# kaal:claim:3981021-007

**Claim.** Because boards and donors seek to preserve endowments rather than spend them, funds accrue tax free long after the donor has taken the deduction, which runs counter to the spirit of the rules governing charitable deductions and may contribute to harmful inefficiency.

**Type.** failure  **Support.** argued

**Holds when.**

- jurisdictions granting an immediate deduction with deferred payout obligations

**Source quote.**

> Rather than funds being employed immediately, the funds are allowed to accrue tax free. 49 This may run counter to the spirit of the rules governing charitable deductions and may contribute to harmful inefficiency.

**From.** Wulf A. Kaal, *How Decentralized Autonomous Organizations Optimize Charitable Giving* (2021), Motivation, Tax Free Cash Hoarding, page 13

**Cite as.** Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021

**Verify.** sha256 of source PDF `9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202021%20-%20How%20Decentralized%20Autonomous%20Organizations%20Optimize%20Charitable%20Giving.pdf

**Failure mode.** Tax free cash hoarding  (family: board-and-oversight-failure)

**Topics.** law-and-legal-systems, risk-and-incentives, economics

**Keywords.** zombie-charities, tax-deduction, endowment-hoarding, legal-incentives, inefficiency

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