The Threat of Small Trust Termination Statutes to Small Charities

Alyssa A. DiRusso (Samford University – Cumberland School of Law) recently published, Euthanizing Small Charities: The Threat of Small Trust Termination Statutes, 45 Cumberland L. Rev. 475 (2015).  Below is the abstract of Professor DiRusso’s article:

With the widespread adoption of the Uniform Trust Code, many American states are enacting statutes that grant a trustee full discretion to terminate a trust on the sole ground that it has too little money to justify administrative expenses. This Article argues that there are two key costs of terminating small charities: depleting democracy in philanthropy and shrinking diversity in charitable focus. To support these claims of harm to democracy and diversity in charity, the Article reviews empirical evidence mined from tax returns: first, on disparity between charitable goals of the well-funded trust and the less-so, and second, on diversity of focus in smaller versus larger charities. The analysis reveals that smaller charities do tend to have different substantive primary goals than larger charities and that smaller charities do demonstrate more variety in focus than larger charities. We therefore may threaten democratic and diverse charity when terminating small charitable trusts, and ought to be reluctant to put our smaller charities to sleep.

TLH