The odds that Congress will pass any major legislation this year to change rules affecting donors and nonprofit groups are growing slimmer.
Two key lawmakers are squabbling over the measures, and unless they come up with a compromise before Memorial Day, Congressional aides and charity lobbyists say they doubt the measures would be considered again until 2007.
For several years, charities and some members of Congress have been pressing for legislation that would stimulate charitable giving and abuses of tax laws by donors and nonprofit organizations.
Charities were optimistic when the Senate passed many such measures last year as part of a major tax bill. But all those measures were stripped out of the legislation in a compromise with the House, and the only charity provision left in the bill, which President Bush signed into law on Wednesday, is one that will tighten the rules on corporate tax-shelter abuses that involve charities. It imposes steep penalties on charities and other entities that participate in abusive tax shelters.
Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, is pushing his colleagues to include the charity provisions in another measure: pension legislation that would tighten rules that protect America's private pension system. Congressional leaders are calling for a vote on the pension measure by the end of next week.
But his counterpart in the House of Representatives, William M. Thomas, the California Republican who is chairman of the House Ways and Means Committee, says he worries that not enough time is left for Congress to think through all the provisions affecting charities and donors before Congress votes on the pension bill. He is suggesting that at least some of the measures be put on hold so Congress has more time to conduct research on the effects and potential costs of the provisions.
Among the provisions the Senate passed — and that are now up in the air:
Donors who do not itemize deductions on their tax returns — more than two-thirds of Americans — would be allowed to write off a portion of their charitable donations. Currently, only those who itemize may write off their gifts.
People age 70 1/2 and older would be permitted to withdraw money from their individual retirement accounts and donate it directly to charity without being subject to income tax.
Individuals and companies would be prohibited from realizing improper financial gains from charity-owned life-insurance policies.
Donors who create conservation easements, a legal tool used to protect private land from development, would face tougher rules designed to prevent abuses.
Supporting organizations and donor-advised funds that offer overly generous benefits to donors would also face new restrictions.
Senator Grassley has vowed to fight for passage of the measures. "Non-itemizer is an important issue for the Finance Committee," said an aide to the committee who asked to remain anonymous. And, he added, Mr. Grassley will not support efforts to encourage people to give unless he is assured that Congress will also pass legislation to stop abuses by donors and charities. "We're continuing to work on the issues," he said.
Charity officials say they are puzzled why Mr. Thomas wants more time to review the charitable-giving incentives.
Patrick Lester, policy director at United Way of America, which is among the groups that are backing the charity measures, notes that the House approved a measure to extend write-offs to people who do not itemize on their taxes almost three years ago as part of a charitable-giving bill that failed to become law, he said.
"As far as United Way is concerned, the incentives have been thoroughly reviewed," he said. "We believe they enjoy very broad support in Congress."
United Way officials and other charity leaders plan to visit House lawmakers next week to lobby them to pass the nonprofit provisions, he said.
If the charity provisions aren't included in the pension bill, chances are slim they could become law this year, says Erica Greeley, director of strategic policy planning at the National Council of Nonprofit Associations, one of the groups that has been lobbying for the changes.
"The understanding of many of us working on this was that the pension bill might be the best road," she said. "The House and Senate have so many other priorities. I'm not sure what it would take to get this through."
Not all charities support the bill. Concerns have been expressed by the Philanthropy Roundtable, in Washington, a group of donors, foundations, and corporations that promotes efforts to support private enterprise. The group created an organization called the Alliance for Charitable Reform, which has organized efforts against the measure. Members of the alliance have expressed concern that stricter rules on supporting organizations and donor-advised funds would harm charities without doing enough to protect the public from abuse.
Cleta Mitchell, a lobbyist at the Alliance for Charitable Reform, said the group supports some changes, for example an increase in some of the penalties levied by the IRS for infractions of the laws that govern charities and donors.
But she said it's too soon for Congress to pass legislation because many charities, especially small ones, haven't had a chance to give Congress their views on what needs to be done.
"What we are concerned about is the attempt to treat all charities alike," Ms. Mitchell said. "Some of the things the large organizations support would be very harmful to small charities nationwide."