In the latest episode of The Art of Association podcast, I talk with Professor Dana Brakman Reiser, Centennial Professor of Law at Brooklyn Law School, about the history of charitable sector reform, the developments prompting calls for a new regulatory framework, and the prospects for establishing one.
Setting the rules of the game for charitable giving is a wonky topic, but it’s one we will have to grapple with sooner or later. Consider this episode a primer on the big issues at stake.
You can listen to our conversation on Apple Podcasts, Spotify, or Amazon Music.
Our point of departure is the stellar book that Brakman Reiser coauthored with Steven A. Dean, For-Profit Philanthropy: Elite Power and the Threat of Limited Liability Companies, Donor-Advised Funds, and Strategic Corporate Giving. It provides historical context and legal analysis that anyone concerned with the regulation of philanthropy and the charitable sector will need to reckon with in the years ahead.
We begin our conversation by tracing the decades of debate spurred by the rise of big foundations and the drive to rein them in, culminating in the Tax Reform Act of 1969. The “Grand Bargain” embodied in this landmark legislation established the policy settlement that has governed the charitable sector over the ensuing decades.
We then explore the rise of alternative forms of what Brakman Reiser and Dean term “for-profit philanthropy,” which have enabled wealthy donors and institutions to circumvent many of the key constraints that the 1969 Act imposed on private foundations like Ford and Rockefeller.
These alternative forms of giving include LLCs like the Chan Zuckerberg Initiative and the Emerson Collective; national donor-advised fund providers affiliated with financial institutions like Fidelity and Vanguard; and corporations engaging in strategic giving as an integral part of their business operations.
We discuss how elite donors using these new vehicles enjoy privacy, flexibility, and financial benefits not available to private foundations. But these advantages come at a cost. The rise of for-profit philanthropy has increasingly undermined the regulatory framework Congress established in 1969. In the process, it is putting the legitimacy of philanthropy writ large at risk.
We conclude by considering pathways to reform that could restore public trust in philanthropy — and the steps that policymakers, funders, their advisors, and sector advocates could take to bring them about.
As always, please listen and share the episode with others who might be interested. And if you could give the podcast a quick rating or review, it would help more people discover it — and I would be much obliged.