Uncharitable SCOTUS

Two most powerful super PACs: Editorial cartoon - cleveland.comSir Thomas Browne (d. 1682) is acknowledged to be the first to coin the expression into print form in 1642: Charity begins at home, is the voice of the world; yet is every man his greatest enemy, and, as it were, his own executioner. Some critics regard Browne’s admonition as one that the current SCOTUS should keep in mind. Nonetheless, it appears that American exceptionalism has operated to carry Browne’s caution about becoming an enemy and executioner into the nation’s charitable scheme.

The term charity originated in Old English, referencing a theological virtue of Christians and love for fellow mankind. Its meaning has evolved over time to be employed as simply providing for those in need. In colonial America, the original thirteen colonies inherited a concept of poor laws from magisterial England under which the needy were to be accommodated in the localities of their residence, effectively proscribing any role for the central government. However, these beneficiaries had to be “settled” in the area; itinerants were neither welcomed nor offered charity.

A notable exception was a 1798 payroll tax upon the wages of sailors to support hospitals for sick and disabled sailors. But such charity was not a common virtue or value. Localities were often bitterly divided over paupers who were not “settled” for whom welfare might be extended from resident taxes. The prevalent view was that charity was ineffective and useless because “distress and poverty multiply in proportion to the funds created to relieve them.” (Lawrence Friedman, A History of American Law). Functionally, such public policy was intended to discourage any sense among the populace that welfare was acceptable. The religious and theological underpinnings were unmistakable.

Throughout the 1800s, persons deemed paupers were routinely “farmed out” to the lowest bidders to be exploited as forced labor, generally on farms. A few states (Massachusetts and New York) made early attempts to curtail the “outdoor” welfare of the auction system in favor of “indoor” care by way of government-sponsored poorhouses accompanied by educational or moral training. However, these were notably unsuccessful due to societal indifference and the powerlessness of the poor, according to Friedman.

Conscience in the new republic was significantly and substantially altered by the moral debate over slavery and its later legal demise following the Civil War. Vast waves of immigration and the Industrial Revolution also contributed to an increased sense of providing for the needy. In the mid-1800s, states began to accept the legal concept of a permanent charitable trust, often funded by wealthy individuals for the benefit of a special interest, such as a college or hospital. At the same time, courts fashioned decisions immunizing charities from liability lawsuits.  A broader construct and concept for charity or social welfare was necessary to a country accepting massive immigration and compacting populations into urban centers.

With the passage of the 16th Amendment in 1913 authorizing Congress to levy an income tax on individuals and further expanded by the War Revenue Act of 1917, a deduction for charitable contributions was initiated on the basis of fear that increasing taxation would cause the wealthy to restrict charitable giving. Thus the necessities of World War I boosted the cause of charities. Just over a decade later in 1929, the Great Depression would create yet more instability, requiring the federal government to act. States and localities were hemorrhaging revenues, virtually bankrupted. In response, the New Deal created a social security system, housing programs, and the national government became a major employer.

Throughout this lengthy set of developments, the notion of maintaining the privacy of the names of donors never emerged. . . . Despite the 1954 congressional effort to restrict charitable monies’ purposes and encourage contributions to organizations “organized and operated exclusively for charitable purposes,” political interests have interceded and secured legal decisions creating exceptions and shielding the process from public view.

Throughout this lengthy set of developments, the notion of maintaining the privacy of the names of donors never emerged. Certainly, some retained anonymity but such was a personal, not legal matter. In 1954, Congress adopted statutes enabling and defining charitable contributions and deductions, popularly known as 501(c) of the IRS code. At present there are some 29 types of 501(c) not-for-profit organizations, with 501(c)(3) being perhaps the most familiar as it covers churches, colleges, universities, hospitals, ASPCAs, YMCAs, and thousands upon thousands of local charitable efforts. The provision also applies to organizations that are politically inspired, such as “social advocacy” and special interest PACs.

Thus, despite the 1954 congressional effort to restrict charitable monies’ purposes and encourage contributions to organizations “organized and operated exclusively for charitable purposes,” political interests have interceded and secured legal decisions creating exceptions and shielding the process from public view.

Charitable donors enjoy the benefit of reducing tax liability by a percentage of the amount donated. The income to the qualified organizations is not subject to income tax, thereby increasing the utility of such gifts. At some level, the costs of this public policy are borne by all taxpayers as a kind of social obligation. Once upon a time, donors, especially the wealthy, proudly had their family names attached to charities of choice. However, over the past few decades, statutes and court decisions, especially by SCOTUS and largely influenced by political considerations, have granted donors anonymity. Thus, megagifts, especially by the wealthy such as the Koch brothers, have become secretive and used by favored organizations to influence the populace of special interests, mostly with a political object.

The result is that the shared tax burden of the public absorbs well-funded political advertising about issues often directed at that very same public. Americans for Prosperity (AFP), a Koch-initiated and -funded advocacy group, proclaims on its website among its purposes, opposition to

unsustainable government spending and debt, a broken immigration system, a rigged economy, and a host of other issues you can explore.

Ironically, AFP is a government cost, a public recipient. At the same time, AFP asserts that its activities are directed to “advancing a free and open society.” But not too open so as to require the brothers to acknowledge their financial contributions to these lofty goals. SCOTUS has swallowed whole a legal line of jurisprudence, intellectualized as Constitutionally protected. Its reasoning wraps such financial dealings in First Amendment protections of freedom of speech and association, asserting that prohibiting government requirements to disclose donor identities is more an American value than the public’s right to know the identities of those donors or amounts contributed to which organizations.

AFP was the plaintiff in a recent high court case involving a California statute requiring disclosure to the state’s attorney general the identities of significant donations, e.g., more than $5,000, which SCOTUS found unconstitutional. The state argued the necessity of the disclosure to assist in investigating fraudulent transactions, an interest of high intensity to the public. The majority disagreed, finding the statute too broad in scope to meet its goals because “that information will become relevant in only a small number of cases.” AFP also argued that the statute would deter charitable contributions.

Dark money operations such as AFP, protected by anonymity from public disclosure, according to SCOTUS, is a primary legal doctrine overshadowing a right to know the identities and extent of charitable contributions to organizations such as AFP, which alleges its First Amendment right to “advancing a free and open society.” 

Sir Thomas Browne’s 1642 adage is made hollow. Charity is not the voice of the world; “every man is his greatest enemy” and, indeed, “his own executioner.”  

 



Categories: congress, FREE SPEECH, Immigration, Issues, National, political parties, politics, RULE OF LAW, SCOTUS, wealth inequality

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