Monday, October 2, 2023

Book Review of Giving In Time: Temporal Considerations in Philanthropy

I’m on sabbatical this semester, which for me means reading whole books. I just finished reading the best book I’ve read so far about an issue that continues to grow in importance among nonprofit law scholars, and, well, the title is pretty self-explanatory: Giving in Time: Temporal Considerations in Philanthropy (Urban Inst. 2023). The volume, edited by Ray Madoff and Benjamin Soskis, contains essays from leading scholars from a wide variety of perspectives on how philanthropists should consider the “temporal” aspects of their charitable giving. The introduction asserts that “Questions surrounding … the obligations of the donor to the present or to the future[,] are now some of the most fiercely debated within the philanthropic and nonprofit sectors.” Of course, the focus of this blog is not on how philanthropists should act, but how the law does or should shape the balance of restrictions and incentives contained in the law. Nonprofit legal scholars have always been interested in this issue, of course, since under English common law it was legal for charitable trusts to exist in perpetuity, while private trusts could not due to the (infamous to law students) “rule against perpetuities.” Perpetual charitable trusts, and the weight given a trust indenture to bind future trustees to the intent of the donor/testator, created a “dead hand” problem for charity along with the immortality it granted philanthropists’ intentions.  The book is not exclusively about philanthropy law, but it provides important perspectives from historians, philosophers, and political scientists (along with legal scholars) that will be useful to legal scholars considering this issue.

The “slant” of the book is decidedly on the side of those who favor present uses of charity over attempts at perpetuity. One of its editors, Ray Madoff, is perhaps the leading scholar advocating for changes to current law in the interest of rebalancing the existing incentives for future giving.  But even her chapter (co-authored with Brian Galle) advocates relatively modest changes to the Private Foundation “payout rules” largely intended to preserve the existing balance. This delicate balance was introduced in the 1969 private foundation legislation, when Congress rejected proposed legislation that would require private foundations to spend down their assets over a lifetime in favor of a requirement for a mere 5% annual distribution. Madoff and Galle propose keeping the 5% payout rule, which permits perpetual foundations (as long as they invest well), and they advocate some modest changes of law to “tighten up on all these rules.” Their essay takes seriously counter arguments and largely does them justice.

I previously posted on Lila Corwin Berman’s wonderful book, The American Jewish Philanthropic Complex. Berman also has a chapter in this volume. In my post on Berman’s book, I wrote, “My main criticism of the book is that one could read it as presenting the flourishing of the ‘present spending’ movement as unremarkable, and the rise of endowment advocates as a novel (and negative) trend.” And I asserted that “the law of charities in the United States has always been deeply supportive of delayed charitable giving ….” That (minor) critique also applies to Berman’s contribution to Madoff and Soskis’s book, but placing her contribution alongside historical chapters by Soskis and Rob Reich make it clear that the struggle between current spending and endowment building has been with us for a very long time.

I’m generally skeptical of simplistic arguments in favor of presentism over futurism in philanthropy, and I’m generally a supporter of laws that respect and maintain a balance in which both perspectives have the opportunity to flourish. But, as always, arguments in favor of “balance” mean that each proposed revision of existing law needs to be critically evaluated in light of the complex interactions between interested stakeholders.  This new volume will give hours of enjoyment and benefit to anyone looking to expand their understanding of the issue.

Benjamin Leff

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