What’s Wrong with Charitable Rent Seeking?
Two recent stories and an earlier one make me ask the question whether we should be concerned about charitable rent seeking, particulaly as it effects good government. Some time ago, we blogged about the Supreme Court Historical Society and the “blockbuster” story (to use Robert Reich’s word) that the Society exploits its freely given access to Supreme Court Justices to garner donations, including donations from people with business before the Court. Here is what the Times said about that:
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 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.
And then late last month, the Times ran a story about the way the law school formerly known as ASSLaw or ASSol has exploited its unusually close relationship with Court jesters to enhance its charitable mission:
The school also creates bespoke programs for the justices in far-flung locations. Justice Gorsuch has traveled to Iceland and Italy to teach; Justice Kavanaugh has taught in Britain. During the first pandemic summer, both justices pressed on with their classes, teaching at stateside resorts. (Only Justice Thomas has routinely held his classes on campus, with two of his former clerks as co-professors.) “When a justice is with us, we do everything we can to engage the justice with our students,” the law school’s dean, Ken Randall, said in a statement. He added, “Law schools serve students, and their education is undoubtedly enhanced by the justices teaching or visiting or speaking with students.”
I looked it up, by the way, and the word “bespoke” is ancient Latin for “boondoogle.” And its kinda funny that Justice Thomas never took advantage of the bespoke programs. But then, he’s been cruising on SuperYachts and private Bombadier jets with Leonard and Harlan on 9 day island hopping excursions to Indonesia and New Zealand. And he didn’t have to fake teach a buncha bothersome students either. Who needs bespoke programs with friends like that?
AssLaw students have seen their chances increase for Supreme Court clerkships, by the way. Clerkships normally reserved for students at Harvard, Yale, Chicago, and Stanford (with Harvard and Yale taking the lion’s share). One student landed one of the coveted spots just last year and ASSLaw proudly boasts about its relationship to the Supremes as a factor in that effort. As well it should.
Anyway, the final example is from San Diego where the Vice Mayor’s nonprofit has raised over $700,000 in donations from people the Vice Mayor “behested.” A behested payment, you may recall from a prior post, is a donation made to an exempt organization at the behest of an elected official. This has raised eyebrows:
“Even if everything is legal, the public perception is horrible,” said Sean McMorris of California Common Cause, a nonprofit group that promotes government transparency. “As an elected official, when you’re involved in this kind of activity, where money is exchanged at an elected official’s request, the public has every right to question whether a public official’s loyalty is with that donor or with the public,” McMorris said of the solicited donations.
The comment is spot on. There is something unseemly when government officials lend their office holder “uumph” to an exempt organization’s fortunes. Doing so raises the question whether the government official is selling access and outcomes, even.
Dean Randall is technically correct that ASSLaw’s mission is enhanced, but at what cost to the rest of us. He seems to expect to be lauded for the efforts. There is nothing illegal about an exempt organization using its access to government official to enhance its charitable mission, even to solicit donations from people hoping to endear themselves to those government officials. That’s a problem for government and its officials, not us, charities probably say to themselves. Besides, there seems no private inurement, private benefit or prohibited political activity when the entity name drops to get more donations and opportunities for its beneficiaries. Seems like good business to Dean Randall. And me too, truth be told.
Still, should the exempt organization be congratulated for achieving its charitable mission — in ASSLaw’s case with spectacular success — at the expense of ethical government? At best, AssLaw, the Supreme Court Historical Society, and the Vice Mayor’s organization would be unindicted co-conspirators in a corruption trial arising from circumstances described above. Should we not be bothered by such obvious charitable rent seeking? The charity benefits but what about the larger public good?
If this is a big enough problem, how might we articulate a rule against “behested” payments, whether implicit or explicit. On first thought, it seems a difficult task unless we somehow preclude exempt organizations from seeking endorsements from famous government officials. I am not sure it can be done. In any event, exempt organizations who rely on behested payments are rent-seekers because they are increase their own fortunes by decreasing the fortunes of everybody else. In this case, the rest of us suffer from the implicit promises (and the resulting bad government) invariably accompanying behested payments.
darryll jones