Philanthropic Facilitation Act - Amends the Internal Revenue Code to: (1) expand the definition of, and requirements relating to, "program-related investments" made by private foundations to for-profit entities to further certain charitable purposes; (2) allow a judicial determination (i.e., declaratory judgment) as to whether investments in any entity qualify as program-related investments; (3) require expanded reporting by for-profit entities that receive program-related investments of their gross income, expenses, disbursements, and other information; and (4) allow public inspection of any petition seeking a determination that an investment by a private foundation is a program-related investment and of any information reported by organizations receiving program-related investments.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3420 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 3420
To amend the Internal Revenue Code of 1986 to facilitate program-
related investments by private foundations.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 14, 2011
Mr. Schock (for himself and Mr. Polis) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to facilitate program-
related investments by private foundations.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Philanthropic
Facilitation Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; Table of Contents.
Sec. 2. Facilitation of program-related investments.
Sec. 3. Declaratory judgment remedy.
Sec. 4. Information returns.
Sec. 5. Publicity of information.
Sec. 6. Conforming amendments.
Sec. 7. Regulations.
Sec. 8. Effective date.
SEC. 2. FACILITATION OF PROGRAM-RELATED INVESTMENTS.
Subsection (c) of section 4944 of the Internal Revenue Code of 1986
is amended to read as follows:
``(c) Program Related Investments.--
``(1) Treatment of program related investments.--For
purposes of this subchapter, program-related investments--
``(A) are not investments which jeopardize the
carrying out of one or more purposes described in
section 170(c)(2)(B),
``(B) are not business holdings under section 4943,
and
``(C) may be qualifying distributions under section
4942.
``(2) Program-related investments defined.--
``(A) In general.--For purposes of this subchapter
and chapter 61, an investment made by a private
foundation constitutes a program-related investment
if--
``(i) the primary purpose of the investment
is to accomplish one or more of the purposes
described in section 170(c)(2)(B),
``(ii) no significant purpose of the
investment is the production of income or the
appreciation of property, and
``(iii) no purpose of the investment is to
accomplish one or more of the purposes
described in section 170(c)(2)(D).
``(B) Special rules.--For purposes of subparagraph
(A)--
``(i) determinations of whether an
investment qualifies as a program-related
investment shall be based on consideration of
all relevant facts and circumstances, and
``(ii) the fact that the entity produces
significant income or capital appreciation
shall not, in the absence of other factors, be
conclusive evidence of a significant purpose
involving the production of income or the
appreciation of property.
``(3) Safe harbor determinations.--The Secretary shall
establish a procedure which shall be substantially similar to
the processes for recognition of exemption under section 501(a)
or 4945(g) and under which an entity seeking to receive
program-related investments may petition the Secretary for a
determination that, based on consideration of all relevant
facts and circumstances, investments by private foundations in
such entity will be program-related investments meeting the
requirements of paragraph (2). Under this procedure, the
Secretary shall rule on all requests within 120 days of
submission.
``(4) Effect of determination.--Once a determination has
been made that investments in an entity qualify as program-
related investments, organizations making such investments
shall be entitled to rely on the determination, unless and
until the Secretary publishes notice of revocation of the
determination.
``(5) Voluntary nature of process.--Entities seeking
program-related investments are not required to seek a
determination under paragraph (3), and the absence of such a
determination shall not affect the ability of a private
foundation to make a program-related investment based on its
own determination that the investment qualifies as a program-
related investment.
``(6) Organizations treated as private foundations.--For
purposes of this subsection and section 6104A, all references
to private foundations include organizations that are treated
as private foundations under any of the provisions of sections
4940 through 4948, inclusive, whether created under state law
or the law of any federally-recognized tribe.''.
SEC. 3. DECLARATORY JUDGMENT REMEDY.
Paragraph (1) of section 7428(a) of the Internal Revenue Code of
1986 is amended by striking ``or'' at the end of subparagraph (C) and
by adding after subparagraph (D) the following new subparagraph:
``(E) with respect to whether investments in an
entity are program-related investments (as described in
section 4944(c)(2)), or''.
SEC. 4. INFORMATION RETURNS.
Part III of subchapter A of chapter 61 of the Internal Revenue Code
of 1986 is amended by inserting after section 6033 the following new
section:
``SEC. 6033A. INFORMATION REPORTING BY FOR-PROFIT ORGANIZATIONS
RECEIVING PROGRAM-RELATED INVESTMENTS.
``(a) Organizations Required To File.--If investments in an entity
have been determined to be program-related investments through a
determination of the Internal Revenue Service pursuant to section
4944(c)(3) or by a determination of a court pursuant to section
7428(a), the entity shall, in addition to any other applicable filing
obligations, file an annual return providing the information specified
in subsection (b) for any taxable year in which it receives or retains
one or more program-related investments (as defined in section
4944(c)(2)).
``(b) Required Reporting.--The return described in subsection (a)
shall provide, in such manner and at such time as the Secretary may by
forms or regulations prescribe, the following information--
``(1) the organization's gross income for the year,
``(2) its expenses attributable to such income incurred
within the year,
``(3) its disbursements within the year for one or more
purposes described in section 170(c)(2)(B), together with a
narrative statement describing the results obtained from the
use of those assets for such one or more purposes described in
section 170(c)(2)(B),
``(4) a balance sheet showing its assets, liabilities, and
net worth as of the beginning and end of such year,
``(5) the names and addresses of all private foundations
holding program-related investments in the organization,
``(6) a statement of the portion of its liabilities and net
worth that represent capitalization obtained by means of
program-related investments as of the beginning and end of such
year,
``(7) a statement of any interest, dividends, or other
distributions paid with respect to any program-related
investments during the year, and
``(8) such other information as may be necessary for the
return described in subsection (a) to satisfy the annual
financial reporting required by the expenditure responsibility
rules pursuant to the regulations under section 4945 or as the
Secretary may by forms or regulations prescribe.''.
SEC. 5. PUBLICITY OF INFORMATION.
Subchapter B of chapter 61 of the Internal Revenue Code of 1986 is
amended by inserting after section 6104 the following new section:
``SEC. 6104A. PUBLICITY OF INFORMATION REGARDING ORGANIZATIONS
RECEIVING PROGRAM-RELATED INVESTMENTS.
``(a) Inspection of Petitions for Determination of Program-Related
Investment Status.--If an entity seeks a determination pursuant to
section 4944(c)(3) that investments by private foundations in such
organization will be program-related investments, the petition seeking
such a determination, together with any documents submitted in support
of such petition and any determination or other document issued by the
Internal Revenue Service with respect to such petition, shall be open
to public inspection at the national office of the Internal Revenue
Service.
``(b) Inspection of Annual Information Returns.--The information
required to be furnished by section 6033A, together with the names and
addresses of such entity, shall be made available to the public at such
times and in such places as the Secretary may prescribe.
``(c) Public Inspection of Petitions and Annual Information
Returns.--Any entity that receives a determination from the Internal
Revenue Service that private foundation investments shall be program-
related investments pursuant to section 4944(c)(3) shall make copies
available at the organization's principal office, during regular
business hours, of the petition for such determination (together with
supporting materials provided with the petition and documents issued by
the Internal Revenue Service with respect to such petition), as well as
the annual returns required by section 6033A filed by such
organization. Upon request of an individual made at such principal
office, copies of such petition materials and annual reports shall be
provided to such individual without charge other than a reasonable fee
for any reproduction and mailing costs. The inspection and duplication
rights granted in this subsection shall apply to an annual return only
during the three-year period beginning on the last day prescribed for
filing such return (determined with regard to any extension of time for
filing).
``(d) Limitation on Providing Copies.--Paragraph (c) shall not
apply to any request if, in accordance with regulations promulgated by
the Secretary, the entity has made the requested documents widely
available, or the Secretary determines, upon application by an entity,
that such request is part of a harassment campaign and that compliance
with such request is not in the public interest.''.
SEC. 6. CONFORMING AMENDMENTS.
(a) Conforming Change to Section 501(n).--Paragraph (4)(A) of
section 501(n) of the Internal Revenue Code of 1986 is amended by
inserting ``paragraph (2) of'' before ``section 4944(c).''
(b) Conforming Change to Section 514(b).--Paragraph (1) of section
514(b) of the Internal Revenue Code of 1986 is amended by redesignating
subparagraphs (D) and (E) as subparagraphs (E) and (F) and by inserting
after subparagraph (C) the following new subparagraph:
``(D) any property owned or treated as owned by a
private foundation by virtue of its having made an
investment in an entity that has received a
determination from the Internal Revenue Service
pursuant to section 4944(c)(3), or by a court pursuant
to section 7428(a), that such investments in such
entity qualify as program-related investments;''.
(c) Conforming Change to Section 4943(d).--Paragraph (3) of section
4943(d) of the Internal Revenue Code of 1986 is amended by striking
``or'' at the end of subparagraph (A), by redesignating subparagraph
(B) as subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
``(B) any program-related investment, as defined in
section 4944(c)(2), or''.
SEC. 7. REGULATIONS.
The Secretary of the Treasury shall, not later than 1 year after
the date of the enactment of this Act, amend any applicable regulations
as may be necessary or appropriate to implement any amendments
contained in this Act or to carry out the purposes of this Act,
including providing additional examples of qualifying program-related
investments.
SEC. 8. EFFECTIVE DATE.
The amendments made by this Act shall apply to investments made
after the date of the enactment of this Act in taxable years ending
after such date.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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