[Congressional Record Volume 148, Number 10 (Friday, February 8, 2002)]
[Senate]
[Pages S546-S556]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LIEBERMAN (for himself, Mr. Santorum, Mr. Bayh, Mr. 
        Brownback, Mr. Nelson of Florida, Mr. Cochran, Mrs. Carnahan, 
        Mr. Lugar, Mrs. Clinton, and Mr. Hatch):
  S. 1924. A bill to promote charitable giving, and for other purposes; 
to the Committee on Finance.
  Mr. LIEBERMAN. Mr. President, I am truly proud to join Senators 
Santorum, Bayh, Brownback, Bill Nelson, Cochran, Carnahan, Lugar, 
Clinton and Hatch in introducing the Charity Aid, Recovery, and 
Empowerment, or CARE, Act. This important bill responds to a 
significant problem facing our nation: the social service needs of far 
too many of our fellow citizens continue to go unmet, and we in 
Congress must do more to bring additional resources to people in need 
and to assist and empower the community and charitable groups seeking 
to serve them.
  A little over a year ago, Senator Santorum and I stood with President 
Bush as he unveiled his Faith-based and Community Initiative. At the 
time, I embraced the plan's worthy goals, to strengthen our 
partnerships with charitable organizations and help them help more 
people in need, but I cautioned that the devil truly would be in the 
details.
  As it turned out, those details, particularly as they related to 
creating a larger, lawful space for faith-based groups at the public 
policy table, proved more than devilish when it came to translating our 
outline into legislation. It would not be an exaggeration to say that 
many people had lost faith in ever seeing anything remotely resembling 
a faith-based and community initiative.
  But after many months of discussion, debate, and disappointments, I 
am proud to report that we have finally reached a balanced, bipartisan 
agreement, one that avoids the controversies that have to date bogged 
down the President's plan in Congress, and that advances our common 
interest in turning the growing good will in our country into more good 
works in our communities. The truly bipartisan and diverse group of 
cosponsors who join me today testify to that.
  That good will is an unmistakable outgrowth of the September 11 
attacks. I have never seen our country more united or more committed to 
our common values, to freedom and tolerance, faith and family, 
responsibility and community. With this bill, we hope to harness that 
renewed American spirit to help make our country as good as our values, 
and to help restore hope to people and places it has too often gone 
missing.
  We start by acknowledging that, in the wake of September 11 and the 
weakened economy, there is an ongoing and consequential charity crunch. 
With so much of our generosity focused on relief efforts, contributions 
to other groups have dropped markedly and resources have dwindled 
considerably, severely constraining the ability of many vital charities 
to meet rising demands. A survey released this week by the Association 
of Fundraising Professionals found that 44 percent of charities are 
experiencing shortfalls in contributions.
  This bill is designed in part to respond directly to that charity 
crunch with a targeted two-year strategy to help leverage new public 
and private funding for the nation's non-profits. It would create a 
series of new tax incentives, including a meaningful deduction for non-
itemizers, to spur more charitable giving. And it would substantially 
increase Federal funding for the Social Services Block Grant program, 
which underwrites a broad range of critical programs, by more than $1 
billion.
  But this is not a short-term or short-sighted proposal. The CARE Act 
employs a number of other tools to help empower community and faith-
based groups over the long haul and expand their capabilities, by 
providing new forms of technical assistance that will make it easier 
for smaller grassroots organizations to qualify for Federal aid. And it 
builds on a proposal that Senator Santorum and I have long advocated to 
expand the use of innovative Individual Development Accounts, IDAs, to 
help low-income working families save and build assets and attain self-
sufficiency.
  As you can tell, this is not just a faith-based bill. It is a civil 
society bill. It is aimed at strengthening support for the broad range 
of community, civic, and philanthropic groups, including the 
religiously-affiliated, that are strengthening our social fabric. It 
contains none of the troubling charitable choice provisions that were 
in the House bill, H.R. 7, that undermined or preempted civil rights 
laws and raised constitutional concerns.
  What it does do, though, is to take some common-sense, narrowly-
targeted steps to knock down specific, documented barriers preventing 
many smaller faith-based social service providers from fairly competing 
for Federal funding. There's just no good reason to disqualify an 
otherwise qualified faith-based group just because they have a cross on 
their wall or a mezuzah on their door, or because they have a religious 
name in their title, or they have praise for God in their mission 
statement.
  In moving forward with this bill, we as Democrats and Republicans 
recognize that while charities are not a replacement for government, 
government cannot do it all, either. In fact, there are some things 
that government cannot do at all, like repairing the human spirit. That 
is why it is so important for us to partner with the agents of civil 
society, who, as we saw again and again after September 11, can fill in 
those holes and fill up our hearts.
  And that is why I am so pleased with this proposal, and proud of the 
work we have done together to make it viable. In the end, the Good 
Lord, not the devil, is in the details. I want to thank the President 
for his leadership and his cooperation, and to thank my friend Senator 
Santorum for his steadfast faith in that process. This is one CARE 
package that will, I am confident, deliver a lot of good to a lot of 
people, and which I believe a lot of Democrats and Republicans will 
eagerly support.
  People in need and the groups that help them are waiting for our 
help. The CARE Act will bring it to them. I urge my colleagues to join 
us in supporting it. I ask unanimous consent that the text of the bill 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1924

       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 ``Charity 
     Aid, Recovery, and Empowerment Act of 2002'' or the ``CARE 
     Act of 2002''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

[[Page S547]]

             TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE

Sec. 101. Deduction for portion of charitable contributions to be 
              allowed to individuals who do not itemize deductions.
Sec. 102. Tax-free distributions from individual retirement accounts 
              for charitable purposes.
Sec. 103. Increase in cap on corporate charitable contributions.
Sec. 104. Charitable deduction for contributions of food and book 
              inventories and bonds.
Sec. 105. Reform of excise tax on net investment income of private 
              foundations.
Sec. 106. Excise tax on unrelated business taxable income of charitable 
              remainder trusts.
Sec. 107. Expansion of charitable contribution allowed for scientific 
              property used for research and for computer technology 
              and equipment used for educational purposes.
Sec. 108. Adjustment to basis of S corporation stock for certain 
              charitable contributions.

               TITLE II--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 201. Short title.
Sec. 202. Purposes.
Sec. 203. Definitions.
Sec. 204. Structure and administration of qualified individual 
              development account programs.
Sec. 205. Procedures for opening and maintaining an individual 
              development account and qualifying for matching funds.
Sec. 206. Deposits by qualified individual development account 
              programs.
Sec. 207. Withdrawal procedures.
Sec. 208. Certification and termination of qualified individual 
              development account programs.
Sec. 209. Reporting, monitoring, and evaluation.
Sec. 210. Authorization of appropriations.
Sec. 211. Account funds disregarded for purposes of certain means-
              tested Federal programs.
Sec. 212. Matching funds for individual development accounts provided 
              through a tax credit for qualified financial 
              institutions.

        TITLE III--EQUAL TREATMENT FOR NONGOVERNMENTAL PROVIDERS

Sec. 301. Nongovernmental organizations.

       TITLE IV--EZ PASS RECOGNITION OF SECTION 501(c)(3) STATUS

Sec. 401. EZ pass recognition of section 501(c)(3) status and waiver of 
              application fee for exempt status for certain 
              organizations providing social services for the poor and 
              needy.

                    TITLE V--COMPASSION CAPITAL FUND

Sec. 501. Support for nonprofit community-based organizations; 
              Department of Health and Human Services.
Sec. 502. Support for nonprofit community-based organizations; 
              Corporation for National and Community Service.
Sec. 503. Support for nonprofit community-based organizations; 
              Department of Justice.
Sec. 504. Support for nonprofit community-based organizations; 
              Department of Housing and Urban Development.
Sec. 505. Coordination.

                 TITLE VI--SOCIAL SERVICES BLOCK GRANT

Sec. 601. Restoration of authority to transfer up to 10 percent of TANF 
              funds to the Social Services Block Grant.
Sec. 602. Restoration of funds for the Social Services Block Grant.
Sec. 603. Requirement to submit annual report on State activities.

                    TITLE VII--MATERNITY GROUP HOMES

Sec. 701. Maternity group homes.

             TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE

     SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS 
                   TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE 
                   DEDUCTIONS.

       (a) In General.--Section 170 of the Internal Revenue Code 
     of 1986 (relating to charitable, etc., contributions and 
     gifts) is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Deduction for Individuals Not Itemizing Deductions.--
     In the case of an individual who does not itemize his 
     deductions for any taxable year beginning after December 31, 
     2001, and before January 1, 2004, there shall be taken into 
     account as a direct charitable deduction under section 63 an 
     amount equal to the lesser of--
       ``(1) the amount allowable under subsection (a) for the 
     taxable year for cash contributions, or
       ``(2) $400 ($800 in the case of a joint return).''.
       (b) Direct Charitable Deduction.--
       (1) In general.--Subsection (b) of section 63 of the 
     Internal Revenue Code of 1986 (defining taxable income) is 
     amended by striking ``and'' at the end of paragraph (1), by 
     striking the period at the end of paragraph (2) and inserting 
     ``, and'', and by adding at the end thereof the following new 
     paragraph:
       ``(3) the direct charitable deduction.''.
       (2) Definition.--Section 63 of such Code is amended by 
     redesignating subsection (g) as subsection (h) and by 
     inserting after subsection (f) the following new subsection:
       ``(g) Direct Charitable Deduction.--For purposes of this 
     section, the term `direct charitable deduction' means that 
     portion of the amount allowable under section 170(a) which is 
     taken as a direct charitable deduction for the taxable year 
     under section 170(m).''.
       (3) Conforming amendment.--Subsection (d) of section 63 of 
     such Code is amended by striking ``and'' at the end of 
     paragraph (1), by striking the period at the end of paragraph 
     (2) and inserting ``, and'', and by adding at the end thereof 
     the following new paragraph:
       ``(3) the direct charitable deduction.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
                   ACCOUNTS FOR CHARITABLE PURPOSES.

       (a) In General.--Subsection (d) of section 408 of the 
     Internal Revenue Code of 1986 (relating to individual 
     retirement accounts) is amended by adding at the end the 
     following new paragraph:
       ``(8) Distributions for charitable purposes.--
       ``(A) In general.--No amount shall be includible in gross 
     income by reason of a qualified charitable distribution.
       ``(B) Qualified charitable distribution.--For purposes of 
     this paragraph, the term `qualified charitable distribution' 
     means any distribution from an individual retirement 
     account--
       ``(i) which is made directly by the trustee--

       ``(I) to an organization described in section 170(c), or
       ``(II) to a split-interest entity, and

       ``(ii) which is made on or after the date that the 
     individual for whose benefit the account is maintained has 
     attained age 67.
     A distribution shall be treated as a qualified charitable 
     distribution only to the extent that the distribution would 
     be includible in gross income without regard to subparagraph 
     (A) and, in the case of a distribution to a split-interest 
     entity, only if no person holds an income interest in the 
     amounts in the split-interest entity attributable to such 
     distribution other than one or more of the following: the 
     individual for whose benefit such account is maintained, the 
     spouse of such individual, or any organization described in 
     section 170(c).
       ``(C) Contributions must be otherwise deductible.--For 
     purposes of this paragraph--
       ``(i) Direct contributions.--A distribution to an 
     organization described in section 170(c) shall be treated as 
     a qualified charitable distribution only if a deduction for 
     the entire distribution would be allowable under section 170 
     (determined without regard to subsection (b) thereof and this 
     paragraph).
       ``(ii) Split-interest gifts.--A distribution to a split-
     interest entity shall be treated as a qualified charitable 
     distribution only if a deduction for the entire value of the 
     interest in the distribution for the use of an organization 
     described in section 170(c) would be allowable under section 
     170 (determined without regard to subsection (b) thereof and 
     this paragraph).
       ``(D) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which a distribution is a 
     qualified charitable distribution, the entire amount of the 
     distribution shall be treated as includible in gross income 
     without regard to subparagraph (A) to the extent that such 
     amount does not exceed the aggregate amount which would be so 
     includible if all amounts were distributed from all 
     individual retirement accounts otherwise taken into account 
     in determining the inclusion on such distribution under 
     section 72. Proper adjustments shall be made in applying 
     section 72 to other distributions in such taxable year and 
     subsequent taxable years.
       ``(E) Special rules for split-interest entities.--
       ``(i) Charitable remainder trusts.--Notwithstanding section 
     664(b), distributions made from a trust described in 
     subparagraph (G)(i) shall be treated as ordinary income in 
     the hands of the recipient of the annuity described in 
     section 664(d)(1)(A) or the payment described in section 
     664(d)(2)(A).
       ``(ii) Pooled income funds.--No amount shall be includible 
     in the gross income of a pooled income fund (as defined in 
     subparagraph (G)(ii)) by reason of a qualified charitable 
     distribution to such fund, and all distributions from the 
     fund which are attributable to qualified charitable 
     distributions shall be treated as ordinary income to the 
     recipient.
       ``(iii) Charitable gift annuities.--Qualified charitable 
     distributions made for a charitable gift annuity shall not be 
     treated as an investment in the contract.
       ``(F) Denial of deduction.--Qualified charitable 
     distributions shall not be taken into account in determining 
     the deduction under section 170.
       ``(G) Split-interest entity defined.--For purposes of this 
     paragraph, the term `split-interest entity' means--
       ``(i) a charitable remainder annuity trust or a charitable 
     remainder unitrust (as such terms are defined in section 
     664(d)) which is funded exclusively by qualified charitable 
     distributions,

[[Page S548]]

       ``(ii) a pooled income fund (as defined in section 
     642(c)(5)), but only if the fund accounts separately for 
     amounts attributable to qualified charitable distributions, 
     and
       ``(iii) a charitable gift annuity (as defined in section 
     501(m)(5)).''.
       (b) Modifications Relating to Information Returns by 
     Certain Trusts.--
       (1) Returns.--Section 6034 of the Internal Revenue Code of 
     1986 (relating to returns by trusts described in section 
     4947(a)(2) or claiming charitable deductions under section 
     642(c)) is amended to read as follows:

     ``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 
                   4947(A)(2) OR CLAIMING CHARITABLE DEDUCTIONS 
                   UNDER SECTION 642(C).

       ``(a) Trusts Described in Section 4947(a)(2).--Every trust 
     described in section 4947(a)(2) shall furnish such 
     information with respect to the taxable year as the Secretary 
     may by forms or regulations require.
       ``(b) Trusts Claiming a Charitable Deduction Under Section 
     642(c).--
       ``(1) In general.--Every trust not required to file a 
     return under subsection (a) but claiming a charitable, etc., 
     deduction under section 642(c) for the taxable year shall 
     furnish such information with respect to such taxable year as 
     the Secretary may by forms or regulations prescribe, 
     including:
       ``(A) the amount of the charitable, etc., deduction taken 
     under section 642(c) within such year,
       ``(B) the amount paid out within such year which represents 
     amounts for which charitable, etc., deductions under section 
     642(c) have been taken in prior years,
       ``(C) the amount for which charitable, etc., deductions 
     have been taken in prior years but which has not been paid 
     out at the beginning of such year,
       ``(D) the amount paid out of principal in the current and 
     prior years for charitable, etc., purposes,
       ``(E) the total income of the trust within such year and 
     the expenses attributable thereto, and
       ``(F) a balance sheet showing the assets, liabilities, and 
     net worth of the trust as of the beginning of such year.
       ``(2) Exceptions.--Paragraph (1) shall not apply in the 
     case of a taxable year if all the net income for such year, 
     determined under the applicable principles of the law of 
     trusts, is required to be distributed currently to the 
     beneficiaries. Paragraph (1) shall not apply in the case of a 
     trust described in section 4947(a)(1).''.
       (2) Increase in penalty relating to filing of information 
     return by split-interest trusts.--Paragraph (2) of section 
     6652(c) of such Code (relating to returns by exempt 
     organizations and by certain trusts) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Split-interest trusts.--In the case of a trust which 
     is required to file a return under section 6034(a), 
     subparagraphs (A) and (B) of this paragraph shall not apply 
     and paragraph (1) shall apply in the same manner as if such 
     return were required under section 6033, except that--
       ``(i) the 5 percent limitation in the second sentence of 
     paragraph (1)(A) shall not apply,
       ``(ii) in the case of any trust with gross income in excess 
     of $250,000, the first sentence of paragraph (1)(A) shall be 
     applied by substituting `$100' for `$20', and the second 
     sentence thereof shall be applied by substituting `$50,000' 
     for `$10,000', and
       ``(iii) the third sentence of paragraph (1)(A) shall be 
     disregarded.
     If the person required to file such return knowingly fails to 
     file the return, such person shall be personally liable for 
     the penalty imposed pursuant to this subparagraph.''.
       (3) Confidentiality of noncharitable beneficiaries.--
     Subsection (b) of section 6104 of such Code (relating to 
     inspection of annual information returns) is amended by 
     adding at the end the following new sentence: ``In the case 
     of a trust which is required to file a return under section 
     6034(a), this subsection shall not apply to information 
     regarding beneficiaries which are not organizations described 
     in section 170(c).''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001, and before January 1, 2004.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to returns for taxable years beginning after 
     December 31, 2001.

     SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE 
                   CONTRIBUTIONS.

       (a) In General.--Paragraph (2) of section 170(b) of the 
     Internal Revenue Code of 1986 (relating to corporations) is 
     amended by striking ``10 percent'' and inserting ``the 
     applicable percentage''.
       (b) Applicable Percentage.--Subsection (b) of section 170 
     of the Internal Revenue Code of 1986 is amended by adding at 
     the end the following new paragraph:
       ``(3) Applicable percentage defined.--For purposes of 
     paragraph (2), the applicable percentage shall be determined 
     in accordance with the following table:

``For taxable years beginning         The applicable in percentage is--
    2002............................................................13 
    2003............................................................15 
    2004 and thereafter..........................................10.''.
       (c) Conforming Amendments.--
       (1) Sections 512(b)(10) and 805(b)(2)(A) of the Internal 
     Revenue Code of 1986 are each amended by striking ``10 
     percent'' each place it occurs and inserting ``the applicable 
     percentage (determined under section 170(b)(3))''.
       (2) Sections 545(b)(2) and 556(b)(2) of such Code are each 
     amended by striking ``10-percent limitation'' and inserting 
     ``applicable percentage limitation''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD AND 
                   BOOK INVENTORIES AND BONDS.

       (a) Food Inventory.--Subsection (e) of section 170 of the 
     Internal Revenue Code of 1986 (relating to certain 
     contributions of ordinary income and capital gain property) 
     is amended by adding at the end the following new paragraph:
       ``(7) Special rule for contributions of food inventory.--
     For purposes of this section--
       ``(A) In general.--In the case of a charitable contribution 
     of apparently wholesome food by a taxpayer--
       ``(i) paragraph (3)(A) shall be applied without regard to 
     whether or not the contribution is made by a C corporation, 
     and
       ``(ii) in the case of a taxpayer other than a C 
     corporation, the total deductions under subsection (a) with 
     respect to such contributions for any taxable year shall not 
     exceed the applicable percentage under subsection (b)(2) of 
     the taxpayer's net income from the trade or business, 
     computed without regard to this section.
       ``(B) Limit on reduction.--In the case of a charitable 
     contribution of apparently wholesome food which is a 
     qualified contribution (within the meaning of paragraph 
     (3)(A), as modified by subparagraph (A) of this paragraph), 
     the amount of the reduction determined under paragraph (3)(B) 
     shall not exceed the amount determined under clause (ii) 
     thereof (computed without taking into account the amount 
     determined under clause (i) thereof).
       ``(C) Determination of basis.--For purposes of this 
     paragraph, if a taxpayer--
       ``(i) does not account for inventories under section 471, 
     and
       ``(ii) is not required to capitalize indirect costs under 
     section 263A,
     the taxpayer may elect, solely for purposes of paragraph 
     (3)(B)(ii), to treat the basis of any qualified contribution 
     of such taxpayer as being equal to 25 percent of the fair 
     market value of such contribution.
       ``(D) Determination of fair market value.--In the case of a 
     charitable contribution of apparently wholesome food which is 
     a qualified contribution (within the meaning of paragraph 
     (3), as modified by subparagraphs (A) and (B) of this 
     paragraph) and which, solely by reason of internal standards 
     of the taxpayer or lack of market, cannot or will not be 
     sold, the fair market value of such contribution shall be 
     determined--
       ``(i) without regard to such internal standards or such 
     lack of market and
       ``(ii) by taking into account the price at which the same 
     or substantially the same food items are sold by the taxpayer 
     at the time of the contribution (or, if not so sold at such 
     time, in the recent past).
       ``(E) Apparently wholesome food.--For purposes of this 
     paragraph, the term `apparently wholesome food' has the 
     meaning given such term by section 22(b)(2) of the Bill 
     Emerson Good Samaritan Food Donation Act (42 U.S.C. 
     1791(b)(2)), as in effect on the date of the enactment of 
     this paragraph.
       (b) Book Inventory.--Section 170(e)(3) of the Internal 
     Revenue Code of 1986 (relating to certain contributions of 
     ordinary income and capital gain property) is amended by 
     redesignating subparagraph (C) as subparagraph (D) and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(D) Special rule for contributions of book inventory for 
     educational purposes.--
       ``(i) Contributions of book inventory.--In determining 
     whether a qualified book contribution is a qualified 
     contribution, subparagraph (A) shall be applied without 
     regard to whether or not--

       ``(I) the donee is an organization described in the matter 
     preceding clause (i) of subparagraph (A), and
       ``(II) the property is to be used by the donee solely for 
     the care of the ill, the needy, or infants.

       ``(ii) Qualified book contribution.--For purposes of this 
     paragraph, the term `qualified book contribution' means a 
     charitable contribution of books, but only if the 
     requirements of clauses (iii) and (iv) are met.
       ``(iii) Identity of donee.--The requirement of this clause 
     is met if the contribution is to an organization--

       ``(I) described in subclause (I) or (III) of paragraph 
     (6)(B)(i), or
       ``(II) described in section 501(c)(3) and exempt from tax 
     under section 501(a) (other than a private foundation (as 
     defined in section 509(a)) which is not an operating 
     foundation defined in section 4942(j)(3)) which is organized 
     primarily to make books available to the general public at no 
     cost or to operate a literacy program.

       ``(iv) Certification by donee.--The requirement of this 
     clause is met if the donee certifies in writing that--

       ``(I) the books are suitable, in terms of currency, 
     content, and quantity, for use in the donee's educational 
     programs, and
       ``(II) the donee will use the books in its educational 
     programs and will not transfer the books in exchange for 
     money, property, or services.''.

[[Page S549]]

       (c) Bonds.--Section 170(e)(5) of the Internal Revenue Code 
     of 1986 (relating to special rule for contributions of stock 
     for which market quotations are readily available) is 
     amended--
       (1) by striking ``stock.'' in subparagraph (A) and 
     inserting ``stock or qualified appreciated bonds.'',
       (2) by adding at the end the following new subparagraph:
       ``(D) Qualified appreciated bonds.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `qualified appreciated bonds' means United States Treasury 
     securities and such other debt instruments as may be 
     prescribed by the Secretary in regulations.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001, and before January 1, 2004.

     SEC. 105. REFORM OF EXCISE TAX ON NET INVESTMENT INCOME OF 
                   PRIVATE FOUNDATIONS.

       (a) In General.--Subsection (a) of section 4940 of the 
     Internal Revenue Code of 1986 (relating to excise tax based 
     on investment income) is amended by striking ``2 percent'' 
     and inserting ``1 percent (2 percent for any taxable year 
     beginning after December 31, 2003)''.
       (b) Temporary Repeal of Reduction In Tax Where Private 
     Foundation Meets Certain Distribution Requirements.--Section 
     4940(e) of the Internal Revenue Code of 1986 is amended by 
     inserting ``beginning after December 31, 2003'' after ``any 
     taxable year''..
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF 
                   CHARITABLE REMAINDER TRUSTS.

       (a) In General.--Subsection (c) of section 664 of the 
     Internal Revenue Code of 1986 (relating to exemption from 
     income taxes) is amended to read as follows:
       ``(c) Taxation of Trusts.--
       ``(1) Income tax.--A charitable remainder annuity trust and 
     a charitable remainder unitrust shall, for any taxable year, 
     not be subject to any tax imposed by this subtitle.
       ``(2) Excise tax.--
       ``(A) In general.--In the case of a charitable remainder 
     annuity trust or a charitable remainder unitrust that has 
     unrelated business taxable income (within the meaning of 
     section 512, determined as if part III of subchapter F 
     applied to such trust) for a taxable year, there is hereby 
     imposed on such trust or unitrust an excise tax equal to the 
     amount of such unrelated business taxable income.
       ``(B) Certain rules to apply.--The tax imposed by 
     subparagraph (A) shall be treated as imposed by chapter 42 
     for purposes of this title other than subchapter E of chapter 
     42.
       ``(C) Tax court proceedings.--For purposes of this 
     paragraph, the references in section 6212(c)(1) to section 
     4940 shall be deemed to include references to this 
     paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR 
                   SCIENTIFIC PROPERTY USED FOR RESEARCH AND FOR 
                   COMPUTER TECHNOLOGY AND EQUIPMENT USED FOR 
                   EDUCATIONAL PURPOSES.

       (a) Scientific Property Used for Research.--Clause (ii) of 
     section 170(e)(4)(B) of the Internal Revenue Code of 1986 
     (defining qualified research contributions) is amended by 
     inserting ``or assembled'' after ``constructed''.
       (b) Computer Technology and Equipment for Educational 
     Purposes.--Clause (ii) of section 170(e)(6)(B) of the 
     Internal Revenue Code of 1986 is amended by inserting ``or 
     assembled'' after ``constructed'' and ``or assembling'' after 
     ``construction''.
       (c) Conforming Amendment.--Subparagraph (D) of section 
     170(e)(6) of the Internal Revenue Code of 1986 is amended by 
     inserting ``or assembled'' after ``constructed'' and ``or 
     assembling'' after ``construction''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001, and before January 1, 2004.

     SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR 
                   CERTAIN CHARITABLE CONTRIBUTIONS.

       (a) In General.--Paragraph (2) of section 1367(a) of the 
     Internal Revenue Code of 1986 (relating to adjustments to 
     basis of stock of shareholders, etc.) is amended by adding at 
     the end the following new flush sentence:
     ``The decrease under subparagraph (B) by reason of a 
     charitable contribution (as defined in section 170(c)) of 
     property shall be the amount equal to the shareholder's 
     proportionate share of the adjusted basis of such 
     property.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

               TITLE II--INDIVIDUAL DEVELOPMENT ACCOUNTS

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Savings for Working 
     Families Act of 2002''.

     SEC. 202. PURPOSES.

       The purposes of this title are to provide for the 
     establishment of individual development account programs that 
     will--
       (1) provide individuals and families with limited means an 
     opportunity to accumulate assets and to enter the financial 
     mainstream,
       (2) promote education, homeownership, and the development 
     of small businesses,
       (3) stabilize families and build communities, and
       (4) support continued United States economic expansion.

     SEC. 203. DEFINITIONS.

       As used in this title:
       (1) Eligible individual.--
       (A) In general.--The term ``eligible individual'' means, 
     with respect to any taxable year, an individual who--
       (i) has attained the age of 18 years but not the age of 61 
     as of the last day of such taxable year,
       (ii) is a citizen or legal resident of the United States as 
     of the last day of such taxable year,
       (iii) was not a student (as defined in section 151(c)(4) of 
     the Internal Revenue Code of 1986) for the immediately 
     preceding taxable year,
       (iv) is not an individual with respect to whom a deduction 
     under section 151 of such Code is allowable to another 
     taxpayer for a taxable year of the other taxpayer ending 
     during the immediately preceding taxable year of the 
     individual, and
       (v) is a taxpayer the modified adjusted gross income of 
     whom for the immediately preceding taxable year does not 
     exceed--

       (I) $20,000, in the case of a taxpayer described in section 
     1(c) of such Code,
       (II) $30,000, in the case of a taxpayer described in 
     section 1(b) of such Code,
       (III) $40,000, in the case of a taxpayer described in 
     section 1(a) of such Code, and
       (IV) zero in the case of a taxpayer described in section 
     1(d) of such Code.

       (B) Inflation adjustment.--
       (i) In general.--In the case of any taxable year beginning 
     after 2003, each dollar amount referred to in subparagraph 
     (A)(v) shall be increased by an amount equal to--

       (I) such dollar amount, multiplied by
       (II) the cost-of-living adjustment determined under section 
     (1)(f)(3) of the Internal Revenue Code of 1986 for the 
     calendar year in which the taxable year begins, by 
     substituting ``2002'' for ``1992''.

       (ii) Rounding.--If any amount as adjusted under clause (i) 
     is not a multiple of $50, such amount shall be rounded to the 
     nearest multiple of $50.
       (C) Modified adjusted gross income.--For purposes of 
     subparagraph (A)(v), the term ``modified adjusted gross 
     income'' means adjusted gross income--
       (i) determined without regard to sections 86, 893, 911, 
     931, and 933 of the Internal Revenue Code of 1986, and
       (ii) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax.
       (2) Individual development account.--The term ``Individual 
     Development Account'' means an account established for an 
     eligible individual as part of a qualified individual 
     development account program, but only if the written 
     governing instrument creating the account meets the following 
     requirements:
       (A) The owner of the account is the individual for whom the 
     account was established.
       (B) No contribution will be accepted unless it is in cash.
       (C) The holder of the account is a qualified financial 
     institution.
       (D) The assets of the account will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       (E) Except as provided in section 207(b), any amount in the 
     account may be paid out only for the purpose of paying the 
     qualified expenses of the account owner.
       (3) Parallel account.--The term ``parallel account'' means 
     a separate, parallel individual or pooled account for all 
     matching funds and earnings dedicated to an Individual 
     Development Account owner as part of a qualified individual 
     development account program, the sole owner of which is a 
     qualified financial institution, a qualified nonprofit 
     organization, or an Indian tribe.
       (4) Qualified financial institution.--
       (A) In general.--The term ``qualified financial 
     institution'' means any person authorized to be a trustee of 
     any individual retirement account under section 408(a)(2) of 
     the Internal Revenue Code of 1986.
       (B) Rule of construction.--Nothing in this paragraph shall 
     be construed as preventing a person described in subparagraph 
     (A) from collaborating with 1 or more qualified nonprofit 
     organizations or Indian tribes to carry out an individual 
     development account program established under section 204.
       (5) Qualified nonprofit organization.--The term ``qualified 
     nonprofit organization'' means--
       (A) any organization described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from taxation under 
     section 501(a) of such Code,
       (B) any community development financial institution 
     certified by the Community Development Financial Institution 
     Fund,
       (C) any credit union chartered under Federal or State law, 
     or
       (D) any public housing agency as defined in section 3(b)(6) 
     of the United States Housing Act of 1937 (42 U.S.C. 
     1437a(b)(6)).
       (6) Indian tribe.--The term ``Indian tribe'' means any 
     Indian tribe as defined in section 4(12) of the Native 
     American Housing Assistance and Self-Determination Act of 
     1996 (25 U.S.C. 4103(12), and includes any tribally 
     designated housing entity (as defined in section 4(21) of 
     such Act (25 U.S.C. 4103(21)), tribal

[[Page S550]]

     subsidiary, subdivision, or other wholly owned tribal entity.
       (7) Qualified individual development account program.--The 
     term ``qualified individual development account program'' 
     means a program established under section 204 after December 
     31, 2001, under which--
       (A) Individual Development Accounts and parallel accounts 
     are held by a qualified financial institution, and
       (B) additional activities determined by the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     as necessary to responsibly develop and administer accounts, 
     including recruiting, providing financial education and other 
     training to Account owners, and regular program monitoring, 
     are carried out by the qualified financial institution, a 
     qualified nonprofit organization, or an Indian tribe.
       (8) Qualified expense distribution.--
       (A) In general.--The term ``qualified expense 
     distribution'' means any amount paid (including through 
     electronic payments) or distributed out of an Individual 
     Development Account and a parallel account established for an 
     eligible individual if such amount--
       (i) is used exclusively to pay the qualified expenses of 
     the Individual Development Account owner or such owner's 
     spouse or dependents,
       (ii) is paid by the qualified financial institution, 
     qualified nonprofit organization, or Indian tribe--

       (I) except as otherwise provided in this clause, directly 
     to the unrelated third party to whom the amount is due,
       (II) in the case of distributions for working capital under 
     a qualified business plan (as defined in subparagraph 
     (B)(iv)(IV)), directly to the Account owner,
       (III) in the case of any qualified rollover, directly to 
     another Individual Development Account and parallel account, 
     or
       (IV) in the case of a qualified final distribution, 
     directly to the spouse, dependent, or other named beneficiary 
     of the deceased Account owner, and

       (iii) is paid after the Account owner has completed a 
     financial education course if required under section 205(b).
       (B) Qualified expenses.--
       (i) In general.--The term ``qualified expenses'' means any 
     of the following expenses approved by the qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe:

       (I) Qualified higher education expenses.
       (II) Qualified first-time homebuyer costs.
       (III) Qualified business capitalization or expansion costs.
       (IV) Qualified rollovers.
       (V) Qualified final distribution.

       (ii) Qualified higher education expenses.--

       (I) In general.--The term ``qualified higher education 
     expenses'' has the meaning given such term by section 
     529(e)(3) of the Internal Revenue Code of 1986, determined by 
     treating the Account owner, the owner's spouse, or one or 
     more of the owner's dependents as a designated beneficiary, 
     and reduced as provided in section 25A(g)(2) of such Code.
       (II) Coordination with other benefits.--The amount of 
     expenses which may be taken into account for purposes of 
     section 135, 529, or 530 of such Code for any taxable year 
     shall be reduced by the amount of any qualified higher 
     education expenses taken into account as qualified expense 
     distributions during such taxable year.

       (iii) Qualified first-time homebuyer costs.--The term 
     ``qualified first-time homebuyer costs'' means qualified 
     acquisition costs (as defined in section 72(t)(8)(C) of the 
     Internal Revenue Code of 1986) with respect to a principal 
     residence (within the meaning of section 121 of such Code) 
     for a qualified first-time homebuyer (as defined in section 
     72(t)(8)(D)(i) of such Code).
       (iv) Qualified business capitalization or expansion 
     costs.--

       (I) In general.--The term ``qualified business 
     capitalization or expansion costs'' means qualified 
     expenditures for the capitalization or expansion of a 
     qualified business pursuant to a qualified business plan.
       (II) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures included in a qualified 
     business plan, including capital, plant, equipment, working 
     capital, inventory expenses, attorney and accounting fees, 
     and other costs normally associated with starting or 
     expanding a business.
       (III) Qualified business.--The term ``qualified business'' 
     means any business that does not contravene any law.
       (IV) Qualified business plan.--The term ``qualified 
     business plan'' means a business plan which has been approved 
     by the qualified financial institution, qualified nonprofit 
     organization, or Indian tribe and which meets such 
     requirements as the Secretary may specify.

       (v) Qualified rollovers.--The term ``qualified rollover'' 
     means the complete distribution of the amounts in an 
     Individual Development Account and parallel account to 
     another Individual Development Account and parallel account 
     established in another qualified financial institution for 
     the benefit of the Account owner.
       (vi) Qualified final distribution.--The term ``qualified 
     final distribution'' means, in the case of a deceased Account 
     owner, the complete distribution of the amounts in the 
     Individual Development Account and parallel account directly 
     to the spouse, any dependent, or other named beneficiary of 
     the deceased.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.

     SEC. 204. STRUCTURE AND ADMINISTRATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Establishment of Qualified Individual Development 
     Account Programs.--Any qualified financial institution, 
     qualified nonprofit organization, or Indian tribe may 
     establish 1 or more qualified individual development account 
     programs which meet the requirements of this title.
       (b) Basic Program Structure.--
       (1) In general.--All qualified individual development 
     account programs shall consist of the following 2 components:
       (A) An Individual Development Account to which an eligible 
     individual may contribute cash in accordance with section 
     205.
       (B) A parallel account to which all matching funds shall be 
     deposited in accordance with section 206.
       (2) Tailored ida programs.--A qualified financial 
     institution, a qualified nonprofit organization, or an Indian 
     tribe may tailor its qualified individual development account 
     program to allow matching funds to be spent on 1 or more of 
     the categories of qualified expenses.
       (c) Coordination With Public Housing Agency Individual 
     Savings Accounts.--Section 3(e)(2) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437a(e)(2)) is amended by 
     inserting ``or in any Individual Development Account 
     established under the Savings for Working Families Act of 
     2002'' after ``subsection''.
       (d) Tax Treatment of Parallel Accounts.--
       (1) In general.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

     ``SEC. 7525. TAX INCENTIVES FOR INDIVIDUAL DEVELOPMENT 
                   PARALLEL ACCOUNTS.

       ``For purposes of this title--
       ``(1) any account described in section 204(b)(1)(B) of the 
     Savings for Working Families Act of 2002 shall be exempt from 
     taxation,
       (2) except as provided in section 45G, no item of income, 
     expense, basis, gain, or loss with respect to such an account 
     may be taken into account, and
       (3) any amount withdrawn from such an account shall not be 
     includible in gross income.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 77 of such Code is amended by adding at the end the 
     following new item:

``Sec. 7525. Tax incentives for individual development parallel 
              accounts.''.

     SEC. 205. PROCEDURES FOR OPENING AND MAINTAINING AN 
                   INDIVIDUAL DEVELOPMENT ACCOUNT AND QUALIFYING 
                   FOR MATCHING FUNDS.

       (a) Opening an Account.--An eligible individual may open an 
     Individual Development Account with a qualified financial 
     institution, a qualified nonprofit organization, or an Indian 
     tribe upon certification that such individual has never 
     maintained any other Individual Development Account (other 
     than an Individual Development Account to be terminated by a 
     qualified rollover).
       (b) Required Completion of Financial Education Course.--
       (1) In general.--Before becoming eligible to withdraw 
     matching funds to pay for qualified expenses, owners of 
     Individual Development Accounts must complete a financial 
     education course offered by a qualified financial 
     institution, a qualified nonprofit organization, an Indian 
     tribe, or a government entity.
       (2) Standard and applicability of course.--The Secretary, 
     in consultation with representatives of qualified individual 
     development account programs and financial educators, shall 
     establish minimum quality standards for the contents of 
     financial education courses and providers of such courses 
     offered under paragraph (1) and a protocol to exempt 
     individuals from the requirement under paragraph (1) in the 
     case of hardship, lack of need, the attainment of age 61, or 
     a qualified final distribution.
       (c) Proof of Status as an Eligible Individual.--Federal 
     income tax forms for the immediately preceding taxable year 
     shall be presented to the qualified financial institution, 
     qualified nonprofit organization, or Indian tribe at the time 
     of the establishment of the Individual Development Account 
     and in any taxable year in which contributions are made to 
     the Account to qualify for matching funds under section 
     206(b)(1)(A).
       (d) Direct Deposits.--The Secretary may, under regulations, 
     provide for the direct deposit of any portion (not less than 
     $1) of any overpayment of Federal tax of an individual as a 
     contribution to the Individual Development Account of such 
     individual.

     SEC. 206. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT 
                   ACCOUNT PROGRAMS.

       (a) Parallel Accounts.--The qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe shall deposit all matching funds for each Individual 
     Development Account into a parallel account at a qualified 
     financial institution.
       (b) Regular Deposits of Matching Funds.--
       (1) In general.--Subject to paragraph (2), the qualified 
     financial institution, qualified nonprofit organization, or 
     Indian tribe shall deposit into the parallel account with 
     respect to each eligible individual the following amounts:
       (A) A dollar-for-dollar match for the first $500 
     contributed by the eligible individual

[[Page S551]]

     into an Individual Development Account with respect to any 
     taxable year of such individual.
       (B) Any matching funds provided by State, local, or private 
     sources in accordance to the matching ratio set by those 
     sources.
       (2) Inflation adjustment.--
       (A) In general.--In the case of any taxable year beginning 
     after 2003, the dollar amount referred to in paragraph (1)(A) 
     shall be increased by an amount equal to--
       (i) such dollar amount, multiplied by
       (ii) the cost-of-living adjustment determined under section 
     (1)(f)(3) of the Internal Revenue Code of 1986 for the 
     calendar year in which the taxable year begins, by 
     substituting ``2002'' for ``1992''.
       (B) Rounding.--If any amount as adjusted under subparagraph 
     (A) is not a multiple of $20, such amount shall be rounded to 
     the nearest multiple of $20.
       (3) Timing of deposits.--A deposit of the amounts described 
     in paragraph (1) shall be made into a parallel account--
       (A) in the case of amounts described in paragraph (1)(A), 
     not later than 30 days after the end of the calendar quarter 
     during which the contribution described in such paragraph was 
     made, and
       (B) in the case of amounts described in paragraph (1)(B), 
     not later than 2 business days after such amounts were 
     provided.
       (4) Cross reference.--

  For allowance of tax credit for Individual Development Account 
subsidies, including matching funds, see section 45G of the Internal 
Revenue Code of 1986.
       (c) Deposit of Matching Funds Into Individual Development 
     Account of Individual Who Has Attained Age 61.--In the case 
     of an Individual Development Account owner who attains the 
     age of 61, the qualified financial institution, qualified 
     nonprofit organization, or Indian tribe which owns the 
     parallel account with respect to such individual shall 
     deposit the funds in such parallel account into the 
     Individual Development Account of such individual on the 
     later of--
       (1) the day which is the 1-year anniversary of the deposit 
     of such funds in the parallel account, or
       (2) the first business day of the taxable year of such 
     individual following the taxable year in which such 
     individual attained age 61.
       (d) Uniform Accounting Regulations.--To ensure proper 
     recordkeeping and determination of the tax credit under 
     section 45G of the Internal Revenue Code of 1986, the 
     Secretary shall prescribe regulations with respect to 
     accounting for matching funds in the parallel accounts.
       (e) Regular Reporting of Accounts.--Any qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe shall report the balances in any Individual Development 
     Account and parallel account of an individual on not less 
     than an annual basis to such individual.

     SEC. 207. WITHDRAWAL PROCEDURES.

       (a) Withdrawals for Qualified Expenses.--
       (1) In general.--An Individual Development Account owner 
     may withdraw funds in order to pay qualified expense 
     distributions from such individual's--
       (A) Individual Development Account, and
       (B) parallel account, but only--
       (i) from matching funds which have been on deposit in such 
     parallel account for at least 1 year,
       (ii) from earnings in such parallel account, after all 
     matching funds described in clause (i) have been withdrawn, 
     and
       (iii) to the extent such withdrawal does not result in a 
     remaining balance in such parallel account which is less than 
     the remaining balance in the Individual Development Account 
     after such withdrawal.
       (2) Procedure.--Upon receipt of a withdrawal request which 
     meets the requirements of paragraph (1), the qualified 
     financial institution, qualified nonprofit organization, or 
     Indian tribe shall directly transfer the funds electronically 
     to the distributees described in section 203(8)(A)(ii). If a 
     distributee is not equipped to receive funds electronically, 
     the qualified financial institution, qualified nonprofit 
     organization, or Indian tribe may issue such funds by paper 
     check to the distributee.
       (b) Withdrawals for Nonqualified Expenses.--An Individual 
     Development Account owner may withdraw any amount of funds 
     from the Individual Development Account for purposes other 
     than to pay qualified expense distributions, but if, after 
     such withdrawal, the amount in the parallel account of such 
     owner (excluding earnings on matching funds) exceeds the 
     amount remaining in such Individual Development Account, then 
     such owner shall forfeit from the parallel account the lesser 
     of such excess or the amount withdrawn.
       (c) Withdrawals From Accounts of Noneligible Individuals.--
     If the individual for whose benefit an Individual Development 
     Account is established ceases to be an eligible individual, 
     such account shall remain an Individual Development Account, 
     but such individual shall not be eligible for any further 
     matching funds under section 206(b)(1)(A) for contributions 
     which are made to the Account during any taxable year when 
     such individual is not an eligible individual.
       (d) Effect of Pledging Account as Security.--If, during any 
     taxable year of the individual for whose benefit an 
     Individual Development Account is established, that 
     individual uses the Account or any portion thereof as 
     security for a loan, the portion so used shall be treated as 
     a withdrawal of such portion for purposes other than to pay 
     qualified expenses, and such individual shall forfeit an 
     equal amount of matching funds from the individual's parallel 
     account.

     SEC. 208. CERTIFICATION AND TERMINATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Certification Procedures.--Upon establishing a 
     qualified individual development account program under 
     section 204, a qualified financial institution, a qualified 
     nonprofit organization, or an Indian tribe shall certify to 
     the Secretary on forms prescribed by the Secretary and 
     accompanied by any documentation required by the Secretary, 
     that--
       (1) the accounts described in subparagraphs (A) and (B) of 
     section 204(b)(1) are operating pursuant to all the 
     provisions of this title, and
       (2) the qualified financial institution, qualified 
     nonprofit organization, or Indian tribe agrees to implement 
     an information system necessary to monitor the cost and 
     outcomes of the qualified individual development account 
     program.
       (b) Authority To Terminate Qualified IDA Program.--If the 
     Secretary determines that a qualified financial institution, 
     a qualified nonprofit organization, or an Indian tribe under 
     this title is not operating a qualified individual 
     development account program in accordance with the 
     requirements of this title (and has not implemented any 
     corrective recommendations directed by the Secretary), the 
     Secretary shall terminate such institution's, nonprofit 
     organization's, or Indian tribe's authority to conduct the 
     program. If the Secretary is unable to identify a qualified 
     financial institution, a qualified nonprofit organization, or 
     an Indian tribe to assume the authority to conduct such 
     program, then any funds in a parallel account established for 
     the benefit of any individual under such program shall be 
     deposited into the Individual Development Account of such 
     individual as of the first day of such termination.

     SEC. 209. REPORTING, MONITORING, AND EVALUATION.

       (a) Responsibilities of Qualified Financial Institutions, 
     Qualified Nonprofit Organizations, and Indian Tribes.--
       (1) In general.--Each qualified financial institution, 
     qualified nonprofit organization, or Indian tribe that 
     operates a qualified individual development account program 
     under section 204 shall report annually to the Secretary 
     within 90 days after the end of each calendar year on--
       (A) the number of eligible individuals making contributions 
     into Individual Development Accounts,
       (B) the amounts contributed into Individual Development 
     Accounts and deposited into parallel accounts for matching 
     funds,
       (C) the amounts withdrawn from Individual Development 
     Accounts and parallel accounts, and the purposes for which 
     such amounts were withdrawn,
       (D) the balances remaining in Individual Development 
     Accounts and parallel accounts, and
       (E) such other information needed to help the Secretary 
     monitor the cost and outcomes of the qualified individual 
     development account program (provided in a non-individually-
     identifiable manner).
       (2) Additional reporting requirements.--Each qualified 
     financial institution, qualified nonprofit organization, or 
     Indian tribe that operates a qualified individual development 
     account program under section 204 shall report at such time 
     and in such manner as the Secretary may prescribe any 
     additional information that the Secretary requires to be 
     provided for purposes of administering and supervising the 
     qualified individual development account program. This 
     additional data may include, without limitation, identifying 
     information about Individual Development Account holders, 
     their Accounts, additions to the Accounts, and withdrawals 
     from the Accounts.
       (b) Responsibilities of the Secretary.--
       (1) Monitoring protocol.--Not later than 12 months after 
     the date of the enactment of this Act, the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     shall develop and implement a protocol and process to monitor 
     the cost and outcomes of the qualified individual development 
     account programs established under section 204.
       (2) Annual reports.--In each year after the date of the 
     enactment of this Act, the Secretary shall submit a progress 
     report to Congress on the status of such qualified individual 
     development account programs. Such report shall, to the 
     extent data is available, include from a representative 
     sample of qualified individual development account programs 
     information on--
       (A) the characteristics of participants, including age, 
     gender, race or ethnicity, marital status, number of 
     children, employment status, and monthly income,
       (B) deposits, withdrawals, balances, uses of Individual 
     Development Accounts, and participant characteristics,
       (C) the characteristics of qualified individual development 
     account programs, including match rate, economic education 
     requirements, permissible uses of accounts, staffing of 
     programs in full time employees, and the total costs of 
     programs, and
       (D) process information on program implementation and 
     administration, especially on problems encountered and how 
     problems were solved.
       (3) Reauthorization report on cost and outcomes of idas.--

[[Page S552]]

       (A) In general.--Not later than July 1, 2008, the Secretary 
     of the Treasury shall submit a report to Congress and the 
     chairmen and ranking members of the Committee on Finance, the 
     Committee on Banking, Housing, and Urban Affairs, and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Ways and Means, the Committee on 
     Banking and Financial Services, and the Committee on 
     Education and the Workforce of the House of Representatives, 
     in which the Secretary shall--
       (i) summarize the previously submitted annual reports 
     required under paragraph (2),
       (ii) from a representative sample of qualified individual 
     development account programs, include an analysis of--

       (I) the economic, social, and behavioral outcomes,
       (II) the changes in savings rates, asset holdings, and 
     household debt, and overall changes in economic stability,
       (III) the changes in outlooks, attitudes, and behavior 
     regarding savings strategies, investment, education, and 
     family,
       (IV) the integration into the financial mainstream, 
     including decreased reliance on alternative financial 
     services, and increase in acquisition of mainstream financial 
     products, and
       (V) the involvement in civic affairs, including 
     neighborhood schools and associations,

     associated with participation in qualified individual 
     development account programs,
       (iii) from a representative sample of qualified individual 
     development account programs, include a comparison of 
     outcomes associated with such programs with outcomes 
     associated with other Federal Government social and economic 
     development programs, including asset building programs, and
       (iv) make recommendations regarding the reauthorization of 
     the qualified individual development account programs, 
     including--

       (I) recommendations regarding reforms that will improve the 
     cost and outcomes of the such programs, including the ability 
     to help low income families save and accumulate productive 
     assets,
       (II) recommendations regarding the appropriate levels of 
     subsidies to provide effective incentives to financial 
     institutions and Account holders under such programs, and
       (IV) recommendations regarding how such programs should be 
     integrated into other Federal poverty reduction, asset 
     building, and community development policies and programs.

       (B) Authorization.--There is authorized to be appropriated 
     $2,500,000, for carrying out the purposes of this paragraph.

     SEC. 210. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to the Secretary 
     $1,000,000 for fiscal year 2003 and for each fiscal year 
     through 2009, for the purposes of implementing this title, 
     including the reporting, monitoring, and evaluation required 
     under section 209, to remain available until expended.

     SEC. 211. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF CERTAIN 
                   MEANS-TESTED FEDERAL PROGRAMS.

       Notwithstanding any other provision of Federal law that 
     requires consideration of 1 or more financial circumstances 
     of an individual, for the purposes of determining eligibility 
     to receive, or the amount of, any assistance or benefit 
     authorized by such provision to be provided to or for the 
     benefit of such individual, an amount shall be disregarded 
     for such purposes equal to the sum of--
       (1) the lesser of--
       (A) all amounts (including earnings thereon) in any 
     Individual Development Account of such individual, or
       (B) an amount equal to $1,000 times the number of years 
     (including the year in which such determination is made) that 
     such Account (including any predecessor Account) has been 
     open, plus
       (2) the matching deposits made on behalf of such individual 
     (including earnings thereon) in any parallel account.

     SEC. 212. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS 
                   PROVIDED THROUGH A TAX CREDIT FOR QUALIFIED 
                   FINANCIAL INSTITUTIONS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT.

       ``(a) Determination of Amount.--For purposes of section 38, 
     the individual development account investment credit 
     determined under this section with respect to any eligible 
     entity for any taxable year is an amount equal to the 
     individual development account investment provided by such 
     eligible entity during the taxable year under an individual 
     development account program established under section 204 of 
     the Savings for Working Families Act of 2002.
       ``(b) Applicable Tax.--For the purposes of this section, 
     the term `applicable tax' means the excess (if any) of--
       ``(1) the tax imposed under this chapter (other than the 
     taxes imposed under the provisions described in subparagraphs 
     (C) through (Q) of section 26(b)(2)), over
       ``(2) the credits allowable under subpart B (other than 
     this section) and subpart D of this part.
       ``(c) Individual Development Account Investment.--
       ``(1) In general.--For purposes of this section, the term 
     `individual development account investment' means, with 
     respect to an individual development account program of a 
     qualified financial institution in any taxable year, an 
     amount equal to the sum of--
       ``(A) the aggregate amount of dollar-for-dollar matches 
     under such program under section 206(b)(1)(A) of the Savings 
     for Working Families Act of 2002 for such taxable year, plus
       ``(B) $50 with respect to each Individual Development 
     Account maintained as of the end of such taxable year, with a 
     balance of not less than $100 (other than the taxable year in 
     which such Account is opened).
       ``(2) Inflation adjustment.--
       ``(A) In general.--In the case of any taxable year 
     beginning after 2003, the $50 amount referred to in paragraph 
     (1)(B) shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2002' for `1992'.
       ``(B) Rounding.--If any amount as adjusted under 
     subparagraph (A) is not a multiple of $5, such amount shall 
     be rounded to the nearest multiple of $5.
       ``(d) Eligible Entity.--For purposes of this section, 
     except as provided in regulations, the term `eligible entity' 
     means a qualified financial institution.
       ``(e) Other Definitions.--For purposes of this section, any 
     term used in this section and also in the Savings for Working 
     Families Act of 2002 shall have the meaning given such term 
     by such Act.
       ``(f) Denial of Double Benefit.--
       ``(1) In general.--No deduction or credit (other than under 
     this section) shall be allowed under this chapter with 
     respect to any expense which--
       ``(A) is taken into account under subsection (c)(1)(A) in 
     determining the credit under this section, or
       ``(B) is attributable to the maintenance of an Individual 
     Development Account.
       ``(2) Determination of amount.--Solely for purposes of 
     paragraph (1)(B), the amount attributable to the maintenance 
     of an Individual Development Account shall be deemed to be 
     the dollar amount of the credit allowed under subsection 
     (c)(l)(B) for each taxable year such Individual Development 
     Account is maintained.
       ``(g) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including--
       ``(1) regulations allowing taxpayers other than qualified 
     financial institutions to claim credits under this section, 
     and
       ``(2) regulations providing for a recapture of the credit 
     allowed under this section (notwithstanding any termination 
     date described in subsection (h)) in cases where there is a 
     forfeiture under section 207(b) of the Savings for Working 
     Families Act of 2002 in a subsequent taxable year of any 
     amount which was taken into account in determining the amount 
     of such credit.
       ``(h) Application of Section.--
       ``(1) In general.--This section shall apply to any 
     expenditure made in any taxable year ending after December 
     31, 2002, and beginning on or before January 1, 2010, with 
     respect to any Individual Development Account which--
       ``(A) is opened before January 1, 2008, and
       ``(B) as determined by the Secretary, when added to all 
     previously opened Individual Development Accounts, does not 
     exceed 900,000 Accounts.
     Notwithstanding the preceding sentence, this section shall 
     apply to amounts which are described in subsection (c)(1)(A) 
     and which are timely deposited into a parallel account during 
     the 30-day period following the end of last taxable year 
     beginning before January 1, 2010.
       ``(2) Determination of Limitation.--The limitation on the 
     number of Individual Development Accounts under paragraph 
     (1)(B) shall be allocated by the Secretary among qualified 
     individual development account programs selected by the 
     Secretary.''.
       (b) Credit Treated as Business Credit.--Section 38(b) of 
     the Internal Revenue Code of 1986 (relating to current year 
     business credit) is amended by striking ``plus'' at the end 
     of paragraph (14), by striking the period at the end of 
     paragraph (15) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(16) the individual development account investment credit 
     determined under section 45G(a).''.
       (c) No Carrybacks.--Subsection (d) of section 39 of the 
     Internal Revenue Code of 1986 (relating to carryback and 
     carryforward of unused credits) is amended by adding at the 
     end the following:
       ``(11) No carryback of section 45g credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the individual 
     development account investment credit determined under 
     section 45G may be carried back to a taxable year ending 
     before January 1, 2003.''.
       (d) Conforming Amendment.--The table of sections for 
     subpart C of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new item:

``Sec. 45G. Individual development account investment credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2002.

[[Page S553]]

        TITLE III--EQUAL TREATMENT FOR NONGOVERNMENTAL PROVIDERS

     SEC. 301. NONGOVERNMENTAL ORGANIZATIONS.

       (a) General Authority.--For any social service program, a 
     nongovernmental organization that is (or is applying to be) 
     involved in the delivery of social services for the program 
     shall not be required--
       (1) to alter or remove art, icons, scripture, or other 
     symbols, or to alter its name, because the symbols or name 
     are religious;
       (2) to alter or remove provisions in its chartering 
     documents because the provisions are religious, except that 
     no such charter provisions shall affect the application to a 
     nongovernmental organization of any law that would 
     (notwithstanding this paragraph) apply to the nongovernmental 
     organization; or
       (3) to alter or remove religious qualifications for 
     membership on its governing boards.
       (b) Prior Experience.--A nongovernmental organization that 
     has not previously been awarded a contract, grant, or 
     cooperative agreement from an agency shall not, for that 
     reason, be disadvantaged in a competition to secure a 
     contract, grant, or cooperative agreement to deliver services 
     under a social service program from the agency administering 
     the program.
       (c) Intermediate Grantors.--
       (1) In general.--An agency that administers a social 
     service program, and that is authorized to award grants or 
     cooperative agreements to nongovernmental organizations under 
     the program, may award to a nongovernmental organization 
     (referred to in this subsection as an ``intermediate 
     grantor'') a grant or cooperative agreement, the terms of 
     which authorize the intermediate grantor--
       (A) to award contracts or subgrants to nongovernmental 
     providers, to administer and deliver social services for the 
     program; and
       (B) to administer the contracts or subgrants.
       (2) Responsibilities.--Except for those administrative 
     responsibilities that the intermediate grantor fully performs 
     on behalf of the recipient of such a contract or subgrant, 
     the recipient of the contract or subgrant shall have the same 
     responsibilities with respect to the program as the recipient 
     would have if it were the intermediate grantor.
       (3) Rights.--The recipient of a contract or subgrant from 
     an intermediate grantor shall have the same rights under this 
     section as the recipient would have if it were the 
     intermediate grantor.
       (d) Compliance.--To enforce the provisions of this section 
     against a Federal agency or official, a nongovernmental 
     organization may bring an action for injunctive relief in an 
     appropriate United States district court. To enforce the 
     provisions of this section against a State or local agency or 
     official, a nongovernmental organization may bring an action 
     for injunctive relief in an appropriate State court of 
     general jurisdiction.
       (e) Definitions.--In this section:
       (1) Federal financial assistance.--The term ``Federal 
     financial assistance'' does not include a tax credit, 
     deduction, or exemption.
       (2) Social service program.--
       (A) In general.--The term ``social service program'' means 
     a program that--
       (i) is administered by the Federal Government, or by a 
     State or local government using Federal financial assistance; 
     and
       (ii) provides services directed at helping people in need, 
     reducing poverty, improving outcomes of low-income children, 
     revitalizing low-income communities, and empowering low-
     income families and low-income individuals to become self-
     sufficient, including--

       (I) child care services, protective services for children 
     and adults, services for children and adults in foster care, 
     adoption services, services related to the management and 
     maintenance of the home, day care services for adults, and 
     services to meet the special needs of children, older 
     individuals, and individuals with disabilities (including 
     physical, mental, or emotional disabilities);
       (II) transportation services;
       (III) job training and related services, and employment 
     services;
       (IV) information, referral, and counseling services;
       (V) the preparation and delivery of meals, and services 
     related to soup kitchens or food banks;
       (VI) health support services;
       (VII) literacy and mentoring programs;
       (VIII) services for the prevention and treatment of 
     juvenile delinquency and substance abuse, services for the 
     prevention of crime and the provision of assistance to the 
     victims and the families of criminal offenders, and services 
     related to the intervention in, and prevention of, domestic 
     violence; and
       (IX) services related to the provision of assistance for 
     housing under Federal law.

       (B) Exclusions.--The term does not include a program having 
     the purpose of delivering educational assistance under the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6301 et seq.) or under the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

       TITLE IV--EZ PASS RECOGNITION OF SECTION 501(c)(3) STATUS

     SEC. 401. EZ PASS RECOGNITION OF SECTION 501(C)(3) STATUS AND 
                   WAIVER OF APPLICATION FEE FOR EXEMPT STATUS FOR 
                   CERTAIN ORGANIZATIONS PROVIDING SOCIAL SERVICES 
                   FOR THE POOR AND NEEDY.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate (in this section, referred to as the 
     ``Secretary'') shall adopt procedures to expedite the 
     consideration of applications for exempt status under section 
     501(c)(3) of the Internal Revenue Code of 1986 by any 
     organization that--
       (1) is organized and operated for the primary purpose of 
     providing social services;
       (2) is seeking a contract or grant under a Federal, State, 
     or local program that provides funding for social services 
     programs;
       (3) establishes that, under the terms and conditions of the 
     contract or grant program, an organization is required to 
     obtain such exempt status before the organization is eligible 
     to apply for a contract or grant;
       (4) includes with its exemption application a copy of its 
     completed Federal, State, or local contract or grant 
     application; and
       (5) meets such other criteria as the Secretary deems 
     appropriate for expedited consideration.
     The Secretary may prescribe other similar circumstances in 
     which such organizations may be entitled to expedited 
     consideration.
       (b) Waiver of Application Fee for Exempt Status.--Any 
     organization that meets the conditions described in 
     subsection (a) (without regard to paragraph (3) of that 
     subsection) is entitled to a waiver of any fee for an 
     application for exempt status under section 501(c)(3) of the 
     Internal Revenue Code of 1986 if the organization certifies 
     that the organization has had (or expects to have) average 
     annual gross receipts of not more than $50,000 during the 
     preceding 4 years (or during such organization's first 4 
     years).
       (c) Social Services Defined.--For purposes of this section, 
     the term ``social services'' means services described in 
     subparagraph (A)(ii) of section 301(e)(2) (except as 
     described in subparagraph (B) of that section).

                    TITLE V--COMPASSION CAPITAL FUND

     SEC. 501. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF HEALTH AND HUMAN 
                   SERVICES.

       (a) Support for Nongovernmental Organizations.--The 
     Secretary of Health and Human Services (referred to in this 
     section as ``the Secretary'') may award grants to and enter 
     into cooperative agreements with nongovernmental 
     organizations, to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of nonprofit community-based 
     organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Support for States.--The Secretary--
       (1) may award grants to and enter into cooperative 
     agreements with States and political subdivisions of States 
     to provide seed money to establish State and local offices of 
     faith-based and community initiatives; and
       (2) shall provide technical assistance to States and 
     political subdivisions of States in administering the 
     provisions of this Act.
       (c) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Secretary at such time, in 
     such manner, and containing such information as the Secretary 
     may require.
       (d) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (e) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $85,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (f) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

[[Page S554]]

     SEC. 502. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; CORPORATION FOR NATIONAL AND 
                   COMMUNITY SERVICE.

       (a) Support for Nongovernmental Organizations.--The 
     Corporation for National and Community Service (referred to 
     in this section as ``the Corporation'') may award grants to 
     and enter into cooperative agreements with nongovernmental 
     organizations and State Commissions on National and Community 
     Service established under section 178 of the National and 
     Community Service Act of 1990 (42 U.S.C. 12638), to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of community-based organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State Commission, State, or 
     political subdivision shall submit an application to the 
     Corporation at such time, in such manner, and containing such 
     information as the Corporation may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $15,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 503. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF JUSTICE.

       (a) Support for Nongovernmental Organizations.--The 
     Attorney General may award grants to and enter into 
     cooperative agreements with nongovernmental organizations, 
     to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of nonprofit community-based 
     organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Attorney General at such 
     time, in such manner, and containing such information as the 
     Attorney General may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Attorney General) may receive more than 1 grant or 
     cooperative agreement under this section for the same 
     purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $35,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 504. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF HOUSING AND URBAN 
                   DEVELOPMENT.

       (a) Support for Nongovernmental Organizations.--The 
     Secretary of Housing and Urban Development (referred to in 
     this section ``the Secretary'') may award grants to and enter 
     into cooperative agreements with nongovernmental 
     organizations, to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of community-based organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Secretary at such time, in 
     such manner, and containing such information as the Secretary 
     may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $15,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 505. COORDINATION.

       The Secretary of Health and Human Services, the Corporation 
     for National and Community Service, the Attorney General, and 
     the Secretary of Housing and Urban Development shall 
     coordinate their activities under this title to ensure--
       (1) nonduplication of activities under this title; and
       (2) an equitable distribution of resources under this 
     title.

                 TITLE VI--SOCIAL SERVICES BLOCK GRANT

     SEC. 601. RESTORATION OF AUTHORITY TO TRANSFER UP TO 10 
                   PERCENT OF TANF FUNDS TO THE SOCIAL SERVICES 
                   BLOCK GRANT.

       (a) In General.--Section 404(d)(2) of the Social Security 
     Act (42 U.S.C. 604(d)(2)) is amended to read as follows:
       ``(2) Limitation on amount transferable to title xx 
     programs.--A State may use not more than 10 percent of the 
     amount of any grant made to the State under section 403(a) 
     for a fiscal year to carry out State programs pursuant to 
     title XX.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to amounts made available for fiscal year 2003 and 
     each fiscal year thereafter.

     SEC. 602. RESTORATION OF FUNDS FOR THE SOCIAL SERVICES BLOCK 
                   GRANT.

       (a) Findings.--Congress makes the following findings:
       (1) On August 22, 1996, the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996 (Public Law 104-
     193; 110 Stat. 2105) was signed into law.

[[Page S555]]

       (2) In enacting that law, Congress authorized 
     $2,800,000,000 for fiscal year 2003 and each fiscal year 
     thereafter to carry out the Social Services Block Grant 
     program established under title XX of the Social Security Act 
     (42 U.S.C. 1397 et seq.).
       (b) Restoration of Funds.--Section 2003(c) of the Social 
     Security Act (42 U.S.C. 1397b(c)) is amended--
       (1) in paragraph (10), by striking ``and'' at the end;
       (2) in paragraph (11), by striking `` and each fiscal year 
     thereafter.'' and inserting a semicolon; and
       (3) by adding at the end the following:
       ``(12) $1,975,000,000 for the fiscal year 2003; and
       ``(13) $2,800,000,000 for the fiscal year 2004.''.

     SEC. 603. REQUIREMENT TO SUBMIT ANNUAL REPORT ON STATE 
                   ACTIVITIES.

       (a) In General.--Section 2006(c) of the Social Security Act 
     (42 U.S.C. 1397e(c)) is amended by adding at the end the 
     following: ``The Secretary shall compile the information 
     submitted by the States and submit that information to 
     Congress on an annual basis.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to information submitted by States under section 2006 
     of the Social Security Act (42 U.S.C. 1397e) with respect to 
     fiscal year 2002 and each fiscal year thereafter.

                    TITLE VII--MATERNITY GROUP HOMES

     SEC. 701. MATERNITY GROUP HOMES.

       (a) Permissible Use of Funds.--Section 322 of the Runaway 
     and Homeless Youth Act (42 U.S.C. 5714-2) is amended--
       (1) in subsection (a)(1), by inserting ``(including 
     maternity group homes)'' after ``group homes''; and
       (2) by adding at the end the following:
       ``(c) Maternity Group Home.--In this part, the term 
     `maternity group home' means a community-based, adult-
     supervised group home that provides young mothers and their 
     children with a supportive and supervised living arrangement 
     in which such mothers are required to learn parenting skills, 
     including child development, family budgeting, health and 
     nutrition, and other skills to promote their long-term 
     economic independence and the well-being of their 
     children.''.
       (b) Contract for Evaluation.--Part B of the Runaway and 
     Homeless Youth Act (42 U.S.C. 5701 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 323. CONTRACT FOR EVALUATION.

       ``(a) In General.--The Secretary shall enter into a 
     contract with a public or private entity for an evaluation of 
     the maternity group homes that are supported by grant funds 
     under this Act.
       ``(b) Information.--The evaluation described in subsection 
     (a) shall include the collection of information about the 
     relevant characteristics of individuals who benefit from 
     maternity group homes such as those that are supported by 
     grant funds under this Act and what services provided by 
     those maternity group homes are most beneficial to such 
     individuals.
       ``(c) Report.--Not later than 2 years after the date on 
     which the Secretary enters into a contract for an evaluation 
     under subsection (a), and biennially thereafter, the entity 
     conducting the evaluation under this section shall submit to 
     Congress a report on the status, activities, and 
     accomplishments of maternity group homes that are supported 
     by grant funds under this Act.''.
       (c) Authorization of Appropriations.--Section 388 of the 
     Runaway and Homeless Youth Act (42 U.S.C. 5751) is amended--
       (1) in subsection(a)(1)--
       (A) by striking ``There'' and inserting the following:
       ``(A) In general.--There'';
       (B) in subparagraph (A), as redesignated, by inserting 
     ``and the purpose described in subparagraph (B)'' after 
     ``other than part E''; and
       (C) by adding at the end the following:
       ``(B) Maternity group homes.--There is authorized to be 
     appropriated, for maternity group homes eligible for 
     assistance under section 322(a)(1)--
       ``(i) $33,000,000 for fiscal year 2003; and
       ``(ii) such sums as may be necessary for fiscal year 
     2004.''; and
       (2) in subsection (a)(2)(A), by striking ``paragraph (1)'' 
     and inserting ``paragraph (1)(A)''.
                                  ____


  The Charity Aid, Recovery and Empowerment, (``CARE'') Act of 2002--
                       Section-by-Section Summary


                                overview

       The Lieberman-Santorum CARE Act aims to tap into America's 
     renewed spirit of unity, community and responsibility in the 
     wake of September 11th to better respond to pressing social 
     problems and ultimately help more people in need. To do so, 
     it would leverage new support and resources for a broad range 
     of community and faith-based groups--including those that are 
     already working cooperatively with government to provide 
     critical services and improve people's lives, and those who 
     want to become part of that partnership.
       This diverse universe of charitable organizations--which 
     proved once again after the terrorist attacks how effective 
     they are in meeting real human needs--is uniquely American 
     and forms the backbone of our civil society. The CARE Act 
     would strengthen that backbone through a broad array of tools 
     and strategies--(1) tax incentives to spur more private 
     charitable giving; (2) innovative programs to promote savings 
     and economic self-sufficiency for low-income families; (3) 
     technical assistance to help smaller social services 
     providers do more good works; (4) narrowly-targeted efforts 
     to remove unfair barriers facing faith-based groups in 
     competing fairly for federal aid; and (5) additional federal 
     funding for essential social service programs.


                 title i: charitable giving incentives

       This section offers a series of targeted tax incentives to 
     spur additional charitable giving and thereby bring increased 
     resources to organizations helping those in need. Among other 
     things, these provisions would:
       Create a charitable tax deduction of up to $400 for 
     individual taxpayers and $800 for couples who do not itemize 
     on their tax returns;
       Allow IRA holders to make charitable contributions from 
     their accounts;
       Provide an enhanced deduction for donations of food and 
     books to charitable organizations;
       Reduce and simplfy the excise tax on foundations from 2 
     percent to 1 percent to encourage greater social investments;
       Raise the contributions cap for subchapter C corporations 
     and expand incentives for S corporations to increase 
     corporate charitable giving; and
       Modify the unrelated business income tax for charitable 
     remainder trusts.
       These provisions are designed to respond to the immediate 
     challenges facing charities in the wake of the September 11th 
     attacks and the weakened economy, which have put a 
     significant drain on resources. These provisions, which are 
     effective through 2003, have not been officially scored by 
     the Joint Tax Committee, but are estimated to cost between 
     $8 billion and $10 billion.


               title ii: individual development accounts

       This section encompasses the bipartisan legislation that 
     Senators Lieberman and Santorum have introduced to expand the 
     use of Individual Development Accounts (IDAs) to encourage 
     low-income working families to save and build assets. IDAs 
     are special savings accounts that offer matching 
     contributions from the sponsoring bank or community 
     organization, on the condition that the proceeds go to buying 
     a home, starting or expanding a small business, or to pay for 
     post-secondary education--the assets necessary to provide 
     stability and self-sufficiency.
       Initial IDA demonstrations around the country have proven 
     successful in changing the lives of account holders and 
     reducing their dependency on governmental and other social 
     services. The CARE Act aims to build on these successes and 
     increase the availability of IDAs, by significantly reducing 
     the cost for banks and community organizations to offer these 
     innovative accounts. Specifically, it would provide a dollar-
     for-dollar tax credit to offset the matching contributions up 
     to $500 per account. This incentive, which is estimated to 
     cost $1.7 billion over the next 10 years, could help create 
     as many as 900,000 new accounts over that time.


       title iii: equal treatment for non-governmental providers

       This section addresses a recurring complaint of small 
     faith-based organizations--that certain government agencies 
     have refused to consider grant applicants with religious 
     names or those who use facilities containing religious art or 
     icons--with a narrowly-tailored solution. Specifically, it 
     states that an applicant may not be disqualified from 
     competing for government grants and contracts simply because 
     the applicant imposes religious criteria for membership on 
     its governing board, because the applicant's chartering 
     provisions contain religious language, because the applicant 
     has a religious name, or because the applicant uses 
     facilities containing religious art, icons scriptures or 
     other symbols. These provisions do not relieve any applicant 
     from meeting all other grant criteria or address the issues 
     of preemption or civil rights laws.
       This section also addresses another problem many smaller 
     community and faith-based grassroots organizations face in 
     obtaining federal funding. These organizations often do not 
     have the capacity or resources to seek and administer a 
     government grant or contract, even though they may be best 
     positioned to deliver the services. To help them overcome 
     this hurdle, this section authorizes government agencies to 
     give grants or enter into cooperative agreements with larger 
     and more experienced organizations, who then will be 
     authorized to award subcontracts or subgrants to smaller 
     grassroots organizations, with whom they will work to 
     administer the grant.


                      title iv: 501(c)(3) EZ Pass

       This section would make it easier for many charitable 
     groups to obtain a 501(c)(3) designation, and thereby make it 
     easier to qualify for Federal grants and contracts. 501(c)(3) 
     status confirms that an organization is a tax-exempt charity, 
     eligible to receive tax-exempt donations. Although any group 
     that applies for that status can hold itself out as a 
     501(c)(3) once it sends the IRS its application, a number of 
     government programs won't consider applications from any 
     group that hasn't yet received approval of its application 
     from the IRS--a process that sometimes can take several 
     months.
       To help facilitate that process, the bill requires the IRS 
     to expedite the 501(c)(3) application of any group that needs 
     that status to apply for a government grant or contract. And, 
     in a effort to help the smallest of these groups, it requires 
     the IRS to waive the application fee for groups whose annual 
     revenues don't exceed $50,000.

[[Page S556]]

                    title v: Compassion capital fund

       To help small community and faith-based organizations 
     better partner with the government and serve communities in 
     need, the bill creates a Compassion Capital Fund and 
     authorizes four agencies to distribute its resources. HHS, 
     DOJ, HUD and the Corporation for National and Community 
     Service will collectively have over $150 million to offer 
     technical assistance to community-based organizations for 
     activities such as writing and managing grants, assistance in 
     incorporating and gaining tax-exempt status, information on 
     capacity building and help researching and replicating model 
     social service programs.


                 title VI: social services Block Grant

       This section would increase Federal funding for the Social 
     Services Block Grant (SSBG), which most charitable 
     organizations agree is a critically important and effective 
     program for meeting the needs of disadvantaged communities 
     and families. SSBG provides flexible funds to states for such 
     vital programs as Meals on Wheels, child and elderly 
     protective services, and support services for the disabled. 
     Over the last five years, however, the program has seen its 
     funding reduced by more than $1 billion.
       The bill aims to restore funding for SSBG over the next two 
     years to its authorized level as dictated in the 1996 welfare 
     reform law. It would first increase the funding level to 
     $1.975 billion for fiscal year 2003; the program is currently 
     funded at $1.7 billion. It would then raise the funding level 
     to its full authorized level--$2.8 billion--for fiscal year 
     2004. This would represent an increase of $275 million for 
     the coming fiscal year, and more than $800 million for the 
     following year.


                    title vii: maternity group homes

       This section is designed to advance one of the key goals of 
     welfare reform--helping teenage mothers achieve self-
     sufficiency--by strengthening federal support for locally-run 
     maternity group home programs. The 1996 welfare reform law 
     requires that minors live at home under adult supervision or 
     in one of these maternity group homes in order to receive 
     benefits. Teenagers who are provided the opportunity to live 
     in these homes are more likely to continue their education or 
     receive job training, less likely to have a second teenage 
     pregnancy, and more likely to find gainful employment that 
     allows them to leave welfare. To help give more teenage 
     mothers this kind of opportunity, the bill creates a separate 
     funding stream for maternity group home programs and 
     authorizes $33 million in additional funding.
                                 ______