Statement of Principles for Model State Laws to Encourage Philanthropic Creation and Operation
Philanthropy exemplifies the American ideal of private action in the public interest, demonstrating our faith in the capacity of individual citizens not only to create wealth, but also – voluntarily – to care for their country, their communities and their fellow citizens without undue reliance on government.
Philanthropy shows our commitment to the wellbeing of our neighbors, strangers in need, the well being of the environment, and of our society. It rests upon the premise that both recipients and donors have the capacity for self-government and wise choices and further serves as a laboratory of innovation in addressing some of society’s greatest challenges.
The independence of thought and diversity of interests and perspectives of so many committed private actors is the wellspring of the sector’s vitality, and must therefore be protected. This deeply-rooted American tradition should be honored as one of America’s finest achievements and as evidence of people’s capacity for individual initiative and self-governance, not burdened with costly and potentially crippling constraints on its work.
- Promote and facilitate innovation in the philanthropic sector:
- Simplify and streamline the process for establishing foundations, trusts and donor advised funds
- Modernize state trust and charitable benefit laws to encourage innovation in the creation of charitable vehicles to encourage and advance philanthropy
- Simplify the valuation of in-kind charitable donations
- Lessen bureaucratic burdens faced by foundations and promote simplicity:
- Accept the federal forms 1023 and 990-PF for state tax exempt recognition and tax filing requirements
- Promote and expand electronic filing of state required documents
- Develop streamlined procedures for operational oversight or regulation of foundations by agency(s) of the State
- Protect foundations’ rights to self-governance:
- Establish by law that decisions concerning the size and composition of foundations’ board and staff are exclusively within the discretion of foundations themselves consistent with their governing documents
- Safeguard the freedom of foundations to pursue their diverse and myriad charitable purposes:
- Establish by law a foundation’s charitable mission and the scope of its work be determined solely by the foundation’s bylaws and incorporating documents
- Promote the highest standards of integrity in the philanthropic sector:
- Impose or increase current excise tax penalties on those engaging in self-dealing
- Make tax-exempt entities and their managers subject to penalties for facilitating tax shelter transactions.