Contents

§3.3 MEANING OF CHARITABLE ORGANIZATION• No part of the organization’s net earnings inures to the benefit of any privateshareholder or individual. 276• It does not have as a substantial part of its activities attempts to influencelegislation. The amount of permissible lobbying in this context is definedby the substantial part test or, if the charitable organization makes an election,the expenditure test. 277• It does not participate in, or intervene in (including the publishing or distributingof statements), any political campaign on behalf of (or in oppositionto) any candidate for public office. 278There are, therefore, two dimensions to the term charitable in this context.One is the definition of the term charitable as one of seven categories of charitabledonee status (as reflected in the preceding quotation). The other is a definition ofthe term charitable that embraces all categories of charitable donees.As to the latter definition, the law is clear that the concept of charity is an overarchingone that encompasses all of the specific categories, such as religion andeducation. This is because U.S. tax law precepts of charity are based on commonlaw standards, which the courts have held must inform the statutory uses of theterm. For example, one court observed that “we must look to established [trust]law to determine the meaning of the word ‘charitable.’” 279 Likewise, the court subsequentlywrote that Congress intended to apply these tax rules “to those organizationscommonly designated charitable in the law of trusts.” 280 Another courtnoted that “the term ‘charitable’ is a generic term and includes literary, religious,scientific, and educational institutions.” 281 The U.S. Supreme Court held that“Congress, in order to encourage gifts to religious, educational, and other charitableobjects, granted the privilege of deducting . . . gifts from gross income.” 282One of the reasons that the term charitable has such an all-inclusive gloss inthis definitional setting is that the Supreme Court has held that all organizationsthat wish to qualify as charitable entities—both for tax exemption and charitabledonee purposes—must adhere to a public policy doctrine. In so doing, the Courtwrote that each of these entities must meet “certain common law standards ofcharity” and that “[t]he form and history of the charitable exemption and deductionsections of the various income tax acts reveal that Congress was guided bythe common law of charitable trusts.” 283 The Court said that charitable organizationsmust “be in harmony with the public interest” and “must not be so at oddswith the common community conscience as to undermine any public benefitthat might otherwise be conferred.” 284 While recognizing the IRS’s authority to276 IRC § 170(c)(2)(C). The private inurement doctrine is discussed in Tax-Exempt Organizations ch. 19.277 IRC § 170(c)(2)(D). The limitations on attempts to influence legislation by charitable donees is the subject ofTax-Exempt Organizations ch. 20.278 IRC § 170(c)(2)(D). The prohibition on efforts to engage in political campaign activities by charitable doneesis the subject of Tax-Exempt Organizations ch. 21.279 Pennsylvania Co. for Insurance on Lives v. Helvering, 66 F.2d 284, 285 (D.C. Cir. 1933).280 International Reform Federation v. District Unemployment Board, 131 F.2d 337, 339 (D.C. Cir. 1942).281 United States v. Proprietors of Social Law Library, 102 F.2d 481, 483 (1st Cir. 1939).282 Helvering v. Bliss, 293 U.S. 144, 147 (1934) (emphasis supplied).283 Bob Jones University v. United States, 461 U.S. 574, 586, 587–88 (1983).284 Id. at 591–92. 97