Statement of Principles on Philanthropic Freedom

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 rests upon the premise that both recipients and donors have the capacity for self-government and wise choices. This vital and diverse element of civil society should be honored as one of America’s finest achievements and as evidence of people’s capacity for individual initiative and self-governance.

Legislatures should not pass legislation that encroaches upon the freedom of philanthropic persons and entities, including foundations, donor-advised funds, and limited liability companies, to operate as private institutions or that limits their ability to make granting decisions based on their own principles and priorities. The IRS has a clear determination for organizations who qualify as not-for-profits; states should not seek to politicize charity by limiting directly or indirectly the choices of charities that philanthropists can support.

A free and vibrant civil society, which includes philanthropists and charities, is quintessentially American and is well worth protecting. It should be the goal of every legislature:

• To preserve the distinctive contributions of all philanthropic persons and entities, including small, operating, and family foundations, to American life;
• To safeguard the freedom of philanthropic persons and entities to carry out their various charitable objectives;
• To maintain common-sense laws and regulations that impose strict penalties on wrongdoers without trapping the innocent or wasting valuable charitable assets; and,
• To expand and celebrate America’s leadership as the most generous and charitable nation on earth.

As such, fundamental principles of philanthropic freedom include the following:

• Fairness: Any measure affecting philanthropic organizations must not favor certain types of charities over others. Philanthropy serves as an indispensable laboratory of innovation in addressing many of society’s greatest challenges. The independence of thought and diversity of interests and perspectives produced by having so many committed private actors is the wellspring of this sector’s vitality, and must therefore be protected.
• Economic Viability: Excessive tax on or regulation of philanthropic entities necessarily harms the charities and causes they support, and, by extension, weakens our civil society. Civil society is strongest when participation by all members of society is encouraged.
• Simplicity: The tax and other reporting systems should be as simple as possible, and should minimize complexity. The cost of tax and regulatory compliance is a real cost to society and complexity serves as a disincentive to creating new philanthropic entities and expanded charitable giving.
• Transparency: The Internal Revenue Service requires foundations and charities to submit an annual disclosure form (990PF and 990). These forms ensure compliance with tax law and disclose all grants made by organizations as well as other relevant information. Beyond these requirements, states should respect the freedom of private, philanthropic organizations and charities to determine their own internal policies and governance practices as long as they operate within the law.
• Predictability: Many foundations are formed in perpetuity to serve social needs and to build better communities. When creating new philanthropic organizations, it is important that donors know that changes in the laws will not weaken their original mission and intent.
• Privacy: Many individual philanthropists prefer to keep their giving private. The longstanding and constitutionally-protected right of philanthropists to keep their giving private should be respected and only abrogated in narrow and specific instances where a compelling government interest exists.
• Independence: Philanthropists must be free to support the charitable organizations and causes that match their own interests and priorities, without the government intruding into the decision-making process or limiting the diversity of charities eligible to receive donations.

 Approved by the ALEC Board of Directors on September 11, 2008 

Re-approved January 9, 2014.

Amended and re-approved December 26, 2018.