H.R. 3035House115th Congress (2017-2019)In Committee

Philanthropic Enterprise Act of 2017

Introduced June 23, 2017

AI-Generated Summary

Updated April 15, 2026 at 4:39 PM UTC

The Philanthropic Enterprise Act of 2017 changes the tax code so that private foundations are not subject to the excess business holdings tax when they own certain charitable business enterprises. To qualify, the foundation must own the business outright, the business must give all its net income to the foundation each year, and the business must operate independently of the foundation’s major donors. The rule applies to tax years after 2016 and does not affect certain types of private foundations and trusts.

Key Provisions

  • Adds a new subsection (g) to IRC §4943 that creates an exception from the excess business holdings tax for qualifying philanthropic business holdings.
  • Exclusive ownership requirement: the foundation must hold 100% of the business interests, and those interests must have been acquired through a will or trust upon the donor’s death.
  • All profits to charity requirement: the business must distribute an amount equal to its net operating income to the foundation within 120 days after the year‑end.
  • Independent operation requirement: major donors or their families cannot hold leadership positions in the business, a majority of the foundation’s board cannot also serve in the business, and no loans may exist between the business and major donors or their families.
  • Excludes from the exception certain private foundations and charitable or split‑interest trusts as defined elsewhere in the tax code.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

June 23, 2017

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HouseIntro Referral

Introduced in House

June 23, 2017

HouseIntro Referral

Referred to the House Committee on Ways and Means.

June 23, 2017

Floor Debate

24 members

What members said about H.R. 3035 on the floor

10 Republicans14 Democrats
John Shimkus
Rep. John ShimkusR-IL-15 · May 10, 2018

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to include extraneous material on the bill, H.R. 3053. Mr. Chair, I yield myself…

Dina Titus
Rep. Dina TitusD-NV-1 · May 10, 2018

Mr. Chair, I thank the gentleman for yielding. Mr. Chair, today we must decide if you are going to double down on policies that have been an abject failure for the last three decades or if you will…

Paul Tonko
Rep. Paul TonkoD-NY-20 · May 10, 2018

Mr. Chair, I yield myself such time as I may consume. Mr. Chair, I rise today in support of H.R. 3053, the Nuclear Waste Policy Amendments Act. First, let me recognize the hard work done by Mr.…

Greg Walden
Rep. Greg WaldenR-OR-2 · May 10, 2018

Mr. Chairman, first of all, I want to thank the chairman on the Subcommittee on Environment, Mr. Shimkus, whose, I think, life's work is on the floor today in many respects. Nobody has been more…

William R. Keating
Rep. William R. KeatingD-MA-9 · May 10, 2018

Mr. Chairman, I have an amendment at the desk. Mr. Chairman, I would like to thank Congressman Shimkus for his support of this amendment. I would also like to thank Congressman Tonko as well, and…

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Frank Pallone, Jr.
Rep. Frank Pallone, Jr.D-NJ-6 · May 10, 2018

Mr. Chairman, I want to thank our ranking member, Mr. Tonko. I rise in support of H.R. 3053. Congress first passed the Nuclear Waste Policy Act back in 1982, but more than 35 years later, we still do…

Bradley Scott Schneider
Rep. Bradley Scott SchneiderD-IL-10 · May 10, 2018

Mr. Chairman, I have an amendment at the desk. Mr. Chairman, I rise today in support of my amendment which would help those communities saddled with housing our Nation's stranded nuclear waste while…

Ruben J. Kihuen
Rep. Ruben J. KihuenD-NV-4 · May 10, 2018

Mr. Chair, today I rise to speak in opposition to H.R. 3053, the Nuclear Waste Policy Amendments Act. Mr. Chair, I find it offensive. I sit here and listen to all my colleagues, and they all want to…

Steve Womack
Rep. Steve WomackR-AR-3 · May 10, 2018

Mr. Chair, today, my colleagues and I will vote on H.R. 3053, the Nuclear Waste Policy Amendments Act of 2018. H.R. 3053 provides practical reforms to ensure that the federal government fulfills its…

Doris O. Matsui
Rep. Doris O. MatsuiD-CA-6 · May 10, 2018

Mr. Chairman, I thank Mr. Tonko for yielding. Mr. Chairman, I rise today in support of the Nuclear Waste Policy Amendments Act. In Sacramento, our publicly owned utility stores spent nuclear fuel at…

Ben Ray Luján
Rep. Ben Ray LujánD-NM-3 · May 10, 2018

Mr. Chairman, I oppose this bill because I believe that it makes it more likely that a future interim storage site--potentially one in New Mexico--becomes a permanent home for nuclear waste. I know…

Joe Barton
Rep. Joe BartonR-TX-6 · May 10, 2018

Mr. Chairman, I can't think of a more unrewarding, difficult, fruitless issue to be asked to be the leader on than trying to find a solution to high-level nuclear waste. Can you imagine if, when you…

Joe Courtney
Rep. Joe CourtneyD-CT-2 · May 10, 2018

Mr. Chairman, I rise in strong support of the Nuclear Waste Policy Amendments Act. Next to me is a picture of Haddam Neck, Connecticut, which is a pristine part of the State where the Connecticut…

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Jacky Rosen
Rep. Jacky RosenD-NV-3 · May 10, 2018

Mr. Chair, I thank the gentleman from New York for yielding. Mr. Chair, I rise today and stand with the overwhelming majority of Nevadans who wholeheartedly oppose our State becoming the dumping…

Debbie Dingell
Rep. Debbie DingellD-MI-12 · May 10, 2018

Mr. Chairman, I rise in support of H.R. 3053, the Nuclear Waste Policy Amendments Act. Finding a way forward on the future of our Nation's nuclear waste storage is no easy task. But I believe we have…

Marcy Kaptur
Rep. Marcy KapturD-OH-9 · May 10, 2018

Mr. Chairman, I thank my fellow Great Lakes Member, Representative Schneider, for yielding the time. I also want to thank the ranking member of the Appropriations Committee, Congresswoman Lowey, for…

Fred Upton
Rep. Fred UptonR-MI-6 · May 10, 2018

Mr. Chairman, I particularly commend John Shimkus, the chairman of the subcommittee, who helped shepherd this bill through; Chairman Walden; Ranking Member Pallone and others; Mr. Tonko. It is truly…

Jerry McNerney
Rep. Jerry McNerneyD-CA-9 · May 10, 2018

Mr. Chairman, I rise today in support of H.R. 3053. I thank Ranking Member Tonko and Chairman Shimkus for their hard work on this very difficult subject. This is a bipartisan bill that seeks a…

Leonard Lance
Rep. Leonard LanceR-NJ-7 · May 10, 2018

Mr. Chairman, I rise in support of H.R. 3053, the Nuclear Waste Policy Amendments Act. This is an enormous achievement for Chairman Shimkus, who has worked so hard, and so long, to make this day a…

Gene Green
Rep. Gene GreenD-TX-29 · May 10, 2018

Mr. Chairman, I thank my colleague, our ranking member, for allowing me to speak. I rise in support of H.R. 3053, the Nuclear Waste Policy Amendments Act of 2018. Congress, back in 1982, passed the…

Steve Scalise
Rep. Steve ScaliseR-LA-1 · May 10, 2018

Mr. Chairman, I thank my colleague from Illinois (Mr. Shimkus) for his leadership on this issue. For so long we have been trying to get a solution and to get proper use made out of Yucca Mountain and…

Mark Sanford
Rep. Mark SanfordR-SC-1 · May 10, 2018

Mr. Chairman, I rise too, in support of this bill, and I want to single out Chairman Shimkus for his tireless work. He stood up in conference after conference after conference, insisting that we move…

Robert B. Aderholt
Rep. Robert B. AderholtR-AL-4 · May 10, 2018

Mr. Chair, I thank my colleague, Mr. Shimkus, for this important legislation. This is a bipartisan piece of legislation that, it has already been said, puts our country back on the right track in…

Adam Kinzinger
Rep. Adam KinzingerR-IL-16 · May 10, 2018

Mr. Chair, I thank the gentleman for yielding. Mr. Chair, as a military pilot, Air Force pilot, I think it is important to note that this will not affect range operations at Nellis Air Force Base. My…

Bill Text

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Introduced in HouseIssued June 23, 2017

I

115th CONGRESS

1st Session

H. R. 3035

IN THE HOUSE OF REPRESENTATIVES

June 23, 2017

Mr. Reichert (for himself, Mr. Larson of Connecticut, Mr. Tiberi, Mr. Kelly of Pennsylvania, Mr. Rice of South Carolina, Mr. Paulsen, Mr. Holding, Mr. Smith of Missouri, Ms. Jenkins of Kansas, Mr. Frelinghuysen, Mr. Higgins of New York, Ms. Esty of Connecticut, and Mr. Calvert) 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 exempt private foundations from the tax on excess business holdings in the case of certain philanthropic enterprises which are independently supervised, and for other purposes.

1.

Short title

This Act may be cited as the Philanthropic Enterprise Act of 2017.

2.

Exception from private foundation excess business holding tax for certain philanthropic business holdings

(a)

In general

Section 4943 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(g)

Exception for certain philanthropic business holdings

(1)

In general

Subsection (a) shall not apply with respect to the holdings of a private foundation in any business enterprise which for the taxable year meets—

(A)

the exclusive ownership requirements of paragraph (2),

(B)

the all profits to charity distribution requirement of paragraph (3), and

(C)

the independent operation requirements of paragraph (4).

(2)

Exclusive ownership

The exclusive ownership requirements of this paragraph are met if—

(A)

all ownership interests in the business enterprise are held by the private foundation at all times during the taxable year, and

(B)

all the private foundation’s ownership interests in the business enterprise were acquired under the terms of a will or trust upon the death of the testator or settlor, as the case may be.

(3)

All profits to charity

(A)

In general

The all profits to charity distribution requirement of this paragraph is met if the business enterprise, not later than 120 days after the close of the taxable year, distributes an amount equal to its net operating income for such taxable year to the private foundation.

(B)

Net operating income

For purposes of this paragraph, the net operating income of any business enterprise for any taxable year is an amount equal to the gross income of the business enterprise for the taxable year, reduced by the sum of—

(i)

the deductions allowed by chapter 1 for the taxable year which are directly connected with the production of such income,

(ii)

the tax imposed by chapter 1 on the business enterprise for the taxable year, and

(iii)

an amount for a reasonable reserve for working capital and other business needs of the business enterprise.

(4)

Independent operation

The independent operation requirements of this paragraph are met if, at all times during the taxable year—

(A)

no substantial contributor (as defined in section 4958(c)(3)(C)) to the private foundation, or family member of such a contributor (determined under section 4958(f)(4)) is a director, officer, trustee, manager, employee, or contractor of the business enterprise (or an individual having powers or responsibilities similar to any of the foregoing),

(B)

at least a majority of the board of directors of the private foundation are not—

(i)

also directors or officers of the business enterprise, or

(ii)

members of the family (determined under section 4958(f)(4)) of a substantial contributor (as defined in section 4958(c)(3)(C)) to the private foundation, and

(C)

there is no loan outstanding from the business enterprise to a substantial contributor (as so defined) to the private foundation or a family member of such contributor (as so determined).

(5)

Certain deemed private foundations excluded

This subsection shall not apply to—

(A)

any fund or organization treated as a private foundation for purposes of this section by reason of subsection (e) or (f),

(B)

any trust described in section 4947(a)(1) (relating to charitable trusts), and

(C)

any trust described in section 4947(a)(2) (relating to split-interest trusts).

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2016.