There is currently $1.2 trillion in wealth warehoused in private foundations and donor-advised funds (DAFs). Money tied up for a so-called “rainy day” that seems to never come. Yet, we know our communities are braving hurricanes every day, and a bipartisan majority of Americans agree that mainstream philanthropy must radically change before we all drown.
A new national survey conducted by Ipsos and the Charity Reform Initiative at the Institute for Policy Studies has revealed that Americans across the political spectrum support bold charity reforms that align with the goals of our Equitable Funder Pledge.
According to Gilded Giving 2022, if foundations had a 10% minimum payout and DAFs had a three-year mandated payout between 2018 and 2020, at least $193 billion in additional funds would have flowed to charitable organizations.
These funds represent billions of dollars in lost opportunities. Instead of wealth hoarding that benefits a few, it is time to reimagine a radically different America, one where we lift up our shared humanity and realize shared abundance for all communities. Now more than ever, we need the promises of philanthropic organizations to be matched with action.
One of the principal asks of our funder pledge is for philanthropic organizations to release more funds. Currently, the IRS requires charitable organizations to payout only 5% of their funds each year. DAFs are even less regulated as there are currently no guidelines on when these funds must be dispersed, leaving many philanthropic organizations holding on to these funds for unacceptably lengthy amounts of time.
An overwhelming 81% of Americans believe that U.S. taxpayers should not be subsidizing wealthy donors to create permanent foundations and grant donations as they choose. The national poll found 69% of Americans are in favor of increasing the annual foundation payout rate to 10% or more, and 72% support requirements to ensure DAFs make grants within two to five years of receiving donations.
In a highly polarized political environment, these numbers are extraordinary. They represent the bipartisan recognition that the current system is broken and that the potential for funders to truly support equitable outcomes has been severely stunted.
While recent proposed legislation has attempted modest reforms in this area, such as the Emergency Charity Stimulus to temporarily increase foundation payout rates and the Accelerating Charitable Efforts (ACE) Act to reform donor-advised funds and increase grant flow, this new poll suggests that Americans are united around even more robust changes.
At the BIPOC ED Coalition, our priorities are to call in philanthropy, disrupt business as usual, and promote trust-based and community-centered giving. Join us in pushing for a seismic shift in philanthropic giving — one that balances power with BIPOC-led nonprofits and supports communities most affected by systemic injustice — with both funding and action.