Mortmain is a perplexing yet important legal doctrine with a dark history, yet it still has relevance for modern businesses. In its simplest form, mortmain refers to the inability of a corporation or other legal entity to receive gifts or donations. The term itself derives from medieval Latin, and its literal interpretation is “dead hand,” evoking the idea of a powerful corporation or entity holding on to its power or assets in perpetuity, with no way of donating or dispersing them.
Despite its age-old roots, the concept of mortmain still applies to organizations today. In the United States, and other countries around the world, there are often laws that prevent organizations from receiving certain types of gifts, including land, investments, and other assets. This is done to protect the interests of the organization’s shareholders and other stakeholders.
Mortmain also has implications for taxation. Organizations may be taxed on gifts they receive, even if the gift in question does not have tangible value. This is why many organizations choose to set up foundations or trust funds to funnel any donations they receive into.
Navigating Mortmain: Tips for Companies and Organizations
Given the potential implications of mortmain, business owners and other leaders must stay apprised of the laws in their respective jurisdictions when it comes to receiving donations. Recognizing mortmain may prove challenging, as it may manifest itself in various forms.
The simplest practice for any entity looking to receive a donation is consulting a legal professional to understand the applicable laws and regulations. This is particularly important if the donation has strings attached, or if the donor wishes to reserve certain rights with respect to the donation.
By understanding the implications of mortmain, organizations can structure their donations wisely and avoid costly legal disputes. By doing so, they can ensure that their beneficiaries receive the full benefit of their gifts and donations, while also protecting their own interests.