The Best Laid Plans of Mice and Men: What You Can Do For Your Country

I once read a blog post about a well-intentioned Parisian office worker. The worker was upset about the mouse control efforts undertaken by several colleagues. In response to a rising mouse problem set off by the onset of winter, the writer’s officemates deployed a series of glue traps to catch their unwanted rodent denizens. Seeking a more humane alternative, the writer, on his own dime, bought more-humane traps and set them around the office.

The new more-humane traps did not work. While the less humane traps captured mice in cruel fashion, the more- humane ones allowed their targets to forage without actual capture. The writer checked day in and day out to no avail before leaving for an extended vacation, with total mouse count at zero. A week later, he returned from his rest to find that his efforts in capturing a mouse finally proved successful, but his intentions were still dashed as his captive had starved to death in his absence.

One group of bequests follows the Parisian office mouse trap model, and while intended for good, the outcome is a bit more complicated: national debt bequests. While it may confound the larger populace, some citizens make gifts to the government to pay down their government’s national debt. In several notable cases, though, their wishes did not go according to their plans and good intentions.

The Bequeathed Mouse Trap: Unspent Debt Relief.

Many bequests that focus on paying the national debt were motivated by wartime. War is expensive. Up until 10 years ago, England was still paying for World War One. Literally. In 2014—100 years after it started— the British government paid off a consolidated loan issued in 1935 that offset the war bonds that financed the first World War.[1] It was one of many ways that the government paid the heavy burden of the war to end all wars.

In addition to government debt and bonds, the British also sought other support to offset the war’s heavy financial burden. In 1919, conservative prime minister Stanley Baldwin made several anonymous appeals for voluntary donations to pay off the country’s war debt, focusing his ask on the country’s wealth and elite. Some citizens answered that call and some did it through their estates. For his part, Baldwin himself donated 1/5 of his own net worth during his lifetime to the National Treasury in furtherance of that cause.[2]

One citizen of note likely followed Baldwin’s lead. In 1928, an anonymous donor left a £500,000 bequest to the British government with the stipulation that it earn enough interest to pay off the national debt. In the intervening 95 years, the bequest is unspent and has grown to £350 million.[3]

The 1928 bequest, however well intended, has encountered its own mouse trap, so to speak. Because of the restrictions applied by the donor, which required that it be used to pay off the entire debt of England, no pound or penny has been used to date to address the national debt.[4] Today, England’s national debt sits at £2.44 trillion, meaning that the bequest still sits roughly £2,439,650,000,000.00 (Two-trillion, four-hundred-thirty-nine-billion, six-hundred-fifty-million) short of meeting the necessary condition of its restriction (or .03% the way to its goal).[5]

There have been several court petitions to release the funds to help lessen the national debt and to put the funds to use, but courts have been unwilling so far to depart from the originally-documented donor restrictions. As a result, the dollars remain unspent and appreciating until such time as the fund has sufficient value to pay off the country’s entire debt, which may never come to pass.

The American Counterpart: Also Paying Off British Debt

Paying British debt is an American marvel, too. In his 1927 will, James Bertram, a resident of New York, bequeathed his $4.3 million estate to the United States government, should he have no children or grandchildren.[6] Mr. Bertram was a Scottish native who settled in New York , eventually making a successful career at the Carnegie Institute. In making his bequest, he added the restriction that the funds received should be used to repay some of the $4.2 billion that the British borrowed from the U.S. to pay for World War One.

Mr. Bertram died in 1934 and his only daughter, Jean, died childless in 1996. In keeping with his will’s restrictions, a New York probate court ordered the distribution of his estate to the U.S. government, against the objections of his daughter’s estate, who argued that his bequest should be directed towards the personal foundation she set up to promote causes in animals and veterinary scholarships.

A Problem That Persists Today

While satisfying war debts was a strong motivator for many to makes gifts to governments in the 20th century, the issue still exists today and the challenges and legal issues that follow them are equally ripe. In 2013, the British government received 11 gifts ranging from 78 to 520,000 pounds, all purposed for addressing the country’s national debt. The £520,000 bequest came from a 90-year-old former nurse, Joan Edwards, who made a bequest to “whichever government is in office at the date of my death for the government in their absolute discretion to use as they may think fit.”[8] Ms. Edwards initially distributed the bequest to the British Conservative and Liberal Democrat parties, who were in control of Parliament at the time of her death. Public outcry soon followed, with many criticizing that Ms. Edwards, who was not overly political, intended her bequest to benefit the general government rather than a political party. The Conservatives and Liberal Democrats both returned the bequest to the national treasury.

The United States also has a program to receive gifts from private citizens to reduce the national debt, and contrary to what some may expect, the program is significantly more successful than its British counterpart. The United States government may accept gifts from private citizens if the receipt of the gift is authorized by statute. To this end the Treasury Department is statutorily authorized to accept gifts on the condition that the gift be used to reduce debt held by the public.[9] Since 1996, the federal government has received $63,535,635.40 in furtherance of this cause,[10] or $204,953 per year.[11]

Hindsight 20/20: Resolve Ambiguities Before They Become Problems

The Parisian office story at the beginning is in many ways the quintessential and perhaps all too convenient example of the best laid plans of mice and men. Even with the best intentions in mind, plans can go sideways. And the best laid plans of debt donors shows that this can happen with testamentary gifts to noble causes, too.

In each of the national debt cases, the challenge centers on ambiguity. But ambiguity in testamentary gifts is not a problem confined to national government bequests intended to reduce debt. They touch nonprofits in every corner of the charitable space.

One of the key elements in making sure that best laid plans do come to pass is to involve experts as part of the conversation. Good intentions can accomplish a lot, but experts can help them meet their goals more efficiently and more assuredly. Experts can help with wording, spot common hurdles, and ensure that a gift is made to the appropriate legal authority.[12] In the context of the charitable space, the experts reside within the intended charitable recipients. Charities are the best experts of their work and involving them in a conversation about the gift can be a very important step to resolving ambiguity.

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[1] Julia Kollewe, Britian’s first world war debts are to be repaid, what does it mean?, The Guardian, Dec. 3, 2014. [2] Keith Stagg, Stanley Baldwin Asked Britian's rich to help pay off the national debt after World War I – but it didn't work, Yahoo News, May 18, 2018. [3] Brooke Masters, Anonymous Bequest to Nation Worth £350m Sits Untouched Since 1928, The Financial Times, Aug. 16, 2013. [4] Reuters Staff, Huge Donation Awaits UK Treasury—But There’s a Hitch, Reuters, Aug. 17, 2013. [5] Office for National Statistics, UK Government Debt and Deficit: September 2022, https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/september2022. [6] Court Backs 1927 Bequest on War Debt, N.Y. Times at B5, Apr. 10, 2000. [8] John McDermott, Joan Edwards—a Curious Case of a Generous Bequest, The Financial Times, Aug. 14, 2013. [9] 31 U.S.C. 3113. Other areas of the United States Code accommodate gifts to other departments. See, e.g., 15 U.S.C. 1522 (authorizing the Secretary of Commerce to accept and use outright and testamentary gifts. [10] TreasuryDirect, Gifts to Reduce the Public Debt, https://treasurydirect.gov/government/public-debt-reports/gifts/. [11] It is worth noting that gifts made to the United States government would qualify for a charitable income or estate tax deduction. [12] For those readers considering a bequest to a specific department of the federal government, keep in mind that the gift must be given to a specific department with statutory authorization to accept gifts. Consulting offices before codifying the gift in your plans can ensure that the intended recipient can actually accept the gift. The same would apply to other offices within nonprofits, especially large, complex, and sophisticated organizations.