The Supreme Court’s Behested Charitable Contributions
Me and my BFF and mentor, Roger Taney, at the Supreme Court a few weeks ago.
Silicon Valley Bank (SVB) was the 16th largest bank in the country and the largest in Silicon Valley. It operated in 13 different countries. According to yesterday’s Wall Street Journal, SVB committed itself to spend “$11 billion through 2026 supporting underserved communities.” Here are a few more snippets from the article:
Nonprofits were also among the tens of thousands of clients that kept cash at the bank and wondered if they could make payroll if there were a delay in accessing their accounts. Although leaders of affected nonprofits say they feel relieved by the emergency measures, many worry about the hole that SVB leaves as a dependable lender for affordable housing projects and partner for community programming. Some nonprofit leaders are also concerned about the fundraising landscape moving forward as the bank’s closure rattles a donor base of wealthy technology executives.
SVB committed in 2021 to spend $11.2 billion between 2022 and 2026 supporting underserved communities. That money was set aside for charitable contributions, residential mortgages to low- and middle-income borrowers, small-business and affordable-housing loans, and other investments.
Nonprofits comprise a relatively small part of the bank’s business compared with tech and healthcare companies. SVB had about $1 billion in loans to nonprofits and businesses outside the tech and healthcare industries at the end of last year, or 1.4% of total loans. But SVB’s purchase of Boston Private Bank in 2021 brought in nonprofits and small businesses outside the Massachusetts Bay Area tech world, including Dorchester Bay.
The SVB failure points to something interesting. Something called “behested” gifts. Yeah, California and apparently New York City have entire regulatory schemes regulating behested gifts. I guess a noun really can be made into a verb. As in “A gifted Blackacre to B” to mean “A made a gift of Blackacre to B.” A behested payment is a gift to a charity made at the behest of someone. So when SVB imploded last week, media folk started sniffing around to see what caused it all. Now, I am not a big fan of the right wing scribe known as the Daily Caller–the name is suspiciously like “the Daily Stormer.” But then again, its getting increasingly difficult to distinguish right wingers from neo-nazis these days so maybe my prejudice is justified. My Dad used to say, though, that “even a fool can teach you something.” So I read the Stormer article and actually learned something The article notes that in 2021 SVB made behested gifts to Govenor Gavin’s family foundation of $100,000, and another $25,000 to another charity at Gavin’s behest. Spare change to panhandlers, really but I checked it out at the Fair Political Practices Commission website, where you can search for behested gifts by a politician’s name. And I tell you what, Governor Gavin has been doing a whole lot of behesting! I mean you gotta scroll a long long time to see all the gifts he successfully behested. Its alot. But gifts made at the behest of elected officials is a different topic. Suffice to say that the behestees probably don’t all love Gavin’s pet charities, there must be something else they were after. Here is a primer on California’s behested gifts statute. And here is a recent law review article on the topic.
Learning about behested gifts made me finally understand what all the fuss was about over at the Supreme Court Historical Society. I saw the article in the NYTimes a few weeks ago with the sensational headline, A Charity Tied to the Supreme Court Offers Donors Access to the Justices. Robert Reich called the report a “a blockbuster story,” one that proves serious ethical lapses at the Court. Ok I am as bummed about the Court as anybody right about now, but I thought the Times story was a lot of noise about nothing. Here are a few snippets from the Times that capture the gist of the “blockbuster” revelations:
The charity, the Supreme Court Historical Society, is ostensibly independent of the judicial branch of government, but in reality the two are inextricably intertwined. The charity’s stated mission is straightforward: to preserve the court’s history and educate the public about the court’s importance in American life. But over the years the society has also become a vehicle for those seeking access to nine of the most reclusive and powerful people in the nation. The justices attend the society’s annual black-tie dinner soirees, where they mingle with donors and thank them for their generosity, and serve as M.C.s to more regular society-sponsored lectures or re-enactments of famous cases. The society has raised more than $23 million over the last two decades. Because of its nonprofit status, it does not have to publicly disclose its donors — and declined when asked to do so. But The New York Times was able to identify the sources behind more than $10.7 million raised since 2003, the first year for which relevant records were available.
At least $6.4 million — or 60 percent — came from corporations, special interest groups, or lawyers and firms that argued cases before the court, according to an analysis of archived historical society newsletters and publicly available records that detail grants given to the society by foundations. Of that, at least $4.7 million came from individuals or entities in years when they had an interest in a pending federal court case on appeal or at the high court, records show.
So now I get it. The article implies that the that the justices are going around behesting people, even if only by winks and nods. And potential litigants and others with business before the Court understand who puts the sauce on their certiorari. In return for gifts to the Society, they get access, special invitations and maybe even Dobbs v. Jackson! I think that’s what we are supposed to make of it.
I might articulate a private benefit concern in all of that, but big donors, behested or not, get special access all the time not just at the Supreme Court. Somewhere in tax exemption jurisprudence we ignore a big donor’s special access to stadium skyboxes, even. We might choke off all big donor contributions if that sort of benefit were intolerable. And even though I am slow about all this, I am not totally naïve. I allow for the possibility that the donors support the Society because they know that not even the Supremes are above extra judicial influence. Uber and Lyft gave Governor Gavin nice behested gift right about the time they were fighting to have drivers classified as independent contractors instead of employees. That turned out pretty well for both companies. The problem is that the article doesn’t point to any instances of actual behesting by any of the justices. Though it may look as bad as the NY Times seems to think, the most we can say about the gifts made by those with business before the Court is that they are . . . non-behested.
darryll jones