Hurricane Forces Delay on Key Actions in Congress

Because of the need to focus on responding to the disaster caused by Hurricane Katrina, leaders of Congress have postponed action on repeal of the estate tax and probably will have to slow the introduction of proposals aimed at fixing oversight and governance problems in the charitable world.

The Senate had planned to vote last week on permanently repealing the federal estate tax. Many charities and private foundations oppose a repeal, which was approved in April by the House of Representatives.

Under current law, the estate tax will be phased out gradually in coming years, then will be repealed entirely for one year in 2010. After 2010, without a new law, the tax will be restored.

The bill that was passed by the House would make the repeal permanent beginning in 2010. Many nonprofit organizations worry that repeal of the tax would eliminate a powerful incentive for wealthy donors to make charitable bequests.

Meanwhile, the Senate Finance Committee was expected to delay its introduction of charity legislation — which had been anticipated this month — that could contain new rules to deal with donor-advised funds, supporting organizations, abusive tax shelters, and many other nonprofit activities.

The Southeastern Council of Foundations, in Atlanta, urged Sen. Charles E. Grassley, an Iowa Republican and chairman of the Finance Committee, to exercise caution in any legislative crackdown in light of the hurricane. “I hope you and your Congressional colleagues will watch and listen with special care to the reports of how the vast majority of charitable institutions and the agencies through which they channel their philanthropy are responding in this time of crisis,” said Martin C. Lehfeldt, the council’s president, in a letter to Mr. Grassley. “What they are doing completely overshadows the misbehavior of a few.”