Nearly 300 philanthropists and foundation leaders have joined an effort to require that foundations and donor-advised fund account holders put more money into the hands of charities.
In a letter sent today, the group asked Congress to raise the payout mandate for foundations from 5 percent of assets to 10 percent for three years and to institute a temporary payout requirement for donor-advised funds for the first time, also at 10 percent.
Scott Wallace, co-chair of the Wallace Global Fund, began pushing for the proposal last month and is joined by Patriotic Millionaires, a group that is concerned about the concentration of wealth in the United States, and the Institute for Policy Studies, a progressive think tank.
The list includes some familiar names, including Abigail Disney, granddaughter of the co-founder of the Walt Disney Company; Aileen Getty, granddaughter of J. Paul Getty; and Catherine Gund, president of the George Gund Foundation’s Board of Trustees and granddaughter of philanthropist George Gund II.
Others signing the letter include foundation leaders who don’t necessarily control the money in their endowments, including some that have already increased their payout. They include Se-ah-dom Edmo of the MRG Foundation, and Justin Maxson of the Mary Reynolds Babcock Foundation.
Sara Miller, who manages the philanthropy of Lin-Manuel Miranda and his family, and Rory Kennedy, the youngest child of the late Robert F. Kennedy and human-rights advocate Ethel Kennedy, also signed the letter.
A three-year increase in the payout requirement would generate around $200 billion for charities and, unlike funds appropriated by Congress in response to the pandemic, would not use taxpayer money.
Since the start of coronavirus pandemic, calls to increase payout have grown louder. Nine philanthropy organizations have called on foundations to give more, even if it means taking money out of their endowments when the market is sagging.
Foundations, particularly those designed to exist in perpetuity, have generally resisted increasing payout requirements out of fear that their endowments will not be able to maintain giving levels into the future. Donor-advised-fund sponsoring organizations, including commercial funds like Fidelity Charitable and Vanguard Charitable, along with many community foundations, have resisted calls to institute a payout. One reason given is that a payout requirement might stifle intergenerational giving.
Proponents of a higher payout say the pandemic is too big a crisis to ignore.
“It’s 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,” Getty said in a statement.
The proposal is sure to meet resistance from philanthropy organizations.
Sandra Swirski, executive director of the Alliance for Charitable Reform, suggested that if a payout increase were put in place following the September 11,2001, attacks or following the Great Recession, foundation endowments might have ended up being too depleted to have an impact today. Given the uncertainty surrounding the fallout from the pandemic, many philanthropists are preparing for how to respond months, or even years, in the future.
She said the Philanthropy Roundtable, which created the alliance, will push its members to give generously in response to the pandemic but oppose any payout mandate.
Regarding the letter, she said: “We defend their right to ask other funders to see the world as they do, but demanding it is wrong.”
Growing Impatience
The push to mandate a higher payout, even if it’s only temporary, reflects a growing impatience among legislators on both sides of the aisle with universities and foundations that sit on wealthy endowments, according to William Schambra, a philanthropy observer who wrote about the letter in the Giving Review blog.
Schambra presents several reasons Congress may have an appetite for an increased payout requirement. First, he wrote, it would be temporary, which would short-circuit an expected full-on lobbying effort by donor-advised funds and foundation groups. And with Congress having already given the go-ahead to spend hundreds of billions of taxpayer dollars, requiring private money already designated for charity to circulate among nonprofits providing essential services could be appealing to fiscal hawks.
Schambra hopes foundations voluntarily spend more than the 5 percent mandated by federal law. But, he says, populist conservative lawmakers might lend their support if Congress crafted a bill ensuring the additional money would go to direct services in response to the crisis, such as food banks, rather than “cadres of ideological activists” who use philanthropy to push “thinly veiled political activism.”
Wallace, in an interview last week, said it would be unprecedented for Congress to dictate to philanthropists where they should give their money. He said he is not worried that an increased payout requirement would advance causes that he doesn’t agree with.
“It’s our experience that every single one of our grantees is adapting to focus on the challenges presented by the crisis.”
