Paul L. Caron

Monday, February 14, 2022

Dean & Brakman Reiser Present For-Profit Philanthropy Today At Oregon

Steven Dean (Brooklyn) & Dana Brakman Reiser (Brooklyn; Google Scholar) present For-Profit Philanthropy (Oxford University Press 2022) at Oregon today as part of its Tax Policy Colloquium hosted by Roberta Mann:

Dean-brakmanreiserPractices, players, and norms native to the business sector are migrating into philanthropy, muddying the distinction between commerce and charity and eliding the regulatory framework designed to keep them separate. Philanthropies organized as limited liability companies (LLCs) like the Chan Zuckerberg Initiative (CZI), donor-advised funds sponsored by investment company giants like the $35 billion Fidelity Charitable, and strategic corporate philanthropy programs that align charitable giving by multinationals as diverse as Citigroup, Google, and General Motors to their business objectives illustrate the tremendous change underway. Their for-profit philanthropy rejects the longstanding divide regulation has maintained between business and charitable activities. For-profit philanthropy represents a threat the scale of which has, until now, gone unrecognized.

That crisis threatens the trust that has always been central to charity law, allowing donors to give without hesitation even when they know little about a charitable organization or its leaders. Charity law’s “nondistribution constraint,” for example, ensures that those leaders may not enrich themselves at their charity’s expense. With that particular worry set aside, would-be givers can donate to a public charity with the same ease they might purchase shares in a public company, confident that whatever may happen, their donation (or investment) will be remain dedicated to a cause (or to generating profit).

The erosion of that trust can be seen in the rising political fortunes of taxes targeted at the richest Americans, ranging from Senator Warren’s wealth tax to the billionaires income tax proposed by Senator Wyden. For the last half-century, Americans have been content to let elites put their wealth into private foundations to benefit the public. Today, they seem increasingly open to the possibility of deciding for themselves where that wealth goes rather than leaving the choice up to General Motors or Bill Gates. For-Profit Philanthropy explains what has made the public more inclined to dismiss elite philanthropy as so much virtue signaling, hollow measures to burnish reputations rather than sincerely charitable acts. Simply put, elites have brought this on themselves by setting aside philanthropy law’s equivalent of the nondistribution constraint—the private foundation—created by the 1969 Tax Reform Act. When for-profit philanthropists spurn its Grand Bargain, they threaten the future of what has been one of the cornerstones of American society for hundreds of years.

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