The Private Foundation's Topsy Turvy Road in the American Political Process

Abstract

This article studies the American political debate on the charitable tax exemption from 1864 to 1969, in particular, the debate regarding philanthropic, private foundations. The article’s premise is that the debate’s core has evolved little since the period from the 1850s to the 1870s. To create perspective, a short summary of the modern economic significance of the foundation sector follows. Thereafter, the article reviews the pre- and post-colonial attitudes toward charitable institutions leading up to the debates in the 1800s, illustrating the incongruity of American policy regarding whether and to what extent to grant tax exemptions to charities. The 1800s state debates are referenced and correlated to parts of the 1900s federal debate to show the similarity if not sameness of the arguments against and justifications for exemption. The 20th-century legislative examination primarily focuses upon the regulatory evolution of foundations. Finally, the article concludes with a brief discussion of the 1969 tax reform’s changes to the foundation rules and the significant 20th-century legislation regulating both public and private foundations.