Texas Senators Echo Other Legislators' Concerns Over Proposed Supporting Org Guidance

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February 29, 2008

The Honorable Henry M. Paulson, Jr.
Secretary
The Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

Dear Secretary Paulson:

The Pension Protection Act of 2006 authorized the Department of Treasury to promulgate rules that target donor abuse of Type III supporting organizations. I am concerned about possible unintended consequences that may result from a proposed rule by the Treasury Department (Advance Notice of Proposed Rulemaking REG-155929-06) to historical organizations that have a long and continuous philanthropic history with a supported charity.

There are supporting organizations in Texas which have operated for decades, amassed large endowments, and made significant contributions to charities that provide valuable educational, healthcare and community services. The proposed asset test for functionally integrated Type III supporting organizations may be difficult for some historical organizations to meet because the test does not allow for the consideration of investments as assets. Furthermore, while I am in favor of payout requirements for charitable entities, I want to ensure that such requirements do not jeopardize the ability of the historical organizations to exist in perpetuity.

Numerous Texas-based supporting organizations play a vital role in our communities and have had a positive impact for our constituents. I am supportive of actions by the Treasury Department to prevent abuse of the supporting organization structure; however, I respectfully ask that you work with historical organizations to adopt tailored regulations that will preserve the services these organizations provide to the citizens of Texas. Your careful consideration of this request and prompt attention to this important issue is sincerely appreciated.