Americans are incredibly generous. We contribute around $250 billion annually to a wide array of charitable causes. Our culture of philanthropy is an expression of the highest of American ideals; it shows our commitment to the well-being of our neighbors -- and of strangers in need.

Philanthropy is critically important in Montana, a small state with a big heart. Montana, the most remote of the lower 48 states, is characterized by geographically isolated communities. Most depend upon a mix of self-reliance and local giving to meet social demands.

Here in Gallatin County, an excellent example is Gallatin Gateway’s Willing Workers Ladies Aid, Inc. Each year they offer up a corned elk feed at the Gallatin Gateway Community Center. This is a community facility built entirely from local contributions of time, material, and money. Not a penny of taxpayer money was used. Having paid off the building, the funds raised by the elk feed are now earmarked for educational scholarships for local kids.

Montana has almost nine thousand nonprofit organizations. This number has grown by 35 percent over the last decade. Bozeman is home to dozens. From the symphony to Shakespeare in the Parks to Bozeman Deaconess Hospital and Heart of the Valley, our community gives generously. Next time you visit the Museum of the Rockies, check out the list of donors on the wall behind the reception desk and in the new Hall of Horns and Teeth. It’s packed with local givers. The Museum is justifiably proud of its high level of hometown support.

Small, private family foundations play a key role in our success. They provide essential financial support to hospitals, libraries, youth centers, historic preservation, the arts, and social services in Bozeman and across the state.

Nationally these small foundations provide half of the total foundation giving. Their small size and knowledge of local circumstances is a great advantage. It allows them to be nimble social entrepreneurs and, importantly, to monitor the progress of their investments. This independence of thought and local, on-the-ground perspective is hard to replicate.

Responding to charitable abuses in large nonprofits like the United Way and the Nature Conservancy, U.S. Senators Grassley and Baucus have proposed overhauling tax laws that govern charities and foundations. One proposal they’re considering gives the IRS the power to review and revoke the tax-exempt status of every charity and foundation every five years. When considering their reform, I urge them to be careful. Here’s why.

One-size-fits-all rules are rarely effective. Congressional acts are like operating with blunt instruments. Rarely do they result in precise, well-defined law. Unintended consequences and perverse incentives are the rule. This effort is no exception.

By enacting rules in response to a few particularly flagrant, widely publicized abuses, regulators would impose burdens of paperwork, record keeping, and other costs on all nonprofits, regardless of size. This will likely result in costs that outweigh the benefits.

The impacts to Montana nonprofits will be particularly onerous. For example, compliance with the new rules will cost organizations at least $1000 per year. With almost nine thousand nonprofits across the state, this means close to $9 million will be spent on compliance. This is money that will no longer be available for either charitable giving or operations.

Congress may not think a few thousand dollars is a lot of money. But groups with small budgets and volunteer staff, e.g., the Bozeman Friends of Music, will be particularly hard pressed to meet these requirements. Many will close rather than attempt to comply with complex accounting rules.

Philanthropy rests upon the premise that both recipients and donors have the capacity for self-governance. This vital and diverse element of civil society should be honored as one of America’s finest achievements. It’s evidence of society’s capacity for individual initiative and self-governance. Let not the transgressions of a tiny minority burden the rest with costly and potentially crippling constraints on this important work.

Contact Senator Max Baucus’s Bozeman office at 586-6104.