Leaders of several charitable groups, including many representing conservative and Christian causes, appealed to Senate Majority Leader Bill Frist (R-TN) in an April 28 letter to head off the Senate Finance Committee's tightening of rules applicable to charities. "These proposals, if enacted, would severely reduce the ability of public charities to play their historic role of addressing public needs with private resources," the letter from the Alliance for Charitable Reform said. "Indeed, with regard to the large number of charities that are small institutions, it could put many of them out of business, while simultaneously discouraging the formation of new charitable organizations." Senate Finance Committee and Joint Committee on Taxation proposals floated this year would impose regulations on small institutions that only the largest institutions could satisfy, and make board members of charitable organizations--many of whom donate their time--subject to new federal liability standards and legal exposure, the letter said. The groups have support from Sen. Rick Santorum (R-PA), who sent a letter to the Philanthropy Roundtable March 15 expressing that commitment and urging them to convene a group to inform the Finance Committee about the effects of its proposals and unintended consequences. The Alliance's letter urged Frist to not allow proposals of the Finance Committee staff or similar proposals to come to the Senate floor.

Next week, Senate Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT) will introduce legislation aimed at reducing abuses in certain life insurance contacts involving tax-exempt organizations. The bill will target life insurance contracts that inappropriately afford benefits to private investors that would not otherwise be available without the charity’s involvement.