Subsidizing Good Works (by Students)
The rebuilding of New Orleans is one of several activities that have attracted the energy and generosity of students across the country, and here at Chicago. Let's put aside the question (addressed in earlier posts) of whether that city ought to be rebuilt as is presently contemplated, and ask whether law schools (say ours) ought to subsidize a group of students who organize to travel there on spring break and do work under the auspices of Habitat for Humanity. I think we should be very proud of these students, and it is hard to imagine a teacher preferring any other spring break activity for students. But I find myself resisting the practice of some other schools that quickly give money to the cause.
Among the the positive reasons to give or allocate money in this manner is that the donor school looks good, associates itself even more strongly with these terrific students, sends a message about philanthropic values, and, well, it is hard to make the case that this is not a better use of money than, say, the marginal treat after exams or donuts on a Wednesday morning. On the other hand, it is hard to see why a 501(c)(3) organization should ask donors for money only to turn around and give some of it (essentially) to another well-known organization. Our donors and tuition-payers are intelligent people who can allocate on their own, and who may for example be opposed to the rebuilding of New Orleans. They may prefer to give charitably to relocated residents from that city who are struggling to make new lives on higher ground. Why should we make this philanthropic decision for them? In contrast, when we spend on a clinical program for indigent clients, we are engaging directly in the education of our students, and also can be said to expend resources where we have much more information than do individual donors. (Cutting in the other direction, I think, is the argument that under present circumstances only students of means will go do good works when they must pay to do so, as in the case of traveling to New Orleans. If the Law School subsidizes the trip, students who could not have afforded to go might be able to do so, and this might be good for their growth as individuals. I like this argument best of the positive ones, especially because there are many more students who tried to sign up to travel than could Habitat accommodate. It is not really a question of encouraging more good works, but rather one of which students engage in such activities.) A similar argument is that New Orleans is very much in the public eye, so that there is a collective decision, in Congress and elsewhere, and as good a decision as the democratic system can muster, about the strategy and cost of rebuilding; private charity may be much more effective where the donor or decisionmaker has better information on the ground than does a legislature sitting far away. In fact, when our students return, I hope to learn from them something about programs or strategies that seemed particularly successful in New Orleans, so that I might contribute on my own to one organization rather than another.
It is interesting that tax law more or less tracks some of these thoughts - though few institutions seem to notice tax law at all. I am likely to be wrong about this, but thus far I see no reason why any funds we disburse to our admirable student-travelers would not be taxable to them! I can see that a school-organized trip might be provided to students with no tax consequences, if it is plainly a part of their education. Not so, I would think, for one that earns no credit and is not a regular part of the curriculum. A disbursement of cash to students seems especially taxable (and thus an inefficient way of giving and encouraging good works) unless it fits a specific exclusion, as do most scholarshipa awarded in the normal course of admissions and financial aid. There are a few law schools that presently give money outright to students who engage in good works (and indeed one reason to give is not to seem miserly and uncharitable by comparison), but I think this should be accompanied by some tax research, a note to the students that this may be taxable income, and perhaps some reporting of the disbursement to the IRS. Habitat for Humanity could of course receive money (as a 501(c)(3) organization) and it could then, as part of its mission, turn around and pay for dormitory rooms and other spring-break expenses, in which case the students would be relieved of these costs.
My tentative conclusion is that, with few exceptions, educational institutions should try to stick to the business of providing education, and of doing what they (certainly we!) do best. I might say the same about Habitat; I would be surprised if it thought it correct for it to give stipends to a subset of volunteers or employees who chose to come to the University of Chicago Law School. But I have some doubt about my conclusion, and it is not just about the image thing. It is because part of education is the demonstration of values, and students surely look to their schools for guidance about these things. It is for this reason, I think, that we glorify students and faculty who do good works, and perhaps it is reasonable to put some money behind those thoughts. One compromise might be that while we encourage good works through our terrific public interest programs, which do require that the good works be carried out in a manner that uses or furthers one's legal education, we might add a few public interest fellowships in the form of direct subsidies or scholarships for students who engage in good works (though we would need to look into their taxability), rather than only for those who work for qualifying 501(c)(3) organizations or government units during their summers.