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The law is excruciatingly clear that perpetuity limits don't apply to charitable donations, or charitable trusts, for that matter. Technically speaking, the Rule Against Perpetuities only applies to contingent remainders and executory interests, and charitable donations have neither. Practically speaking, courts and legislators are reluctant to invoke perpetuity limits on charities as a matter of public policy. I'm on the board of a nonprofit, and large donations to the general fund are rare. You can get this money from annual fundraising events, membership fees, and small donations, but if someone is looking to drop serious cash they're going to want to know in advance what projects you have coming up that it can be used for. If your projects consist of ongoing expenses, like salaries or scholarships, you'll need to raise about 20 times the annual cost and invest it so the money is always available. The alternative is that people just don't donate because they don't want their money going into a black hole. Sometimes you can get out of it, but usually only in extraordinary circumstances, and even then you'll need court approval and have to notify the AG. There's a lot of fuckery surrounding charitable orgs as it is, and removing restrictions without good reason only encourages that kind of fuckery.
Dang. It's worse than I thought. Thanks for the color. Your posts are always very informative.
I wonder what percentage of wealth is controlled by dead hands at this point?
Of course, in reality, it's often worse than dead hands. It's very live hands with a radical agenda and no accountability. Imagine if Henry Ford could see what his foundation is up to today. These endowments simply must be taxed. I'm always blown away by how much wealth they control, and how it's controlled by a group of elites who have almost no checks and balances. (The whole OpenAI fiasco shined a light on non-profit boards that way).
There are random foundations all over the country with billion dollar endowments. For example, the Kellogg foundation in Battle Creek Michigan has $8.8 billion.
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