A lengthening list.
As we and others have noted, for several reasons, there has been an uptick in ideas, suggestions, recommendations, and proposals to reform philanthropy—not just the practice of it, but even its very underlying structure. Floated by observers and analysts with differing underlying worldviews, some of them are in the below list, which we update again here.
We fully realize there are deep historical antecedents to all of the ideas, of course, but include only selected relatively recent mentions of them. We also fully acknowledge that the list is partial and anticipate that it likely will be further expandable moving forward. We may thus continue to further update the list.
Statutory structure: definitions, denials, disclosures
Repeal of Internal Revenue Code §501 (Paul Streckfus, EO Tax Notes, E-mail Update 2020-167, August 27, 2020)
Denial of tax-exempt status to those Internal Revenue Code §501 organizations that are not public charities (Philip Hackney, “The 1969 Tax Reform Act and Charities: Fifty Years Later,” Pittsburgh Tax Review, Vol. 17, page 235, 2020)
Redefinition to narrow “what constitutes charitable activities by 501(c)(3) groups, with the result that many of these policy and advocacy organizations would be reclassified 501(c)(4)” social-welfare groups “and contributions to them would no longer be tax-deductible” (David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017)
Ban on §501(c)(3) public charities’ contributions to §501(c)(4) social-welfare groups (Craig Kennedy, “Time to reform donor-advised funds,” The Giving Review, October 12, 2022)
Increase in regulatory scrutiny of relationship between §501(c)(3) and (4) groups (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020)
Requirement that contributions to §501(c)(4) groups be in cash—meaning that assets like stocks and estate would have to be sold and taxed, and only then could the proceeds go to the (c)(4) (Craig Kennedy, “Reforming §501(c)(4) organizations,” The Giving Review, September 26, 2022; see also Roger Colinvaux, “Political Activity Limits and Tax Exemption: A Gordian’s Knot,” Urban Institute, August 25, 2014 [“extend the income tax to transfers of appreciated property to noncharitable exempts”])
Requirement that §501(c)(4) groups disclose their donors (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Voting
Ban on §501(c)(3) funding of voter-registration projects and activities (Scott Walter, “Scott Walter Testifies to a Senate Finance Subcommittee on ‘the Political Activities of Tax Exempt Entities,’” Capital Research Center, May 4, 2022)
State and/or federal bans or restrictions on nonprofit funding support of public election administration (Craig Kennedy, “Time to separate philanthropy and politics,” The Giving Review, September 20, 2022; see Sarah Lee and Hayden Ludwig, “States Banning or Restricting ‘Zuck Bucks,’” Capital Research Center, September 16, 2022)
Limits and expansions, deductions and credits
Lifetime cap of $1 billion on charitable contributions (“A conversation with First Things editor R. R. Reno (Part 2 of 2),” The Giving Review, December 12, 2019)
Lifetime cap, suggested at $500 million, on charitable tax deductions (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Cap on charitable tax deduction for lifetime contributions beyond $1 billion to a singular or related charity (“A conversation with First Things editor R. R. Reno (Part 2 of 2),”The Giving Review, December 12, 2019)
Cap on charitable deduction of $10,000 per year (Caritas, “Plutocrats and their philanthropy: More ideas for saving the soul of the charitable sector,” The Giving Review, October 15, 2020)
Various expansions of charitable deduction, permanently or temporarily
Replacement of charitable tax deduction with charitable tax credit for all contributions, set as a percentage of such contributions, with total annual claimable credit capped at some level (Rob Reich, Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better, 2018)
Creation of universal tax credit for any households charitably contributing more than 2% of their adjusted gross income (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Levy of tax on closely held assets in private foundations and donor-advised funds (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
“Sunsetting”
Mandatory “sunsetting” of private foundations, requiring distribution of all assets, within some specified period of time after their creation (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020; “A conversation with Carl Schramm (Part 2 of 2),” The Giving Review, August 15, 2019; Rob Reich, Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better, 2018)
Mandatory “sunsetting” of private foundations, requiring distribution of all assets, within some specified period of time after their original donor’s death (“A conversation with Carl Schramm (Part 2 of 2),” The Giving Review, August 15, 2019)
Payout
Permanent increase in mandatory minimum annual private-foundation payout rate from 5% to 10% (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020, and Caritas, “Plutocrats and their philanthropy: More ideas for saving the soul of the charitable sector,” The Giving Review, October 15, 2020)
Permanent increase in mandatory minimum annual private-foundation payout rate from 5% to between 7% and 10% (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Temporary increase in mandatory minimum annual payout rate for private foundations from 5% to 10% of assets for three years (Patriotic Millionaires, Institute for Policy Studies’ Charity Reform Initiative, and Wallace Global Fund, among others)
“[A]ny charitable organization with an endowment over $100 million must spend 20 percent of its endowment each year, or else it loses its 501c3 status and the preferential treatment of its income” (J. D. Vance, "Stop Treating Left-Wing Advocacy Groups Like Charities," Newsweek, October 13, 2021)
Exemption of private foundations from excise tax on investment income in any year when their payout tops 7% of assets (John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
Exemption of newly created private foundations from excise tax on investment income if time-limited to 25 years or fewer (John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
Voluntary increases in private-foundation payout rates (The GR Editors, “More than five,” The Giving Review, April 27, 2020, and Crisis Charitable Commitment, among others)
Prohibition of private-foundation grants to donor-advised funds from counting toward payout requirement (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020, and John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,”The Chronicle of Philanthropy, October 1, 2020)
Requirement of state-level reporting of transfers from private foundations to donor-advised funds (Minnesota Council of Nonprofits, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
Elimination or reduction of private-foundation administrative and operating expenses counting toward payout requirement (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020; Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Prohibition of private foundations’ program-related and impact investments from counting toward payout requirement (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Elimination of foundation contributions to endowments or capital projects (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020)
Fiscal sponsorship and Forms 990
Disallowance of fiscal sponsorship unless the sponsored entity has filed an application for §501(c)(3) status with the Internal Revenue Service (The GR Editors, “Reform of ‘fiscal sponsorship,’” The Giving Review, July 19, 2021)
Termination of fiscal-sponsorship duration upon determination of the sponsored applying entity’s status by the Internal Revenue Service (The GR Editors, “Reform of ‘fiscal sponsorship,’” The Giving Review, July 19, 2021)
Requirement that a §501(c)(3)-organization fiscal sponsor and the fiscally sponsored entity file separate Form 990s with the Internal Revenue Service (The GR Editors, “Reform of ‘fiscal sponsorship,’” The Giving Review, July 19, 2021, and Robert Stilson, “Some suggestions for improving the Form 990,” The Giving Review, March 18, 2022)
Modification of Form 990 to include new schedule solely for listing any projects fiscally sponsored by filing nonprofit, with amount of such support (Hayden Ludwig, “Fiscal sponsorship, the Left, and beginning to explore reform,” The Giving Review, July 26, 2021, and Robert Stilson, “Some suggestions for improving the Form 990,” The Giving Review, March 18, 2022)
Instruction to filers who have provided support to a nonprofit for one of its fiscally sponsored projects to clearly indicate the nature of that support in the grant description/purpose column of their own Form 990/990-PF (Robert Stilson, “Some suggestions for improving the Form 990,” The Giving Review, March 18, 2022)
Governance
Requirement that private foundations be governed by independent boards, with rules similar to those for public-corporation boards in many states (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Prohibition of compensation for private-foundation board members (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020)
Cap on compensation for private-foundation board members and officers
Prohibition of compensation or payment of travel expenses for private-foundation board members from original donor’s family (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020, and John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
State-level mandates to disclose gender breakdowns of nonprofit boards
State-level prohibitions on requirements to disclose gender breakdowns of nonprofit boards
More on DAFs
Treatment of DAFs in same way as private foundations overall (Craig Kennedy, “Time to reform donor-advised funds,” The Giving Review, October 12, 2022)
Requirement that donor-advised funds distribute money at same rate as private foundations (Patriotic Millionaires, Institute for Policy Studies’ Charity Reform Initiative, and Wallace Global Fund, among others, and David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017)
Permanently require minimum annual payout for private foundations and donor-advised funds of 10% of assets (Craig Kennedy, “Time to reform donor-advised funds,” The Giving Review, October 12, 2022)
Temporarily require minimum annual payout for donor-advised funds of 10% of assets for three years (Patriotic Millionaires, Institute for Policy Studies’ Charity Reform Initiative, and Wallace Global Fund, among others)
Requirement that donor-advised funds pay out donations within three years after donations went into fund (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Creation of a new category of donor-advised funds allowing a donor to elect to claim an upfront income-tax deduction, including the avoidance of capital-gains taxes, provided the funds are distributed within 15 years (John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
Allowance of tax deduction for contributions to donor-advised funds only after distribution of funds to active charity, not to another donor-advised fund or impact investment (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020, and John Arnold’s and Ray Madoff’s Initiative to Accelerate Charitable Giving, as reported by Marc Gunther, “Philanthropist Urges Congress to Force More Giving From Donor-Advised-Funds and Foundations,” The Chronicle of Philanthropy, October 1, 2020)
Requirement that donor-advised funds disclose their donors (David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017, among others)
Requirement that contributions to and from donor-advised funds be disclosed, on account-by-account basis, in way that protects donor privacy (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Regulation and oversight
Increase in excise tax on foundation investment income to 4%, to enhance Internal Revenue Service enforcement and oversight of philanthropy and nonprofits (Anonymous, “Big Philanthropy Stopped Being Charitable, Here’s How To Fix It,” The American Conservative, August 5, 2020)
Creation of new U.S. “Office of Charitable Oversight,” removing that responsibility from the Internal Revenue Service (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Provision of block grants to state charitable-oversight offices (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Creation of “new U.S. federal office of charitable affairs” to orchestrate research on philanthropy and nonprofits, “analyzing the benefits of charitable giving as well as the sector’s performance” (David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017)
“Decolonization”
Private foundations voluntarily engage in “reparations tithing,” in form of 10% of their assets being devoted to establishment of “a trust fund to which Native Americans and African Americans could apply for grants for various asset-building projects” (Edgar Villanueva, Decolonizing Wealth: Indigenous Wisdom to Heal Divides and Restore Balance, 2018)
Private foundations voluntarily ensure that at least 50% of staff, advisors, and board members “have intimate, authentic knowledge of the issues and communities involved” (Edgar Villanueva, Decolonizing Wealth: Indigenous Wisdom to Heal Divides and Restore Balance, 2018)
Foreign funding
Requirement that nonprofit groups disclose contributions from foreign governments and foreign political parties in excess of $50,000 per year (see Eli Clifton, “GOP lawmakers move to expose foreign money in US think tanks,” Responsible Statecraft, March 19, 2021)
Scrutiny
Congressional investigation of philanthropy, including its role in politics (William A. Schambra and Michael E. Hartmann, “Checking the Power of Progressive Big Philanthropy,” The American Conservative, July 6, 2020; “A conversation with Carl Schramm (Part 2 of 2),” The Giving Review, August 15, 2019)
Increased scrutiny of philanthropy, including its role in politics, by nonprofit watchdogs, journalists, and commentators (William A. Schambra and Michael E. Hartmann, “Checking the Power of Progressive Big Philanthropy,” The American Conservative, July 6, 2020; Rob Reich, Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better, 2018; and David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017, among many others)
