A proposal to require foundations to pay more in grants each year was essentially eliminated from a bill approved by a House committee.
The provision to bar foundations from counting expenses as part of the 5 percent of assets they must pay annually in grants now excludes only salaries over $100,000 and non-coach airfare expenses.
While the House bill is set for floor vote, the controversy remains.
The compromise has the support of the Council on Foundations and many private foundations that fought the original provision, but is opposed by the National Committee for Responsible Philanthropy and others that backed the original provision because it would have generated more money for charities and held foundations more accountable for their expenses.
The provision was part of the Charitable Giving Act of 2003 that the House Ways and Means Committee approved Sept. 9.
The measure also would allow taxpayers who take the non-itemized, standard deduction to make charitable deductions.
About two-thirds of taxpayers, mostly low- and middle-income Americans, now take the standard deduction.
The bill also will let people over age 70˝ make tax-free distributions to charity from their individual retirement accounts, and will raise the corporate charitable contribution cap to 20 percent of taxable income from 10 percent.
The bill is set to go before the entire House soon.