In one dimension, the law of charity is oversimplified. A transfer either meets or fails to meet the definition of charitability. Lawmakers acknowledge no gradations of charity, and a gift to a food bank sustaining indigent citizens is treated in the same way as a gift to the National Mustard Museum.1 In another dimension, though, the opposite is true. As Nancy McLaughlin shows in a recent article, Donor Standing to Enforce Charitable Gifts in the 21st Century, categorical fragmentation has caused the law of charity to become overcomplicated.
Professor McLaughlin’s article explores donors’ rights to oversee a charitable transfer after they have made it. As a general principle, once donors make a transfer, whether in the form of a trust or an outright gift, they no longer have an interest in the corpus of the transfer. Accordingly, donors lack standing thereafter to bring a cause of action against the beneficiary. Under the common law, even a restricted gift to a charitable entity constitutes a complete transfer, leaving enforcement to the “beneficiary,” viz. the state attorney general, representing society at large. The problem is that waves of codification have splintered the law of charity. The Uniform Trust Code (UTC), currently in effect in thirty-six states, is confined to charitable trusts. The Uniform Prudent Management of Institutional Funds Act (UPMIFA), currently in effect in forty-nine states, covers gifts to charitable organizations—but pertains only to investment funds, not to program-related assets that a charity uses to accomplish its purposes, which continue to be governed by common law. Finally, nonuniform legislation enacted in several states further modifies donors’ rights.
Will we ever learn? Whenever legal categories get split apart, trouble follows. Professor McLaughlin ably and methodically elaborates the myriad troubles with donors’ rights in a world of fragmentary law.
On one hand, the law of donor’s rights has become structurally inconsistent. Notwithstanding the traditional no-donor-standing rule under the common law, the UTC explicitly grants donors standing to enforce charitable trusts. A handful of states have gone further, extending standing beyond a donor’s lifetime. Under “Donor Intent Protection Acts,” applicable to charitable endowments, donors or the personal representatives of their estates, and in some states surviving spouses or descendants, are granted standing. Meanwhile, UPMIFA is silent on the issue, leaving its interpretation unclear.
On the other hand, by virtue of categorical inconsistency (and possible overlap), coupled with inconsistent Restatements, the rules of donor standing have grown uncertain. Even common-law decisions are now unpredictable, some denying standing and others granting it, often on hazy grounds. And when rules become complex and inconsistent, they also become inequitable. Well-heeled donors are also well-represented ones. Their advisors can structure donations to retain standing with greater assurance than donations made by those who lack access to legal expertise.
As a policy matter, Professor McLaughlin favors granting donors standing to enforce charitable transfers. She convincingly argues that it compensates for deficiencies of oversight by state attorneys general and that, when granted, it has failed to have deleterious side effects, such as overlitigation. More pointedly, Professor McLaughlin argues that these rules ought to be reunified into a rule of standing that applies to all sorts of charitable transfers, erasing formal distinctions between different subcategories of charitable transfers.
Thus far, Professor McLaughlin’s analysis is important. Yet, as she explains in her conclusion, thus far isn’t far enough. The sorts of legal mayhem detailed by Professor McLaughlin regarding donor standing are replicated across the board with respect to other distinctive rules within the law of charity—cy pres, administrative deviation, and so on.
What we truly need, Professor McLaughlin posits, is a new Uniform act that would compress all of charity law into a single category, as existed before the modern era of codification. It is, as she acknowledges, a tall order and would raise difficult problems of public choice. But she believes it is doable, and I heartly applaud her efforts. Spurred on by Professor McLaughlin, a Uniform Law Study Commission has recently been formed to address this matter. Time will tell what comes of it, but—as this article demonstrates—it is a worthy endeavor.
- See Eric Kades, The Charitable Continuum, 22 Theoretical Inquiries in Law 285 (2021), reviewed by Adam J. Hirsch in JOTWELL, “Revisiting the Law of Charitable Transfers” (June 10, 2024).
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