A coalition of philanthropists and foundation leaders has launched an initiative to promote commonsense, nonpartisan charitable giving reforms that help increase donations to charities while enhancing the effectiveness of the philanthropic sector.
Announced on #GivingTuesday, the Initiative to Accelerate Charitable Giving will work "to promote greater and more accountable charitable giving" by "fixing the inefficiencies in our charitable giving tax laws [to] ensure the timely flow and increase of resources to working charities." Coalition members include Arnold Ventures; Global Citizen; the North Star Fund; the Wallace Global Fund; and the Ford, Hewlett, High Tide, Kresge, MRG, TomKat, and W.K. Kellogg foundations; philanthropists Seth and Beth Klarman, Jacqueline Novogratz and Chris Anderson, Melanie Lundquist, Robert and Alison Price, and Jennifer and David Risher; and academics Ray Madoff and Rob Reich.
According to the initiative's Statement of Principles, "more than $1 trillion is sitting in private foundations and donor-advised funds (DAFs)" — money that could be used to support charities and the millions of people they serve during the COVID-19 crisis and beyond — while "[e]xisting laws deliver significant tax breaks upon initial funding, but do not provide sufficient incentives or requirements to ensure that these funds will ever be distributed to working charities." The coalition's members are calling on lawmakers to enact reforms to close loopholes for private foundations and better ensure that distributions that can be applied to the mandatory payout requirement are available for use by working charities; incentivize higher payout through reforms to the excise tax on private foundations; adopt measures to ensure that funds in donor-advised accounts are distributed to working charities within a reasonable period of time; and incentivize greater giving by individuals by expanding and extending the non-itemizer charitable deduction in a cost-effective way.
"If you're wondering about the disparity between the immense philanthropic wealth in this country and the daily fight most charities have to wage to stay alive, look no further than charitable tax laws," said Arnold Ventures founder and co-chair John Arnold. "The rules disincentivize philanthropists from giving with any sense of urgency. [F]oundations and donor-advised funds get immediate tax breaks and feel no pressure to deliver resources to where they are needed: charities solving this generation's most pressing problems."
"The COVID-19 pandemic is deepening inequality and putting a monumental strain on nonprofit organizations that serve marginalized communities," said Ford Foundation president Darren Walker. "Philanthropy needs to act with bold leadership and innovation to help frontline advocacy organizations and movements remain strong and resilient in the days and months ahead."
(Photo credit: Initiative to Accelerate Charitable Giving)