Restricted Charitable Gifts to Government

Reid Weisbord and Christiana Markella de Borja have a new paper coming soon.  Here is the abstract:

With surprising frequency, the government accepts a restricted charitable gift but later determines that compliance with the donor’s restrictions is illegal, undesirable, or impossible. The government must then continue complying with a restriction it deems objectionable, seek court approval to modify or deviate, or risk legal consequences for violation. When accepting a restricted charitable gift, the government often discounts future administration and compliance costs that can significantly undermine public benefits produced by the donor’s philanthropy.

A rich literature has examined restricted charitable gift policy largely from the donor’s perspective. That scholarship focuses on various mechanisms for supervision, legal standing, and enforcement of donor-imposed restrictions. This Essay accepts as settled law the underlying principle that any charitable donee, including the government, should generally comply with donor-imposed restrictions unless legally altered. Rather, this Essay covers new ground by considering the donee’s role in philanthropic transfers, and by focusing on a context that directly implicates the public interest in charitable assets: the government’s acceptance of restricted charitable gifts. 

This Essay surveys litigated disputes involving governmental compliance with a restricted charitable gift and reveals four patterns of frequent conflict: when donor restrictions (1) violate public policy, (2) diverge from governmental priorities, (3) prescribe a charitable purpose impossible to accomplish with the amount given, or (4) subject the government to liability for gift maladministration. Those disputes demonstrate why the government’s policy regarding restricted charitable gifts should not be acceptance by default. The Essay concludes by recommending governmental acceptance policy reforms that better protect the public interest in charitable assets while providing greater clarity and transparency for donors deciding how to structure a restricted charitable gift.

darryll k. jones