As money from March’s CARES Act stimulus bill dwindled, the number of Americans living in poverty has grown by eight million due to the COVID-19 pandemic. While a second stimulus bill flounders in Congress, nonprofits and the communities they serve are in dire need.
About $1.2 trillion in wealth is locked in private foundations and Donor Advised Funds (DAFs). Donors received substantial tax benefits when they set up these funds—sometimes decades ago—yet the law allows 95 percent of private foundation assets and 100 percent of donor advised fund dollars to remain unspent, year after year. During a crisis like COVID-19, a slight increase in grantmaking from these entities would do a great deal of good for Americans hurting today.
Rachel’s Network has joined other philanthropic donors in urging Congress to support an Emergency Charity Stimulus that would release $200 billion of these funds to frontline nonprofits and community organizations during the COVID-19 pandemic and recovery.
“We have seen incredible need within our own sector during the pandemic, and have responded with emergency funding to partners through our Community Resilience Fund, but individual grantmakers can only do so much,” said Rachel’s Network President Fern Shepard. “We need Congress to take action so that charities serving those who are struggling can get the resources they need today.”
A simple, temporary change to the laws governing how much private foundations and DAFs pay out would enable charities to provide more services now and for three years, without costing taxpayers another cent. The law would double the mandated annual foundation payout over the next three years, from five percent to ten percent, and mandate the same ten percent payout requirement for DAFs.
“At a time when COVID is aggravating the already huge income inequities in this country, it seems counterproductive for wealthy donors to put money into charitable funds, receive tax deductions, and then do nothing. Charitable donations are meant to be helping others, not just sitting on ice,” said Rachel’s Network Member Abigail Rome.
“One of the beauties of philanthropy is that different foundations invest in widely different nonprofits. By increasing foundation payout, philanthropies will be making more grants across a wide array of causes. We’ll be keeping nonprofit workers employed, and we’ll also be increasing funding across diverse areas,” said Mary Mountcastle, trustee of the Mary Reynolds Babcock Foundation.
To learn more about the Emergency Charity Stimulus or to sign onto the letter, visit charitystimulus.org.
Rachel’s Network, a 501(c)3 nonprofit, is a community of women who come together at the intersection of environment, philanthropy, and women’s leadership to exchange ideas and contribute to a healthier world. Named in honor of environmentalist Rachel Carson, its mission is to promote women as agents of change dedicated to the stewardship of the earth.