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The Care Act and AFIA

The CARE Act

The Charity Aid, Recovery, and Empowerment (CARE) Act is being reintroduced in January 2005 by Senators Rick Santorum (R-PA) and Joe Lieberman (D-CT). Although the Senate passed the CARE Act on April 9, 2003, with overwhelming support, 95-5, the 2003–2004 Congress adjourned without final action. In the new 109th Congress, CARE is part of Senate leadership’s top ten bills.

The bill’s primary purpose is to encourage charitable giving, but the CARE Act also includes provisions to boost social services and includes the Savings for Working Families Act, a provision that would make $450 million in tax credits available for the creation of up to 300,000 Individual Development Accounts (IDAs) — a substantial expansion of the program.

The CARE Act originally included controversial provisions that would have allowed faith-based organizations to use federal funds with no restriction on the use of religious language, symbols, or hiring practices. Facing stiff resistance from civil rights groups, Senator Rick Santorum (R-PA) announced in March that the faith-based measure would be removed from the bill.

The main provisions of the CARE Act are as follows:

  • Provide those who do not itemize their taxes the opportunity to deduct a portion of their charitable contributions.
  • Allow individuals to give tax-free contributions from their Individual Retirement Accounts for charitable purposes.
  • Encourage food donations from farmers, restaurants, and corporations.
  • Create up to 300,000 IDAs through a $450 million tax credit. This section of the bill is often referred to as the Savings for Working Families Act (SWFA).
  • Create a “Compassion Capital Fund ” to assist small community and faith-based organizations with technical assistance.
  • Add $1.3 billion in funding for the Social Services Block Grant, which provides money to states to administer a variety of social services.

The 108th Congress failed to pass CARE because the Savings for Working Families Act, the provision within the CARE Act that includes the IDA tax credits, was not included in the House campanion bill, the Charitable Giving Act (H.R.7).

Resources:

CARE Act summary

Comparison between H.R.7 and S.476

The Assets for Independence Act

The Assets for Independence Act (AFIA) was signed into law in 1998, providing $125 million over five years to create Individual Development Accounts. The demonstration projects funded by AFIA are designed to determine:

  1. The social, civic, psychological, and economic effects of providing to individuals and families with limited means an incentive to accumulate assets by saving a portion of their earned income;
  2. The extent to which an asset-based policy that promotes saving for post-secondary education, homeownership, and microenterprise development may be used to enable individuals and families with limited means to increase their economic self-sufficiency; and
  3. The extent to which an asset-based policy stabilizes and improves families and the community in which they live.

AFIA was reauthorized in 2004 by the 108th Congress.

Resources:

AFIA overview