Groups call for expanded mandatory payout requirements for foundations, DAFs

• Date: 01 November 2020
• Published date: 01 November 2020
• DOI: http://doi.org/10.1002/nba.30876

NOVEMBER 2020 NONPROFIT BUSINESS ADVISOR

7

© 2020 Wiley Periodicals LLC • All rights reserved

DOI: 10.1002/nba

Industry News

Groups call for expanded mandatory payout

requirements for foundations, DAFs

A coalition of foundation and philanthropic lead-

ers is calling on Congress to increase the mandatory

payout for foundations and donor-advised funds to

facilitate extra funding to the nonprot sector—or

what the coalition calls “charity stimulus.”

In an open letter to Congress, the group argued

that doubling the mandatory payout for foundations,

from 5% to 10% over the next three years, and impos-

ing a similar 10% mandatory payout for DAFs, would

push some $200 billion in additional funding to the

nation’s nonprots over the next three years—none

of which would be taxpayer funding.

“As you know, private foundations are currently

mandated by federal law to spend ve percent of

their assets each year in grants and overhead, and

DAFs are not required to spend a dime,” the letter

states. “While some foundations pay out more, the

vast majority of American foundations treat the ve

percent oor as a ceiling on their giving, in part to

ensure that the institutions will live in perpetuity.”

In its letter, the coalition explains that wealthy do-

nors benet from an immediate tax deduction when

giving money to these entities, regardless of when the

money is distributed. And in this time of unprece-

dented crisis—due to COVID-19, the resulting eco-

nomic downturn and widespread social unrest—the

money is not reaching charities fast enough.

“In the midst of global pandemic and economic

shutdown, there is no justication for allowing the

country’s wealthiest dynasties to continue to hoard

tax-advantaged funds that have already been desig-

nated as charitable contributions in anticipation of

some future need, when there are so many urgent

needs now.”

The coalition of individuals signed on the letter in-

cludes representatives from such organizations as the

Tides Foundation, the Lodestar Foundation, the Ed-

ucation Foundation of America, the Wallace Global

Fund and the United Way. They derive their gures

for the additional funding based on the amount of

wealth held by private foundations—$1 trillion or

so—plus about $120 billion in DAF accounts. For

each 1% increase in payout from foundations, an

estimated $11 billion to $12.6 billion will ow to

charities annually. Add in requirements for DAFs,

and over three years a 10% payout requirement would

raise over $200 billion, they said.

To read the letter in full, visit http://charitystimulus.

org. ■

2020 sees increased volunteerism, LinkedIn data suggest

Data from social networking site LinkedIn’s

Economic Graph team shows that the platform’s

users have signicantly boosted their volunteer

efforts in 2020.

The data show that through August, LinkedIn’s

U.S. members have reported about 110,000 volun-

teer experiences and activities to their proles each

month. That’s roughly 2½ times what they logged

in 2017, the company said, indicating a major surge

in volunteerism among its members.

The company’s data also show how its members

are spending their volunteer hours. The organiza-

tion with the highest average number of monthly

volunteers was the American Red Cross, followed

by the Crisis Text Line, Toastmasters International,

Volunteer Income Tax Assistance and Big Broth-

ers Big Sisters of America. Rounding out the top

10 are Boy Scouts of America, Meals on Wheels,

Team Rubicon, Habitat for Humanity and Rotary

International.

For more information, visit https://www.linkedin.

com. ■

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