The Secret Economy of Charitable Giving

55 Pages Posted: 27 Oct 2015

See all articles by Allison Anna Tait

Allison Anna Tait

University of Richmond - School of Law

Date Written: October 26, 2015

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.

Keywords: charitable giving, charitable trusts, cy pres, uniform trust code, gift economy

Suggested Citation

Tait, Allison Anna, The Secret Economy of Charitable Giving (October 26, 2015). Boston University Law Review, Vol. 95, 2015. Available at SSRN: https://ssrn.com/abstract=2680466

Allison Anna Tait (Contact Author)

University of Richmond - School of Law ( email )

28 Westhampton Way
Richmond, VA 23173
United States

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