Tainted Money and Charity

Abstract

This article examines the right of a 501(c)(3) organization to refuse an unrestricted cash donation, concluding that such right is generally illusory. If a charity disagrees with the donor on a moral issue, it may see nothing improper in turning away a would-be benefactor. When this occurs in the context of a 501(c)(3) organization, its exempt purpose requires looking beyond the conscience of the individuals making the decision. Specifically, the question of the organization's moral right to turn away funding occurs in the context of its pursuit of a legally sanctioned purpose. The organization's agreement with the IRS in seeking tax-exempt status produces a fiduciary responsibility with its stakeholders. These include donors, potential recipients of the organization's goods or services, taxpayers, and the government. Viewed from this perspective, turning down a gift, it is argued, is comparable to mismanagement in squandering scarce resources.