By Suzanne Perry

Missoula, Mont.

Sen. Max Baucus, the Montana Democrat who took over the reins of the Senate Finance Committee in January, said that he does not give high priority to cracking down on charitable abuses or imposing new regulations on nonprofit groups such as hospitals.

“That’s not at the top of my list,” he said during a brief interview on the sidelines of a conference on rural philanthropy held here this week. “I haven’t got time.”

Mr. Baucus also said he favored extending a law that allows people to give money from their individual retirement accounts to charity without paying any taxes, which expires at the end of this year.

But he is not sure that expanding the provision to allow more types of groups to accept such gifts and increasing the amount donors can give — ideas advocated by nonprofit and foundation leaders — is politically feasible given Congress’s vow to rein in the budget deficit.

“I’d like to extend it as far into the future as we can, but recognizing the limitations that we have,” he said.

The nonprofit world has been wondering whether Senator Baucus, as chairman of the Senate committee that regulates tax-exempt organizations, would give as much priority to highlighting alleged charitable abuses as his predecessor, Sen. Charles Grassley, Republican of Iowa.

While the two senators are known for having a cordial relationship, Mr. Baucus suggested that his priorities will be different.

“Senator Grassley and I work very closely together,” he said. “It’s a relationship that we both treasure and we agree far more than we don’t on policy,” he said. “But I also have to look at the calendar.”

Mr. Baucus said his top priority now is getting legislation enacted to extend and expand the State Children’s Health Insurance Program, which provides health care to children from low-income families. While both houses of Congress have passed such legislation, President Bush has threatened to veto it.

He said he will also give priority to other issues related to health care — including the high cost to business of providing insurance, which he said is hurting U.S. competitiveness — as well as to various trade and taxation issues.

Mr. Baucus expressed doubts about a specific proposal, issued in July by aides to Republican lawmakers on the Senate Finance Committee, to require nonprofit hospitals to spend at least 5 percent of their annual budgets on charity care or lose their tax-exempt status.

The proposal aims to ensure that the hospitals do more to serve the uninsured and justify the estimated $40-billion the federal government loses each year in taxes.

But Mr. Baucus said he questions a solution that would apply an “across-the-board rule that applies to all nonprofit hospitals in all part of the country.”

“What does 5 percent really mean?” he said. “Some hospitals do far more than 5 percent, some do far less than 5 percent,” he said. “In some areas, it’s very hard to do 5 percent. It depends on the community that you’re in.”

He said that the discussion about nonprofit hospitals, which Mr. Grassley has been raising for several years, has been useful, however, because it has encouraged many hospitals to develop guidelines for offering free health care and other services. He specifically praised the Catholic Health Association, which has developed guidelines that require hospitals to publicize financial aid they offer to uninsured patients, follow uniform methods for reporting the benefits they provide to the public, and make hospital leaders accountable to their boards for providing adequate benefits.

Nonprofit and foundation leaders have been lobbying to get Congress to expand the IRA provision — which allows people at least 70-1/2 to donate up to $100,000 a year to a charitable organization tax-free.

Lawmakers in the House and Senate have both introduced legislation to allow people to donate as much as they want each year and to give to groups that are now not allowed such as private foundations and donor-advised funds. But Mr. Baucus noted that Congress has adopted a “pay as you go” rule requiring any tax cuts or increased spending on programs such as Social Security and Medicare to be offset by spending cuts or tax increases elsewhere. That will make it difficult for anyone who wants to extend a tax break, he said.

“I want to look at the extension [of the IRA benefit] first because I just know it’s going to be difficult to extend very far,” he said. And expanding the provision could cut into the length of time it would be extended, he said.

Mr. Baucus also said the Internal Revenue Service needs more money to do its job, but not only to monitor charitable organizations.

An IRS official testified last month at a House Ways and Means subcommittee hearing — which highlighted the failure of some nonprofit groups to pay payroll and other taxes — that his office did not have enough resources to properly monitor all charities. “I think IRS personnel is stretched,” Mr. Baucus said. “They need some help, generally, in all areas. I don’t know that one area should be singled out [over] others.”

When he spoke to the conference on rural philanthropy held here this week, the senator again urged foundations to double their grants to rural areas like his home state within five years.

Mr. Baucus first issued that challenge at the Council on Foundations’ annual meeting in Pittsburgh last year, saying rural areas were being shortchanged when it came to philanthropic dollars. The council then worked with him to set up the Missoula conference to get foundation leaders together to plan ways to get more money to those regions.

“I understand that each foundation has particular funding guidelines, regions of focus, and priorities,” Mr. Baucus told the conference participants. “But I encourage foundations to work hard to make rural places a priority.”

The senator asked foundations to do four specific things:

Work on rural projects with other foundations, nonprofit groups and associations, and government bodies. He said foundations could, for example, help nonprofit groups identify children without health insurance who would be eligible for the Children’s Health Insurance Program. Give money to community foundations in rural areas to help them hire staff and build strong organizations. “Localized grant-making means grant-making by decision-makers who are familiar with the local need, local conditions, and local resources,” he said. Offer grants to help rural nonprofit groups build up their infrastructure — for example, for programs in nonprofit management, programs to help nonprofit groups design internship opportunities for “top-notch” students, and state nonprofit associations. Remove the barriers that hinder national foundations from making grants to rural nonprofit groups.

“Funding guidelines are too often written in a way that requires programs or organizations to have already achieved a high level of development, including sophisticated partnerships and alliances,” he said. “But rural programs often need funding to navigate these crucial developmental stages.”

Steve Gunderson, president of the Council on Foundations, told Mr. Baucus that the group’s members would follow through in all four areas.