A variety of issues relating to charities and other 501(c)(3) groups are likely to be considered in May as the CARE Act of 2002 (S. 1924) comes up for consideration in the Senate. The Finance Committee is expected to consider the bill sometime during the week of May 6, but no date has been set. The President has been pushing for passage by Memorial Day. The bill, which does not contain the controversial charitiable choice provisions that passed the House last summer in H.R. 7, would go to a conference committee. The President has endorsed the CARE Act compromise on his faith-based initiative, but it not clear whether the House will follow his lead, or push for charitable choice. Changes to some provisions of the bill, including the nonitemizer deduction, are possible. The nonitemizer has a relatively high cost, and a Congressional Research Service study has found it will do little to stimulate new giving. Some new provisions may also be added, including simplification of the rules governing legislative lobbying by 501(c)(3)s by eliminating the distinction between direct and grassroots lobbying. OMB Watch is a strong supporter of this proposal. The Joint Tax Committee (JCT) has recommended this step to eliminate a "largely unnecessary, but burdensome, process of definition and calculation." Last week JCT staff said that new disclosure requirements for nonprofits could be added to the bill. While no specifics are available, the requirements would be based on a 2000 JCT report that recommended increased reporting for lobbying activities and new requirements for tracking and reporting expenses for research that discusses specific legislation and has a "limited call to action." (OMB Watch strongly opposed many of these JCT recommendations.) OMB Watch has written to the sponsors of the CARE Act, Sens. Joseph Lieberman (D-CT) and Rick Santorum (R-PA) expressing support for parts of the bill and concerns about others. The letter supports the elimination of the "charitable choice" approach to the federal grant process included in H.R. 7, the increase in funding for the Social Services Block Grant Program and many of the charitable giving incentives in the bill. OMB Watch suggested improvements to the equal treatment requirements for nonprofits applying for federal grants, including a requirement that all federal grantees file IRS Form 990. Under current law religious organizations are not required to file Form 990, even if they receive federal funds. Stronger protections against employment discrimination based on religion for jobs funded with federal dollars is also needed. The CARE Act also has a provision for expedited review of applications for tax exempt status of 501(c)(3)s for new, small charities that are applying for grants. Our letter suggests that simplification of IRS Form 1023, the application for 501(c)(3) status, would be a better approach, and benefit all 501(c)(3)s. The IRS is working on revisions to Form 1023 that would eliminate unnecessary information requests. The new form is expected in the fall. OMB Watch's letter stated our opposition to the version of the nonitemizer deduction in the CARE Act because it does not generate enough new giving to justify the cost, especially in a budget climate that will likely result in cuts to important domestic programs. However, we urged Lieberman and Santorum to consider changes that might make the nonitemizer more beneficial.