The 1969 Tax Reform Act and Charities: Fifty Years Later

Abstract

Fifty years ago, Congress enacted the Tax Reform Act of 1969 to regulate charitable activity of the rich. Congress constricted the influence of the wealthy on private foundations and hindered the abuse of dollars put into charitable solution through income tax rules. Concerned that the likes of the Mellons, the Rockefellers, and the Fords were putting substantial wealth into foundations for huge tax breaks while continuing to control those funds for their own private ends, Congress revamped the tax rules to force charitable foundations created and controlled by the wealthy to pay out charitable dollars annually and avoid self-dealing. Today, with concerns of similar misuse of philanthropic institutions to further wealthy interests, it is worthwhile to reconsider this significant legislation fifty years later.

Keywords: private foundation, charity, inequality, 501(c)(3), nonprofit, philanthropy, 1969 Tax Act, Federal Income Tax, Tax Exemption

JEL Classification: K31, K34, K23, H11, H2, H20, H23, H25, H41, H50, P16