Charitable Waste: Consideration of a 'Waste Not, Want Not' Tax

67 Pages Posted: 3 Jul 2010

See all articles by Evelyn A. Lewis

Evelyn A. Lewis

University of California, Davis - School of Law

Date Written: July 1, 2010


Lavish expenditures by charities occur regularly, even in today’s depressed economy. Many are unwarranted and foolish while some prove to be extremely beneficial and valuable over time. But even the best of charitable splurges involve government waste since all charities are substantially supported by significant government subsidies. Unfortunately, most taxpayers don’t respond to charitable luxury-type waste with the same degree of outrage they do to other forms of government waste. This article first reveals the probable reasons for this different taxpayer reaction and posits that it’ll be difficult to change taxpayer response given the complexity of the perception problems. As an alternative, this article proposes a tax solution to the problem, after describing how existing laws are currently inadequate to the task of preventing or curbing lavishness by charities. Moreover, the article articulates why flat prohibitions or oppressive sanctions are unwarranted and proposes taxing only the excess amount of charitable expenditures without threat, judgment or blame about a charity’s worthiness for general tax-exemption. A chief difficulty is in defining wastefulness. This article offers criteria for the tax’s design that tackles this issue as well as other considerations.

Keywords: charities, charity, tax exempt entities, non-profits, not-for-profits, tax expenditure, waste, cy pres, private benefit

Suggested Citation

Lewis, Evelyn A., Charitable Waste: Consideration of a 'Waste Not, Want Not' Tax (July 1, 2010). Virginia Tax Review, Vol. 40, 2010; UC Davis Legal Studies Research Paper No. 210. Available at SSRN:

Evelyn A. Lewis (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States

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