Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption

47 Pages Posted: 25 Jul 2006


This piece explores the broad financial relationship between the public and the charitable sectors. Tax exemption operates as a peculiar subsidy - offering the greatest benefits to charities carrying on the most profitable activities and owning the most valuable property. Perhaps, then, the property tax and income tax exemption of charities can be explained by a 'sovereign' view of the charitable sector. Resembling the federal tax treatment of state and local governments, exemption for charities respects the independence of the nonprofit sector, and minimizes the involvement of charities in the political process. Unfortunately, the long history of Anglo American philanthropy also contains a great deal of mistrust by the state of the economic power of charities, and a sovereign view of charity can explain as well some of the peculiar rules that reduce, rather than enhance, the value of tax exemption.

Keywords: Charity law, non-profits, tax exemption

Suggested Citation

Brody, Evelyn, Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption. Journal of Corporation Law, pp. 585-629, 1998, Available at SSRN: https://ssrn.com/abstract=918129

Evelyn Brody (Contact Author)

Chicago-Kent College of Law ( email )

565 West Adams St.
Chicago, IL 60661
United States
312-906-5276 (Phone)
312-906-5280 (Fax)

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