solve the 
Nation's problems, it is encouraging to see that our legislative system 
can be made to work for the benefit of the average American. Again, Mr. 
Speaker, I would like to thank the gentleman from Virginia [Mr. 
Bliley], the gentleman from Illinois [Mr. Hyde], and especially the 
gentleman from California [Mr. Waxman]. Also, I would like to thank the 
various staff members who have worked on this corrections day process.
  Mr. MARKEY. Mr. Speaker, I yield 5 minutes to the gentleman from 
California [Mr. Stark].
  Mr. STARK. Mr. Speaker, I thank the distinguished gentleman from 
Massachusetts [Mr. Markey].
  Mr. Speaker, I rise in strong support of H.R. 2519 and again to 
repeat from the previous week my urge that there is nothing we need 
more around here than corrections.
  I would like to explain that the most correcting that is needed is 
not entirely addressed by H.R. 2519 by charities alone but also is to 
do away with the approach that the congressional Republicans have taken 
in their budget.
  Referring to H.R. 2519, we clearly need to encourage more charitable 
giving. A summer study of 100 charities showed that, based on the 
Republican budget, they alone would cause the Nation's charities a $250 
billion shortfall between 1996 and 2002. Now, it may just be 
coincidental that that is almost the amount of the tax cut that the 
Republicans intend to give to their rich friends. However, the head of 
the independent sector, Dr. Sara Melendez, says that the Nation's 
nonprofits will not only be unable to provide services at their current 
levels but their capacity will be so reduced that they will be 
incapable of meeting the increasing services that are projected for the 
new needs created by the Federal reductions in entitlement programs by 
2002.
  Now, H.R. 2519 takes a small step in correcting that. However, when 
we look at the huge problem that has been created by the Republican 
budget, and I quote here; for example, the study shows that the 
Lutheran Social Services of Michigan will have a shortfall of almost 
280,000 days in nursing homes for the elderly.
  The Crittendon Family Services in Columbus, OH, will serve 13 percent 
fewer people in their Family Preservation Services program.
  The Arkansas Easter Seal Society will serve 20 percent fewer children 
in its early intervention program for children with disabilities.
  In Houston, TX, the Family Resources Society will have to turn away 
20,000 children from its Child Abuse Prevention and Treatment program, 
all because of the Republican budget cuts.
  The Jewish Family Service of Los Angeles, CA, will be unable to meet 
the needs of some 80,000 meals for its Meals to the Elderly program.
  If the participating organizations are to make up their program 
revenue with private giving, which H.R. 2519 will help them do, the 
contributions would have to increase by 125 percent from the previous 
year over and above expected increases.

  Now, when we are going to cut services to the elderly from 17 to 9 
percent, nursing homes for the elderly from 42 to 30 percent, community 
development programs from 50 to 31 percent, home health care from 39 to 
27 percent, legal services from 40 to 4 percent, food services from 46 
to 40 percent, we need H.R. 2519.
  Because the Republican draconian cuts that impact the poor and the 
disadvantaged, which these charities under H.R. 2519 are designed to 
serve, and where that money is being given, the $245 billion that is 
being cut and given to the very rich in tax cuts, we can only hope that 
H.R. 2519 will encourage those same rich Republicans who get the $245 
billion in tax cuts to give a little bit of it back. The harm they are 
causing the poor, the elderly, the disadvantaged, the disabled in this 
country and the young children is so huge that one wonders if this 
little correction is going to be enough to overcome that awful, 
heartless cutting and gutting of the social programs that protect the 
needy and the disadvantaged in this country.
  While I urge my colleagues to vote for H.R. 2519, I urge them to 
remember that we cannot let this budget that the Republicans have 
suggested go through, giving all of this $245 billion in tax cuts to 
rich, taking it out of the hides of the poor. H.R. 2519, while it is a 
good bill, will do a little bit but not nearly enough to correct the 
egregious error and hurt that the Republicans are inflicting on 
American society.
  Mr. RICHARDSON. Mr. Speaker I would like to voice support for this 
bipartisan legislation and I would like to commend Mr. Bliley, Mr. 
Fields, Mr. Markey, and Mr. Dingell for expediting this important bill.
  Some years ago the New Mexico Boys Ranch, Inc. became a member of the 
Committee on Gift Annuities--now American Council on Gift Annuities--
because they were told that the Securities and Exchange Commission and 
the U.S. Treasury Dept. utilized the committee to ensure that charities 
were properly trained and equipped to issue and administer charitable 
gift annuities to their donors. They were told that being a member was 
essential to demonstrate to both government regulators and donors that 
as a charity they were qualified to participate in this area of 
deferred giving.
  This legislation will clarify that the American Council on Gift 
Annuities has not violated the law. It will dismantle a pending lawsuit 
that would otherwise limit the ability of the new Mexico Boys and Girls 
Ranches to provide services to children and potentially bankrupt and 
close the ranches permanently.
  Because the future of philanthropy in the United States as we now 
know it is at stake and the future of the New Mexico Boys and Girls 
Ranches and many other new Mexico charities is threatened, I am 
wholeheartedly supportive of H.R. 2519.

                                                        New Mexico


                                     Boys Ranch & Girls Ranch,

                                Albuquerque, NM, October 30, 1995.
     Congressman Bill Richardson,
     Rayburn House Office Bldg.,
     Washington, DC.
       Dear Representative Richardson, Years ago the New Mexico 
     Boys Ranch, Inc. became a member of the Committee on Gift 
     Annuities (now American Council on Gift Annuities) because we 
     were told that the Securities and Exchange Commission and the 
     United States Treasury Dept. utilized the committee to ensure 
     that charities were properly trained and equipped to issue 
     and administer charitable gift annuities to their donors. I 
     was told that being a member was essential to demonstrate to 
     both government regulators and donors that as a charity we 
     were qualified to participate in this area of deferred 
     giving.
       I learned recently that a federal lawsuit had been filed in 
     Texas that alleges that the American Council on Gift 
     Annuities violated antitrust laws by providing actuarial 
     tables to charities to assist them in determining the annuity 
     rates for charitable gift annuities and that commingling of 
     more than one charities' trust funds in a pooled income fund 
     is a violation of the Investment Company Act of 1940, and 
     other securities laws.
       To my astonishment I learned last week that now the 
     attorneys for the plaintiff have been granted class action 
     certification to expand the suit to charities in every state. 
     The plaintiff attorneys want to force charities to return all 
     charitable gift annuities to the donors plus treble damages. 
     With New Mexico Boys and Girls Ranch Foundation as a member 
     of the American Council on Gift Annuities in the past, this 
     would obviously greatly limit the ability of the New Mexico 
     Boys 

[[Page H 13677]]
     and Girls Ranches to provide services to children and has the potential 
     of bankrupting and closing the ranches permanently.
       Because the future of philanthropy in the United States as 
     we now know it is at stake and the future of the New Mexico 
     Boys and Girls Ranches and many other New Mexico charities is 
     threatened, I am urgently asking you to co-sponsor (if you 
     have not already done so) and support HR 2519, introduced 
     jointly by Representative Thomas Bailey of Virginia, Chairman 
     of the House Commerce Committee and Representative Jack 
     Fields of Texas, Chairman of that committee's subcommittee on 
     Telecommunications and Finance. I also urge you to co-sponsor 
     and support HR 2525, introduced by representative Henry Hyde, 
     Chairman of the House Judiciary Committee.
       I would deeply appreciate hearing from you as soon as 
     possible. I thank you in advance for your help in addressing 
     this crisis. I honestly feel that the work of the charitable 
     community throughout this nation will be seriously damaged if 
     this legislation is not passed very soon.
           Sincerely yours,
                                                  Michael H. Kull,
                                                        President.

  Mr. STEARNS. Mr. Speaker, I rise in strong support of H.R. 2519, 
legislation to modify our federal securities laws to preclude 
litigation that is threatening the future funding of our Nation's 
numerous philanthropic organizations.
  Philanthropic organizations are some of the most important 
organizations in the United States today. These charitable, religious 
and educational groups have the laudable goal of providing assistance, 
support and hope to those in society that may need a helping hand.
  When an individual makes the generous decision to contribute to a 
charitable donation fund, the charity should not be prevented from 
enjoying the benefits derived from that contribution because some 
disgruntled relative, feeling that the money should go in their 
pockets, makes a claim on the money. Such relatives should not be 
allowed to initiate lawsuits on these grounds especially when the donor 
made a valid gift with sufficient donative intent.
  Charitable donations funds fall outside the purview of our securities 
laws for the simple reason that donors do not intend to reap high 
returns on their investments. Instead they are seeking to make a gift 
to charity.
  I urge all my colleagues to support H.R. 2519 to prevent 
contributions intended for charitable donation funds out of the pockets 
of selfish relatives.

                              {time}  1500

  Mr. MARKEY. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. FIELDS of Texas. Mr. Speaker, I have no further requests for 
time, and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Barr). Pursuant to the rule, the 
previous question is ordered on the amendment in the nature of a 
substitute and the bill.
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from Virginia [Mr. Bliley].
  The amendment in the nature of a substitute was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken.
  Mr. MARKEY. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 5, rule I, further 
proceedings on this bill will be postponed.
  The point of no quorum is considered withdrawn.

                          ____________________