After failing to persuade Congress to force the wealthy to give more to charity during the pandemic, a group of rich donors is trying another tactic to urge their peers to give big: steering them to three pooled funds that focus on causes in need.
The group, called the Crisis Charitable Commitment, calls its campaign “Big Bet Bundles.” Its goal is to raise a total of $42 million for three funds:
- The Black Liberation Pooled Fund managed by Solidaire Network, which provides multi-year general operating support to Black-led organizations that work for racial justice.
- Healthy Democracy Fund managed by Tides Foundation, which aims to create a more representative democracy by building power among underrepresented groups of people and by advocating for electoral changes that expand the vote.
- Tax the Ultra Rich Now! Education Fund, managed by Amalgamated Foundation, which will create a public education campaign on wealth inequality and support groups that advocate for a more progressive tax policy.
The three funds were picked because they are responding to areas of great need and to find a way to get more money to small charities rather than the colleges, hospitals, and other rich institutions that often receive huge gifts from millionaires and billionaires, says Alan Davis, president of the Leonard and Sophie Davis Fund and chairman of the group.But the campaign’s goal is to generate more giving overall among the ultra-rich.
Pointing to billionaire Elon Musk, who once opined on Twitter that being an effective philanthropist is difficult, Davis suggested that the mega-rich just need a little guidance on where to give.
“Even with all the advisers out there, they just have some difficulty figuring it out,” he says.
Drafting Legislation
Since it formed two years ago the Crisis Charitable Commitment has attracted pledges from 105 individuals and organizations that said they would increase their giving, resulting in $690 million in donations and grants, according to Davis. In addition to starting the pledge, Davis has been a vocal supporter of raising the minimum annual distribution to charities for private foundations and placing rules on donor-advised funds to ensure dollars flow regularly and speedily to working charities.
An attempt to double the annual minimum foundation payout rate to 10 percent and institute a payout rate of 10 percent for donor-advised funds on an emergency basis for three years ran aground last year in Congress. Davis says he is part of a group, including the Institute for Policy Studies, that is preparing draft legislation that could be offered by the end of the year that would not only institute higher payout requirements, but would focus tax incentives for giving on middle-income donors.
Given Congress’ unwillingness to increase payout rates during the crisis of the pandemic, Davis and the Crisis Charitable Commitment will focus in the meantime on promoting ways for donors to increase their giving by choice.
“The voluntary approach is not going to get you as far as mandatory, obviously,” he says. “But our mission is to get people to give more, and if that means highlighting where to give and how to give, sobeit.”
Giving Lags
As a group, the kind of donors Davis wants to appeal to give away about 1.2 percent of their wealth annually, according to a 2018 study by Bridgespan that tracked giving among people worth at least $500 million. While the consulting group hasn’t followed up with a formal study since then, Alison Powell, a Bridgespan partner, says that philanthropic giving among the superrich hasn’t kept up with increases in wealth over the past several years.
Amid the disruption of the pandemic, the number of people with more than $30 million in assets hit 611,000 globally last year, an increase of more than 9 percent, according to Knight Frank’s annual report on wealth. Powell fears that recent stock-market turbulence might make donors hold on to their cash more tightly.
The use of pooled funds has increased in the past several years, according to a separate Bridgespan report that tracked more than $2 billion given through donor collaborations last year. Wealthy donors have joined forces in a number of efforts, including the Audacious Project, Blue Meridian Partners, a fund that was spun off of the Edna McConnell Clark Foundation, and Lever of Change, which was formerly a MacArthur Foundation program.
Powell said those efforts and the recent creation of the Crisis Charitable Commitment’s Big Bets Bundle would increase the volume of money going to movement groups rather than large institutions like hospitals and universities. Often, she said, people don’t think social-justice groups can absorb large philanthropic gifts.
“Sometimes when people think about giving to social change, they have a smaller dollar amount in their mind,” she said.
The Crisis Charitable Commitment will not manage donations made to any of the three funds it is promoting. Davis said he hoped that publicizing the work of the funds will prompt donors to give more, but the group will not track gifts made as a result of the commitment’s efforts.
Davis said he wanted to help donors grow more confident about their gifts because smaller organizations will be properly vetted by the organizers of the pooled funds, which have working relationships with grantees.
The Big Bet Bundles effort appeals to Faith Cordell, a philanthropic services adviser at Tides Foundation, where, she said, they have a saying that donors should “get off their assets.”
“Money shouldn’t just be sitting in big pots and waiting around.” she said. “We should be doing as much as we can right now to drive social change with big donations.”
