DATELINE: July 2, 2008
I'm not trying to run your life, I know you wanna do what's right.
Give your love now, to whoever you choose...
It's your thing, do what you wanna do.
I can't tell you, who to sock it to.Isley Brothers, It's Your Thing
Leona Helmsley left none of her estate to the 'little people." In fact, she left none of her money to the big people, little people, short people, tall people, or green people. Moreover, she managed to avoid paying taxes by leaving the money to a charitable trust. In short, she is laughing under her acid-washed tombstone.
What Helmsley apparently did was leave somewhere between $5 billion and $8 billion for the care and welfare of dogs, according to the New York Times' resident...
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bloodhound, Stephanie Strom. Helmsley, Dog's Best Friend, Left Them Billions. The bequest certainly has people talking. As of 10:15AM, there were 216 comments posted on the Times' Web site.
Strom, with her ever sensitive nose (we've heard it's cold to the touch) has learned that the trustees of the Leona M. and Harry B. Helmsley Charitable trust "have fretted about the public outcry that the disclosure of its terms might incite." One expert who apparently has seen some of the language told Strom that the charitable purpose clause is an expression of Helmsley wishes, but may not be legally binding. We are unable to dispute that statement, not having seen the terms of the trust. We, however, are both skeptical and disturbed by the expert's characterization. We suspect that had the trust's purpose been to aid indigent persons nobody would be raising questions regarding the validity of the trust's purposes.
Helmsley has accomplished more with a two-page statement than Senator Grassley has through years of investigations and surveys. She has forced everyone to ask one simple question: What is charity? Her trust will undoubtedly be one of the central stories in law school case books.
Those who protest that Helmsley's bequest isn't charitable had better take a good look at Section 501(c)(3). It specifically provides that organizations organized and operated exclusively for the "prevention of cruelty to animals" are charities. For those who are unfamiliar with the statutory language, Section 501(c)(3) makes absolutely no specific reference to poor, low-income, or indigent individuals. Of course, for centuries the courts have recognized that aiding those populations is a charitable activity. But those who demand that Helmsley's directions are against public policy or are wasteful should be very reticent in making demands or voicing their displeasure. Section 501(c)(3) reflects a clear manifestation of public policy in favor of preventing cruelty to animals. Many of the other charitable purposes recognized by the courts and the IRS are not as clearly reflected in the statute.
Strom has doggedly pursued this story, uncovering statistics that Helmsley's trust will be worth 10 times the combined assets of all 7,381 animal-related nonprofit groups filing returns with the IRS in 2005. While that is an interesting comparison, we are not sure it is the right one. We suspect that the animal-related nonprofits are short on endowment, meaning that the more appropriate measure is on income. Roughly speaking, the Helmsley trust will be required to distribute 5% of its asset value each year under federal income tax law. At a $5 billion value, that means $250,000,000 per year. The 2005 annual report for the ASPCA reports $65 million in direct public support. The International Fund for Animal Welfare reports $10 million in 2006 direct public support. The Animal Medical Center reports $13.7 million in 2005 direct public support. The North Shore Animal League America generated $29 million in 2005 direct public support. In short, just four charities are generating almost half of what Helmsley's trust could prudently make available each year. Helmsley apparently isn't the only American who loves animals—in her case dogs. Everyone who chose to give to these four charities and the over 7,000 other charities can be viewed as choosing animals over people.
We don't view Helmsley or these other Americans in such a negative light. American charity offers choices. Like it or not, charity means more than just serving indigent people. While some may look askance at Helmsley's choice, others will look equally askance at multi-million donations of money to support art museum expansions and acquisitions, operas, public television, certain forms of graduate education, or conservation. What is one person's charity is another's frivolity.
In the end, each donor is entitled to have their intent respected. That is why the courts should respect Helmsley's intent, no matter how a court personally views the wisdom of her decision. If Helmsley made a bad resource allocation, the marketplace can undo it. The public can shift their donations to organizations that assist indigent individuals or what many might view as other worthy charitable causes (e.g., reporters seeking scholarships to go back to school to learn more about dogs so that they can cover the dog charity beat rather than the human charity beat).
Strom's subject today is highly entertaining and provocative. It also serves as a national Rorschach test, as the posted comments accompanying the article demonstrate. One 37-year old argued that this further justifies his decision to retire and travel with his family—money doesn't make you happy. Another sees Helmsley's choice as a powerful argument for inheritance taxes—the government knows how to spend money better, like invading Iraq. Others see it as validating Helmsley's reputation as mean-spirited. All of these commentators have one thing in common. Just like Helmsley, each, through their last will and testament, will be able to make their own statement when they depart this life.
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