Giving Compass' Take:
- There is more pressure for philanthropy to move money faster and increase its role in civil society. To make this happen, Congress seeks to bolster that philanthropic giving.
- How can DAF growth help move donor capital faster?
- Learn how DAFs unleash capital for impact at scale.
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While the wealth gap in the U.S. has been widening for decades, conversations about that wealth, the rise of billionaires, and growing income inequality broke into the mainstream of public attention through the Occupy Wall Street movement in the fall of 2011 (Volle, 2022).
Today, parallel conversations within the philanthropic sector tend to be focused on the funding landscape. Across the last 10–15 years, we’ve seen increased attention to foundation payout rates, the declining number of individual donors, and the growth of donor-advised funds (DAFs). The common thread in those conversations is an increasingly frequent discussion about moving more money from funders to operating nonprofits — and moving it more quickly along that path.
This trend is best understood as a reprise of conversations that have happened before — and a conversation that has multiple perspectives. The new shift is in the role Congress seems eager to play.
New Urgency for Giving in the 2010s and 2020s
In 2010, at the same time that Occupy Wall Street was capturing the public’s attention, two related movements to encourage wealthy donors and foundations to give more were starting up:
- Patriotic Millionaires was founded to advocate for ending the Bush-era tax cuts for wealthy Americans (n.d.). By 2020, Patriotic Millionaires had joined with other advocates to push Congress to raise the private foundation payout requirements from 5% of assets to 10% for three years, primarily in response to the COVID-19 pandemic (Daniels, 2020).
- Bill Gates, Melinda French Gates, and Warren Buffett launched the Giving Pledge (n.d.a) with their own commitment and encouraged others to join them in “a promise by the world’s wealthiest individuals and families to dedicate the majority of their wealth to charitable causes” (n.d.b, para. 1) during their lifetimes. As of December 2022, 236 individuals and families have publicly joined the Giving Pledge.
The second half of the 2010s saw a series of public speeches, white papers, and books on the same subject. The starting gun sounded with Anand Giridharadas’ provocative speech to the Aspen Institute in July 2015, “The Thriving World, the Wilting World, and You,” followed by his book Winners Take All in 2018.
These voices elevated a discussion — accelerated by the pandemic — that created another set of nonprofit advocates. The Crisis Charitable Commitment launched in 2020, seeking to “double the amount of charitable dollars going to nonprofits without creating an unreasonable burden on the donor” (para. 2). Their four-part strategy centered around a call for Congress to include an emergency charitable stimulus in the omnibus COVID-19 relief legislation, a commitment from donors to commit 1% of their assets to democracy-related organizations, more widespread adoption of the Giving Pledge by billionaires, and renewed consideration of a national wealth tax.
That said, it is important to note that the debate about moving money differently within the sector is still a debate — and it’s not a new one. Cursory Google searches show that conversations about the trade-offs inherent in time-limited versus perpetual foundations could be found in The New York Times in 2009 (Johnston), and in “how to” guides for managing spend-down foundations from the Philanthropy Roundtable in 2002 (Piereson). No consensus exists as to whether one strategy is more impactful than the other.
Read the full article about moving money faster by Jeff Williams at Johnson Center.