With the exception of outliers like Rep. Xavier Becerra (D-Calif.), who once remarked that the tax exemption for foundations is a "$32 billion earmark," few are foolish enough to say that charitable dollars are simply “public” monies. For one thing, the average American would revolt at the bald claim that private giving is just one more thing that governments may take at will. Instead we usually hear fuzzy things like, “philanthropic assets should be considered partially-public, partially-private dollars. As investors in this country's philanthropic institutions, taxpayers have a stake in the missions and successes of foundations.”
That’s from a press release by the National Committee for Responsive Philanthropy (NCRP), a group that looks kindly on governmental meddling with charitable giving, up to and including the federal government’s dictating the racial make-up of foundations’ boards and staffs so as to satisfy reverse-discrimination goals (see, for instance, its testimony before the House Ways and Means Committee).
Apparently, in the halls of Congress and federal agencies like the IRS, the nation’s deepest wisdom and most exalted justice is lying around in piles, ready to be put to use improving the country as soon as citizens and non-federal government entities have their assets taken from their control.
This kind of thinking is simply upside down. America’s founders never intended for the U.S. government to monopolize power, much less to rule over citizens and civil society as a parent rules small children. That’s why the Constitution carefully designed the government’s structure to make it difficult for officeholders to act rashly at the national level and also limited the revenue sources those officeholders could play with. And that’s why states, under the original Constitution, retained significant national roles.
Nor were the states to be highly centralized entities: They in turn had their own limitations of power and gave significant roles to local governments. Alexis de Tocqueville – who famously praised the role of the civil associations that we now call charities – emphasized that decentralization was critical to the nation’s well-being. Keeping decisions close to the citizen, he explained, fosters citizens’ concern for the public good precisely by permitting them to take personal responsibility for the public good, rather than giving that responsibility to distant governments.
Conversely, Tocqueville warned, if America ever falls victim to centralized rule she will bring forth a novel form of despotism, one based on claims of kindly intentions. The centralized ruler would be
an immense and tutelary power, which takes upon itself alone to secure [the people’s] gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?
Fortunately, good arguments are being made against the claim that charitably deployed money is “public,” i.e., not to be left under the control of free citizens and civil associations. The NCRP press release quoted above was issued in response to a Philanthropy Roundtable booklet, How Public Is Private Philanthropy?, which makes excellent arguments for the traditional understanding that private charitable work can serve public purposes without excessive governmental control. (Don’t miss the lively discussion of the booklet held at the Bradley Center for Philanthropy and Civic Renewal.)
The books’ authors, law professor Evelyn Brody and John Tyler of the Ewing Marion Kauffman Foundation, have now added to their argument in a law review article. In their article, the authors examine “four centuries of law and policy” in America and Britain to show that “foundations and other charities are not inherently public bodies and their assets are not ‘public money.’” Indeed, the leading Supreme Court decision goes back to 1812, when Chief Justice Marshall and his colleagues decided the Dartmouth College case. That dispute sounds like something that could happen this afternoon in California: the state legislature of New Hampshire wanted to dictate who would serve on the private college’s board of trustees. (Congressman Becerra, call your office.)
Under “one of the most stubborn and well settled doctrines” of England’s common law, Justice Story declared, even the King was not allowed to run roughshod over private charities like Dartmouth, and American officials should be kept on at least as short a leash. The public good demands it.