Promoting a Closer Alignment Between Philanthropy and the Public Good
Abstract
Charitable gifts are often perceived by the public to be private acts of generosity. However, due to the many benefits provided by the tax code, charitable gifts are more accurately described as a public-private partnership in the charitable choices of the donor. In some cases, the combined tax benefits can be as great as $0.72 on the dollar. At her Boisi Center lunch, Madoff will tackle this question about whether the current tax rules governing philanthropy are providing sufficient public benefit.
Speaker Bio
Ray Madoff听is a professor at Boston College Law School. She is the co-founder and director of the Boston College Law School Forum on Philanthropy and the Public Good, a non-partisan think tank. Madoff鈥檚 areas of expertise include philanthropy policy, the rights of the dead, estate taxes, comparative inheritance law and wealth inequality and taxes. A regular commentator on a number of these topics, Madoff has appeared on dozens of national radio shows including听On Point,听Talk of the Nation,听All Things Considered,听Here and Now听补苍诲听Marketplace, among others. Madoff is a frequent contributor to the opinion pages of the听New York Times, and has also published Op-Eds in the听Washington Post, the听LA Times, the听Boston Globe听and the听Chronicle of Philanthropy. Madoff is a member of the American Law Institute, an Academic Fellow of the American College of Trusts and Estate Counsel and past president of the American Association of Law School鈥檚 Trusts and Estates Section. She was named a 2014 Top Women of the Law by听Mass Lawyer鈥檚 Weekly.听She received her AB from Brown University and her JD, LLM from New York University.听
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Event Photos
51茶馆 Law School Professor Ray Madoff discusses the relationships between philanthropy, taxes, and politics in America at the Boisi Center. Tuesday, February 9, 2016.
Photos by MTS Photography
Event Recap
On February 9, Boston College Law School professor Ray Madoff led a discussion on the intersection of charity and taxes, exploring the benefits to the American public good. An expert in philanthropy policy, estate taxes and comparative inheritance law, Madoff began her talk by discussing the history of some of the largest philanthropic institutions in America. She said these organizations benefited from federal tax deduction policies, which in turn, may short the American net common good due to the loss of substantial amounts of tax dollars.听
The rise of donor-advised funds (or DAFs) further contributes to the disconnect between philanthropy and the public good, according to Madoff. DAFs are relatively new investment vehicles, run by banks and investment firms for companies or individuals to donate money to charities. Instead of giving directly to charities, donors are able to give to DAFs, which then invest the money and collect fees on investment performance until the money is ultimately distributed to charity. One of Madoff鈥檚 major concerns about DAFs is that donors are able to claim full and immediate tax benefits upon giving to a DAF, but the money donated may not be distributed to charities for many years.听
Madoff also noted that private foundations benefit from favorable philanthropic tax policies. For instance, private foundations are only required to spend 5 percent of the value of their annual total worth each year to be considered a philanthropic organization, and this spending may include staff salaries. DAFs are not required by law to spend anything at all.听
Madoff referred to these issues as 鈥減erpetuity over charity鈥� 鈥� the political tendencies to keep philanthropic foundations alive rather than to increase听funding to charities. Consequently, many corporations and private foundations benefit more from charitable tax deductions than what the public receives in philanthropy.
Read More
Books
Maydoff, Ray D.听. (Yale University Press, 2011).听
Articles
Ray D. Maydoff's articles in听The听New York Times,听"" and听""听
Ray D. Maydoff's article in听B.C. Int'l & Comp. L. Rev.,听""
Ray D. Maydoff's article in听The Chronicle of Philanthropy,听"."
Ray D. Maydoff's article in听Boston College Law School听""
In the News
Early last December, Mark Zuckerberg鈥攁longside wife Priscilla Chan鈥斕齢e would donate 99% of his shares in Facebook stock to charity over the course of his and Priscilla鈥檚 lifetimes. The value of those shares at today鈥檚 price amounts to roughly $45 billion.
Despite initial public approval of the philanthropic gesture,听听the accuracy of describing Zuckerberg鈥檚 efforts as truly 鈥渃haritable.鈥� The issue, those skeptical of the announcement claim, arises from the fact that the proceeds from those shares will flow through a limited liability corporation, or LLC鈥攁n entity that can invest in private companies, make political donations, and is exempt from regulatory policies that non-profit charities are normally subjected to.听听from December takes aim at Zuckerberg鈥檚 decision not to register as a non-profit charitable foundation, and discusses why creating an LLC might ultimately benefit Zuckerberg in the long run.
听Zuckerberg鈥檚 philanthropic announcement may also be a disguised effort to avoid certain taxes in Germany, Britain, and other parts of Europe鈥攚here certain columnists have taken note of Facebook鈥檚 alleged historical tendency to skirt corporate taxes.
Still,听, of Zuckerberg鈥檚 decision鈥攑ointing less to the logistics of his announcement and instead to the greater social implications such a message might have on millennials and future wealth. Regardless of its implementation, some have commented, Zuckerberg鈥檚 charitable intent may signal to a new generation that philanthropy should take higher priority in corporate culture鈥攅specially among the technology sector.