Nonprofit Law Prof Blog

Miranda Perry Fleischer’s Chapter in Giving In Time is Especially Worth Your Time

On Tuesday, I posted some musings on a current investigation by the DC AG into several nonprofits associated with Leonard Leo, but it didn’t include a link to a Politico article that was posted that same day, so I have updated the previous post with the following: “UPDATE: Politico posted another article today that reports that the Leo-affiliated entities are not cooperating with the DC AG and that the DC AG is also investigating Arabella Advisors, a "liberal 'dark money' group" that was the subject of a complaint from a conservative watchdog group.”

On Monday, I posted a book review of the recently published Giving in Time: Temporal Considerations in Philanthropy, in which I promised “hours of enjoyment and benefit” for readers interested in questions about the timing of charitable expenditures, and the laws that constrain, incentivize, or otherwise affect such issues. Today, I want to return to that book to especially recommend Miranda Perry Fleischer’s chapter, Intergenerational Justice and Charitable Giving: A Libertarian Perspective. I’m separately posting about that chapter not so much because of its insights into the central question of the book – time – but because it is such a clear and concise summary of Professor Fleischer’s work theorizing nonprofit law from a libertarian perspective. I agree heartily with Fleischer that at least some corrective is needed to the fact that “tax scholarship [including exempt-organizations tax scholarship] focuses overwhelmingly on welfarism and egalitarianism….” Fleischer’s work is among the most important to investigate “what comprehensive rights-based theories of justice say about [the law of] charitable giving.” The chapter builds on prior work by Fleischer, but the chapter is well worth reading even if you are familiar with professor Fleischer’s prior work.

Fleischer seeks to refute the simplistic (but popular) view that “libertarianism stands for the proposition that one can do whatever one wants with one’s property[.]” Instead, the argument made by libertarians for very strong protection of existing property rights is subject to two extremely important caveats.  First, the “Lockean proviso” holds that privatization of natural resources is only just if “enough and as good is left for others.” Any claim to ownership of natural resources (such as land) cannot be just if others were excluded from the use of that resource without them having access to other resources just as plentiful and valuable. Second, the justice of the current distribution of property is dependent on the justice of not only the original acquisition but also all subsequent transfers. Fleischer quotes Jeremy Waldron’s work on Robert Nozick stating, “The point of Nozick’s argument … was that egalitarians were condemning the existing distribution for the wrong reason—that is, simply as unequal—rather than on account of the violence, fraud, expropriation, ethnic cleansing, state corruption, and so on, involved in the history of most holdings of property in America.”  Importantly, violation of these two requirement for a just distribution of property doesn’t only justify governmental corrective action, it plausibly demands it. In other words, even a minimal state (sometimes called a night watchman state) is plausibly required to use the legal system to transfer property from some owners to others to rectify past injustice.

What does all this have to do with charity law? Fleischer argues that the deduction for donations to charity are the equivalent to a governmental subsidy to the charity, and therefore libertarianism weighs in favor of a more restrictive deduction for charitable contributions, not a more permissive one. She argues that a charitable tax deduction for charities that do anything other than some plausible version of rectification of past injustices is not justified. Although she does permit quite broad interpretations of what constitutes rectification, including general mitigation of poverty. As for the question of “time,” these insights suggest that it is important to look at the past as well as the future when one is determining both how to give and how the laws should incentivize or constrain giving. When evaluating the laws that affect the choice between present or future spending, Fleischer concludes that donors should be free to choose whether to emphasize current spending or future spending, but perhaps limitations on future generations’ control of a donor’s charitable endowments may be justified. I’m not sure I agree with all of Fleischer’s conclusions about how to apply the basic insights of property-rights-based theories of justice to charity law questions, but I do think her summary of these basic insights, and the reasoning she uses to apply them, is an important corrective to the dominant modes of analysis of such issues.

Benjamin Leff

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

Book Recommendation: How to Save the World in Six (Not So Easy) Steps

I’ve just finished reading a truly excellent book by nonprofit law professor and former dean of Columbia Law School, David Schizer. On one level, How to Save the World in Six (Not so Easy) Steps (Post Hill Press 2023) is a trove of good advice for nonprofit board members, leadership, and even funders. But it is also a deep meditation on some of the most difficult and interesting issues in the nonprofit world. The six steps are: (i) plan, (ii) persevere, (iii) prioritize, (iv) pivot, (v) publicize, and (vi) partner. It seems intuitive that all six “p”s are important to the success of any venture. But Schizer explains – and illustrates with countless examples from his own experience and the experience of nonprofit leaders he interviewed – that each step is deeply complicated by the central tensions of the nonprofit sector.

For example, in the chapter called “Prioritize,” Schizer points out that the fundamental difference between non-profit and for-profit enterprises is that for-profit enterprises can measure their effectiveness (and therefore guide their priorities) by a relatively simple metric: profitability. Nonprofit enterprises can’t do the same.  Because their purpose is to advance some non-monetary goal, they need to find or create the metrics by which to measure their own effect. If they can’t be rigorous in this undertaking, it’s impossible for them to decide which activities they should pursue, and how. In the “Publicize” chapter, Schizer points out that this same rigorous application of effectiveness metrics is at the heart of communicating the organization’s work to its stakeholders. This central tension in the nonprofit sector – that it cannot rely on profits to measure success – is both the sector’s strength and its weakness. Nonprofit stakeholders all know this, but it is rare to read a practical guide that is so sensitive to the many permutations of this central issue.

Benjamin Leff

The American Jewish Philanthropic Complex

I’m following my post from yesterday about a really good book, by posting about another really good book.  Lila Corwin Berman’s The American Jewish Philanthropic Complex: The History of a Multimillion-Dollar Institution is a history of philanthropy in America in the past hundred years or so, with a special focus on Jewish philanthropic institutions. One of my favorite things about this book is that my great uncle, Henry Zucker, plays a relatively minor, but important role in the story (albeit plausibly as a villain).

Even if you’re not very interested in American Jewish history or unlikely to read the whole book, I highly recommend watching this conversation between Berman and Rob Reich (not to be confused with Robert Reich) from 2021. I especially like the way that they provide a general introduction to what’s at stake in the study of philanthropy generally (6:40-13:30), in which Berman calls philanthropy “a certain kind of engine that pulls [government and the market] together.” She argues that giving to philanthropy is “not exactly a private activity at all” but is “as deep a relationship [with the state] as April 15^th when you pay your taxes.”

The conversation also has a very interesting discussion of the historical development of donor-advised funds (“DAFs”), which Reich calls “the kudzu” of contemporary American philanthropy, and “a genuine problem.” The book does a very compelling job of describing two historical trends in American Jewish philanthropy, one of which arguably gave us the historical antecedent of the DAF. In the first half of the 20^th Century, Jewish federations began to appear and flourish as a mechanism for “professionalizing” Jewish philanthropy. These federations almost exclusively focused on current spending, believing that donors wanted to see the immediate benefits of their charitable giving. There was massive immigration of poor Jews to American cities at that time, and institutional philanthropy was one potential support for those migrants. In the beginning of the second half of the 20^th Century, this “present spending” ideology was countered by a movement for to facilitate endowment giving, possibly because the volume of needy immigrants declined. The Jewish Community Federation of Cleveland (under the direction of my Uncle Henry) promoted a new philanthropic “institutional technology” which allowed donors to give to the federation not for current spending but for the future.  Even more novel was the ability of donors to “advise” the federation how to spend the money in the present or future. That structure became the DAF. It also resulted in the reduced influence of the “present spending” advocates.

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.  In the longer history of philanthropy, of course, the urge of donors to create perpetual endowments, and the development of legal innovations to facilitate that urge, is the norm. After all, the very first purpose of the charitable trust in 17th Century England was to permit an exception to the “rule against perpetuities,” which prevented donors from creating perpetual charitable institutions until the law was modified. An historical moment when Jewish institutions successfully persuaded their donors to resist that urge is the surprising story, not the fact that legal institutions permit charitable endowments today. Whether the current law of DAFs goes too far and constitutes “a genuine problem” or not, the law of charities in the United States has always been deeply supportive of delayed charitable giving, whether through university endowments, private foundations, or (non-DAF) public charities with large endowments. Berman's book gives us evidence that advocates of immediate spending also have a long history to draw from.

Benjamin Leff

Ellen P. Aprill Reviews "For Profit Philanthropy"

The incomparable Ellen P. Aprill has written an insightful review essay (which is unfortunately behind a paywall) about Dana Brakman Reiser’s and Steven A. Dean’s book, For-Profit Philanthropy: Elite Power and the Threat of Limited Liability Companies, Donor-Advised Funds, and Strategic Corporate Giving.  She characterizes the book as lamenting the “unraveling of a pact between elites and the public that fueled half a century of philanthropic achievement.”  That pact, which Reiser and Dean call “the Grand Bargain,” is found in the Tax Reform Act of 1969, which created the rules for so-called private foundations.  “This bargain, they believe, enacted rules grounded on principles of targeting, timing, and transparency to ensure that elite resources serve public rather than private ends. For them, new approaches that renounce this Grand Bargain destroy trust in elite giving.”  In other words, a lot of money doesn’t flow through private foundations as much anymore, and that’s bad for the charitable sector. 

Aprill recognizes what a massive contribution this book makes to the literature critically evaluating the outsized influence of hyper-wealthy charitable donors.  But she is critical of several aspects of the book’s analytical frame. Among other things, she argues that one should not compare charitable LLCs (the first focus of the book’s analysis) to wealthy donors giving to private foundations, but to wealthy donors giving directly to charities, which of course was never blocked by the Grand Bargain. Since 20^th Century philanthropists like John D. Rockefeller and Andrew Carnegie waited until relatively late in life to establish their philanthropic foundations, contemporary philanthropists criticized by Dean and Reiser “do one better than the Grand Bargain” by actively pursuing their philanthropic activities when they are still young.

Aprill does acknowledge that charitable LLCs do benefit from “entity-ness” while avoiding the burdens that would be imposed if they were treated as corporations that would have to qualify for some form of tax-exempt status to avoid corporate-level taxes. She argues that the value of this “entity-ness,” which enables wealthy elites to develop a prestigious philanthropic identity should not be underestimated. She proposes a rule that would automatically treat philanthropic LLCs as corporations, forcing them to seek tax-exempt status, probably under section 501(c)(4). While they would still avoid the rules that apply to private foundations, they would at least be subject to self-dealing rules, and have some transparency through the filing of Forms 990.

Notwithstanding Aprill’s excellent observations, I highly recommend the book (as does she). It is really really good.

Benjamin Leff

Plerhoples: Social Enterprises and Benefit Corporations in the United States

Alicia E. Plerhoples (Georgetown) has written Social Enterprises and Benefit Corporations in the United States, which has been published in The International Handbook of Social Enterprise Law (Springer 2023). Here is the abstract:

The United States is the birthplace of benefit corporations precisely because of American society’s over-reliance on the private sector to solve societal problems. U.S. federal and state regulation continuously fails to provide robust social safety nets or prevent ecological disasters. American society looks to companies to do such work. U.S. social enterprise entities attempt to upend the U.S. legal framework which binds fiduciaries to focus on shareholder value. These entities are permitted, and sometimes required, to consider environmental, social, and governance (“ESG”) impacts of their operations, essentially internalizing ESG costs that would otherwise be paid by American communities and the environment. This chapter traces social enterprise development under U.S. law, starting with a brief discussion of corporate law as a creature of state law. It then provides an overview of the two major types of social enterprise entities in the United States: (1) the Delaware Public Benefit Corporation, and (2) the California Social Purpose Corporation. The chapter briefly discusses other types of U.S. social enterprise entities, including hybrid ventures, worker cooperatives, and the low-profit liability company. The chapter concludes with a discussion of responses to companies’ ESG efforts by legal scholars, asset managers, and the U.S. Securities and Exchange Commission. These responses and the uptake of publicly traded public benefit corporations indicate a seismic shift forward in the use of ESG frameworks in the United States.

Lloyd Mayer

Sidel: The Future of Civil Society Research in China, Hong Kong and Vietnam

Mark Sidel (Wisconsin) has posted The Future of Civil Society Research in China, Hong Kong and Vietnam, which has been published in A Research Agenda for Civil Society (Edward Elgar 2022). Here is the abstract:

I have worked on civil society research, particularly on nonprofit–state relations and philanthropic issues in China and Vietnam for several decades. More recently I have been closely following the situation in Hong Kong after China took draconian steps to control Hong Kong in mid-2020,especially through the enactment and enforcement of the National Security Law applicable to Hong Kong. I have long followed the work of civil society researchers in China, Hong Kong and Vietnam, and collaborated with some of those impressive scholars. And I have long been concerned about the future of research in this important field in those jurisdictions. Let me discuss each of these areas in turn, with a focus on:

• Key ideas, main debates, significant relevant publications and unresolved issues.

• Observations about changes in civil society in over the past years with expectations for the period to come.

• Suggestions about the content of a future civil society research agenda.

Lloyd Mayer

Fleischer: The morality of charitable bequests

Miranda Perry Fleischer (San Diego) has a chapter titled The morality of charitable bequests in a the new book Inheritance and the Right to Bequeath: Legal and Philosophical Perspectives (Routledge 2022). Here is the abstract for the chapter:

Although discussions of inheritance law and policy focus on private bequests to family members, decedents also bequeath large sums to charity – roughly $42 billion in 2020 in the United States alone. The place of charitable bequests has largely been overlooked in the philosophical literature, which tends to approach inheritance as the transfer of wealth between generations of the same family. Most theorists simply assume, with little discussion, that charitable bequests raise different policy concerns and should be given favourable treatment. This chapter explores the interaction of charitable bequest-giving and two common concerns of inheritance law and policy, namely equality of opportunity and the hereditary transmission of political and economic power over others. It argues that charitable bequests are not equal when it comes to alleviating such concerns, and in fact, some charitable bequests exacerbate them. To that end, priority should be given to charitable bequests that further the head start of the least-advantaged and that do not perpetuate family control over assets.

Lloyd Mayer

Plerhoples: Purpose Driven Companies in the United States

Alicia E. Plerhoples (Georgetown) has posted Purpose Driven Companies in the United States, to be published in the International Handbook of Social Enterprise Law: Benefit Corporations and Other Purpose Driven Companies (Henry Peters, et al., eds., forthcoming 2022),. Here is the abstract:

The United States is the birthplace of benefit corporations precisely because of American society’s over-reliance on the private sector to solve societal problems. U.S. federal and state regulation continuously fails to provide robust social safety nets or prevent ecological disasters. American society looks to companies to do such work. U.S. social enterprise entities attempt to upend the U.S. legal framework which binds fiduciaries to focus on shareholder value. These entities are permitted, and sometimes required, to take into account environmental, social, and governance (“ESG”) impacts of their operations, essentially internalizing ESG costs that would otherwise be paid by American communities and the environment. This chapter traces social enterprise development under U.S. law, starting with a brief discussion of corporate law as a creature of state law. It then provides an overview of the two major types of social enterprise entities in the United States: (1) the Delaware Public Benefit Corporation, and (2) the California Special Purpose Corporation. The chapter briefly discusses other types of U.S. social enterprise entities, including hybrid ventures, worker cooperatives, and the low-profit liability company. The chapter concludes with a discussion of responses to companies’ ESG efforts by legal scholars, asset managers, and the U.S. Securities and Exchange Commission. These responses and the uptake of publicly traded public benefit corporations indicate a seismic shift forward in the use of ESG frameworks in the United States.

Lloyd Mayer

New Edition of the Model Nonprofit Corporation Act Now Available

The American Bar Association has published the Model Nonprofit Corporation Act, 4th Edition. Only time will tell if it is more successful than the 3d Edition, that was only adopted by one jurisdiction (the District of Columbia). Here is a description:

The 4th Edition of Model Nonprofit Corporation Act is a model statute governing nonprofit corporations designed for adoption by state legislatures. The 4th Edition of the MNCA was adopted in 2021 and is a substantial revision of the Act while preserving important aspects of the 3d Edition. The Act follows the Model Business Corporation Act provisions to the extent possible while highlighting and respecting the characteristics that distinguish nonprofit from profit corporations.

The original Model Nonprofit Corporation Act was approved by the ABA Business Law Section Corporate Laws Committee in 1952 and has evolved with revisions and updates by the Nonprofit Organizations Committee. The MNCA is a model set of statutes governing nonprofit corporations proposed for adoption by state legislatures. This updated Fourth Edition contains many changes that follow the updated provisions and revised official comments in the 2016 revision of the Model Business Corporation Act, along with a variety of other changes. New provisions in the Fourth Edition include the ability to renounce in advance corporation opportunities, procedures to ratify defective corporate actions and records, and the validity of forum selection bylaws. While it includes important new provisions, the Fourth Edition also stands in direct continuity with prior versions and continues the substantive approach of the Third Edition.

A general nonprofit corporation statute must be designed to provide rules for all types of nonprofit corporations from large hospital systems to small human services nonprofits to country clubs and to the other thousands of nonprofit corporations that exist in each state. Besides following the MBCA as much as possible, the MNCA provides as much flexibility as possible to nonprofit corporations as to how they are structured and governed. The Fourth Edition continues to provide great flexibility for nonprofit corporations to organize and operate in what they believe to be the most efficient and effective manner.

Lloyd Mayer

Annual Status of Civil Society Published

Lucy Bernholz published her annual industry assessment of civil society entitled Philanthropy and Digital Civil Society: Blueprint 2022. You can download it here.

Think readers will be interested in the report. It is described as follows: "Philanthropy and Digital Civil Society: Blueprint is an annual industry forecast about the ways we use private resources for public benefit in the digital age. Each year, the Blueprint provides an overview of the current landscape, points to big ideas that matter, and directs your attention to horizons where you can expect some important breakthroughs in the coming year."

‘This year’s Blueprint asks us to consider that many perceived “impossibilities” – think of the major transformations we need to solve our biggest challenges – are indeed possible, and how digital civil society and independent philanthropy can help make them a reality,’ said Bernholz, Senior Research Scholar at the Stanford Center on Philanthropy and Civil Society (Stanford PACS) and Director of its Digital Civil Society Lab.

‘We are in a threshold moment, and civil society, rooted in collective purpose and shared values, has clear opportunities to lead in creating new and better pathways forward.’

Philip Hackney

Giving Remains Steady As Pandemic Continues, But Some Giving Patterns Change

Several recent studies of giving in the United States reveal various trends as the pandemic and other crises continue.

The Fundraising Effectiveness Project released this week its 2021 Second Quarter Fundraising Report. According to the report's announcement, the key findings include: 

• While giving in 2021 has not seen the explosive growth of 2020, the pace of giving and number of donors has remained roughly the same or even a little higher. The estimated number of donors increased by 0.7% in the first half of 2021 compared to the same period in 2020, while the total amount of money given has risen by a projected 1.7%.
•  
• Fundraising has remained strong in the first half of the year due to the number of newly retained donors—that is, the number of new donors in 2020 who have continued to give in 2021. The number of newly retained donors increased 22.4% over the first half of 2021. 
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• Total giving and the number of donors grew by record rates in the first quarter of 2021 (10% and 6%, respectively), but the growth was much more nominal in the second quarter. The drop in growth in the second quarter might be a developing trend that leads to flat or decreasing in the third quarter, or the result of abnormally strong first quarter growth.

The IUPUI Lilly Family School of Philanthropy also released this month Understanding Philanthropy in Times of Crisis: The Role of Giving Back During COVID-19. Its key findings were:

• Individual Giving: 1. Americans have maintained their commitment to charitable giving throughout the pandemic, with some notable exceptions. 2. Donors who gave to COVID-related causes often indicated that other people can be trusted and were more motivated to strive for the wellbeing of others and society. 3. End-of-year giving made up a larger portion of giving in 2020 than in the previous two years. 4. Nonprofit subsectors directly related to responding to the pandemic, such as human services, health, and public-society benefit, saw significant increases in donations. 5. The characteristics of donors to COVID-related causes appear similar to general patterns in giving to charitable causes more broadly. 6. Innovation and digital adaptation were vital to meeting new demands during COVID-19.
•  
• Corporate Giving: 1. Corporations responded to the increased health demands imposed by COVID-19 with increased giving and multi-year pledges. 2. The commitment of corporate philanthropy to health causes is distinct from other types of donors. 3. Finance and insurance companies dominated U.S. corporate giving to COVID-19 relief in 2020. 4. Corporations (that participated in interviews with the school) adapted their workplace giving programs in response to COVID-19, with a heavy reliance on technology.

Earlier this fall, Bank of American and the IUPUI Lilly Family School of Philanthropy released The 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households. According to the overview, it found "[t]he vast majority (88.1 percent) of affluent households gave to charity in 2020, and nearly a third (30.4 percent) of affluent individuals volunteered their time (down significantly from 47.8 percent in 2017), despite the COVID-19 global pandemic. On average, affluent donor households gave $43,195 to charity in 2020. By comparison, donor households in the general population gave $2,581." It also found that issues drove giving roughly as much as organizations, in a shift from previous studies indicating that organizations were a strong influence, and that support for social and racial justice grew in significance. 

Lloyd Mayer

Huber, Pittavino & Peter, Tax Incentives for Charitable Giving: Evidence from the Canton of Geneva

Giedre Lideikyte Huber, Marta Pittavino, and Henry Peter (all from the University of Geneva) have posted Tax Incentives for Charitable Giving: Evidence from the Canton of Geneva on SSRN (to be published in the Routledge Handbook of Taxation and Philanthropy). Here is the abstract:

This contribution presents the legal framework of income tax incentives for charitable giving in Switzerland and describes the reform putting this system in place in 2006. Using a unique data set shared by the Tax Administration of the Canton of Geneva for this purpose, we provide descriptive statistics about taxpayers’ charitable giving behaviour in Geneva from 2001 to 2011. In this period, the number of taxpayers deducting charitable contributions significantly increased. In contrast, the size of individual annual deductions (both mean and median) decreases. The data show that the amount of tax deductions for charitable giving sharply increases relative to income class, and the median charitable deduction by taxpayer rises exponentially with income (i.e. years 2001 and 2011). Currently, no clear effects of the 2006 tax reform are visible; however, more in-depth studies are needed in this respect.

Lloyd Mayer

Murray, Charity Law and Accumulation: Maintaining an Intergenerational Balance

Ian Murray (University of Western Australia) recently published Charity Law and Accumulation: Maintaining an Intergenerational Balance (Cambridge: Cambridge University Press, 2021). Here's a description of the book: 

Much has been written in charity law on the type of benefits that charities can provide (charitable purposes) and who such benefits must be directed towards (the public benefit question). Much less has been written about when those benefits must be provided. However, accumulation of assets by charities raises profound ethical, economic and social considerations, that are highlighted by the present retreat of the welfare state and the on-going impact of the Global Financial Crisis and COVID-19. In particular, how should the public benefits produced by charities and affected by accumulation be shared between different generations? It is, after all, inherent in the notion of accumulation, that the delivery of some benefits will be deferred. Which generation(s) should decide that allocation of benefits? Might the decision-making discretion afforded to charity controllers over accumulation and the allocation of benefits increase agency costs and so reduce the level of public benefit achieved?

This book analyses these issues through a normative, doctrinal and comparative analysis of the legal constraints upon accumulation by charities. It reveals that the legal restraints contain significant gaps in relation to the intergenerational distribution of benefits and to the balance of decision-making between generations. In particular, the book asserts that, to fill those gaps, there is room for law reform to better identify and incorporate principles of intergenerational justice into the regulation of charities. The book makes this theory and its practical application accessible to readers without specialised training in political philosophy and economics. The book also explains to those steeped in political philosophy and economics (but not law) why it is there are issues and how they can start thinking about law reform.

Samuel D. Brunson

OECD report on Taxation and Philanthropy

The OECD recently  issued a report on Taxation and Philanthropy that will likely be of interest to our readers.

The summary provides: "This report provides a detailed review of the tax treatment of philanthropic entities and philanthropic giving in 40 OECD member and participating countries. The report first examines the various arguments for and against the provision of preferential tax treatment for philanthropy. It then reviews the tax treatment of philanthropic entities and giving in the 40 participating countries, in both a domestic and cross-border context. Drawing on this analysis, the report then highlights a range of potential tax policy options for countries to consider."

Philip Hackney

Frye: The Illusory "Public Trust"' in Art

Brian L. Frye (Kentucky) has posted The Illusory "Public Trust" in Art, which has been published in Deaccessioning in a Post-Pandemic Word. Here is the abstract:

The "deaccessioning police" argue that it is "unethical" for art museums to "deaccession" or "sell" works of art from their collections for any purpose other than buying different works of art, because museums do not really own the art in their collections, but only hold it subject to the "public trust doctrine." This essay observes that the public trust doctrine doesn't apply to art, and that the arguments made by the deaccessioning police are absurd, on their own terms.

Lloyd Mayer

Russell: The Contractual Revolution in Charity Governance

Jacob Hale Russell (Rutgers) has posted For Whom Are Non-Profit Managers Trustees? The Contractual Revolution in Charity Governance, which will be published in Fiduciary Obligations in Business (forthcoming). Here is the abstract:

This chapter chronicles an unnoticed aspect of the intellectual history of the “contractarian” paradigm, the descriptive claim that firms are best characterized as nexus of contracts. Although the paradigm’s rise in the 1980s in the corporate world is well known, little has been said about its success in rewriting both theory and doctrine in charitable and not-for-profit law. The contract paradigm has reshaped the questions that not-for-profit scholarship attempts to answers, and it is tightly linked to developments in not-for-profit doctrine and practice. Key examples include the growth of donor standing — the notion that not-for-profits have a fiduciary duty to their donors, and that donors may bring suit for breaches — and the growing obsession with “donor intent” throughout the not-for-profit sphere. I contrast contractarianism with an institutionalist “public trust” conception of charities, which was the prevailing intellectual paradigm for most of the 20th century.

Lloyd Mayer

Debates in Charity Law (Picton & Sigafoos, editors)

Hart Publishing has released Debates in Charity Law, edited by John Picton and Jennifer Sigafoos (both Liverpool). Here is the description:

Charitable organisations occupy a central place in society across much of the world, accounting for billions of pounds in revenue. As society changes, so does the law which regulates nonprofit organisations. From independent schools to foodbanks, they occupy a broad policy space. Not immune to scandals, sometimes nonprofits are in the news for all the wrong reasons and so, when they are in the public eye, regulators must respond to high profile cases.

In this book, a team of internationally recognised charity law experts offers a modern take on a fast-changing policy field. Through the concept of policy debates it moves the field forward, providing an important reference point for developing scholarship in charity law and policy. Each chapter explores a policy debate, setting out the fault-lines in play, and often offering proposals for reform.

Two important themes are explored in this edited collection. First, there is a policy tension in charity law between its largely conservative history and the need to keep up-to-date with social change. This pressure is felt acutely along key fault-lines, such as the extent to which a body of law which developed before the advent of legislated human rights is able to adapt to a rights-based world, and the extent to which independent schools – historically so closely linked with charity – might deserve their generous tax-breaks. The second theme explores the law from the perspective of a good-faith regulator, concerned to maximise the usefulness of charities. From the need to reform old organisations, to the need to ensure that charities enjoy the right amount of regulatory freedom in a world of payment-by-result contracts, the book critically charts the policy justifications for regulatory intervention, as well as the costs that such intervention might bring.

Debates in Charity Law will be of interest to both academic researchers and students of the non-profit sector, looking to understand the links between law, social change and regulation. It will also help and guide nonprofit employees and volunteers, showing how their sector is shaped and moulded by the law.

And here is the Table of Contents:

1. Fault Lines in Charity Law
John Picton and Jennifer Sigafoos
2. Independence and Accountability in the Charity Sector
Matthew Harding
3. Debating the Extent of Party/State Control Over Overseas Nonprofit Organisations: Charity Law Debates in China
Mark Sidel
4. Regulating Egoism in Perpetuity
John Picton
5. Deploying Communitarianism Bankruptcy Theory to Rescue Insolvent Charities and Maintain Charitable Purposes
John Tribe
6. When Should Charities be Allowed to Discriminate? The Case of Single-Sex Services and Transgender People
Jennifer Sigafoos
7. Regulating Charitable Activities through the Requirement for Charitable Purposes: Square Peg Meets Round Hole
Adam Parachin
8. Redefining the Regulatory Space? Th e First Forays of the Irish Charities Regulatory Authority
Oonagh B Breen
9. Independent Schools in Scotland: Should they be Charities?
Patrick Ford
10. Licking their Own Lollipops: What do Charities and the Public Think about the Regulation of Charitable Activities?
Eddy Hogg
11. Commissioning of Services by Charities in the Third Decade of the Contract Culture: Lessons Learned (or Not Yet)
Debra Morris
12. Regulating the Digital (Currency) Revolution: Unravelling the Technological Challenge Faced by Charities
Matthew Robert Shillito
13. Social Housing – Charities and Vulnerable Groups
Warren Barr
14. Charity Law and Policy: Looking Forward
Jennifer Sigafoos and John Picton

Lloyd Mayer

The Chronicle's Nonprofit Reading List

 I found this helpful list of recommended nonprofit readings on the Chronicle of Philanthropy website:

https://www.philanthropy.com/article/Catch-Up-on-Books-Recommended/247018?cid=cpfd_home

I have read a few of them, have a couple of others on my Nook awaiting my attention (with summer reading time coming to an end and the new semester ... they may be waiting a while), and others that I'm about to add to the stack.   I read Winner Take All - I think the central point was important, but found the author's approach to be so judgmental as to overwhelm his argument.  I just started Just Giving, and am looking forward to finishing that as part of an article I'm writing (slowly...) on endowments.   I think the next up will be Uncharitable.

I'd love to hear any thoughts others might have on these books, and if there are any that you all might add to the list.

 

EWW

Update Available for Fishman, Schwarz, and Mayer Nonprofit Organizations: Cases and Materials (5th ed.)

For those of you who use the Nonprofit Organizations casebook I co-author with James J. Fishman (Pace) and Stephen Schwarz (Hastings, emeritus), a new Student Update Memorandum is available for download (at no charge to you or your students) and and a new Teacher's Manual Update Memorandum is also available (also at no charge, but requires a West Academic Account). Both are current through July 15, 2019, and so include discussions of all relevant provisions of the 2017 Tax Cuts and Jobs Act (TCJA) as well as guidance relating to those provisions. The Student Update Memorandum also includes the text of new provisions added by TCJA and the Bipartisan Budget Act of 2018, as well as the text of other changed or added provisions that are included in the Nonprofit Organizations Statutes, Regulations and Forms book that we also author.

As always, any feedback - positive or negative - regarding the casebook and the updates is greatly appreciated. 

Lloyd Mayer