As COVID-19 reversed decades of global progress on ending extreme inequality, the world’s wealthiest recorded record financial gains. Billionaires across the globe — collectively worth more than 13 trillion dollars — saw their wealth increase by $5.2 billion U.S. dollars per day. The wealth of the 50 richest Americans increased 10X more than that of the average U.S. family.
What’s more, traditional philanthropic endowments have actually grown in the past year, so the anxiety shared by some in philanthropy that foundations are in a state of crisis is unfounded. Data from the Institute for Policy Studies and Inequality.org notes that even though large sums have been committed or given, the wealthiest philanthropies and their billionaire benefactors have seen near record returns in the midst of a global pandemic.
As IPS report author and philanthropic expert Chuck Collins notes, “[Billionaire wealth] is growing so fast, it’s simply outstripped their capacity to give it away. But in a time of acute charitable need, there’s another growing concern in the broader charitable sector: Most of these funds may end up in family foundations and donor-advised funds [DAFs] that could legally exist in perpetuity — without ever supporting real, on-the-ground charitable work.”
Even prior to the pandemic, individual billionaire philanthropists running grant-making operations outside of the traditional foundational models have made even more money and avoided grant payouts through a number of loophole strategies, including the creation of donor-advised funds, or DAFs), to hold their money tax-free. Nearly all of these accounts have neither disclosure nor distribution requirements, so while their list members may use their donations to get an immediate tax deduction, their dollars may not reach nonprofit beneficiaries for years, or longer. Many have argued that DAFs and other tax loophole workarounds often serve as performative philanthropic vehicles for positive PR even as investment houses like Vanguard, Schwab, and others make millions annually from funds that are, in theory, meant to be serving charitable purposes today, not in some long-distant future.
Read the full article about endowments growing by Michael Sheldrick at PhilanTopic.
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