Rev. Donald L. Jackson v. The Statler Foundation

SMITH, Before MANSFIELD and OAKES, Judges. Circuit SMITH, Judge: J. JOSEPH Circuit appeal This is an from an order of the United States Court, District Western York, District of New Judge, Curtin, T. John dismissing dated March appellant’s complaint pleadings. on the part, part We reverse in affirm in proceedings. remand for further Appellant brought Reverend Jackson against suit thirteen charitable founda- Jackson, pro appellant Rev. Donald L. Buffalo, tions located in the New York se. alleging area racial discrimination Flaherty, Buffalo, Thomas P. N.Y. against himself, his children and his (William Mahoney and Peter J. Crot- B. appellee foundation that the founda- ty, Buffalo, N.Y., counsel), appel- for tions refused to hire him as a director of lee The Statler Foundation. foundations, give their refused to scholar- Hitchcock, Buffalo, Robert M. N.Y. ships grant to his children and refused to (Phillips, Lytle, Hitchcock, Blaine & money foundation, to his all for reasons Buffalo, Huber, Prahl, N.Y. Heino H. Appellant challenged of race. also an al- Buffalo, appellees counsel), N.Y. of for leged pattern discriminatory employ- Cummings Foundation, Inc., James H. ment and investment the foundations. Farny R. and Wurlitzer Foun- Grace K. sought injunctive Reverend Jackson dation, Inc. and The Buffalo Founda- declaratory damages, relief, the revoca- tion. appellees’ exempt tion of tax status under Mugel, (Jaec- Buffalo, Albert R. N.Y. Code, the Internal Revenue and an order kle, Mugel, Buffalo, Fleischmann & N. directing the to surrender all Y., Brown, Buffalo, N.Y., David M. their assets to the United States Trea- counsel), appellee for R. and Es- Julia Judge sury. Curtin dismissed the com- Foundation, telle L. Inc. plaint, ruling appellant’s that insofar as Kresse, Buffalo, N.Y., Robert J. claims were based on 42 U.S.C. § (Hellings, Morey, Lodge Rickers, Irvis, Kresse & Moose 107 v. No. Buffalo, N.Y.), appellee Margaret for L. 92 S.Ct. 32 L.Ed.2d 627 precluded finding Wendt (1972), Foundation. of “state ac- required dismissal, tion” and thus Buffalo, Michael Hutter, J. N.Y. to the extent claims were based (Hodgson, Russ, Andrews, Woods & on 42 1981 and U.S.C. 1985 there §§ Goodyear, Buffalo, N.Y., M. James were facts stated insufficient. Wadsworth, counsel), appellee for complaint, and that Reverend Jackson The Cameron Baird Foundation. standing challenge appellees’ had no Glick, Falk, Siemer, Tuppen Malo- & exemptions. tax ney, Buffalo, N.Y., on the brief Wil- Throughout proceedings, liam J. Connors Foundation. these appeared pro Reverend Jackson has se. Brown, Turner, Kelly, Hassett & explains This fact no doubt much Leach, Buffalo, N.Y., on the brief complaint and in his confusion his Harry Family Foundation, Dent Inc. compounded briefs. That confusion is Williams, McCarville, shotgun appellant’s approach Stevens & Buf- to this falo, N.Y., Josephine on the litigation, approach brief for casts some an Goodyear substantiality Foundation. of his doubt on the pro Still, personally he courts must construe has been affected claims.1 generously, practices.3 displayed complaints Haines v. Ker- Neither he se explicit representa- ner, L.Ed. intention to in a sue capacity. appellant (1972), appear- district tive and it for the 2d 652 Since pro ing judge se, factual is- not for we leave these matters court and us on re- sues. district court deal with

mand, prejudice without to motions to I. join parties necessary amend complaint allege additional facts. Although reading of a liberal Further, con- district court should appellant’s complaint evidences a suffi represent requesting sider that counsel standing give him chal cient basis regard, appellant. note In we lenge exemptions, see appellees’ incorporated appellant’s if foundation is Connally, F.Supp. McGlotten may only appear with counsel. Sha- court), (three-judge (D.D.C.1972) 452 piro, & Rec- Bernstein Co. v. Continental Department of Reve v. and Falkenstein 1967). Co., (2d ord 386 F.2d 426 Cir. 887, (D.Or.1972) nue, F.Supp. 888 350 dismissed, (three-judge court), appeal jurisdiction This court has Oregon Falkenstein, Elks Ass’n State challenge appellant’s appel consider 1099, 907, 93 34 409 S.Ct. U.S. McGlotten, exemptions.4 lees’ tax See complaint, (1973), insofar as 681 supra, F.Supp. 338 at 452-453. appellees’ of the federal revocation seeks status, exempt is deficient and state tax II. join the its face for failure to Secre on against Appellant’s 1983 claim § Treasury tary of the and the New York tax as well as the Commissioner, Tax who would be State challenges require “into the us to wade parties indispensable for to a suit- such murky doc- ‘state action’ waters appellant Moreover, not al has relief.2 trine.” leged give him stand facts which would challenge employment appellant’s ing past in and dismissed The court below failing patterns, authority to show how of Moose vestment claim on the 1983 § alleges specifies Appellee Cummings form, appellant that nowhere Foundation 4. True to ap challenging. exemptions The this lawsuit arose out of some to fifteen he is ten wliat understandably printed mimeographed pellee form letters have been and/or nationwide, identify 14,900 foundations, and sent to some fill this vacuum reluctant years. ap- period Appellant they enjoy. exemptions Federal as of three over parently requested various 14,900 § of each of these 26 U.S.C. sistance is embodied organiza exempts 501(c)(3), it name board of foundations that him its these which give directors, scholarships §§ and to his children from income taxation tions 170(c)(2), 642(c), grants Appellant 2106(a) give and and to his foundation. gene- description . to such did not of the contest individual contributions which make income, organizations estate sis of the lawsuit. deductible impor Among purposes. gift Treasury Secretary of the 2. Joinder of the provisions 249-c of the are § tant state tax York Tax and the Commissioner New State McKinney’s Law, Con- Tax New York State jurisdictional challenge obviate the well bequests exempts sol.Laws, c. which upon governmental ac based lack of or state tax, 208 §§ the estate foundations from F.Supp. Connally, See, tion. 330 Green “piggy-back” Law, which the Tax 615 of (three-judge (D.D.C.) court), aff’d sub 1150 corporate deduction tax exempts federal income Green, 997, 92 nom. 404 S.Ct. Coit v. U.S. provisions, which § (1971) ; Green v. Ken 30 L.Ed.2d 550 organizations taxation. local from nedy, (D.D.C.1970) F.Supp. 309 exempt organizations definition State’s (three-judge court). substantially definition: federal tracks exclusively operated “organized for reli example, alleged, Appellant has testing charitable, scientific, gious, area, is a al- that he resident of the Buffalo purposes, literary, or safety, though educational he to the the resume which sent cruelty prevention ap- children for the in his foundations and which pendix suggests contained 501(c) (3). § ...” U.S.C. animals. he does reside there. that supra. lodge Lodge, property That decision involved a was located guest lodge suit of a pub- member whereas the restaurant had been on land, lodge who “priv- was refused service he was because lic awas brought black. He under suit ate club” whereas the restaurant had against Pennsyl- lodge open general both the and the public, been save Authority, Liquor vania had people. black lodge. granted liquor license to the Whether conduct which Supreme grant Court held some manner aided the actions of the of the license did not constitute “state State not “state action” for the action,” distinguishing Burton v. Wil- purposes of the Fourteenth Amendment mington Parking Authority, U.S. easy question.5 “Only is not an by sift- (1961), 6 L.Ed.2d 45 S.Ct. ing weighing facts and circumstances action” where “state had been found can the non-obvious involvement of the grounds discriminating Ea- State conduct be attributed gle part of the Restaurant constituted significance. its true Burton . . .at Parking project. Authority The Moose 722, 81 Lodge, supra, S.Ct. 856.” Moose Pennsyl- Lodge emphasized that Court at 1971. This lodge did not vania benefit from appears to be first case in which the Delaware Rad restau- benefited (in viability tax-exempt “pri- rant issue status of terms of the enhanced Parking Authority), vate foundations” been raised. appellant challenges operation 5. Since the actions of field of is not limited to the so- private sector, grants hoth York many New State and of the Federal called of Government, might traditionally it be more accurate to foundations have been made challenged activity “govern- variety refer governmental to the as a to wide of units large programs, mental action” rather as than “state action.” and and small. See, g., University, e. Wahba v. New York only “private” applies in sense which (2d 1974). Nonetheless, 492 F.2d 96 Cir. as that the is of decisions foundations are McQ-lotien pointed the Court out: general public in the of the hands or . . . the determination of state when is, course, of Government. This an of im- bring is involvement either sufficient to mensely important distinction; and the private otherwise aegis discrimination within the is, simply trouble we have a do not suit- the of Fifth or Fourteenth Amend- peculiar able word to describe the mixture ment, duty part to evoke a on the of public of and that characterizes a government prevent that discrimi- public foundation —a of inter- combination nation, traditionally styled has been of one public private judg- and est service with clarity gained “state action.” Little is at ment. It is this in reason that by stage attaching this a different label simplified above, definition the modifier is inquiry depending the same is on who “non-governmental.” say in To it that defendant. way may illuminating simply be than more F.Supp. 448, 455, n. 31. unmodifiedly “private.” call might A fuller definition run such a dispute 6. There ais as the literature complicated, jawbreaking sentence as the proper “private definition aof founda- following: non-govern- are Foundations Cuninggim, tion.” of Mr. Merrimon head privately agencies, mental established and Foundation, the Danforth i states managed, public but in which the has a . are Foundations . . often modified stake ernment, which are answerable to Gov- adjective “private,” but it is some- possessing resources, financial thing ought of a misnomer one be usually endowment, in the form of and ex- chary using about the word. Their funds isting general serve welfare or longer private, money are not for the no segment it, usually some chosen in the of belongs original donor, he whoever grants. of form Rather, public money, is. it is aside set Money Ouninggim, to be act so uncommon of steward- M. Private and Public ship part (N.Y.1972), Pifer, on the of the donor. Corre- Service 4-5. Mr. Alan spondingly, Carnegie Corporation, of activities President of the disa- catalogue private, grees part: are not for a them of reported is, paradoxically, pri- must be The foundation both any- representative people, public pri- of the vate its nature. It is privileged incorporated pri- one is a Their to have look. vate because as a it directly involved, discrimination while not con- Prior law courts case unenlightening. exist; not, course, trolling have found “state action” to noteworthy several courts have where other constitutional claims are It is (due speech), freedom process, the activities issue claims considered organizations generally tax-exempt constitute have courts concluded that Significantly, no cas- “state action” has occurred. Com- action.” “state pare, McGlotten, supra; groups: De- racial Pitts v. divide into two Where es per institution, Product, vate, non-governmental than National less cent of derives donors, pri- voluntary only per giving, and cent and is total its assets from government’s expenditure donor-appointed vately the federal a controlled health, education, self-perpetuating and welfare. trustees. board of short, misunderstanding funds, a case Foundation offer a common There technically private public is of where a asset of the founda- character public it, potential tion, stake de- such must, value to nation and hence the perforce, regarded public tax-exempt as- a be status. How rives from its frequently implications proposition it said that foun- set. The one heard reaching. money, really spending public far . . . dations are Report greater subject Carnegie President of and therefore should Corporation, view, ed., governmental a how- in Reeves control. Such Founda- reasoning (Ithaca, ever, 1970) tions Under on fallacious Fire is based 54-55. ignorance Jeffrey surprising speaks Professor Hart reveals either of founda- governments.” dangerous basic as “shadow disavowal one Founda- system. View, tions and Social A American Activism: tenets Critical Assembly, in The American Columbia Uni- history Throughout have believed we our ed., versity The Future of Foundations practiced pluralism it. We and have (Prentice-Hall, 1973) 43, 47. Professor John recognized that nation’s have purposes disagrees presents cogent Simon de- considerably more extensive unique organiza- fense of the role of these governmental purposes, scope than tions. Controversy: Foundations and Public aegis state, through and, we View, An Affirmative in The Future variety in- enabled wide have Foundations, 58, 79-100. including foundations, stitutions, to be What of, the commentators are unsure accomplish ptiblic, certain chartered though non-governmental, nature consequences of the beast and the purposes. We therefrom, very which flow is much related state, through- aegis also, of the have given question “private before us: Are institutions these tax public foundations” bodies? But regarded and have work to facilitate their appears at agreement least there to be eminently public being inter- in the this as “private fact that the defendants are all public Therefore, to attribute est. foundations” in the of sense the Tax Reform tax-exempt its in the foundation stake 1969, 172, Act of Pub.L. which in ef- “privi- regard 91— aas this status status or to “private fect defines a foundation” as a is, wholly lege” in Pro- It is erroneous. organization charitable that receives its con- phrase, pithy “to Katz’s fessor Milton relatively tributions from few sources and for a effect cause.” mistake an spends through grants its operat- funds aspect public origin of the The true ing programs. 26 U.S.C. 509. in of its ac- lies nature the foundation tivity. public it devotes because It is Although one in issue that case was purposes in total which the socie- funds ty constitutionality provisions Inter- of the education, interest, such has vital nal (§§ 170(c)(4), 642(c), Revenue Code health, in these Grants and welfare. 2055, 2106(a) 2522) the extent pub- question affect do fields without they exemptions authorized tax for non- legitimate public lic, has a and hence the profit organizations which excluded non- make them. which in stake membership, whites there court important an even more is But there stated: public in is the foundation sense which public public leads us into thus claim Plaintiff’s murky because It is character. doc- action” regard “state waters indifference with afford to cannot spent, pre- trine, whether determine we must for so funds are foundation how organiza- granting seen, they, benefits vi- as we have are cious basis on the change, discriminate process so limited tions which social tal membership, Govern- the Federal they billion race $1.3 amount. encouraged supported was, ex- ment has spent in 1967 have itself violated per ample, discrimination so the Gross 0.2 cent of than less

629 Revenue, F.Supp. pendent governmental aid; partment (2) 662 333 court); (E.D.Wis.1971) (three-judge govern- extent intrusiveness supra; regulatory scheme; (3) Falkenstein, YMCA mental Smith v. whether (M.D. Montgomery, F.Supp. ap- 316 899 scheme connotes (5th proval Ala.1970), modified, of the activity 462 F.2d 634 or whether the as- 1972), Miles, merely provided F.2d Cir. Powe 407 sistance is all v. with- (2d 1968); Mitchell, (4) connotation; out 73 Cir. Browns v. such the extent to Chicago (10th 1969); organization 409 F.2d 593 Cir. serves a Amalgamated Clothing surrogate Board, Joint function acts as a for the Chicago State; (5) Co., organization F. Workers v. 435 whether Tribune denied, legitimate 1970), recognition (7th 2d 402 470 Cir. cert. claims to as a “private” organization 973, 1662, U.S. L.Ed.2d 138 91 29 associational S.Ct. (1971); Bright Isenbarger, F. v. 314 or other constitutional terms. Supp. (N.D.Ind.1970), 445 F. 1382 aff’d material; Each these factors no 1971) (7th 2d v. 412 and Marker Cir. one factor is conclusive. Schultz, (D.C.Cir.1973). 485 F.2d 1003 Commission, While record us with re- before also, See Tax Walz 397 v. gard particular defendant 664, 1409, founda- U.S. 90 L.Ed.2d 697 25 S.Ct. appear pri- meager, does (1970). dichotomy explained in This tax-exempt many vate part by foundations in in- “state stand double action” may stances well involve “state action.” recognized one, ard which has been a— involving less ra onerous cases test The defendant foundations no doubt rigorous discrimination, cial and a more receive substantial assistance See, e.g., standard other claims. exemptions. form tax Green v. Ken Legal Society, Lefcourt v. 1150, Aid 445 F.2d nedy, 1127, F.Supp. (D.D.C. 309 1134 (2d 1971); n. Cir. v. 1155 6 Wolin 1970) (three-judge court); Norwood Authority, (2d 83, Port F.2d Cir. 392 89 Harrison, 455, 2804, 413 93 U.S. S.Ct. 1968), denied, 940, cert. 89 S. U.S. (1973); Marker, 730-733 (1969) ; Powe, Ct. 21 L.Ed.2d 275 supra, 4; 485 F.2d n. at Mc- supra, supra, 81-82; Pitts, at F.2d supra, Glotten, F.Supp. n. 37 However, F.Supp. at 668-669. 58; University and Connally, n. Bob Jones explainable results terms also (D.S.C. F.Supp. peculiar facts and circumstances 1971) grounds, , rev’d on other 472 F.2d each case. (4th 1973), granted, 903, 906 Cir. cert. 38 L.Ed.2d 49 A review action” “state highly unlikely they suggests It case law five factors which programs any particularly important could their at sustain to a determina degree tion (1) present of “state action”: the near where levels without the “private” organization which the is de might that, exemptions.8 It well be ab- plaintiff’s right equal protection Goulden, not of concern us.” Quoted the Connally, Money (New 1971), laws.. McGlotten v. York, 338 F. Givers 20. Supp. However, at 455. empirical research which ex- Judge suggests Friendly’s ists the wisdom of 8. philanthropic The motivation behind activi- philanthropy remark that the fruits of “are ty type complex. of this Mr. John T. often better than its Quoted roots.” Jones, President the Houston Endow- Connally, F.Supp. at Green ment, agree “I stated: think we can all Friendly, College The Dartmouth Case originally created and Penumbra, and the Public-Private 12 Texas endowed men more than normal wealth (2d Supp.) 141, L.Q. Thus pass who wish to on this wealth for 1969 the Peterson Commission on Founda- public . benefit. . . Whether this wish Philanthropy and Private asked by pure virtue, slightly-tar- is motivated a eighty-five people median individual whose perpetuated nished desire to see name be- yond giving years grave, nothing annual the last five had been more than sheer $375,000 animal hatred Federal Government what effect the eradication of the exemptions, nual sent these these foundations information return with the Inter- would never have been nal Revenue established. Service.9 The annual re- port must be made available for appears It that these foundations also inspection days period for a of 180 after subject and detailed “sustained newspaper availability.10 notice of its relationship administrative The Internal Revenue Service has as- statutory- enforcement ” Congress closely sured supra, scruti- Walz, . standards. . . nizing “private at 1414. activities foundations.” The 1969 Tax Reform requires The 1969 Tax ev- Reform Act imposed ery Act tax-exempt an excise tax on the net in- file an- foundation to provision where its books records are and main- deduction have do- would on their (i) tained; predicted and addresses of the names its nations. The median reduction managers; (j) persons Prejiared and a list of de- was Statement of Peter G. 75%. (h) Peterson, Chairman, above scribed who are substantial Commission Peterson percent Philanthropy, contributors who own on Foundations and Private any organization Hearings, more of which Senate Tax Reform Act percent 6, pp. 6119, foundation owns 10 or more. Part To extent 6137. responses self-serving, they § 26 U.S.C. 6056. these were un- derestimate the reduction which would occur. 10. 26 § 6104. U.S.C. 11. an Internal This assurance embodied include: information return must income; entitled, gross (a) (b) expenses memorandum “In- Revenue Service attributa- Congress (c) income; ternal Revenue Commitments ble to such disbursements for Exempt Organizations.” purpose (d) exempt; full: It reads in for which it is Early showing assets, former Commissioner balance sheet its liabilities representa- Thrower, beginning with his discussions and net each worth of the Congress, promises year; (e) tives made some of the contributions total revitalizing gifts during year the Service’s connection with and received and Program. Organization Exempt Examination names and addresses of all substantial generally promises (f) referred contributors; are now These the names addresses compensated managers highly the Ex- to as commitments for the Service of its employees; empt Organization Program. They paid include compensation (g) following: (f) to each individual in above. Organization separate Exempt 1. A U.S.C. Audit established in the would be Branch Private over $5000 assets That report Office. Division of the National in- must file an annual which must responsibility following: have Branch would clude closely coordinating, planning, direct- (a) gross year; (b) ex- income for Program. ing Exempt Organization penses attributable income and incurred exempt centralize 2. The would Service year; (c) all within the disbursements organization and ex- letter determination year, including within the administrative key stra- into districts amination work (d) expenses; showing its a balance sheet country. throughout tegically located assets, liabilities and net of the worth Audit Division Office 3. The National beginning year; (e) an itemized develop Office Controlled a National would statement and all other year, securities include the This list would List. Case showing assets at the close of exempt organi- complex largest and most values; (f) both book and the to- market foundations) (primarily zations gifts tal during received of the contributions and organizations aon two- be examined would year; (g) an itemized list year cycle. ap- grants all made or contributions made in increases would be payment during 4. staffing proved Substantial for future Exempt Organization Examin- year. of show This list must the amount Specific key mention districts. grant, ers in the and address each the name Exempt Or- relationship any most of recipient, was made that ganization in- between Program would recipient Examination dividual managers and the foundation’s private recipi- foundations. to audits devoted or between the individual exam- to undertake managers would 5. The Service sub- and the foundation’s or ent five-year private on a contributors, ine all cycle. and a concise state- stantial grant purpose of each or con- ment of the major encompasses foregoing com- principal (h) The ; address tribution in has undertaken place that the Service mitments and of of the foundation office private exempt vestment exempt income foun- ters of foundations. Foundation dations, the revenue to provisions finance sur- charters must now include contemplated by expressly veillance mechanisms require adherence to the the Act.12 The Tax Reform Act also substantive limitations on foundation ac- changes tivity provided mandated certain in the char- for in the Act.13 Exempt Organization its holdings revitalized Exami- combined stock aof foundation and Program. parties percent. nation promises We have fulfilled related to 20 Elaborate establishing separate phase-out provisions made on prescribed are for ex- Exempt Organization Branch, centralizing isting holdings by excess business owned Organization Exempt key the field in to 16 foundations. expanded years districts required spend the man devot- Foundations are to exempt organization ed to purposes year examinations to amount for charitable each approximately during past equal income, excluding cap- three fis- to their current years. expect complete gains. cal We to our com- ital If a foundation’s income is less prescribed mitment to examine all foundations within than a rate of return on its in- years by five assets, December This required pay 1974. vestment is to out right target promise would be (initially with the this minimum return investment set by made former phase-in Commissioner Thrower. percent, the statute at 6 awith period preexisting foundations). National Office Case Pro- Controlled for gram operating promised prohibited has been as since making Foundations are from ex- Accordingly, penditures attempt we feel the Service to influence the out- living Congress up specific to its commitments come Grants for election. vot- exempt organizations. registration in permitted only the area er are limited also, intended, Report- See CCH Private nonparti- Foundations circumstances to insure er, sanship. 1f6502. Foundations are make forbidden to 4940. The U.S.C. rationale appointed payments govern- to elected or Report tax was described in the House except ment officials for reimbursement follows: expenses. domestic travel vigorous t extensive [I] clear grants Individuals who receive foundation pro- administration needed order travel, purposes study, for or similar must appropriate vide assurances objective be selected accordance promptly properly will non-discriminatory procedures approved in purposes. use their funds for charitable advance the Internal Revenue Service. being tax, then, may This be viewed as “expenditure Foundations must exercise part a user fee. grants organi- responsibility” over to other [H.R.Rep.No.91-413, Cong., 91st 1st Sess. zations that are themselves founda- Admin.News, Cong. p. U.S.Code & qualify or do not (1969)] Expenditure responsibility re- charities. report The spoke the Senate Finance Committee quires the ef- foundation to make reasonable supervisory this tax as “a fee and procedures adequate forts establish as an indication of of funds the amount expended by see that the funds are needed Internal Revenue Service grantee prescribed purpose, for the to obtain proper administration of the Internal Reve- complete reports grantee, financial from the provisions relating nue Code foun- reports and to submit detailed IRS. exempt organizations. dations other making prohibited are from Foundations Cong., S.Rep.No.91-552, ...” 1st 91st expenditures attempt legisla- influence Cong. Admin.News, p. Sess. U.S.Code & by seeking public opin- tion either to affect by communicating with ion or portions may participate 13. These Tax Re- substantive officials who the formula- following: legislation. provided Exceptions form Act amount tion of engaging prohibited nonpar- “making Foundations are from results of available the provid- study, research”; analysis, in direct indirect transactions or financial tisan ing (so-called self-dealing) gov- or other with donors to a “technical advice or assistance” parties, response body related whether transactions ernmental or committee expressing opinions request; benefit the foundation or not. its written legislation affecting of a not be in- assets foundation own tax the foundation’s risky speculative legal vested in ventures status. jeopardize purposes. making prohibited charitable Foundations closely expenditures purposes. The use of foundations to control for noncharitable family Reconsidered, Labovitz, held or businesses restricted 1969 Tax Reforms through provision limiting permissible Foundations, a Future 101-02. The grants mem- not made its famous to The of the substantive most relevant Kennedy’s 4945(a)-(d) staff when bers of Senator limitations is U.S.C. § jobs they after his left their federal (g).14 provide that and These sections likely assassination, gives grants that the it indi- is a to foundation which “objective would have Finance Committee do and Senate viduals must so an non-discriminatory” concluded that manner. If does so, man- do the foundation and the not ager effectively existing law does not approved grant are re- who to founda- limit the extent which subject spectively to an tax” of “excise money “edu- their tions can use grant. offending 2y2% and grants people to to enable 10% cational” offending grant If not recovered is abroad, to have take their vacations recovery possible by to the is extent jobs, paid to interludes between time, a the foundation within certain preparation materi- subsidize fines increased furthering political specific 50%. 100% als provisions apply appear These would viewponts. complaint to Reverend of dis- Jackson’s Bittker, Third- Should Foundations Be in the to award crimination failure Charities?, in The Future Class pro- scholarships to These children. appear his Foundations, pp. 157-58. oppose visions also .would Report The House stated: present. notion “state action” is nonobjective prohibits also The bill However, appearances be grants provision This to individuals. Congress deceiving. The abuse which affect does not provi- sought by of these curb means programs engage in extensive which grants making practice of was the sions involving grants chosen to individuals few, practice not a to the well-connected competitions open or a result grants to candidates of failure to make nondiscriminatory program- any other suspect Pro- out for reasons. selected Also, certain foundations matic basis. puts in histor- statute fessor Bittker grant- developed expertise in have making an ical context: pri- by other is utilized developments “indi- These vate foundations. Section 4945’s restrictions field are grants” foundation vidual your com- accord with concern viewed, if one wants also best expertise re- legislation fairness realistic, mittee that as a bit relationships place personal specific whim and general whose form belies origin. had in such matters. Ford If the Foundation delegate, Secretary Congress restrictions, if it or his en- vanee To enforce these designed is satisfaction demonstrated to the a acted series of “excise taxes” Secretary delegate penalties his that —(cid:127) or serve as for violation. scholarship (1) grant procedural provisions or a constitutes The and substantive subject regu- grant fellowship highlights which is are the of the federal noted 117(a) provisions latory generally, to be Pri- of section CCH framework. See study regula- Reporter. institu- an educational As used vate Foundations 151(e) (4). State, tion described section York see tion New U very Reporter. of this existence CCH prize (2) grant a or award constitutes reporter to the “de- testifies two volume subject provisions sec- relation- tailed administrative prize and sustained recipient 74(b), of such if the tion “private ship” foundations” general pub- between from the award is selected or government. lic, or grant (3) purpose achieve significant U.S.C. subsection report specific objective, produce or 4945(g) a : improve (d) (3) product, en- grants.- (g) other similar Individual —Subsection artistic, musical, literary, grant apply scientif- award- hance individual shall not to an capacity, nondiscriminatory ic, teaching, objective similar ba- other ed on grantee. approved skill, procedure pursuant in ad- or talent of the sis

633 H.R.Rep.No.91-413, Cong., Accord, 91st Committee, 1st Sess. Senate Finance 34, Cong. Admin.News, p. S.Rep.No.91-552, & Cong., U.S.Code 91st 1st Sess. (1969). 55, Cong. 1679 Admin.News, p. U.S.Code & (1969). 2027 As one commentator con- remedy provided The tracks this read- “ cludes, the ap- . . . basic Act’s ing Congressional of intent: Since proach is to locate and maintain contact awarding grants evil for invalid was with the foundations. . . .” Pri- reasons, remedy of revocation vate under the Foundations Tax Reform grant. If the evil were a failure to 1969, Act of 7 Colum.J.Law & Soc. grant reasons, for invalid award a revo- 240, Prob. 254 make little sense as a reme- cation would Treas.Reg. dy. accord, In 53.4945- § exemptions question are not 4(b)(5). type government of assistance such Congress attempted pre 4945 § police protection, or fire which is rou grant- nepotism and favoritism in vent provided any tinely to all without conno examples making, the use founda of of approval. Lodge, tation of See Moose purposes. tion for There assets supra, 173, at 1965. effect that Con is no evidence Organizations apply exempt for must gress prevent sought applica Moreover, status.16 the acts of choosing on the basis of race be approval tion and are not value neutral. public uses of foundation tween two effect, appear In would construed, Properly these assets.15 every certifying to be foundation provisions only further evidence of are laboring tax-exempt on its list regulatory instrusiveness Marker, Compare, su interest. scheme. McGlotten, pra, 1007, with 485 F.2d at supra, F.Supp. at 456-457. and an intrusive detailed scheme Such necessary prevent was the use deemed appears It also the defendant range for a foundations’ assets wide constitution assert a foundations cannot private purposes, profit-tak- such as Compare, Gil al claim be left alone. ing, nepotism, businesses, and control of City Montgomery, 473 F.2d more v. exemp- and to ensure that fruits 1973), (5th cert. Cir. 838-839 Report public. tion As the benefit granted, Ways the House Committee on Uni (1973) Bob Jones Cong., Means, H.R.Rep.No.91-413, 91st versity, F.Supp. with Green at Cong. 1st & Admin. Sess. U.S.Code F.Supp. supra, Connally, n. News, p. (1969) stated: organizations While 1165-1168. pub out hold themselves not your committee has deter- did the open a few as all but lic as organizations not mined that should surely not Restaurant, they Eagle continuing receive substantial the intimate which value clubs exchange promise benefits among members relationships their society, their contributions Lodge. extent To the did the Moose carrying out of these then avoid rights in- constitutional responsibilities. Congressional represent resolution appear part impetus 15. It does “problem” discrimination. reverse Tax Reform Act of 1969 was behind the attempt founda- curb the efforts of some Recognition See, “Application of Ex- cause of racial minorities. to aid the 872-C, emption,” and In- Form Form Big Foundations, See, g., Neilsen, e. Department Trea- structions 18-19, impetus This 332-61. is reflected Among sury, Internal Revenue Service. provi- parts Act, such as the some application questions is: “What asked in the as- sions which limit the use of foundation products benefits, services, the or- will purposes. political respect sets 26 U.S.C. its ex- ganization provide 8(a), 4945(d)(1) (e). III, empt of Form But seems clear Part function?” (a)-(d) (g) does that Section 4945 sum, likely right to if on re here, the In we believe that it is more volved that mand the district court finds the property one chooses. dispose of one’s substantially are dis defendant foundations dependent upon cannot that one Yet it is well settled exempt status, racially their pose property in discrimi a regulatory the de entangle in that scheme is both natory the State manner and intrusive, that tailed and that scheme Newton, process. the Evans government ap carries connotations of 86 S.Ct. proval, Pennsylvania that the foundations do not have (1966); Commonwealth pro Cir.), claim (3d a of constitutional Brown, cert. substantial 392 F.2d 120 public they tection, and that serve some denied, finding function, then a of “state ac (1968). L.Ed.2d 657 Moreover, appropriate. tion” would be may function, be public there As to absent, if one of factors is a even legislative history question. The more finding may ap be of “state action” still concerning purpose of the Internal remand, may parties propriate. On exemption charitable Code’s Revenue point individual circum be able to this rationale: and deduction sets forth distinguish the defendants stances which upon the is based [deduction] gener exempt private foundations from theory com- is that the Government ally. anticipated joining Again, by pensated loss revenue its for the Internal the Commissioner of Revenue which relief from financial burden Tax should and State Commissioner by ap- have to be met would otherwise illuminate issues.18 public propriations funds, and from by resulting from the benefits appellee Buf At least as general promotion of welfare. Foundation, however, falo the-record is H.R.Rep.No.1860, Cong., must 75th 3d fuller and the balance be Sess. somewhat might differently. The Buf This said to raise struck somewhat be something approaching in presumption Foundation admitted an affidavit a falo support summary public in of a motion for that foundation activities are However, judgment by-laws provide that not be that functions. this Governing particular respect of its seven-member Commit case with by appointed tee one to be foundations in member is which defendants this Mayor by Buffalo, the gate one the Surro is unclear case.17 record before us County, point. of Erie one United this Exempt activity gam- mation of the rationale the foundation foundation runs the away giant, that from the notion ut from the multifaceted Ford Foun- — things government through dation, many not foundations do mid-sized founda- doing doing exclusively not be and toward the should tions devoted to such areas of education, certain idea should do such foundations endeavor medicine they things things clubs, organizations groups, those better because do as travel dinner government dog hobby generally, than new ra- does them. This clubs clubs. See Exempt Organi- “Activity efficient tionale views foundations as more Numbers Code government zations,” 1023, p. However, than can be Form gov- more flexible and more innovative than “bulk financial assistance that United Peterson, provide” supra, goes n. at 6152-55. ernment. States educa- tion, hospital care, per- If defendant founda- the case that medicine engage activity forming Goldberg, under- arts and basic research. by government only Oates, Foundation-Support- of bu- taken because The Costs majoritarian Activities, News, July/August, ed reaucratic constraints Foundation activity governmental action, pp. 35, then this latter 38. These activities “public perhaps examples public a be considered as should functions. function.” The Peterson determined that Commission activity now foundation however, largely overlap. possible, Indeed, issue will Commission 18. It summary expan- relatively a failure to be mooted survive concluded that recent government activity required judgment. sion a refor- college Judge dormitory of the West rooms tinguished Court can District States dis- York, one from a restaurant ern of New District facility, bowling Supreme league Court from a the Senior Justice bar as- sociation, repair shop and a Buffalo district. radio Trial Term governmental participation broadcasting type a TV network.” This Bittker Kaufman, management organization Rights: of an Taxes and Civil “Constitutionalizing” perilously situation close to the Internal comes Reve- Code, 51, Pennsylvania Trusts, nue 82 Yale v. Board of 353 U. L.J. 87 230, 806, charity We doubt that the S.Ct. 1 L.Ed.2d S. 77 792 fruits will agency position wither on the (1957), of an vine as result where the of a deci- barring organiza sion of the as trustee of racial State discrimination. . Tax-exempt philanthropy more to tion was sufficient without which held consti- course, tutes “state action” thereby constitute action.” Of is limited “state only ensuring and di the extent of here the control is less absolute an ab- governmental Truly pri- sence of rect. But even indirect such discrimination. management meanwhile, philanthropy, vate participation in the of an is not af- organization persuasive fected at all. evidence of “state where existence action” III. participation is both substantial This is not to challenges other than neutral. Appellant both fed say Surrogate that the Court’s tradition exemptions. eral and state Since the supervisory al role transforms estate exemptions clearly two linked in See, “state United practice (in or trust into action.” identity of the terms near Snodgrass, Bank v. statutory States National 202 of the definitions 1954) 530, (en ; P.2d banc Or. 860 275 symbio and in terms of administrative Gordon, 197, Mass. sis) Gordon 332 124 purpose and in and since the evil denied, 947, against 349 N.E.2d cert. which the Fifth and the Four (1955); 99 1273 75 S.Ct. L.Ed. gov teenth Amendments set were was Mayers Ridley, U.S.App.D.C. 45, fostering 151 ernmental of racial discrimina (en (1972) banc, 465 Tamm, J., dissenting). 658-659 merely F.2d merely tion and not state fed here But action, eral similar treatment consti officials, named in their ex ca purposes proper. tutional seems officio pacities, major of a control the selection Appellant’s 1983 claim § ity governing body, and the Buf against slightly the foundations raises a appears falo to have estab Foundation problem. different 42 U.S.C. 1983 § lished, very pur procedure for the “ proscribes only conduct . . un- . involving pose public in its activi any der color of statute ... insig participation neither ties. This ” . . . and has been con- State Therefore, neutral. nificant nor applying strued as not to the actions of Foundation, finding Buffalo government, the federal District Co- “state action” warranted even if Carter, 424-425, lumbia v. 409 U.S. only the court some other should find (1973); 34 L.Ed.2d 613 significant action.” evidence of “state Wheeler, 647, 650, Wheeldin v. 373 U.S. this defini formulation of n. S.Ct. applicable only (1963), tion of “state action” is conspiracy unless there is be- officials, racial claims of discrimination. As tween the state and federal above, admittedly noted conduct Driver, F.2d Kletschka v. 448- governmental part private part (2d 1969). must no Cir. Since colorable strictly conspiracy be more scrutinized when claims can claim of such be made made), (and racial discrimination made. here none been de- Again, termining appellant we think that the combination of whether has a claim gives factors noted courts sufficient under the district court should § only room . exemptions. “. . so look cluster state Judge Friendly Again, dissenting of the state of the because from denial judge us, reconsideration, record we cannot of en before banc in which Cir- exemptions Judges impact Hays Mulligan state alone.19 cuit join, having filed, been IV. Upon thereof, consideration it is Appellant’s claims under U. request Ordered that said be and it 1985 were 1981 and 42 § alleged U.S.C. S.C. hereby is denied. appellant facts dismissed because which, believed, Irving were insufficient Kaufman, if still R. of action under these Judge. to state a cause Chief pro se action this is a sections. Since FRIENDLY, Judge, Circuit of these claims is further consideration MULLIGAN, 520-521, necessary. Haines, whom Judges, HAYS Circuit hope dissenting appellant, join, denial on remand 594. If counsel, fully can reconsideration en with the assistance banc: specific applications defend to not show panel As in opinion, stated the this specific vacancies ants, existence the appears that, the first be claim be- conspira grants, the existence and exemption, cause of tax a denial of part defend on the of the action torial grants by private charitable foundations foundations, facts, other material ant government action, could constitute summary judgment appropriate. will be aggrieved applicant may which an ob- damages injunc- declaratory tain or protection V. equal tive relief under the of the Fourteenth Amendment clause properly court dis below process in its embodiment the due clause remaining appellant’s claim. missed incredibly, of the Fifth. Somewhat judicial cannot seek a Reverend Jackson thought panel an affirmative answer directing be forfeited that assets decree single only a be so obvious as to deserve paragraph Treasury. Wolk the United States slip per opinion, aof curiam Authority, of New York stein v. Port 4, opinion 576, decided December (D.N.J.1959). F.Supp. 209 178 12, 1973, request- I 1973. On December the district is remanded to The case regular judges poll active a ed proceedings accord- for further court banc; en aft- on reconsideration service opinion. ance with this this, judges voted for er had several REQUEST FOR EN BANC ON requested de- panel vote be RECONSIDERATION pending preparation of a revised ferred finding va- opinion, opinion. The new request for en banc A reconsideration riety to reaffirm judge of added reasons having of this made been conclusion, regu- not circulated previous was poll judges Court, of the and a it even having taken, 1974. While until March lar active service been Judges stronger against than defendants Judge Kaufman, Circuit Chief analytically my per curiam, view is having Mansfield, and Timbers Oakes open-ended, at dangerously unsound, against reconsideration, en banc voted controlling precedent both Hays, Judges Friendly, war with and Circuit this circuit. having and in Supreme Court Feinberg Mulligan voted deference, it seems Indeed, all opinion by thereof, Circuit and an favor discrimina Harrison, See, involvement of state 413 Norwood aid (1973) the state turn whether do not : tion at 732 37 up only per up tangi type or adds may grant 51 cent adds A State segre support per cent if that aid here involved ble financial aid gated v. Louisi tendency facilitate, significant Poindexter institution.” has Comm’n, F. support private Assistance reinforce, ana Financial discrimina (1967). constitutionality Supp. “[Djecisions on the tion. action; only question me the most ill-advised decision with re- ment was yet spect sufficiently promot action” rendered “state whether that action corrected will ed and unless court racial ren discrimination to damage impermissible der the source of enormous the decisions for a great philanthropy officer, edifice see Norwood Har country’s rison, one this which has been L. case, by and admirable Ed.2d most distinctive features. In con this Although trast, plaintiff the defendants remand has sued founda manage escape analysis net somehow themselves. While or, likely, panel problems occasionally more two has woven1 overlapped, plaintiff’s Connally, are un- see show criticisms McGlotten v. opinion F.Supp. 448, (D.D.C.1972) founded, harm done (three-judge court); It re- Bittker & Kauf will is therefore most remain. man, grettable despite Rights: that, request Taxes and Civil “Consti tutionalizing” judges present complement half its Internal Revenue Code, regular service, (1972), 82 Yale L.J. the court 61-63 now in active there is a clear decline en distinction between should reconsideration banc. holding pri them. A that an otherwise vate institution has become an arm of I. the state is much broader can have panel’s fundamental error far consequences more serious than a de ac loose characterization of “state impermis termination that state has holding sibly In the fed tion” private doctrine. fostered discrimination. exemptions provided might eral and state tax exposed The foundation to damage render them prior discriminatory charitable claims for rights challenging subject to civil suits required by conduct could be a court policy their decisions in the selection of only to make decisions not as to the dis beneficiai’ies, panel primarily position the relies of its charitable donations but three-judge on employees court cases that have in the of selection in ac exemptions struck down tax for institu properly with the cordance restrictions practicing agencies. imposed governmental the of crudest form ra In might cial discrimination —the of deed, exclusion escape it not be the able government blacks from or attendance schools mark of even dis action membership claiming benefits; in clubs a nature.2 of future tax courts the cases, however, plaintiffs might In years the hold that of tax benefits had federal or sued state officials to had rendered the foundation’s status as agent force revocation of tax benefits. The irrevocable, of the state see challenged govern clearly action was supra, & Kaufman, Bittker at 60-61. Although panel technically approved Supreme the did not the Court was Green government finding Connally, make F.Supp. (D.D.C.), action v. 330 1150 case, the defendant Green, this I mem. aff’d sub nom. Coit 404 v. U.S. 997, cannot see 564, how the (1971), district court can read 92 S.Ct. 30 L.Ed.2d 550 opinion leaving the substituted exemption lily- real which dealt tax with for a leeway. white Southern school struck the down apply holding exemption This does statutory grounds. dissent not Oreen The resj)ect supported result, entirely with the defendant Buffalo Foun case is in its if not dation, agree princi reasoning, which I within falls the in its Poindexter v. Louisiana ple College decisions, Pennsyl Needy the Children, Girard Education Comm’n 296 City Trusts, F.Supp. (E.D.La.), vania v. mem., Board of Directors 686 aff’d 393 U.S. 77 230, 806, (1968), 353 U.S. 1 L.Ed.2d 792 S.Ct. 89 S.Ct. 21 16 (1958), Pennsylvania Brown, 392 F. Brown South Carolina Board of Educa (3 Cir.), denied, tion, F.Supp. (D.S.C.) 2d 120 (three-judge cert. (1968). court), mem., S.Ct. L.Ed.2d 657 aff’d 393 U.S. 21 L.Ed.2d 391 'Significantly, only the one these four per cases cited in the to have been curiam cases action” exemption. The “state II. presence heavy the that have stressed decision for implications of this regulation are those receiving tax benefits institutions carrying private institutions which staggering. Simply sorts various plaintiffs policy against the out state exemptions, private social of tax because benefiting di- state is or in rectly which community centers, agencies, institu- activity. In higher education, homes for tions young (2 Cir. Miles, F.2d Powe v. by private aged, endowed and the argument rejected 1968), we preferential bene- sole donors regulation of educational New York’s races, particular must fit of creeds colleges schools, standards equally all, ev- open with their doors disciplinary actions made the universities judicial ery subject reexami- decision College acts of the state. of Alfred though impair nation, even this noted, argument, That we destroy very purpose led the which point the essential overlooks —that Beyond this, if donor endow them. simply state must be involved given exemption the tax to charitable alleged activity of institution some giving into foundations converts their injury upon plaintiff inflicted have really government action, tena- I no see activity that caused but with distinguishing the tax de- ble basis Putting way, injury. point another corpo- ductions allowed individuals action, action, not the state rations. complaint. subject must be availability, tax Because of its broad Lodge Supreme Court, Moose No. exemption, itself, previous- has never Irvis, 163, 176-177, 92 107 v. govern- ly thought impose been made (1972), 32 L.Ed.2d 627 sufficiently imprimatur to con- ment’s discussing point much regulations same recipient de into a arm vert the facto Pennsylvania Liquor government. An or other Board, applied Control benefit, range available to a wide Lodge. Moose type “However detailed regarded always institutions, has been regulation may par in some be government possible as support, except least form of ticulars,” wrote, “it be the Court cannot police for the and fire encourage any way or in foster to said protection provided The all citizens. it Nor be racial discrimination. can Justices, Justice, writing Chief for five any in realistic said make to State Commission, in said v. Tax Walz 397 U. partner joint venturer sense or even a a 664, 1409, 1415, 675, L. S. 90 S.Ct. 25 enterprise.” The in fact the club’s sug- (1970), Ed.2d ever 697 “no one has Congress I. necessary in has deemed it gested exemption has that tax converted 501(c)(3) exemp limit the tax R.C. to libraries, hospitals galleries, art into or tion to put employees arms of or ‘on the state foundation, organized any . . . ” public any- payroll.’ less had Still religious, operated exclusively for suggested this, prior one ever de- to the testing pub- charitable, scientific, for foundations, here, respect cision many with safety, literary, pur- or lic educational incorpora- simply of which are cruelty prevention poses, or for the pocketbook. tion of an individual’s animals, part no children or earnings panel’s There is no force reli- net which inures in the government’s regulation any private ance on the shareholder benefit part prevent individual, of the foundations to of the tax no substantial abuse plaintiffs. against majority 3. Even There in such a to act case the refused them respect finding Wagner such to the to find could be no action in v. state Coleman regulating College, (2 1970), for foun- 429 F.2d statutes tax Cir. with- 1120 proof college out further dations. administrators required considered a state statute

639 carrying light years away dations are of which is activities from the attempting “company propaganda, analysis town” otherwise Marsh v. Alabama, 501, legislation, 276, which 326 U.S. to influence 66 S.Ct. 90 in, Amalgamated participate (1946), intervene L.Ed. 265 does not Food Employees (including publishing Logan or distribut- Union Local v. Valley statements), Plaza, Inc., ing any political cam- paign (1968). Compare L.Ed.2d candidate on behalf Lloyd Corp. Tanner, v. office gives encouragement no to racial dis- Far reporting university less than the And the detailed crimination. which we held record-keeping requirements im- not to be an arm of the state Powe v. Miles, supra, posed they upon have charitable foundations 407 F.2d at do clearly the foun- “concern to ensure that activities or facilities so been established governmental entities, dations, like taxable benefit nature all the state advantages they only permitted escape responsi- when cannot be from bility statutory by allowing qualifications.4 managed meet the them attempt supposedly agency.” panel’s private essential a blur this dis- regulatory a scheme tinction between panel Whereas the blows factors plays part institution finding favoring a of state action out of government policy in an offensive and. proportion all in the context here designed prevent in- one which is presented, unduly it minimizes a factor acting way in an abusive runs stitution’s pointing strongly way. the other As we counter our recent decisions Shir- University, said in Wahba York New ley National Bank Connecti- State (2 492 F.2d at 1974), Cir. courts 1974), cut, (2 493 F.2d Cir. testing pay heed, govern- should (2 Dentzer, 494 F.2d 302 Cir. Bond v. action, preserving ment “value Judge Mulligan 1973). wrote for us As sector free constitu- former, in the 493 F.2d requirements govern- applicable tional regres- ameliatory not “enactment was organization ment institutions.” An sive; plain- not in’ did ‘move should not have to demonstrate an “asso- buyers, on the or other but rather tiff ciational or other constitutional” claim action does instalment sellers.” Private privacy, panel suggests, before simply not state action because become cognizance the courts will take of the so- regulation gone so private eleemosynary cial values that in- plaintiff far as a like. would promote. stitutions can The interest fleeting preserving panel’s treatment an area of untrammeled “public argument wholly very philanthropy choice function” great. among unconvincing. philanthropic Private foun- Even charitable insti- panel great weight nondiscriminatory” requirement applies 4. The attaches to § particularly only among designated added the the the to Code members of requirement, (g), 4945(d)(3), the in- § that charitable class. As T.R. 53.4945- grants “travel, study, 44(b)(5) Example (2) illustrates, dividual or other the statu- objec- tory permits purposes” “on similar be awarded an standard the charitable class to nondiscriminatory composed single tive the be basis.” As of a members eth- legislative history group long regulations purpose pro- and the make nic gram as the of so the clear, provision legitimate. panel prop- this was to bar is intended Indeed the erly use a device to “There of foundations concedes evidence to the no designated prevent previously Congress sought channel to indi- effect income to foun- unqualified persons choosing basis viduals or to whose re- dations from on the of race ceipt grants suspiciously public in- of between uses of foundation foundation two as- provision putative purpose sets.” In event this could not consistent with holding exemption support government granted of tax other action with —in respect grants prevent to other use of a foundation to foundation than words gifts to by if made individuals. not be deductible would “objective corporation. an individual or engaged in tutions, fami- defendants have not discrim- of charitable activities government Despite this, foundations, receiving will ly no ination. decision spawn rights exemption, civil suits should countless tax other than benefit against “sifting swept, charitable foundations dis- under a to be be last gruntled judgment,” minority applicants, add unnec- of and exercise of facts essarily crushing concept action. to the burden on of state within appeals, of of district courts and the courts thousands There hundreds of discourage ranging giants and, all, seriously of to worst from foundations foundations, private philanthropy by subjecting do- pigmies. most While mainly give necessity justifying large to their particularly ones, nors to creeds, impeccable Even serving in court. all races decisions history institutions although hardly protect completely will not non- fairness in the against discriminatory required way those who trials actions offensive, nothing institutions, to think the inevitable turndowns ei- choose I see grounds. constitutionally morally, in a on racial were based or ther choosing suggests give preferen- that several record this case to foundation’s tially exclusively commenda- to semi- of the defendant foundations Jesuit even colleges liberally bly given naries, Yeshivas, and oth- to have to black black any poli- Indeed, minority None have I find it some- er causes. NAACP. gifts. thing pejora- cy against are in apply Those that of misnomer such scholarships granting to a the business term “racial discrimination” tive granted gift. this One them to blacks. But make charitable have failure foundations, inexplicable passages in the not will save most record suits, many opinion where after others in later footnote noting necessity exploration and the Peterson full factual the conclusion of just they done explanation the “new rationale what have Commission years, bur- more efficient than over the with attendant foundations as views and staffs in that can be dens foundation directors than and the courts. more more innovative flexible government” because of “bureaucratic confidence because their Doubtless applicable majoritarian constraints” merits, prevailing the defend- on the latter, opinion concludes that per from the did not seek certiorari ants subject foundations should be of last December. Since curiam decision govern- applicable same constraints continually judice sub this case has been already Moreover, indi- ment itself. deci- and the substituted this court cated, if the makes go further even to me to sion seems subject judicial scrutiny action state road, may not down state action discrimination, to assure lack of so must this, Col- be gate-Palmolive late to do see F.T.C. too respect the tax deduction with to indi- Co., gifts. corporate vidual and Donors are And L.Ed.2d 904 going willing spend their not although Supreme Court does money, or to have directors time and respect grant generally certiorari spend theirs, and staffs judgments the courts non-final defending one. actions like this If convinced appeals, it does so when supervi- the federal courts take over important and clear-cut “there some philanthropy, there ultimate- will sion ly fundamental that is issue law supervise. philanthropy to nobe the case and further conduct a basis qualify otherwise would

III. certiorari,” Su- see Gressman Stern & Practice, 180-81 preme 4.19 outset, Court makes the at the what As said Dollar, 330 (4th 1969), Land v. peculiarly ed. see opinion panel’s unfortunate so L. n. 67 S.Ct. way evil eradi- U.S. that the will no be Ed; Domes- (1947), Larson finding on remand that the cated Foreign Corp., 337 tic Commerce & L.Ed. n. hoped, It is to

event, that other circuits will follow

this disastrous course.

Judge Feinberg also dissents

denial of en banc. reconsideration

UNITED STATES America ex rel. TESTAMARK, Louis Petitioner- Appellee, VINCENT,

L. J. Superintendent, Green Haven Facility, Correctional Storm ville, York, Respondent-Appellant. New

No. Docket 73-2614.

United Appeals, States Court of

Second Circuit.

Argued Nov. May 8,

Decided Cohen, Atty. Gen., Lillian Asst. Z. City (Louis Lefkowitz,

New York Atty. J. York, State of New Gen. Hirshowitz, and Samuel A. Atty. First Asst. counsel), City, York New Gen., respondent-appellant. Hayes, City York Mifflin New L. Murray (Ralph Allan K. Nickerson Gordon, City, counsel), York New petitioner-appellee. MOORE, Before TIM- HAYS Judges.

BERS, Circuit MOORE, Judge: Circuit brought by appeal This the At- is an torney New General State Vincent, Super- York on behalf L. J. intendent, Haven Fa- Correctional Green cility “State”) from (hereinafter peti- application granting order

Case Details

Case Name: Rev. Donald L. Jackson v. The Statler Foundation

Court Name: Court of Appeals for the Second Circuit

Date Published: Apr 5, 1974

Citation: 496 F.2d 623

Docket Number: 46, Docket 73-1543

Court Abbreviation: 2d Cir.