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A Look At Philanthropy, Law, And The Public Good

Are philanthropic organizations serving the public good or their own interests? Should multi-billion dollar charitable organizations pay more taxes? Are tax-free university endowments in the public’s best interests?

The Forum on Philanthropy and the Public Good, a new, nonpartisan think tank spearheaded by Boston College Law School professors Ray Madoff and William Bagley, hopes to explore those questions and others by establishing a broad conversation about a little-known issue.

Madoff, who has spent 22 years at BC Law, teaches classes on tax policy, property, and death as it pertains to wealth and inheritance. Her current scholarly focus is on how public policy deals with philanthropy. While writing her 2011 book Immortality and the Law: The Rising Power of the American Dead, Madoff spent a lot of time looking at philanthropy law and noticed a potential problem.

“I was surprised by how the rules governing these private foundations seemed to be a lot more concerned with protecting their perpetual life than they were with actually producing philanthropic ends,” Madoff said.

She wrote a series of op-eds, published in The Los Angeles Times, The New York Times, and The Washington Post, among other outlets, questioning whether policies surrounding philanthropic actions ensure that money actually meets charitable ends, or is merely set aside in tax-free perpetuity by big-name foundations like Rockefeller, MacArthur, and Ford.

With her colleague William Bagley, an adjunct faculty member at the law school who teaches classes on philanthropy law, Madoff organized “A Convention on Promoting Meaningful Reform in Philanthropy,” a two-day discussion hosted at BC Law last September. After discussing issues like allocation of charitable resources and donor-advised funds, Madoff and Bagley decided to create the forum. The convention also discussed the growth of university endowments.

“President Obama has a plan to subsidize community college education for everybody, and people say, ‘Well, we don’t have enough money to do that,’” Madoff said. “But at the same time, people seem to fail to recognize how much money we subsidize for the growth of Harvard by allowing their $37 billion endowment to grow tax-free.”

The forum held its first event in Washington, D.C., on Oct. 23, titled “The Rise of Donor-Advised Funds: Should Congress Respond?” Donor-advised funds, or DAFs, are the fastest-growing charitable vehicle, with $50 billion in assets, Madoff said.

The conference gathered a group of experts for discussion and debate. The group presented position papers to Congress from opposing sides of the issue. For example, an essay by Victoria Bjorklund, a lecturer at Harvard Law School, opposed congressional action on the grounds that the growth of DAFs was the expected outcome when Congress included DAFs in the IRS code in the first place. A paper by Roger Colinvaux, a professor at the Columbus School of Law at Catholic University of America, argued that DAFs are “the worst development in the history of philanthropy.”

“Our goal is to promote conversation, with the ultimate goal that there are better policies,” Madoff said. “We’re not advocating for any particular policies, but we are trying to ensure that better conversations occur around them.”

Sharon Beckman, associate clinical professor of law, said in an email that she was interested in the questions the forum has raised about philanthropy law.

“But most exciting of all—and so appropriate for a forum based at Boston College Law School—is that their focus is on how the law can better serve the public good,” she said.

On Nov. 17, the forum has planned a “Philanthropy Boot Camp for Journalists,” where experts on philanthropy will explain some of the complexities of the law to journalists from the Wall Street Journal, National Public Radio, and 60 Minutes. In the spring, the forum will sponsor “Giving in Time: Perpetuity, Limited Life, and the Responsibility of Philanthropy to the Present and the Future,” at Stanford University’s Center on Philanthropy and Civil Society.

“We’re holding it with the Stanford PACS Center because it’s an excellent center on matters of philanthropy policy,” Madoff said. “The rise of tech money in San Francisco has given rise to lots of people out there questioning how best to use philanthropic dollars, so it seemed like a good location.”

The forum’s activities are sponsored by a number of charitable foundations, including the Ford Foundation and the Carnegie Corporation of New York. Madoff said that their support helps to ensure high-quality debate on philanthropic issues. The foundations support an effort that seeks not only to promote better policies and better scholarship on philanthropy tax policy, but also general public awareness.

“We spend a lot of money subsidizing philanthropic activities,” Madoff said. “But we’re not always mindful about whether we’re producing the results that we want.”

Photo courtesy of BC Law Magazine

November 5, 2015