Charity comes from the Latin word caritas, meaning love of mankind. Today, charity usually refers to a tax-exempt organization that performs a public service. They may be private or public foundations that make grants to fund activities promoting the general welfare.
Income and property taxes usually allow the exemption of charitable and religious organizations. The justification recognizes the power to tax is the power to control. If government could tax a church, it could potentially violate the First Amendment protection of religious freedom.
The tax exemption for sectarian foundations may promote the public good. For example, The Ford Foundation promotes social justice, and its mission includes reducing poverty and injustice. Grants are made by an internal board that is not subject to public scrutiny.
The Clinton Foundation solicits “strategic partners” to fund programs that “create economic opportunity, improve public health, and inspire civic engagement and service.” Again, a privately named board of governors and grant reviewers are in charge.
Conservative groups, such as those controlled by the Koch Brothers, fund various tax-exempt organizations to affect policy choices. The consequences of such activities may be as specific as moving the boundaries of renewable fuel sources such as wind farms. Or they can support public education programs to affect policies such as efforts to promote or oppose climate change amelioration.
The Catholic Diocese of Galveston and Houston used tax-exempt money to restore St. Mary’s Cathedral that was situated on tax-exempt land. The Moody Foundation used exempt money to build a gymnasium for a parochial school, as well as to restore historic buildings.
In each case international, national or local foundations have provided a mechanism for individuals and organizations to affect public policy. Tax-exempt foundations can address issues that provoke public debate and concerns. Depending on one’s point of view this may be a good or bad exercise of power.
Normally, public policy is set and reviewed by government officials directly responsible to democratically elected individuals. However, when foundations fund a program they employ their prerogative to affect public policy without review by voters.
But a corollary of this prerogative is that the policies of democratically elected officials may be circumvented through the foundation grant mechanism. They are not subject to democratic review. Well-meaning groups can be quite local but have unintended consequences.
For example, monies used to restore churches implicitly undermine the Establishment Clause of the First Amendment. A public review by an elected representative may have chosen to use the money for an alternative public good.
The public accountability of tax-exempt organizations is critical to the functioning of a democratic republic. This can be enhanced by subjecting them to the same open meetings rules that apply to government agencies.
To assure the representation of the public interest, democratically elected bodies such as city councils, legislatures and Congress should appoint one or more members of the directorate of tax-exempt foundations.
These simple requirements, if adopted, would assure that foundations continue to promote the public good.