aspects of the liberal arts and the learned professions." 432 F. 2d at 654. The court commented further on "the historic reluctance of Congress to exercise control in educational matters." 432 F. 2d at 654. (See also Jones v. National Collegiate Athletic Ass'n., 392 F. Supp. 295 (D. Mass. 1975); Nankin Hospital v. Michigan Hospital Service, 361 F. Supp. 1199 (E.D. Mich. 1973)). We believe that the law was not changed in this respect by Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), which applied the Sherman Act to the commercial aspects of the learned professions.

The Congress has elsewhere in the antitrust laws seen fit to exclude genuinely non-profit institutions. The Non-Profit Institutions Act of 1938 provides that nothing in the Robinson-Patman Price Discrimination Act "shall apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit." (15 U.S.C. §13c) The proposed inclusion of such non-profit institutions in the definition of corporations subject to the Federal Trade Commission Act would be a retreat from this policy as well as from the case law we have cited.

If colleges and universities are now to be subjected to the same antitrust prohibitions as for-profit businesses, many educational activities may well be deterred which have been specifically encouraged by Federal education policy. For example, in recent years the Federal government, under the Higher Education Act and the National Science Foundation Act, has strongly and repeatedly encouraged higher education institutions to enter into cooperative arrangements of all kinds, for the sharing of facilities, resources and personnel. Most recently, in the 1976 Education Amendments the Congress added another such expression of policy, conditioning an enrollment expansion grant program on assurances that the institution has "explored the willingness of other institutions within a reasonable commuting distance to provide educational programs, or space or other components of an educational delivery system, through contract or other agreement with the institution." (P.L. 94-482, §177)

This policy has resulted in consortia of colleges, sharing of courses, joint utilization of facilities, and interchange of faculty members, all in a great variety of arrangements. It has also included joint computer services, purchasing, warehousing, billing and collection, and a great many similar administrative functions. These joint efforts are critically necessary for the efficient operation of financially hard-pressed institutions of higher education. It would be most unfortunate if deliberate Federal education policy to encourage these arrangements were to be thwarted by extension of the antitrust laws. If the result of the pending bill were to create uncertainty on that score, the further development of these joint educational endeavors would be chilled in a way that would be highly detrimental to American higher education.

CONCLUSION

Mr. Chairman, I believe we have documented fully how the consumer practices of higher education institutions are currently being upgraded and monitored by a complex network of Federal, State and private agencies. I believe we have demonstrated that adding still another Federal regulatory agency, with potentially wide-ranging and as yet unknown consequences, would be highly unfortunate for higher education in its present financial plight, and may even run counter to well-established Federal education policy. The other side of the issue has not been substantiated in any respect.

Accordingly, for all these reasons we strongly urge the Subcommittee to delete Section 14 (a) (1) from S. 1288. Thank you for this opportunity to state our position. My colleagues and I would be happy to answer any questions you may have.

Senator FORD. Jack Moskowitz-Is that the correct pronunciationvice president for Government Relations, United Way of America.

STATEMENT OF JACK MOSKOWITZ, VICE PRESIDENT FOR GOVERNMENT RELATIONS, UNITED WAY OF AMERICA; ACCOMPANIED BY PAT BARRETT

Mr. MOSKOWITZ. Mr. Chairman, it is a little early in the morning. Senator FORD. For Washington standards it is.

Mr. MOSKOWITZ. My name is Jack Moskowitz, vice president for Government Relations for the United Way of America. With me is Pat Barrett, my assistant in the office.

I feel redundant to go ahead and read this testimony after listening to the Council on Higher Education. We can answer your questions, but I will be glad to do whatever suits you.

I would put my statement in for the record and save you time and be prepared to answer questions.

I think our position is substantially similar to theirs and I think it would just be repetitive.

Senator FORD. Your statement will be included in the record in its total, Jack, and I appreciate this sort of thing.

It gives us a little more time to get into some questions.

If a charitable organization is not engaging in any deceptive acts or practices in or affecting commerce, why does this provision appear so threatening?

Mr. MOSKOWITZ. Well, sir, that question was asked me once before, and I come back with, if that is a reason to legislate in this area, it seems a foolish reason. We would have committees that would be sitting here 10 hours a day, if the reason to legislate is that you don't have any fear for legislation. I think the anwer is, to just put a piece of legislation on the books or change the definition as drastically as this for this purpose, that is not a sufficient reason.

It isn't that we have anything to fear. I think, Mr. Kurzman touched on this, there are the two cases frequently cited by the FTC. I believe one was in 1969 and one was in 1972.

These instances arise, and they are very troublesome to the legitimate tax exempt organizations in the charitable world. There has been a lot of discussion. The problem is dealing with so many agencies. Most of us feel there may be need for some legislation. If there is needed added authority, the legislation belongs-the added authority belongs in the IRS.

It has been dealing with the tax exempt sector. It has powerful weapons to deal with them, in additional taxation or in revocation of the tax exempt status. One of the problems we have had, is the shortness of time. We are not as well-equipped as the Council for Higher Education to get a reaction from our local people, but the feeling that they have now is that, they are just reporting to a multitude of agencies. They don't fear any additional regulation, in fact, they would like it, but in one agency. There is also the question of State and local laws.

Every time something arises, there is another local ordinance, another State law. I know there can't be total preemption, but we are beginning discussions in that direction, with the appropriate committees to deal with it.

Senator FORD. Don't questionable practices by some, and I underscore some, charitable organizations have a damaging effect on other charities?

Mr. MOSKOWITZ. No question about it. Doesn't exposure benefit the charities not engaged in questionable activities? The analogies I can give you. There are exposures all the time. The problem is, in dealing with legislation and proposals such as this, it is, you know, bringing out the artillery to swat one instance here and one instance there. Senator FORD. Wouldn't you consider this preventive rather than a cannon shot?

Mr. Moskowitz. I am here from the United Way, actually, I would rather have brought somebody that has been into the fundraising or allocation

Senator FORD. I was brought up with the old saying, "An ounce of prevention is worth a pound of cure."

Mr. MOSKOWITZ. I agree with you, sir. One of the things I have recommended, and it's been endorsed by the people of the United Way of America and we are going to go to our board with it here on May 10th, is that we get behind more exetnded regulation in the IRS. As pointed out in the previous testimony, they have expanded their staff now.

We set three goals: that it be effective, and it would be effective there: that it be as preemptive of State and local regulations as far as possible; and that it not impede. This is sometimes what happens in other proposals. There have been proposals in the Postal Service which impedes the legitimate charities from raising funds.

Senator FORD. Several years ago the Vice President, then Senator Mondale, held hearings on some questionable practices by some voluntary organizations. Most of the funds raised were for the purposes of paying excessive salaries and benefits, and for financing additional fundraising.

When exposure occurs, won't other valid organizations benefit as moneys which go to the questionable ones are redirected to those more bonafide organizations?

Mr. MOSKOWITZ. We would certainly benefit, because the United Way is probably the system where the greatest percentage of the dollar goes to the charitable organizations.

There is a question of where the regulation should be.

Presently, in the IRS, the 900 form that they file has been expanded. It just seems to us, here's an agency that has dealt with the charitable sector since the inception of the charitable deductions, that has the mechanism. That would be the place, if there is a need for legislation.

In fact, in the Treasury Advisory Committee for Philanthropy, there was some discussion of this issue and Mr. Dillon reminded everybody there, this was the whole voluntary sector, the leaders of the voluntary sector, that we are in somewhat the same position that foundations were in the 1960's. They resisted legislation and then legislation did come into effect. It is harsh in some respects, but it has worked quite well. The general feeling-I am not just talking about us-was, there is some need for legislation, but the appropriate place for it is in the Internal Revenue Service.

Senator FORD. What is the needed legislation then?

Mr. MOSKOWITZ. We have hired counsel, and we are now taking a look at it. The word "exposure," is the word that comes to me, sir. Senator FORD. That is what I have been trying to drive at.

If a bad operation is exposed, wouldn't that help the good operation? Mr. MOSKOWITZ. Yes. Presently that authority is in the IRS. That is where we think that exposure and that information should reside. We think it should be aggressively exposed, aggressively communicated-in fact, the analogy I used was something that was in the jurisdiction of this committee.

I think, maybe I wonder, Mr. Chairman, if I should bring this up with the Senator from Kentucky

Senator FORD. Be careful now.

Mr. MOSKOWITZ. Yes, sir. But I think it is a

Senator FORD. If you get away from beautiful women, bourbon, fast horses, and cigarettes, you are all right.

Mr. MOSKOWITZ. I was getting to the last one. I think the legislation that required the reporting of nicotine content had had an important impact on this country, in that we have seen the nicotine level in cigarettes being reduced. I think that kind of reporting by the agency that has the information

Senator FORD. But the exposure is among the companies that are fighting among themselves, and we let the industry solve it on their

own.

Let me ask you another question then. Why do you think that organizations such as Consumers Union, which will be subject to the provisions of this, support it?

Mr. MOSKOWITZ. It is difficult for me to answer for them.

Senator FORD. Wouldn't they be faced with the same burden as you, that is, keeping their act clean?

Mr. MOSKOWITZ. You know, I don't want to argue that there is not an argument to be made for some legislative action in this area. We don't disagree with that. And so, therefore, if you start on that premise and if you are involved in consumerism, you certainly can make an argument that perhaps the Federal Trade Commission is the appropriate agency. I think the consumer movement looks at the Federal Trade Commission-and correctly so in many instancesas an effective arm in dealing with fraud and deceptive practices. I assume that is why they support it. But again I come back to our feeling. That is, the IRS, Mr. Chairman, has had a long history in this area.

It isn't that the FTC lacks things to do, sir. However, here we have in the IRS one of the most powerful agencies, a department with a reputation for rough enforcement, already with a substantial jurisdiction in the area. It just doesn't seem to make any sense to me to put it in another agency.

Senator FORD. Let me give you a hypothetical case. What about a charity which says, "We are giving 80 percent," of the money they collect to research, but they are not. They are spending the money on fundraising salaries and so forth and giving minimum to research. Can the IRS regulate deceptive advertising by a charity?

Mr. MOSKOWITZ. I am not an expert in that area, sir. I am assuming not. That is a personal assumption. But on the other hand, if they have tax-exempt status and if they are actually for profit-and by the way, these regulations may have to be strengthened, as the regulations dealing with foundations were-it is a question of salaries, a question of self-dealing, there are all sorts of areas that can be explored by the IRS that could effectively destroy that operation and destroy it quickly.

We all know, the heaviest policeman is an IRS agent at your door. Senator FORD. Well, what you are talking about, though, is the financial part.

There are some ways that you generate funds, and I am not sure that the IRS can get into that arena, where they have the authority. I am going to check to see if they have the ability to regulate deceptive advertising.

You have to prove to them that the organization is tax exempt, you have to fulfill requirements in connection with the applications for grants from the Federal Government, if necessary, and it does suggest that that not just anyone under those conditions can call himself or his organization tax exempt. Really, there are no means of checking so the IRS does check that.

Are you suggesting they get into all related fields, then, so, it is a pretty broad-even though they have beefed up their Bureau, I guess, I am not sure that they are able to go into the broad spectrum of deceptive practices.

Mr. MOSKOWITZ. Mr. Chairman, presently, I think they have a lot broader jurisdiction than what you said. I would suggest somebody from the Treasury Department should come over here.

The present form 990 contains a great deal more information than you have itemized there. Second, I think the history of the foundations and the regulations in the 1969 act-and I am not an expert in that shows that under their jurisdiction the IRS can do a great deal. This is true especially in the areas you are talking about, selfdealing, salaries, excessive payments. They can move very quickly, just as any other taxpayer knows, a Treasury agent can move very quickly.

Senator FORD. Black suit and red tie is dangerous.

Jack, I don't think I have any further questions.

I do appreciate your coming this morning, as I told the previous witnesses, my feet are not set in concerete on any of this legislation. That is the reason for the hearing. So we can hear all sides and try to make a determination, which is in the best interests of all of us. Hopefully when this legislation leaves the full committee and goes to the Senate floor it will be one that all of us can say is pretty decent legislation.

[The statement follows:]

STATEMENT OF JACK MOSKOWITZ, VICE PRESIDENT FOR GOVERNMENT RELATIONS, UNITED WAY OF AMERICA

Mr. Chairman and Members of the Subcommittee: I am Jack Moskowitz, Vice President for Government Relations for United Way of America. This is a national association for local fund raising and planning organizations for the voluntary sector of the social services system.