The tax treatment of private foundations and endowments, long relegated to the wastelands of Washington policy debate, is poised to gain visibility with the selection of J.D. Vance as the Republican vice presidential nominee. Vance has made his opposition to endowed wealth and the power wielded by progressive philanthropies a part of his political identity.
Big foundations, he has said in interviews and op-eds, are “social justice hedge funds,” which get preferential tax treatment as they support hot-button items like trans rights, critical race theory, or the Black Lives Matter movement.
His opinion of the Ford and Gates foundations?
“Cancers on American society,” according to Vance.
Vance, a Republican U.S. Senator from Ohio, in 2023 sponsored legislation to raise the tax on the wealthiest colleges’ net investment gains on their endowments by more than 20-fold, to 35 percent instead of the current 1.4 percent. To further shrink the “war chest” of foundation assets primed for use in setting a progressive agenda, he wants to increase the amount foundations with assets over $100 million must direct to charity from 5 percent to 20 percent of their assets each year.
“We are actively subsidizing the people who are destroying this country, and they call it a charity,” he said on Fox News in 2021.
It’s an open question whether Vance, whose memoir Hillbilly Elegy catapulted him to national prominence as leader of conservative populism, will bring up taxing endowments on the campaign trail. If Trump retakes the White House, it also isn’t certain that he and Vance will make the treatment of charities and foundations a hallmark of their administration.
But the issue may be gaining salience among Washington policymakers as they take their first tentative steps toward revisiting the biggest set of regulations imposed on philanthropy in generations: the Tax Reform Act of 1969.
Over the past year, Republicans on the tax-writing House Ways and Means Committee have held hearings and approved bills intended to stop foreign donors from using the charitable tax code to hide their identities as they try to influence U.S. elections. And the U.S. Treasury has made a first stab at regulating donor-advised funds, a popular mode of giving that has attracted billions in philanthropic dollars.
With the expiration of Trump’s 2017 tax policy at the end of next year, many policy experts see a rewrite of tax policy during the next Congress as an opportune time to address the regulation of foundations and charitable giving. If Vance gains the vice presidency, he will be in a prime position to shape policy debates, said Michael Hartmann, senior fellow at the Capital Research Center, a conservative group that monitors philanthropy and political giving.
“There hasn’t been anyone at this height of American politics and policymaking who has thought as seriously about these things for more than half a century,” he said. “Establishment philanthropy and its lobbyists should have at least a little concern now that he’s the vice presidential nominee.”
If Vance chooses to make university and charitable endowments a signature issue, he may get help from Democrats who share his populist antagonism toward big, wealthy institutions, Hartmann said. The Ford Foundation declined to comment, as did the Institute for Policy Studies, a progressive advocacy group that has pushed for higher foundation payouts and more stringent regulation of donor-advised funds.
But he may get plenty of pushback from within conservative ranks.
That is because an endowment tax is not likely to raise enough revenue to make it an attractive way to offset any decreases envisioned in a 2025 tax rewrite, said Daniel Bennett, an economist and associate director of the Center for Free Enterprise at the University of Louisville. Bennett foresees plenty of opposition from donors.
“If I’m thinking about giving to an organization, I want them to be able to benefit from that money fully,” he said. “I don’t want part of that money going to the government.”
The Philanthropy Roundtable, a conservative network of donors and grant makers, declined to comment directly on Vance’s proposals. But earlier this week, it took issue with efforts to impose levies on nonprofit income in a blog post entitled “Let’s Not Tax a Constitutional Right.”
“Every policymaker should consider the implications of restricting generosity and charitable giving vehicles,” Elizabeth McGuigan, a senior vice president at the Roundtable, said in a statement. “Any policy prescription aimed at charitable giving must use a scalpel and not a sledgehammer or we risk hurting millions of Americans who rely on charities.”
In a 2021 column for the libertarian magazine Reason, Elizabeth Nolan Brown put it a little differently, calling Vance’s foundation plans part of a “Republican-descent-into-batshit-authoritarianism.”
Before Vance’s arguments gained prominence, populist conservative critiques of philanthropy centered around George Soros and his Open Society Foundations, said Ben Soskis, senior research associate in the Center on Nonprofits and Philanthropy at the Urban Institute. In Soros, some critics drew from a deep reservoir of antisemitism and xenophobia to identify a single “bogeyman” to personify the perceived evils of progressive philanthropy.
Vance has been somewhat different, Soskis said, because he has enlarged his focus to include prominent foundations, networks of donors, and elite universities in his warnings about the danger of concentrated wealth. Inasmuch as his focus concentrates on the “bigness” of those institutions, Vance reflects populist viewpoints dating back more than a century. If Vance concentrates on the question of bigness, Soskis said, a bipartisan coalition could emerge to successfully legislate on issues such as donor transparency and foundation payout.
But, Soskis noted, Vance hasn’t tended to make sweeping statements about philanthropy and giving, has excluded religious institutions from his policy fixes, and has selectively chided progressive organizations. As such, his crusade against endowments has a more authoritarian bent, Soskis said, which is more focused on shutting down opposing political viewpoints than making improvements in charitable giving.
Said Soskis: “If the authoritarian strain is what comes to define his approach, there is very little chance for actual compromise.”
