Tax Legal Services · Primary-source case analysis

American Bar Endowment: Insurance Payments Were Not Proven Charitable Contributions

By Aneeta Mishra and Timothy Chan

Published August 19, 2026

United States v. American Bar Endowment involved group insurance sold to members, with experience-rating dividends assigned to the organization and used for its charitable activities.

The insurance activity was a trade or business

Selling insurance-related goods and services in competition with taxable providers fit the unrelated-business framework despite the organization’s exempt status.

The program was not substantially related to the exempt purpose

Raising money for charitable work did not itself make the commercial insurance activity substantially related to carrying out that work.

A charitable deduction requires value and intent proof

A member claiming part of a premium as a gift had to show payment exceeding the insurance’s fair market value and an intention to contribute that excess.

The taxpayers did not carry that burden

The record did not establish that comparable insurance cost less or that participants knowingly paid an excess as a contribution rather than purchasing coverage on the program’s terms.

Key takeaways

• Separate the exempt mission from each revenue-producing activity.
• Measure the fair market value of goods or services received.
• Document donative intent for any asserted excess payment.
• Apply current unrelated-business and charitable-acknowledgment rules.