The author of “Madisonian Nonprofit Law” talks to Michael E. Hartmann about James Madison, Alexis de Tocqueville, checks and balances in the context of the nonprofit sector in general, some of the different ways in which nonprofits engage with and can check government, and the role of philanthropy in particular in counterbalancing government power, or not.
Daniel J. Hemel is the John S. R. Shad Professor of Law at New York University School of Law, where his scholarship includes focusing on tax law and policy and nonprofit organizations, among other subjects. Before joining NYU Law’s faculty in 2022, he taught at The University of Chicago Law School and held visiting appointments at the Harvard, Stanford, Yale, and NYU law schools. He clerked for U.S. Supreme Court Justice Elena Kagan and federal appeals-court judges Sri Srinivasan and Michael Boudin, and he was a visiting counsel to Congress’ Joint Committee on Taxation.
A graduate of Harvard College, the University of Oxford (as a Marshall Scholar), and Yale Law School, where he was editor-in-chief of The Yale Law Journal, Hemel combines rigorous academic scholarship with influential, careful public commentary.
In Hemel’s ambitious “Madisonian Nonprofit Law,” forthcoming next year in the Harvard Journal on Legislation, he develops aframework understanding the nonprofit sector’s place in America’s democratic and constitutional order. Risking oversimplification in summarizing, he broadens our understanding of the familiar modes in which the sector engages with government—supplementary, complementary, and adversarial. While most have considered only the third one to be “Madisonian,” read metaphorically and applied in this context, he argues that all of them have the capacity to healthily serve as checks on and balance state power.
Hemel also adds a fourth characteristic of nonprofits—socialization. Nonprofits teach democratic habits, according to the article, including what Jan-Werner Müller calls “the art of losing.” As part of many voluntary associations in civil society—from churches to amateur sports leagues—members “have to” accept electoral defeat, submit to organizational decisions, rotate leadership, and continue participating after losing. These healthy habits are essential to constitutional democracy itself, he maintains, and the nonprofit groups’ nurturing of them should be recognized, whether it be in discussions about theory, law and regulation, or policy.
He then applies his framework to various specific legal and policy debates about and questions facing the sector.
Hemel was kind enough to join me for a recorded conversation earlier this month. The just more than 22-minute video below is the first part of our discussion; the second is here. During the first part, we talk about James Madison, Alexis de Tocqueville, checks and balances in the context of the nonprofit sector in general, some of the different ways in which nonprofits engage with and can check government, and the role of philanthropy in particular in counterbalancing government power, or not.
“I’m using the term ‘Madisonianism’ to refer to a conception of the American polity as consisting of a series of checks and balances,” Hemel tells me. James
Madison himself was focused on the horizontal separation of powers among the executive, judiciary, and the legislature, and the vertical separation of powers between the federal government and the states. Now we might add local governments to that vertical separation. He was not writing about the nonprofit sector as a source of checks and balances vis-à-vis the state. Madison himself might have been quite suspicious of the nonprofit sector, so I’m using my Madisonianism as a catchphrase for checks and balances more generally.
Madison’s suspicion of what are now called nonprofits, according to Hemel, would have been because they resemble factions, or concentrations of private power.
“I think the clear line between the nonprofit sector and the state—which, as the paper points out, actually, isn’t that clear—was even less clear in Madison’s time,” Hemel says, using early Princeton University as an example. “Was Princeton, where Madison went to college, a state institution or a private institution? I don’t know. It had a charter from New Jersey. New Jersey-elected officials were ex officio members of the Princeton board. The distinction between, for example, public universities” and “private universities was not as clear.”
Hemel offers cautions when asked to compare and contrast the thinking and writing of Madison with Alexis de Tocqueville. While standard nonprofit scholarship treats Tocqueville as a foundational theorist of civil society, Hemel argues, scholars often read too much into a relatively small portion of Democracy in America. Read historically, Tocqueville’s clearest claims are that voluntary associations substitute for aristocracy and perhaps help socialize citizens politically, in Hemel’s view. But Tocqueville’s work, he notes, is not clear enough to so easily apply to modern nonprofit institutions like universities, hospitals, or advocacy organizations.
While discussing the complementary mode of nonprofit-government engagement in particular, in response to the concern that nonprofits dependent on government grants or contracts will hesitate to oppose it, Hemel agrees that this tension can exists, but says that such dependence can also sometimes actually increase nonprofit leverage over the state, as well, rather than diminish it. He provides Catholic Social Services in foster care and Catholic hospitals as examples. Once governments become dependent on these nonprofits to deliver essential services, the groups are able to negotiate from a position of strength with government, because government lacks easy substitutes for the provided services.
“When lawmakers wanted to say you need to facilitate adoptions to same-sex couples and Catholic Social Services said no, the state didn’t really have an avenue for finding homes for children that didn’t run through Catholic Social Services,” Hemel describes. “So by embedding itself in the state, Catholic Social Services actually gained power vis-à-vis the state that perhaps it wouldn’t have had if it didn’t play this complementary function, right?”
He points to similar examples of co-dependency in the higher-education context.
Philanthropy’s role(s)
On the role of philanthropy as part of a “Madisonian” nonprofit sector, Hemel says, “Big foundations coming in and funding nonprofit organizations have cross-cutting effects on the nonprofit sector’s ability to counterbalance the state. On the one hand, they make the nonprofit sector richer. There’s an income effect,” and “if you want a robust, nonprofit sector checking the state, that’s positive.
“On the other hand, there’s a substitution effect. When you have professional managers, you have less volunteer participation,” he continues, citing Theda Skocpol’s work. “And you might think that volunteer participation is really important for bridging across ideological divides, bonding people with similar views together for developing civic skills, for putting people in a position where they can counterbalance state power,” so that would be negative.
As for whether establishment philanthropy can plausibly be considered ideologically pluralistic enough to check and balance a government that shares its worldview, Hemel says, “Certainly most of the big foundations are slanted left. There are counterweights to that.
“I think Madison’s concern about the ideological slant of the nonprofit sector might depend upon who’s in charge in the White House and Congress,” according to Hemel.
I have no idea what James Madison, plunked down in 2026, would think, but if checks and balances are our concern, we might say, Well, the ideological slant of big philanthropy is positive now because it serves as a counterbalance to the current power. Maybe wasn’t positive from 2021 to 2025, when you had a center-left control of the presidency and Congress. Then, you could imagine in 2029 or 2033, if it’s Alexandria Ocasio Cortez, a philanthropic community that is to her right serving a checking-and-balancing function.
Briefly addressing recent tax reforms and proposals that the nonprofit sector for the most part has opposed—and might be considered by some as reactions, or checks, against and balancing of the sector’s power—Hemel characterizes them as mostly incremental adjustments, rather than transformative changes.
In the conversation’s second part, he discusses the effects of philanthropic LLCs on Madisonian nonprofit law and of a Madisonian nonprofit sector on political parties and politics; the tradeoffs in analyzing the interaction between nonprofits and politics and thinking about both the nationalization and commercialization of nonprofits; democracy and the “art of losing;” and democratically expressed backlash against elites, including philanthropic ones, and its risks to Madisonianism.
