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Wednesday, November 25, 2015

Tait on the Secret Economy of Charitable Giving

Allison Anna Tait (University of Richmond - School of Law) has posted The Secret Economy of Charitable Giving on SSRN. Here is the abstract:

Charitable giving is big business. In 2009, the Internal Revenue Service reported close to 100,000 private foundations, almost double the number from fifteen years earlier. Some of these charitable trusts, like the Gates Foundation, are multi-billion dollar enterprises. Trust instruments and other governing documents set forth the terms that control these gifts. Because charitable trusts can exist in perpetuity, however, changing circumstances sometimes render the terms difficult to fulfill. Courts can apply cy pres, a doctrine that allows for the modification of gift restrictions, but in the past courts have tended to apply cy pres narrowly and privilege donor intent above all other considerations. Recent reforms, however, have moved courts toward a more flexible application of the doctrine. In this Article, I analyze certain high-profile cases that have driven these reforms — including the presumption of general charitable intent, the recognition of “wasteful” as a criterion, and the deployment of deviation — and explain how these reforms represent positive change. Moreover, I provide a theoretical grounding to account for the correctness of these reforms. I argue that charitable giving should be understood as embedded in a nexus of material and social exchanges — part of the “charitable gift economy.” I describe how charitable giving provides a range of benefits to donors, including both tangible tax benefits and intangible benefits such as status, social identity, and “warm glow.” Based on this understanding of the charitable gift economy, courts and charities alike should embrace current reforms and seek to expand them further.

I found this article quite fascinating. Not only does Tait provide an excellent, concise but thorough account of the history of the doctrines of cy pres and deviation, but also she proposes a rich account of what she calls the "charitable gift economy" and how it ought to affect our understanding of the proper scope of cy pres and deviation. Essentially, she argues that donors receive a congeries of benefits associated with their charitable contributions, and courts ought to consider the nature of those benefits in determining the appropriate scope and duration of restrictions on charitable gifts. In other words, perhaps cy pres and deviation ought to become easier to invoke as time passes. As an aside, I also commend Tait's well-chosen quotes from Marcel Mauss and La Rochefoucauld in the epigraph of her paper.

Posted by Brian Frye on November 25, 2015 at 09:29 PM | Permalink

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