Abstract
The time is ripe for a reexamination of how charity is governed for federal tax purposes. It is likely that until such an examination occurs, charity will not readily return to its comfortable place out of the critical spotlight.
This Article is an effort to spur such a reexamination. Part II of this Article provides a snapshot of the historical development of the federal income tax law relating to charity in the twentieth century and shows that the statutory law has passively accommodated significant growth of the charitable sector without demanding any rigor of the sector in the form of positive requirements or quantitative measures. This has led to growth without meaningful oversight—a recipe for continuing problems. Part III of this Article provides an overview of many of the scandals that engulfed the sector during the early twenty-first century and shows that the scandals (regardless of their underlying merits) not only seriously eroded the "halo" effect of charitable organizations and enabled passage of reform legislation, but also illustrated the consequences of unchecked growth. Part IV of the Article discusses the central features of current law that are under pressure in part because of this growth without oversight. As highlighted in this Part I, these are the breadth of the charitable standard, a regulatory framework based on the distinction between public charity and private foundation, and a facts and circumstances and all-or-nothing approach to enforcement. This Part of the Article also shows how the reform legislation enacted in 2004- 2006 and in 2010, though not comprehensive reform, nevertheless planted seeds indicative of a shifting legislative policy toward charity, one that favors more substantive distinctions among charities for exemption purposes, undermines the current basis for distinguishing among charities, and points toward a need for brighter enforcement lines. Part V of the Article suggests that such piecemeal reform should be understood as a symptom of the law's inability to make substantive demands upon charitable organizations, and that absent a rethinking of how we regulate and define charity, the trends established by recent legislation are likely to continue. The Article concludes that the time to reconsider the current framework is upon us, and suggests a new approach based on developing different standards for the charitable tax benefits in order to focus our attentions more directly on the tax system's support for the charitable sector.
Recommended Citation
Roger Colinvaux,
Charity in the 21st Century: Trending Toward Decay,
11 Fla. Tax Rev.
(2011).
Available at: https://scholarship.law.ufl.edu/ftr/vol11/iss1/1