Federalism and philanthropy

Regardless of whether you cheered or booed the recent Supreme Court decision on the Affordable Care Act – reading the opinions provides a valuable lesson in federalism and distributed decision making that Foundations would do well to review. I’ve written about this before -but sometimes it seems to me that non-profits have lost sense of why it is that they are tax exempt. In reality private foundations could simply turn all their assets over to the Federal Govt and let the Govt dole out grants for the arts, or for science, or for service organizations. So why do we have a tax code that encourages tax exemptions for gifts to charitable organizations? It derives in part from a tradition dating back to the founding of this country – that is that NOT all decision making should rest in the hands of a central government. Having a host of decision makers involved in charitable activities encourages diverse decision making and ensures a variety of approaches. Non-profits would do well to heed the characterization of non-profits “…as not business and not government.” We who work in this sector should ever be on guard to defend its independence through our actions.29