[Congressional Record Volume 157, Number 137 (Thursday, September 15, 2011)]
[Senate]
[Pages S5686-S5687]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. STABENOW (for herself, Mr. Thune, Mr. Brown of Ohio, Mr. 
        Bennet, Mr. Wyden, Mr. Coons, Mr. Blunt, Mr. Cochran, and Mr. 
        Inhofe):
  S. 1561. A bill to amend the Internal Revenue Code of 1986 to provide 
for the deductibility of charitable contributions to agricultural 
research organizations, and for other purposes; to the Committee on 
Finance.
  Mr. INHOFE. Mr. President, Agriculture is one of the key forces 
driving Oklahoma's economy. In 2008 alone, Oklahoma's agriculture 
industry directly supported 188,000 jobs and contributed more than $8.5 
billion to the States's economy. The importance of agriculture to the 
Nation's economy is also difficult to understate, and the industry's 
products rank among the top exports each year. This year, USDA 
estimates that U.S. farmers and livestock producers will export nearly 
$140 billion in goods to nearly every country on Earth.
  Knowing that strength, it is not surprising that the industry is a 
hotbed of innovation. The agriculture community has long been involved 
in the research and development of better crops and farming methods. 
This work has produced crops that are resistant to drought and certain 
farming chemicals, are packed with more and better nutrients, and 
ultimately provide higher yields for every acre farmed. This research 
will only grow in importance as the global population continues to grow 
and demand more food. Fortunately, the United States is leading the 
world in this effort.
  Oklahoma is also a key agriculture R&D player in the United States. 
This is in large part due to the work of the Samuel R. Noble 
Foundation. Headquartered in Ardmore, OK, the Noble Foundation is one 
of the top 50 private foundations in the United States, and the 
foundation employs hundreds of scientists, agriculture consultants, and 
research personnel who are actively researching better agriculture 
products and practices. Between 2009 and 2010, the foundation spent 
nearly $80 million on agriculture research activities, and this work 
has recently resulted in development of Texoma MaxQ II, a cool-weather 
fescue grass that will reduce the reliance of livestock producers upon 
costly hay and feed for their livestock during the winter months. I 
congratulate the Noble Foundation on this breakthrough and look forward 
to hearing about the future benefits of this research.
  The Food and Agriculture Organization has estimated that food 
productivity will need to expand by 70 percent over the next 40 years 
to meet rising global demand. This underscores the need for continued 
funding for agriculture research and development so that more 
breakthroughs like those at the Noble Foundation occur. Today, a 
substantial amount of agriculture research funding is provided by the 
Federal Government; however, the government's share is declining. Since 
fiscal year 2010, Federal funding for agriculture research has 
decreased by nearly $200 million, and further cuts are likely as we try 
to tackle the national debt. Because government is scaling down its 
role, Congress should do what it can to encourage the private sector to 
fill the gap.
  One way that we can do this is with the Charitable Agriculture 
Research Act, of which I am a cosponsor. This bill, introduced today by 
Senators Stabenow and Thune, will allow the creation of Agricultural 
Research Organization, ARO, which would extend public charity tax 
status to entities conducting continuous agriculture R&D in 
collaboration with land-grant universities and agriculture colleges.
  Currently, several organizations conducting research focused on 
agriculture are structured as private foundations. This is one of the 
two main types of charities that are provided with beneficial tax 
treatment under U.S. law. Public charities--the other type--are given 
full tax exempt status, but because private foundations are often very 
large and supported by a small group of donors, they are not completely 
tax free and must pay taxes on the investment income earned by their 
endowments. Donors are also prevented from collecting their full 
deduction on gifts relative to those made to public charities. Because 
of these restrictions, the United States is not reaching its full 
potential when it comes to attracting private dollars for agriculture 
research.
  The Charitable Agriculture Research Act seeks to encourage 
individuals and families of wealth to contribute more of their assets 
to public agricultural research by working in conjunction with the 
Nation's land-grant universities and non land-grant colleges of 
agriculture. This legislation will provide donors with an additional 
option

[[Page S5687]]

of where to direct their agriculture research and development 
donations.
  This beneficial tax treatment does not come without restrictions. To 
maintain its tax exempt status, an ARO must conduct research and 
development on agriculture issues in conjunction with a land-grant 
university or an agriculture college. An ARO must either commit more 
than 50 percent of its assets to the continuous active conduct of 
agriculture research or it must expend at least 3.5 percent of its 
endowment for the same in each calendar year. These restrictions are 
put in place to ensure that the ARO structure is not being abused as a 
tax shelter for the accumulated personal wealth of an ARO's 
benefactors.
  Over the past decade many families with a passion for agricultural 
research have expressed their desire to do for their geographies and 
their crops of interest what the Noble Foundation has done for 
Oklahoma, forages, and beef cattle operations. However, the tax code is 
not conducive to such efforts and discourages them from maximizing 
their contributions to agricultural research.
  The ARO tax structure is modeled after the extremely successful 
Medical Research Organization model. Similar to AROs, these charities 
must do their medical research in conjunction with a non-profit or 
government hospital. The Howard Hughes Medical Institute and the 
Stowers Institute for Medical Research are prime examples of MROs. The 
MRO structure has made these organizations more effective and 
productive, and I expect no less from the ARO tax structure.
  This bill will directly benefit Oklahoma by building on its legacy as 
a leader in agriculture R&D. As better agricultural methods and crop 
yields are produced in Oklahoma, the State will continue to serve as a 
global leader in agriculture. Oklahoma is home to 86,000 farms that 
occupy 80 percent of the State's land area. The State has the land, the 
natural resources, and the facilities necessary to enhance agricultural 
research. The creation of AROs will help attract the necessary private 
capital to build on this success and boost research at our Nation's 
land-grant universities and non land-grant colleges of agriculture.
  AROs will not be provided with a new tax incentive or a benefit 
greater than existing charitable organizations. They will, however, 
offer individuals an additional choice of where to send their 
charitable dollars. When individuals donate to AROs they will have 
certainty that their money will contribute directly to agriculture 
research rather than to other causes, which are guarantees not provided 
by most other charitable organizations. As we face deeper budget cuts 
on everything from education to agriculture research, we need to take 
the steps to encourage the private sector to step into the void left by 
Washington. AROs will help do this in the agriculture R&D community, so 
I urge its swift passage.
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