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Philanthropists, Foundation Leaders
Call on Congress
to Inject $200B from Their Endowments into Economy
A 3-Year
Emergency Charity Stimulus would Boost Flows to Charities
by $200 Billion
A
Stimulus that is
“Already Paid For” by Tax Deductions Benefiting Donors
A group of more than 275 foundation trustees,
donors and philanthropic leaders today released a letter
urging Congress to mandate an emergency charity stimulus
increase in the pay-out percentage required of foundations
by law.
The letter comes amid public calls for
the philanthropic sector to do more in response to the
COVID-19 pandemic.
Private foundations hold $1.2 trillion and
donor-advised charity funds
(DAFs) hold another $120 billion with minimal payout requirements.
Foundations are mandated to pay out a minimum
of 5 percent of funds on an annual basis no matter what the
invested endowment accrues in returns.
Donor-advised funds have no mandated
payout.
DAF donors receive tax deductions at
the moment the funds are created, but the funds can then sit
for years or even decades before being transferred to active
charities.
In practice, this means that wealth and
endowments meant for the public good often grow in size
rather than being put to use.
Signatories are calling
on Congressional leaders to introduce an
Emergency Charity Stimulus
by enacting the following measures:
1)
Mandating a temporary doubling of private foundation payout from
5 percent to 10 percent for three years,
and 2)
Establishing a similar 10 percent payout for donor-advised
funds (DAFs)
that currently have no mandate.
Researchers at the Institute for Policy
Studies estimate these policies would unleash
an estimated
$200 billion in additional charity funds over
three years.
These funds would support vital social services at no cost to taxpayers.
“Only Congress has the power to compel a
massive injection of wealthy people’s
money into jobs and nonprofit charitable organizations working in areas
vital for our
recovery,”
said Scott Wallace, co-chair of the Wallace Global Fund, a
private foundation that
recently committed to spend 20% of its own endowment in 2020.
“The wealthy donors who created these foundations and DAFs
have already reaped
vast taxpayer subsidies for their
future generosity. But in this moment of crisis,
it’s time we sped that generosity and paid more right now.”
“It is past time to surrender to the truth
that there is no legacy for any of us if we don't align our
resources now toward a more sustainable and compassionate
future,”
said Aileen Getty, founder and president of the Aileen Getty
Foundation and granddaughter of billionaire J. Paul Getty.
“We are collectively facing the most
dire moment that many of us have seen in our lifetimes, and
it is likely the tip of the iceberg in terms of the
challenges that await us as a society and a planet.”
“While some foundations and donors are
stepping up at this moment, others continue to treat the 5
percent payout as a ceiling not a floor,”
said Chuck Collins, director of the Charity Reform Initiative at the
Institute for Policy Studies.
“The independent nonprofit sector is part of
the front-line response to the pandemic, with everything
from food banks, mental and physical health services,
culture and educational institutions. The sector employs 12
million workers, over 10 percent of the private workforce.”
"This is not a time for the philanthropic
community to pull back,”
said Stephen Prince, Vice-Chair of the Patriotic
Millionaires and a businessman who founded Card Marketing
Services.
“We don’t want charitable giving to drop off a cliff in 2021 and 2022.
Our tax code has provided wealthy people with these
huge loopholes over the past 45 years. In these troubling
times, we need to rise to the occasion and double down on
our giving back."
Prominent signers of the letter include:
Scott
Wallace, Wallace Global Fund (PA);
Abigail Disney (NY);
Aileen Getty, Aileen Getty Foundation (CA),
Sara Miller, Miranda Family Fund (NY),
Rory Kennedy (CA)
, Ning Mosberger-Tang (CO);
Catherine Gund, George Gund Foundation (NY);
Mary Mountcastle,
Mary Reynolds Babcock Foundation (NC);
Anna Fink, Amalgamated Charitable;
Ellen Friedman, Compton Fund (CA);
Jerry Hirsch, Lodestar Foundation (AZ);
Morris Pearl (NY);
and Stephen Prince (TN).
To-date, 275 philanthropic leaders have signed the letter.
The full letter and the initial list of signers may be
found
here (http://charitystimulus.org/).
The letter states in part,
“Increased funding could be immediately absorbed by food
banks, health care providers, educational institutions, and
organizations addressing issues like poverty alleviation,
economic development, safe and secure voting, and social
justice.
Otherwise, foundations which are losing assets on Wall Street will cut
their grant-making correspondingly – as they did in the
years after the 2009 recession – forcing many nonprofit
organizations they fund to reduce budgets, lay off staff,
and cut back on their charitable work.”
The letter also says,
“Private foundations are currently mandated by federal law
to spend five percent of their assets each year in grants
and overhead, and DAFs are not required to spend a dime.
While some foundations pay out more, the vast majority of American
foundations treat the five percent floor as a ceiling on
their giving, in part to ensure that the institutions will
live in perpetuity.
Wealthy donors take an immediate, taxpayer-subsidized
deduction when giving money to these entities, regardless of
when the money is distributed.
And in this time of unprecedented crisis, the money is not
reaching charities fast enough.”
The letter was organized by the Charity
Reform Initiative of the Institute for Policy Studies,
Patriotic Millionaires, and the Wallace Global Fund.
About the Charity Reform Initiative
The Charity Reform Initiative of the Institute
for Policy Studies aims to modernize the rules
governing philanthropy to increase the flow of resources to
the nonprofit independent sector and protect the integrity
of the tax system.
About the Patriotic Millionaires
The Patriotic
Millionaires
are high-net worth Americans, business leaders, and
investors who are united in their concern about the
destabilizing concentration of wealth and power in America.
The mission of The Patriotic Millionaires organization is to
build a more stable, prosperous, and inclusive nation by
promoting public policies based on the “first principles” of
equal political representation, a guaranteed living wage for
all working citizens, and a fair tax system.
About the Wallace
Global Fund
The mission of the Wallace
Global Fund is
to support people-powered movements to advance democracy and
rights and to fight for a healthy planet.
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