Americans are a generous people, donating billions of dollars every year to sustain a vibrant independent nonprofit sector. But as wealth has concentrated in fewer hands over the last forty years, philanthropy has become less democratic. Giving by low- and middle-income donors has declined while the ultra-wealthy have come to dominate philanthropy in America. The result has been less money getting to the causes that desperately need it.
Why does this happen? Because wealthy donors are more likely to give through intermediaries like private foundations, which are required to pay out just 5% of their assets each year, and donor-advised funds (DAFs), which have no payout requirements. This stifles the flow of funds to charities on the ground, preventing them from delivering their unique good.
It’s time to take a stand. While the Council on Foundations, Philanthropy Roundtable, and the Community Foundation Awareness Initiative actively lobby against any reasonable change, we, a group of wealthy charitable donors, are calling for urgently-needed, common-sense reform. We must ensure that large charitable gifts don’t languish idly for years in intermediaries, and instead flow to the causes they are intended to support.
Our call to action
To reform private foundations, we should:
Increase the minimum payout requirement from 5 percent to 7 percent to discourage donation warehousing (and increase it to 10 percent for private foundations with assets over $50 million)
Cap management expenses that can be counted towards payout at 1% of assets
Exclude compensation to family members from payout calculations
Exclude private foundation grants to DAFs from counting towards payout
To reform donor-advised funds, we should:
Require DAFs to pay out funds within 5 years of receipt
Exclude DAF grants to other DAFs from counting towards payout
Require sponsors to report on DAFs on an account-by-account basis
Change the tax benefits for DAFs to match those of private foundations
To reduce top-heavy philanthropy, we should:
Limit the estate tax charitable deduction to a percentage of the estate's value, with a lower percentage for gifts to private foundations and DAFs
Provide a charitable tax credit for non-itemizers
Sign our letter
Our statement
We, the undersigned, are donors with either private foundations or donor-advised funds (DAFs).
We enthusiastically support reforming our nation’s philanthropic sector to ensure that when funders receive tax breaks for charitable contributions, those contributions actually get to working charities.
Sincerely,
The Undersigned
Inaugural signers
Chuck Collins
Boston, MA
Ritchie Tabachnick
Pittsburgh, PA
Morris Pearl
New York, NY
Jennifer Risher
San Francisco, CA
Edgar Villanueva
Brooklyn, NY
Farhad Ebrahimi
Brooklyn, NY
Abigail Disney
New York, NY
Scott Wallace
Philadelphia, PA
John Esler
Sutton, MA
Alan Davis
San Francisco, CA
Surina Khan
Irvine, CA
Cynda Collins Arsenault
Boulder, CO
Kimberly Hoover
Miami, FL
David Risher
San Francisco, CA
Katrina Schaeffer
Los Angeles, CA
