In Free
Fertility Foundation v. Commissioner Of Internal Revenue (Filed July 7,
2010) the tax court held that Free Fertility Foundation’s activities may promote
population growth and the propagation of one man’s seed, but do not promote
health for the benefit of the community.
The foundation thus does not qualify for a charitable tax
exemption. The facts of the case
are fascinating on many levels, so I detail them at some length here.
According to the court, William C. Naylor, Jr. (Naylor), a software engineer who holds more than 10 patents on various inventions, founded and incorporated Free Fertility Foundation in 2003 in California as a nonprofit public benefit corporation with the purpose of providing sperm free of charge to women seeking to become pregnant. Petitioner’s Web site states that:
Naylor is its “single sperm donor” and chronicles Naylor’s life from infancy to adulthood. Naylor’s donor profile includes photographs, a physical description, health information, family history, and achievements. In particular, the Web site provides great detail of Naylor’s academic and athletic accomplishments during elementary school (e.g., spelling bee competition), junior high school (e.g., science fair competition), high school (e.g., swimming competitions), and college (e.g., recognition as “top engineering student”). On the Web site Naylor states:
I derive meaning and happiness from believing that I am making the world a better place. Being a sperm donor is a way that I can help a few people to have children who otherwise could not. This makes more of a positive difference to the world than all of the inventions and scientific discoveries that I could ever create.
Naylor is Free Fertility’s secretary and treasurer. His father, a retired university professor, is the president and chairman. Naylor and his father are the only board members and officers, and make all determinations about who will receive the free sperm. Now, this is where the facts get very interesting:
Preference is given to women “with better education” and no record of divorce, domestic violence, or “difficult fertility histories” and are from families “whose members have a track record of contributing to their communities”; who are in “a traditional marriage situation”; who are under age 37; who are ethnic minorities; and who are “from locations where * * * [petitioner has] not previously accepted recipients.”
According to the court, “An organization is not operated exclusively for exempt purposes unless it serves a public rather than a private interest.” The court goes on to say that the promotion of health for the benefit of the community is a charitable purpose, but only if “the class of beneficiaries is sufficiently large to benefit the community as a whole.”
The court ruled that, although the free provision of sperm may, under some circumstances, be a charitable activity, Free Fertility does not qualify for tax exemption “because the class of petitioner’s beneficiaries is not sufficiently large to benefit the community as a whole.” Specifically:
the class of potential beneficiaries includes only the limited number of women who are interested in having one man-–Naylor–-be the biological father of their children and who survive the very subjective, and possibly arbitrary, selection process controlled by the Naylors. Over a 2-year period, petitioner received 819 inquiries and provided sperm to 24 women. In deciding who receives the sperm, petitioner has certain preferences that narrow the class of eligible recipients. It is not apparent what, if any, relationship some of these preferences have to the promotion of health. For example, petitioner prefers women “from families whose members have a track record of contributing to their communities” and women “with better education”. Petitioner does not provide medical care, research, education, or other services that advance or further health.
The court concludes: “Simply put, petitioner’s activities may promote the propagation of Naylor’s seed and population growth, but they do not promote health for the benefit of the community.”
The court may very well be right about the limited benefits of Naylor's activities, but the language used in the case does raise the issue of society’s differing expectations about the motives of men and women who part with reproductive material and, in particular, the traditional skepticism associated with claims of altruistic sperm donation. (Issues that I explore in depth here and here).
In contrast to the altruistic rhetoric surrounding even commercial egg donation, sperm donors are typically assumed to donate primarily, if not solely, for profit opportunity. Indeed, the presumption that sperm donors are motivated by profit-seeking is so strong that men expressing altruistic motives are frequently viewed with skepticism and assumed to be deviants or egomaniacs intent on propagating the earth.
As I discuss in the above-linked articles, this concern is reported in sources as wide-ranging as the Archbishop of Canterbury’s Commission, which worried that sperm donors might invoke “altruistic idealism” to disguise what was actually “spiritual pride” in their greater virility and ability to propagate, to The Genius Factory, which notes that the key attraction of sperm donation to most young men is “making money for something you do anyway,” and that, although some men claim altruistic motives, many of them are really egomaniacs.
As I argue in Sunny Samaritans and Egomaniacs:
Sperm donation, historically associated with deviant behavior, continues to evoke a lingering skepticism regarding donor motives. Monetary payment may have the capacity to normalize these transactions, providing an acceptable donor motive unrelated to sexual impulses or egoistic desires to spread male genes. Sperm donation thus becomes a job like any other, mapping onto more comfortable stereotypes of male interests in financial gain.
The willingness of women to procreate solely for monetary gain, however, causes discomfort of a different sort. As is the case with commercial surrogates, egg donors are reframed as loving altruists, generously giving “the gift of life” to help others less fortunate.
Update: I realized belatedly that Paul Caron posted on this case also.
HT: Naomi Cahn
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