Free Enterprise and Philanthropy Are Inseparable
By Daniel J. Popeo, Washington Legal Foundation
‘Tis the season for gift giving, not just to our friends and loved ones, but also to our favorite charities. Studies show that many charities receive half their donations in the final months of the year.
Sadly, thanks to our still struggling economy, many private foundations, corporations, and everyday citizens are once again finding themselves with less to give this holiday season. This situation reflects a truth that some non-profit leaders and their allies in government may find rather inconvenient: free enterprise and philanthropy are inexorably intertwined.
Virtually every source of funding for charitable work around the world hinges on the free market and the wealth it creates.
Read more at the Washington Examiner
Cross-posted by Forbes.com on WLF Contributor site
From the “you just can’t please some people” files, an illustration from the world of the “food police”:
Back in June, the U.S. Conference of Mayors (USCM) announced that a beverage trade association had made a three-year, three-million dollar grant to the Conference which would fund efforts in cities to target obesity. Now that the dimmer shades of autumn have replaced the glow of summer, the Center for Science in the Public Interest (CSPI) is casting regrettable aspersions on this philanthropic act in a November 3 letter.
The letter reflects concerns that WLF’s Cory Andrews raised in an October 21 WLF Legal Opinion Letter, “Voluntary” Food Marketing Limits: A Hazard To Philanthropy’s Health. The draft “voluntary” food and beverage marketing principles promulgated by four federal agencies led by the Federal Trade Commission (FTC) equated companies’ philanthropy to advance public health with “advertising.” One provision of the report would prohibit such philanthropy if children would be beneficiaries. Even though FTC is reportedly backing away from this, government’s endorsement of such an idea would, the paper noted, surely motivate similar activism from “public interest” groups.
And so it has. Continue reading
As we enter the critical final two weeks of the year’s most important month for non-profit institutions which rely upon donations,* now is a good time to reflect upon the fundamental freedoms that allow Americans to be the world’s most charitable people, and contemplate why those freedoms are increasingly threatened.
The ability to choose freely from the thousands of non-profit organizations seeking our support, to put one’s own personal, financial imprint on a cause, is one of those freedoms. Directly related to that freedom is the ability to create a grant-making institution and designate how the institution’s money will be donated. This same concept of “donor intent” applies when someone makes a donation aimed at a specific purpose, such as giving to a university to fund a certain educational project or endow an academic “chair.” Federal tax policy contemplates and supports these freedoms by broadly defining which institutions qualify for tax exempt status. As Randolph Foundation President Heather Higgins remarked in a WLF Conversations With paper this past summer:
Wisely, [the tax code] doesn’t try to classify some forms of charitable giving as more worthy than others, leaving the judgment of funding priorities to those who are deploying their own resources to make whatever difference they can.
Unfortunately, respect for donor intent and the freedoms which underly it is in decline. Continue reading
Nonprofit foundations and philanthropic organizations face a hostile economic and legal climate. Campaigns to diversify boards of directors, undermine donor intent, and increase government regulation all interfere with the good work that non-profit organizations do for the community. To counter these harmful campaigns, Washington Legal Foundation just released the latest edition of its CONVERSATIONS WITH publication format, featuring a group of nationally recognized philanthropic experts who examine the direct connection between philanthropy and freedom, and how some activists and elected officials are threatening to sever that important link by pursuing legal policies aimed at directing more charitable donations to their “preferred” causes.
Through an informal, question-and-answer conversational format, former Attorney General of the United States and Pennsylvania Governor Dick Thornburgh leads a lively and informative discussion with Dr. Larry Arnn, President of Hillsdale College; Heather R. Higgins, President and Director of the Randolph Foundation; and Adam Meyerson, President of the Philanthropy Roundtable.
The participants explore Americans’ uniquely charitable spirit and the vital role that such widespread generosity has played in our democracy. Heather Higgins observes that “America has a rich charitable tradition, the logical complement to the idea that we as citizens are responsible for taking acre of our neighbors, rather than presuming and waiting for the government to do it for us.” Adam Meyerson agrees, emphasizing how the same spirit of entrepreneurialism that was so successful in making America the leader in initiative and ingenuity in the business sector can also be found in the charitable sector. “Volunteering and charitable giving have been part of the American character since the founding—they’re part of our national DNA,” Meyerson states.
The participants also address the growing movement to impose further government regulation on the philanthropic sector by more narrowly defining which charitable causes are “in the public interest.” Governor Thornburgh notes how the view that philanthropists don’t sufficiently serve the “underserved” has led to increased calls for greater government oversight of, and involvement in, the non-profit sector. The participants are unanimous in decrying this recent trend. Dr. Larry Arnn points out that the federal government is itself a seat of privilege: “When the government identifies underprivileged classes, it has a way, as it has an interest, in turning them into castes. Because unlike charity (when it is really charity), government these days hopes to receive something back from the beneficiaries: it gets political support for them.” Meyerson agrees, adding that “[o]ne thing we should be very cautious about is who gets to decide which groups are the ‘right’ object of charity and which aren’t.”
“From the proposed decrease in the charitable tax deduction to greater government intrusion into the operation of private foundations, there are numerous ways in which philanthropic freedom is now in jeopardy.” — Jeffrey Cain, Ph.D.
The beneficiaries of American charity and generosity are widespread—disaster relief funds have saved residents of Sri Lanka and Haiti, and America’s AIDS initiatives have benefited many, especially in African countries. But the benefits are even greater at home. Because of our proclivity towards charity and civic action, American society is a more cultured, wealthier, and more equitable society. Alexis de Tocqueville noted this when he visited America in 1831, and it has remained true in the present day.
Unfortunately, the very freedoms that have allowed American philanthropy to flourish are now under attack. In a just-released Washington Legal Foundation Legal Backgrounder titled, Five Threats To Philanthropic Freedom In These Recessionary Times, Jeffrey Cain, President of the Arthur N. Rupe Foundation, examines the increasingly hostile environment for charitable foundations, and chronicles specific efforts that, if successful, will likely cripple the philanthropic sector. Continue reading