In recent years, some public officials and advocacy groups have urged that private philanthropies be subject to more uniform standards and stricter government regulation—ranging from board composition to grant distribution
to philanthropies' charitable purposes. A major justification cited by advocates of these proposals is the claim that the charitable tax exemption and deduction are government subsidies, and thus philanthropic funds are "public money" and should be publicly controlled. Some advocates also claim that philanthropic assets are public money because philanthropies operate under state charters and are subject to state oversight.
In the second edition of this monograph, legal scholars Evelyn Brody and John Tyler evaluate the legal basis of the "public money" claim. They conclude that it is not well founded in legal authority. State oversight of philanthropies is not based on an assertion that philanthropies are subject to state direction or that their assets belong to the public, they write. Similarly, the fact that philanthropies have state charters does not make them state agencies or subject them to the constraints that apply to public bodies. Finally, the philanthropies and their donors receive their federal tax benefits in return for the obligation to pursue public rather than private purposes and to comply with the laws designed to ensure the pursuit of such purposes. There is no evidence, Brody and Tyler find, that these benefits were meant to give government other types of control over philanthropies.
Today, however, a new set of challenges confronts American philanthropy. With disturbing frequency, activists, legislators, and policymakers are claiming governmental authority to regulate the activities of American philanthropists. Such proposals are frequently justified with the claim that philanthropic assets are “public money.” Proponents of this view argue that the charitable tax exemption and deduction are government subsidies; thus, philanthropic funds are public money and should be publicly controlled. Some advocates additionally claim that philanthropic assets are public money because philanthropies operate under state charters and are subject to state oversight.
The “public money” claim is not well founded in legal authority. State oversight of philanthropies is based on the need to ensure that philanthropies pursue charitable rather than private purposes, not on an assertion that philanthropies are subject to state direction or that their assets belong to the public. Similarly, the fact that philanthropies have state charters does not make them state agencies or generally subject them to the constraints that apply to public bodies. Finally, the fact that philanthropies and their donors receive their federal tax benefits in return for the obligation to pursue public rather than private purposes and to comply with the laws designed to ensure the pursuit of such purposes; there is no evidence that these benefits were meant to give government other types of control over philanthropies.
Advocates of greater government control of philanthropies may therefore not justify their proposals with the claim that philanthropic assets are public money. They may make other arguments for their position, but these arguments must be evaluated in light of the strong authority in favor of charitable independence, the contributions of foundations and other charities to American society under the traditional, limited philanthropy-government relationship, and the serious consequences that greater government control could have for this relationship.
to philanthropies' charitable purposes. A major justification cited by advocates of these proposals is the claim that the charitable tax exemption and deduction are government subsidies, and thus philanthropic funds are "public money" and should be publicly controlled. Some advocates also claim that philanthropic assets are public money because philanthropies operate under state charters and are subject to state oversight.
In the second edition of this monograph, legal scholars Evelyn Brody and John Tyler evaluate the legal basis of the "public money" claim. They conclude that it is not well founded in legal authority. State oversight of philanthropies is not based on an assertion that philanthropies are subject to state direction or that their assets belong to the public, they write. Similarly, the fact that philanthropies have state charters does not make them state agencies or subject them to the constraints that apply to public bodies. Finally, the philanthropies and their donors receive their federal tax benefits in return for the obligation to pursue public rather than private purposes and to comply with the laws designed to ensure the pursuit of such purposes. There is no evidence, Brody and Tyler find, that these benefits were meant to give government other types of control over philanthropies.
Today, however, a new set of challenges confronts American philanthropy. With disturbing frequency, activists, legislators, and policymakers are claiming governmental authority to regulate the activities of American philanthropists. Such proposals are frequently justified with the claim that philanthropic assets are “public money.” Proponents of this view argue that the charitable tax exemption and deduction are government subsidies; thus, philanthropic funds are public money and should be publicly controlled. Some advocates additionally claim that philanthropic assets are public money because philanthropies operate under state charters and are subject to state oversight.
The “public money” claim is not well founded in legal authority. State oversight of philanthropies is based on the need to ensure that philanthropies pursue charitable rather than private purposes, not on an assertion that philanthropies are subject to state direction or that their assets belong to the public. Similarly, the fact that philanthropies have state charters does not make them state agencies or generally subject them to the constraints that apply to public bodies. Finally, the fact that philanthropies and their donors receive their federal tax benefits in return for the obligation to pursue public rather than private purposes and to comply with the laws designed to ensure the pursuit of such purposes; there is no evidence that these benefits were meant to give government other types of control over philanthropies.
Advocates of greater government control of philanthropies may therefore not justify their proposals with the claim that philanthropic assets are public money. They may make other arguments for their position, but these arguments must be evaluated in light of the strong authority in favor of charitable independence, the contributions of foundations and other charities to American society under the traditional, limited philanthropy-government relationship, and the serious consequences that greater government control could have for this relationship.
