New analysis finds simple changes to outdated laws governing charities would generate $339 billion over next three years
Washington, D.C. – A groundbreaking new analysis from Chuck Collins, Helen Flannery, and Bella DeVaan of the Charity Reform Initiative at the Institute for Policy Studies found that common-sense charity reform measures outlined by the Donor Revolt for Charity Reform campaign could unleash $339 billion in donations over the next three years, generating around $110 billion more each year in charitable contributions and netting $179.7 million in excise tax revenue.
The new report highlights the impact of several key reform measures:
- Increasing the minimum payout rate requirement for foundations to 10 percent for foundations with assets of $50 million or more, and increase it to 7 percent for all other foundations
- Excluding private foundation overhead expenses above 1 percent of assets from counting towards payout
- Excluding grants from private foundations to DAFs from counting towards payout
- Requiring DAFs to pay out funds within 5 years of receipt (and provide individual account-level transparency)
- Excluding grants from DAFs to other DAFs from counting toward payout
- Generating excise tax revenue from intermediaries that don’t meet the new requirements
Currently, an estimated $1.7 trillion sits in private foundations and donor-advised funds (DAFs), go-between vehicles that enable private foundations and donors to collect tax breaks while warehousing wealth.
DAFs alone have skyrocketed in wealth by 411 percent in the last ten years, stockpiling an estimated $230 billion in assets in 2023. The largest U.S. foundations give at a rate that hovers around 5 percent — while their gains in the market have averaged 9 percent over the last five years.
“It’s worth imagining a future in which billions more flow towards life-saving medical cures, food security, housing access, and environmental protection through organizations that are already woven into our social fabric — or organizations that could and should be with strengthened access to funding,” write Helen Flannery and Bella DeVaan in their summary breaking down new findings.
Read key highlights and view charts visualizing the groundbreaking new findings.
Learn more about the Donor Revolt for Charity Reform campaign and its policy recommendations.
To speak with Chuck Collins, Helen Flannery, or Bella DeVaan for comments and interviews, contact IPS Deputy Communications Director Olivia Alperstein at (202) 704-9011 or olivia@ips-dc.org.
About the Charity Reform Initiative at the Institute for Policy Studies
The IPS Charity Reform Initiative aims to overhaul the rules governing philanthropy to boost the flow of funds to working charities, protect democratic institutions, and strengthen the entire independent nonprofit sector. The Initiative regularly publishes groundbreaking, accessible, nonpartisan research and commentary regarding existing laws governing charitable giving and necessary transformations to benefit our common good. Their Charity Data Lab provides vital and comprehensive analyses of a large set of publicly-available tax information for all types of charitable organizations, including private foundations, community foundations, donor-advised fund sponsors, and working charities.
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