A coalition of foundation and nonprofit leaders is doubling down on its efforts to urge Congress to unlock $200 billion in funding for charities by temporarily increasing the mandatory payout rate for private foundations and donor-advised funds (DAFs) to 10 percent.
As outlined in an open letter sent to House and Senate leaders in May, philanthropists, foundation leaders, and nonprofit executives have been calling on Congress to double the mandatory 5 percent payout rate for foundations for the next three years and impose the same rate on DAFs, which currently are not subject to a mandatory distribution requirement. Since May, the number of signatories to the letter has grown from nearly three hundred to five hundred and fifty.
The Institute for Policy Studies estimates that such a mandate would result in foundations and DAFs releasing an additional $200 billion — of the approximately $1.2 trillion they currently hold — to nonprofits impacted by COVID-19. A recent analysis by Candid found that up to 38 percent of nonprofit organizations could close as a result of the pandemic and its economic impacts.
"Increased funding could be immediately absorbed by food banks, [healthcare] providers, educational institutions, and organizations addressing issues like poverty alleviation, economic development, safe and secure voting, and social justice," the letter states.
"While charities and the people they serve are suffering, billionaires are accumulating unprecedented amounts of wealth," said Chuck Collins, director of the Charity Reform Initiative at the Institute for Policy Studies. "As Amazon and others continue to make money off the pandemic, Congress could mandate a payout of an additional $200 billion over three years from foundations to support recovery — without one cent of taxpayer funds."
"I've been appalled for years by how many foundations treat the 5 percent federal floor as a ceiling and refuse to spend a penny more than they are required to," said Scott Wallace, co-chair of the Wallace Global Fund, which committed in April to spend 20 percent of its endowment this year. "The wealthy donors who created these foundations and donor-advised funds have already reaped vast taxpayer subsidies for their future generosity. In this moment of crisis, only Congress has the power to compel a massive injection of wealthy people's money into jobs and nonprofit charitable organizations vital for our recovery. It's time we sped up that generosity by making foundations pay more right now."