Charitable Gifts with Benefits
The common law of charity defines a gift as property that is “freely given without consideration”. That is, a transfer without any expectation of getting something back. It’s an ideal for giving, which often gets tattered and torn in the real world. It has always been so.
Indulgences and Concierges
Perhaps the most famous example of quid pro quo giving are indulgences. In 1517, Pope Leo X launched a fundraising campaign for St. Peter’s Basilica in Rome. He did so by selling indulgences through franchisees, which got to keep half of the money they raised. (Early commission-based fundraising.) Franchisees offered, for a generous donation to the Church, complete remission of sins and escape from the pains of hell and purgatory. As anyone who has visited Rome knows, the pan-European campaign was successful. The Basilica was built, but a monk named Martin Luther was so enraged that he started the Protestant Reformation in response.
When I told my son this story, he said “let’s be real!”. The donors probably got something for their 25,000 gold florins apart from a sin cleanse and a “get out of purgatory free” pass. I suspect he is right. Access and influence by the wealthy were likely other benefits.
Jump forward to Toronto in 2022. A physician friend recently informed me that he knew of two adult teaching hospitals on University Avenue that have medical concierges — doctors — to help important donors and their friends access care. I shook my head about the questionable pragmatism of such a service. Then I remembered when the 68-year-old brother of a major donor had a night time MRI at a children’s hospital in the late 1990s. One of my colleagues at the time called it “corruption”; another, “cultivation”.
Reciprocal Giving
Reciprocal giving is an applied psychological principle that has been documented all over the world. Humans are hard-wired to respond positively to receiving a gift — even if we didn’t want it or ask for it. A gift makes us automatically indebted to the giver, and that is its power.
This concept is used extensively in marketing and charitable fundraising. Remember those charity direct mail fundraising packages with key tags, holiday cards and address labels? Reciprocal giving. At this level it is penny-ante stuff, but it subtly undermines the charitable cause by being structured as an act of exchange. Being a puritan, I have never given in response to a direct mail appeal with trinkets, yet, according to direct marketing colleagues they continue to perform well.
Common v. Civil Law
The English common law sets a very high standard for disinterested altruism, and, in international terms, it is a rare concept. Many more cultures around the world embrace reciprocity in giving. The English concept could be described as: A) pure and idealistic; or B) colonial and duplicitous. I think it is both. It’s taken a while to unpack this heritage in Canada.
Pre-2002, the Income Tax Act (Canada) followed the common law of gifts. If the donor received any benefit from their donation that gift could be invalidated, and the tax benefits rejected. No tax receipts for museum members, charity golf tournament players, or gala attendees, at least in theory.
Canada Revenue Agency had a policy that explained that tax benefits are not a benefit that invalidated gifts. Donor recognition for individuals was also acceptable. Other benefits associated with giving or in exchange for a gift were discouraged. The reality on the ground was different and impossible to regulate. And then Quebec came to the rescue and the Act was updated.
The civil law of gifts is more pragmatic than the common law. Quebec, following Napoleonic civil law, allowed split transactions — a charitable donation could be combined in a single payment with a gift. You could get a rubber chicken gala dinner and a tax receipt if there was a net contribution to the cause. Now the civil law rules apply in Canada — and event fundraiser struggle endlessly with split receipts, eligible amounts, and advantages. Thank you, Quebec.
Pay to play
Reciprocal giving is most pernicious at the high end. The U.S. Ivy League universities have legacy admission policies. Advancement offices seem to have a close working relationship with Admissions. I haven’t witness this in Canada, but to experience the subtle efficiency of some very big-name U.S. universities is breath-taking. It takes a $1 million and your kid is in. Pope Leo X would be proud.
A more local example is WE Charity and its travel program. A Kenyan safari. A luxury camp. School builds. Donor tours. Velcro donor recognition signs. The reciprocity formula was “authentic” experience provided in exchange for future influence and donations. Cultivation in the form of site visits.
Ideals are important
Reading this article, it is possible to surmise that all donations involve some kind of “consideration”, which isn’t true at all. Most donations are made by donors who are primarily altruistic and expect nothing in return. Regular donors to charity get this and live it. Yet stories of quid pro quo are red meat to the sceptics — proof that somehow generosity is a scam that hides other motivations.
My response: it’s a complex world and always has been. There will always be mixed motivations, and there will always be true generosity and “freely given” donations. It’s important to have ideals, even if they are continuously splattered with mud.