ABSTRACT
The donative theory offers an elegant and powerful rationale for subsidizing the objects of donative activity, one that fully meets both the worth and need components of the deservedness criterion. Donors' selections of particular objects of philanthropy from the many available alternatives reveal those that the public finds are of special worth. An institution's resort to solicitations evidences that its needs are not being met elsewhere. For the income tax, the connection between the size of the subsidy and the criterion for deservedness is much more attenuated. Generally, gifts are not considered as income to the recipient by virtue of l.R.C. § 102. Therefore, the value of an income tax exemption with respect to donations alone is zero. The various federal and state manifestations of the charitable tax exemption uniformly require that exempt organizations be organized as nonprofit entities. Usually, this restriction is enforced through a prohibition on the distribution of the exempt entity's assets or profits to private individuals.
