Speaker Series: Jill Horwitz

Recent crises—the pandemic, natural disasters, and political targeting—have caused enormous suffering, sparing no one, including charities.  Even over the past few years, they have faced extreme revenue losses, leading to reductions in programming that advance their purposes, staff layoffs, and bankruptcy. Amid these crises, a lot of money has sat in endowments. It has been largely unavailable to alleviate harms to charities, their beneficiaries, employees, and their purposes. During the pandemic, for example, regulators across the country reminded charities that legal constraints on the use of endowment funds still applied, including restrictions mandating that assets be held for investment, as well as other specific spending restrictions. Charities must observe restrictions on charitable assets, even during a crisis.

Do these rather inflexible restrictions make sense?  Using the pandemic and other recent crises as examples, this article examines the question and, largely, answers it in the affirmative. In doing so, it engages decades of scholarly debate on the justification for adhering to restrictions in general, with particular attention to endowment restrictions, and uses the most recent crises as a stress test of the law.  It considers the wisdom of changing rules during crises more generally. In a discussion of the legal concept of waste, it concludes that, possibly excepting the most extreme cases, both practical evidence and theory point towards maintaining restrictions.  It re-examines traditional arguments for allowing donors to restrict the use of donations as applied in the context of emergencies.

The article concludes that the arguments for granting charities unilateral ability to release restrictions, even during a crisis, are largely wanting.  Existing law almost always provides sufficient tools for charities to respond to needs, even to crises.  Understanding that the goal of charities law is to protect specified charitable purposes rather than particular charities, the case for upholding restrictions becomes even stronger.  Nevertheless, there are exceptions. The article suggests that the Trump administration’s targeting of some charities, particularly universities, may well be one of them.”

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Jill Horwitz previously served as the David Sanders Professor in Law and Medicine at UCLA School of Law and Professor of Public Affairs (by courtesy) at the UCLA Luskin School of Public Affairs and Jack N. Pritzker Visiting Professor of Law at Northwestern Pritzker School of Law. She was the Vice Dean for Faculty and Intellectual Life at UCLA School of Law for the academic years 2019-2021. Professor Horwitz holds appointments as Research Associate at the National Bureau of Economic Research and Adjunct Professor of Economics at the University of Victoria Department of Economics in British Columbia, Canada. Prior to joining UCLA in 2012, she was on the law faculty at the University of Michigan, where she was the Louis and Myrtle Moskowitz Research Professor of Business and Law and Co-Director of Law and Economics. She also held joint appointments at Michigan with the School of Public Health and the Ford School of Public Policy.