The Alliance for Charitable Reform published a press release yesterday for a new report on charitable giving and the government’s relationship with foundations and charities. The report, How Public Is Private Philanthropy? Separating Reality from Myth, is a comprehensive legal analysis that examines the claim that charitable funds are “public money" because they are exempt from federal taxes, receive state charters, and are subject to oversight by state attorneys general.
The report, released by the Philanthropy Roundtable, is co-authored by Evelyn Brody, Professor at the Chicago-Kent College of Law, and John Tyler, Secretary and General Counsel of the Ewing Marion Kauffman Foundation. The conclusion, based on numerous applicable legal precedents, is that the public-money assertion is not well grounded.
Brody and Tyler demonstrate that it is deeply problematic to consider the federal tax exemption and the charitable tax deduction subsidies to charities, and even more problematic to assert that the public has a legitimate claim to private philanthropic assets. Individuals and businesses routinely receive tax preferences, the authors note, but they are never considered governmental entities nor are their assets considered public property.
The law treats foundations like private entities devoted to public ends, but they do not have to serve the government’s purposes nor even those of the public at large. Similarly, a charter from the state does not make foundations and other charities into public entities. Policymakers cannot use these arguments to intrude into the governance, missions, and operations of philanthropies.
The authors criticize the “public money” claim as an unjustified attempt to direct and control foundations and other charities and argue in favor of such organizations maintaining independence and legal separation.
“American philanthropy is the envy of the world, with charitable giving last year at over $307 billion,” said Adam Meyerson, President of The Philanthropy Roundtable. “But it’s under attack by activists, legislators, and policymakers who are clamoring for greater governmental authority to regulate the activities of American philanthropists.”
The full monograph and the synopsis are available online.