Episode Summary:

In this episode of The Art of Association, I talk with Professor Dana Brakman Reiser of Brooklyn Law School about the recent history of charitable sector reform, the developments giving rise to calls for a new regulatory framework for philanthropy, and the prospects for establishing one.

Drawing on For-Profit Philanthropy: Elite Power and the Threat of Limited Liability Companies, Donor-Advised Funds, and Strategic Corporate Giving, which Reiser co-authored with Steve A. Dean, we begin by tracing the decades of debate over the role of foundations that culminated in the Tax Reform Act of 1969. Next, we discuss how the “Grand Bargain” embodied in this landmark legislation established the policy settlement that has governed the charitable sector and private foundations over the ensuing decades. We then explore the rise of alternative modes of what Reiser and Dean term “for-profit philanthropy,” which have enabled wealthy donors and institutions to circumvent the constraints the 1969 Act placed on private foundations. They have enjoyed greater privacy, flexibility, and financial benefits as a result, but these developments have increasingly put the broader legitimacy of large-scale philanthropy at risk. We conclude by considering potential pathways to reforms that could restore public trust in philanthropy — and the steps that policymakers, philanthropic funders, their advisors, and sector advocates could take to bring them about.

Chapter Titles

[1:25]: How Dana came to focus her legal scholarship on the intersection of law, business, and the charitable sector

[5:24]: The rise of big foundations and the push to rein them in, culminating in the Tax Reform Act of 1969

[12:28]: How the 1969 Act regulated private-foundation grantmaking via “timing, targeting, and transparency”

[20:26]: The give and take between philanthropy and the public reflected in the Act’s “Grand Bargain”

[24:43]: How the rise of “for-profit philanthropy” has undermined this regulatory framework

[31:21]: Potential pathways to reforms that could restore trust in philanthropy and the nonprofit sector

[42:04]: The costs and benefits of requiring greater transparency from philanthropy – and how to strike a new balance

[46:32]: Dana’s forthcoming book on the tensions that can arise between commitments to perpetuity and charitable purpose.

Related Resources

Dana’s book (coauthored with Steven A. Dean): For-Profit Philanthropy: Elite Power and the Threat of Limited Liability Companies, Donor-Advised Funds, and Strategic Corporate Giving (Oxford University Press, 2023)

Tax Reform Act of 1969