Lawmakers are forgetting that regulating philanthropy stifles individual donors, devastates the philanthropic sector, and harms civil society.
Daniel Webster.
In the cobwebbed recesses of your mind, you may remember him as an attorney who argued cases before the Supreme Court and served as secretary of state to three U.S. presidents. (And no, he’s not the fellow who wrote the famous dictionary—that was Noah.)
But Daniel Webster's impact went beyond words. His victory in Dartmouth College v. Woodward fortified property rights and bolstered the philanthropic sector in the United States.
Dartmouth College faced an attempt by the New Hampshire legislature to seize control and replace its trustees. Webster, representing the college, argued that it was an “eleemosynary” corporation—a private charitable organization established for the public good.
“Eleemosynary corporations are for the management of private property, according to the will of the donors. They are private corporations. A college is as much a private corporation as a hospital,” said Webster. Chief Justice Marshall, in his majority opinion, agreed, emphasizing that gifts for public benefit do not equate to gifts to the government.
Yet, the true origin of this case is often overlooked. In the aftermath of the American Revolution, the attempted takeover of Dartmouth resulted from ideological jealousy. Encouraged by then-U.S. President Thomas Jefferson, the Democratic-Republicans (“Anti-Federalists”) in New Hampshire wanted the Dartmouth Federalists out of the picture.
They exploited philanthropy, donations, and the concept of the "public good" to achieve their malicious goal. In other words, the Dartmouth case was born out of dirty politics, not principle—a precursor to the ongoing war on private philanthropy.
Progressive ideologues, still reeling from the Citizens United v. Federal Election Commission Supreme Court decision and goaded by ivory-towered professors, continue their efforts to control and punish donors with differing views.
Proposed legislation like the "Accelerating Charitable Efforts Act,” a bill that would have mandated heavy-handed payout requirements for private individual giving accounts, represents the efforts of progressive legislators to punish those with differing views. The legislation would have hamstrung a popular giving tool, donor-advised funds, imposing burdensome requirements on individual giving accounts and restricting donor privacy.
During a Punchbowl News event, Laura Arnold—wife of billionaire John Arnold and co-chair of Arnold Ventures—appeared to reiterate calls for more regulation around individual giving accounts.
Conservative populist voices are joining this dangerous refrain, driven by envy of others' wealth. Sen. J.D. Vance (R-Ohio)—like Mr. Jefferson and Mrs. Arnold—suggested during his Senate campaign that it might be appropriate to seize the funds of private foundations or other nonprofits with which he has political disagreements.
Arnold and Vance argue that co-opting private dollars serves the "public good," but they fail to recognize how regulating philanthropy stifles individual donors and limits their freedom to give how they think best, be it for their neighborhood or their nation.
But, as Alex Reid, former counsel to the Congressional Joint Committee on Taxation, says, “[W]e shield private donations from the brunt of taxation in order to limit government interference with our personal choices on how best to further the public interest.”
In 2021, individual gifts and bequests made up nearly 80 percent of all charitable giving, according to a report from Giving USA, a nonprofit that collects data every year on giving trends. Adding administrative requirements to individual giving accounts would dampen donor engagement and devastate our philanthropic sector. Maybe that’s not the intent, but we all understand the law of unintended consequences.
Karl Zinsmeister, creator of the Almanac of American Philanthropy, reminds us that the U.S. philanthropic sector is uniquely American because it empowers everyone—not merely bureaucrats and politicians—to make a difference, and ceding that power ultimately hurts civil society.
Everyday givers should not be coerced into surrendering their right to shape charitable endeavors based on their values. Lawmakers would be wise to remember Dartmouth v. Woodward and the right of private donors to chart their charitable path.
Communities across the nation thrive on the generosity of individuals who support causes dear to them. Disagreements should spur free support for competing interests, rather than using politics to invalidate others' beliefs. That’s what free people do in a free, albeit messy, pluralistic society.
As Webster is reported to have passionately expressed during the case, "It is, Sir, as I have said, a small college. And yet there are those who love it!"
We all need to protect philanthropic freedom and preserve the pluralistic society that defines our nation. Using politics to dismiss opposing viewpoints is shallow. It was wrong two centuries ago, and it’s wrong today.
