Private foundation assets not public funds, report says

June 22, 2009

Charitable funds are private, not public, and the relationship between philanthropy and government should remain limited, a new report says.

Based on an analysis of legal precedents, the report dismisses as "not well grounded" claims that charitable funds are "public money" because they are exempt from public taxes, received state charters and are subject to oversight by state attorneys general.

The law treats foundations as private entities devoted to public ends, but they do not have to serve the purposes of government or the public, says the report, "How Public is Private Philanthropy? Separating Reality from Myth."

Released by The Philanthropy Roundtable, the report also says that while individuals and businesses routinely receive tax preferences, for example, they never are considered government entities, and their assets are not considered public property.

And a state charter does not make foundations or other charities public entities, says the report, which was written by Evelyn Brody, a professor at the Chicago-Kent College of Law, and John Tyler, secretary and general counsel of the Ewing Marion Kauffman Foundation.

"Policymakers cannot use these arguments to intrude into the governance, missions and operations of philanthropies," The Philanthropy Roundtable says in a statement.

While the relationship between philanthropy and government traditionally has been limited, the group says, the "public money" claim has been used in recent years "to support proposals to urge stricter legal limits on the operations and governance of foundations and other charities."

Adam Meyerson, the group's president, says in a statement that those proposals represent an "attack by activists, legislators and policymakers who clamor for greater governmental authority to regulate the activities of American philanthropists."

The Philanthropy Roundtable says the new report "underscores the legal basis for continued separate between government and philanthropy."

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