As we and others have noted, for several reasons, there has been an uptick recently in ideas, suggestions, recommendations, and proposals to reform philanthropy—not the practice of it, but its very underlying structure. Floated by observers and analysts with differing underlying worldviews, some of them are in the updated list below.
Among the list’s new inclusions are ideas being introduced by billionaire philanthropist John Arnold and Boston College law professor Ray Madoff as part of their Initiative to Accelerate Charitable Giving, about which Marc Gunther first reported last week in The Chronicle of Philanthropy.
We fully realize there are deep historical antecedents to all of the ideas, of course, but cite only selected recent mentions of them. We also fully acknowledge that the list is partial, moreover, and anticipate that it likely will be expandable moving forward. We may thus continue to further update it.
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)
Increased 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 § 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)
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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 deductions (Chuck Collins and Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, Institute for Policy Studies, August 2020)
Denial of charitable 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)
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)
Expansion of temporary universal charitable deduction, available to taxpayers who do not itemize their deductions, from $300 to about $4,000 for individuals and $8,000 for married couples through 2020 (Universal Giving Pandemic Response Act, S. 4032)
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)
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)
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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)
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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)
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)
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)
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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
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Temporary mandatory minimum annual payout rate 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 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)
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 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)
Requirement that donor-advised funds disclose their donors (David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, 2017, among others)
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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)
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Voluntary private-foundation “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)
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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)