Response From Human Needs Community Remains Mixed
On Thursday, February 7, Senators Rick Santorum (R-PA) and Joe Lieberman (D-CT) announced a bipartisan agreement on legislation addressing the President’s Faith-Based and Community Initiative. This legislation, the Charity Aid, Recovery and Empowerment (CARE) Act (S 1924), reflects key elements of the President’s “Armies of Compassion” initiative, which are also included in the Community Solutions Act (HR 7), passed by the House in July 2001.

While the newly introduced Senate legislation mirrors many of the provisions included in the House-passed legislation, sponsored by Representatives J.C. Watts (R-OK) and Tony Hall (D-OH), it does not include several of the more controversial provisions such as “charitable choice” contained in HR 7. “Charitable choice” allows churches and other houses of worship to compete for federal funds without having to change their religious character. Many advocates raised concerns that this provision would infringe on existing civil liberties laws regarding the separation of church and state and non-discrimination in hiring and firing.

While the Senate bill has appeared to generate less controversy in the human needs community than HR 7, some organizations have voiced concerns over a proposed tax incentive for charitable giving included in S 1924 and others are opposed to the entire measure. The CARE Act would create a charitable tax deduction of up to $400 for individual taxpayers and $800 for couples who do not itemize their tax returns. Proponents of the measure argue that this targeted tax incentive will generate new charitable giving. However, critics of this proposal are concerned that the non-itemizer deduction will not substantially increase charitable contributions among those who currently do not give. Furthermore, at a proposed $40 billion dollars over ten years, it is viewed by some as a very costly initiative that will take funding away from much needed domestic programs, at a time when resources are limited.

Other provisions of the CARE Act seek to leverage new support and resources for a broad range of community and faith-based groups, including those that are currently working with the government to provide a variety of social services. The legislation also aims to make it easier for smaller social service providers to qualify for federal aid and have equal access to government funds. Specifically, the legislation states that a federal grant applicant may not be disqualified from competing for government contracts simply because of the organization’s religious affiliation. These provisions do not preempt civil rights laws.

In addition, the bill creates a Compassion Capital Fund and authorizes four federal agencies to distribute over $150 million from the fund to offer technical assistance to community-based organizations for activities such as writing and managing grants, gaining tax-exempt status, capacity-building and identifying and implementing model social service programs.

The legislation also includes a provision to encourage low-income Americans to save money and build assets by opening Individual Development Accounts (IDAs). The initiative includes $1.7 billion in funding over the next ten years, which is projected to help 900,000 Americans open new IDAs. The CARE Act also includes a restoration of funds to the Social Services Block Grant (SSBG), bringing the funding level to $2.8 billion, its full authorization level, by fiscal year 2004.

Another of the provisions in the CARE Act would require the IRS to expedite the 501 (c) (3) application of any group in need of tax-exempt status in order to apply for a government grant or contract. In addition, the IRS would waive the application for those organizations with annual revenues less than $50,000. These two measures are aimed at expediting the collaborative process between the government and faith-based and community organizations.

The President has called on Senate leadership for swift action on the CARE Act so that it may be quickly moved to a House-Senate conference and on to the White House for his signature. The CARE Act has been referred to the Senate Finance Committee and is expected to come up for a vote within the next few weeks.

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