A group of more than 160 philanthropic and social sector policy activists has launched Donor Revolt for Charity Reform, a campaign calling for increases to foundation payouts, greater transparency, and measures to reduce the risk of donor-advised funds (DAFs) being misused.

The campaign is backed by groups such as Patriotic Millionaires, Inequality.org, Solidaire Action, the Excessive Wealth Disorder Institute (EWDI), Resource Generation, the #HalfMyDAF Campaign, the Decolonizing Wealth Project, and the Institute for Policy Studies (IPS).

Donor Revolt also advocates for measures to discourage what is described as donation "warehousing” by increasing the minimum payout requirement for private foundations from 5 percent to 7 percent (and 10 percent for foundations with assets over $50 million) and requiring DAFs to pay out funds within five years of receipt. Other reforms would exclude certain transactions from counting toward payout requirements, including compensation to family members and grants awarded to DAFs from private foundations or other DAFs. To increase transparency, the campaign is calling for rule changes requiring DAF managers, who typically aggregate DAF distribution data, to disclose grantmaking on an account-by-account basis.

As part of the launch of Donor Revolt, IPS has released a report, Who is lobbying against common-sense charity reform? (PDF, 8 pages), which highlights lobbying efforts that have discouraged advancement of the Accelerating Charitable Efforts Act (ACE Act), among other calls for reform. According to the report, since 2018, 21 organizations—including Fidelity Charitable, Schwab Charitable, and Vanguard Charitable; several community foundations; and other groups such as the Community Foundation Awareness Initiative, as well as the Council on Foundations and Philanthropy Roundtable—have spent a combined $11 million to lobby against DAF reform, including an estimated $3 million to defeat the ACE Act.

The report also noted that 41 percent of all individual giving is currently directed into “wealth warehousing vehicles,” rather than going to nonprofits serving critical needs. “Without intervention, wealthy philanthropists will continue to divert more and more charity dollars from operating nonprofits and will rival state and local governments in their ability to shape public policy in their interest.”

“We as taxpayers should not subsidize a donor’s gift unless it moves in a timely way to nonprofit organizations doing the real work of helping our communities to thrive,” said EWDI executive director Gabriela Sandoval. “We should be alarmed when the charity of the excessively wealthy becomes a taxpayer-subsidized form of private power and influence.”

(Photo credit: Getty Images/Valeriya)