[Congressional Record Volume 149, Number 51 (Monday, March 31, 2003)]
[Extensions of Remarks]
[Page E624]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           COLLEGIATE HOUSING AND INFRASTRUCTURE ACT OF 2003

                                 ______
                                 

                             HON. PAUL RYAN

                              of wisconsin

                    in the house of representatives

                         Monday, March 31, 2003

  Mr. RYAN of Wisconsin. Mr. Speaker, I am today introducing 
legislation, along with my colleague Congressman Ben Cardin, that would 
allow charitable and educational organizations to make grants to 
fraternities, sororities, and other collegiate organizations to provide 
housing and student facilities to the same extent that tax-exempt 
colleges and universities may provide such facilities for students.
  By way of background, taxpayers may generally deduct contributions to 
non-profit educational organizations (i.e., educational organizations 
described in section 501(c)(3) of the Internal Revenue Code (``Code'')) 
such as colleges or universities. These colleges and universities may 
expend their funds (including donated funds) on student facilities such 
as dormitories, dining halls, study areas, libraries, computers, 
laundry facilities, physical fitness facilities, and social or 
recreational areas without jeopardizing their tax-exempt status.
  State and private colleges and universities do not, and cannot, 
provide all of the housing and related student facilities necessary for 
their student bodies. Collegiate organizations such as fraternities, 
sororities, and other student associations (e.g., Muslim Students 
Association, Fellowship of Christian Athletes, and Hillel) fill a large 
part of the collegiate housing gap. Fraternities and sororities alone 
provide housing for more than 250,000 students each year. These student 
associations take on significant financial burdens in order to provide 
student housing without cost to affiliated colleges and universities.
  Fraternities, sororities, and student associations provide collegiate 
housing through tax-exempt organizations, but their exemption comes 
under Code section 501(c)(7), with the result that direct contributions 
to these organizations are not deductible. However, educational 
organizations established to benefit these fraternities, sororities, 
and other student associations may qualify under Code section 501(c)(3) 
to receive deductible contributions.
  The current IRS position is that it will not give a tax-exemption 
ruling to these educational organizations unless they limit student 
facility grants to those that are solely for educational use (with 
exceptions for minor social or recreational use). According to this IRS 
position, a fraternity foundation, for example, may make grants to a 
fraternity for the construction (or for annual operating expenses) in a 
fraternity house of a library, study area, computer area, or 
instructional area. The fraternity foundation may also make grants, for 
computers, computer desks, and chairs, if similar to what is provided 
by the specific college with which the fraternity is associated, and 
for internet wiring, if the specific college also provides internet 
wiring. However, the IRS says that fraternity foundations may not make 
student facility grants for the construction or operation of sleeping 
quarters, dining areas, laundry facilities, or dedicated social or 
recreational areas (such as physical fitness facilities or equipment), 
or hallways or rooms used for both educational and other purposes.

  Under the current IRS position, a charitable organization could not 
make a grant to a section 501(c)(7) collegiate housing organization (or 
to an affiliated section 501(c)(2) or (c)(7) organization) to provide 
fire safety upgrades unless those upgrades were limited to areas that 
are solely for educational use. However, fire safety upgrades will not 
provide necessary protection unless they are made throughout an entire 
building. It has been estimated that just the cost of installing 
sprinklers in fraternity and sorority housing is over $300 million 
nationwide.
  There is no policy reason for distinguishing between the types of 
student facilities that may be provided by a tax-exempt college and 
those that may be provided by another tax-exempt charitable or 
educational organization to a collegiate organization for the benefit 
of individuals who are full-time college students. The current IRS 
position, which we believe is an incorrect interpretation of the law, 
puts collegiate organizations at a significant disadvantage in 
obtaining the funds necessary to provide or maintain housing and 
infrastructure, including the funds necessary to provide fire safety 
upgrades.
  I believe that clarifying that tax-exempt charitable or educational 
organizations may make collegiate housing and infrastructure grants 
will encourage private sector contributions to address student housing 
needs, thus relieving a burden that would otherwise fall on financially 
strapped colleges and universities. Accordingly, this bill provides 
that charitable and educational organizations may make grants to 
collegiate housing organizations (including affiliate organizations 
holding title to property) for the construction or operation of 
collegiate housing and infrastructure facilities that are of the type 
tax-exempt colleges are permitted to provide for their students, 
including, but not limited to, sleeping quarters, fire safety equipment 
and upgrades, dining areas, social and recreational areas, study areas, 
libraries, and computers and related furniture and wiring.
  I urge our colleagues to support this worthy legislation.

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