Luis Calderón Gómez (Cardozo) has just posted a new article, “Charity’s Limits,” forthcoming in the Tax Law Review, on SSRN. From the abstract:
Charity law’s most pressing contemporary problems are almost uniformly diagnosed by policymakers and scholars as isolated, doctrinal issues. This Article argues that this consensus is mistaken. Seemingly disparate developments—the increasing commercialization and hybridization of tax-exempt organizations, and renewed governmental efforts to revoke charitable tax exemption for violations of “public policy”—reflect a single underlying phenomenon: the erosion of the legal and conceptual limits that historically separated (and protected)charities from both the market and the State.
The Article develops this claim by reframing these controversies through two rival accounts of the charitable tax exemption used to conceptualize charity and explain and justify its exceptional legal treatment. Dominant “subsidy” theories conceive exemption as an instrument for promoting efficiency, pluralism, or redistribution, but cannot coherently explain why either commercialization or aggressive public-policy enforcement should threaten exempt status in any principled way. In contrast, this Article advances a rival “limits” theory of charity law, under which tax exemption reflects deeper sociopolitical judgments about the proper scope of the public sphere and the distinctive role of charities as autonomous, public-benefit-oriented institutions situated between market and State.
The limits theory reveals that the threats from market capture—recently epitomized by OpenAI’s commercial transformation—and from State coercion— exemplified by expansive challenges against charities’ exemptions on anti- discrimination grounds—are indeed mirror-image threats to charity’s identity and to the charitable exemption’s fundamental justification. By restoring attention to these limits, the Article both clarifies existing doctrine and provides a principled framework for reforming charity law amid intensifying market and political pressures.
