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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