Revealing the True Cost of Billionaire Philanthropy
How the ultra-wealthy use charitable giving to avoid taxes and exert influence — while ordinary taxpayers foot the bill.
What are the risks to the autonomy of the independent nonprofit sector—not to mention our democracy—when a growing amount of philanthropic power is held in fewer hands?
A new Institute for Policy Studies report, Gilded Giving 2018: Top-Heavy Philanthropy and Its Risks to the Independent Sector, takes a close look at the impact of increasing economic inequality on the philanthropic sector.
Co-authored by Chuck Collins, Josh Hoxie, and Helen Flannery of the Institute for Policy Studies, the report finds that our charitable sector is currently experiencing a transition from broad-based support across a wide range of donors to top-heavy philanthropy increasingly dominated by a small number of very wealthy individuals and foundations.
As we reported in 2016, growing inequity in charitable giving continues to hold risks not only for nonprofits themselves, but also for the nation. This is truer now than ever, as ever-greater proportions of charitable dollars technically qualifying as tax-deductible donations are diverted into wealth-warehousing vehicles such as private foundations and donor-advised funds, and away from direct nonprofits serving immediate needs.
This updated edition of Gilded Giving focuses on the impact of increasing financial inequality on the philanthropic sector, highlights trends that have either arisen or increased in intensity since the initial publication of our report, puts forward several possible implications of these changes, and suggests some solutions.
Our charitable sector is currently experiencing a transition from broad-based support across a wide range of donors to top-heavy philanthropy increasingly dominated by a small number of very wealthy individuals and foundations. This has significant implications for the practice of fundraising, the role of the independent nonprofit sector, and the health of our larger democratic civil society.
This report calls for an urgent reform of the philanthropic sector to encourage broader giving, protect the health of the independent sector, discourage the warehousing of wealth in private foundations and donor-advised funds, and increase accountability to protect the public interest and the integrity of our tax system.
Changes in the rules governing philanthropy should include:
To fully address the risks of top-heavy philanthropy, however, policymakers will need to not only reform the rules of charitable giving, but also establish policies to reduce, over time, concentrations of wealth and power in our society at large. This would include restoring steeply progressive income and wealth taxation, and closing loopholes.
Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org. His most recent book is Is Inequality in America Irreversible? from Polity Press and in 2016 he published Born on Third Base. Collins cofounded the Patriotic Millionaires and United for a Fair Economy.
Helen Flannery is an Associate Fellow at the Institute for Policy Studies. She is a longtime researcher and data analysis professional working in the nonprofit sector and has written extensively on nonprofit industry trends, including trends in direct marketing fundraising, online giving, sustainer giving, and the macroeconomic factors affecting donor behavior.
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies and co-edits Inequality.org. He co-authored a number of reports on topics ranging from economic inequality, to the racial wealth divide, to philanthropy. His most recent report is Billionaire Bonanza 2017. He worked previously as a legislative aide for Bernie Sanders.
by Bella DeVaan
/by Chuck Collins
/by Helen Flannery
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