Giving Compass' Take:

• Ellen P. Aprill uses the example of the Trump Foundation to illustrates the limits of charity regulations. She believes that in spite of self-serving donations, the foundation probably avoided breaking the law. 

• Are more stringent regulations needed? How can policies prevent abuse without stifling genuine charity? 

• Learn about the need for additional regulations and safeguards in the aid sector. 

Since 2008, nearly every donation Donald Trump’s foundation has made near his Mar-a-Lago mansion and club in Florida funded charities that hosted events there, according to recent investigative reporting.

This pattern, first reported by The Palm Beach Post, follows an accusation New York Attorney General Barbara Underwood made when she filed a lawsuit against the foundation, Trump and three of his adult children for an alleged “pattern of persistent illegal conduct.”

I am a scholar of nonprofits who has researched their regulation since I served in the Treasury Department’s Office of Tax Policy in the late 1980s. I find these reports about the Trump Foundation disturbing because they give the impression that the foundation was benefiting Trump’s business interests. And that is at odds with the purpose of philanthropy.

At the same time, based on the evidence currently available, I do not believe that the Trump family will have to pay penalties, much less face criminal charges, even if the reports of self-serving charity are true.

Since 1969, the Internal Revenue Code has included a set of onerous excise taxes – a kind of fine designed to prevent self-dealing by private foundations, such as when they make business transactions that involve insiders, like their board members or executives.

These penalties apply in many different situations. They can be a way to punish private foundations for lavishing donations on people and charities closely related to their leaders. More typically, foundations pay off the debts insiders owe or manipulate prices.

But in my view, private foundations have a responsibility to do more than merely comply with tax laws in a technical sense. They have a duty to serve public, not private, interests.

Read the full article about charity regualtions by Ellen P. Aprill at The Conversation.