The Donor Revolt for Charity Reform

New research: Who is lobbying against common-sense charity reform?

We must ensure that large charitable gifts don’t languish idly for years in intermediaries, and instead flow to the causes they are intended to support.

Public opinion strides in step with the Donor Revolt: A recent Ipsos poll commissioned by our team and The Giving Review shows overwhelming support among Americans across the political spectrum for basic charity reforms.

But there’s a concerted effort to maintain a less-than-charitable status quo.

Our new report reveals how Charity Lobby groups have spent millions of dollars lobbying against common sense reforms. Some concerning key findings:

• In 2022, 41 percent of all individual donations went to private foundations and donor-advised funds (DAFs) — leading to concerns that these intermediaries are warehousing charitable funds.
• Since 2018, 21 for-profit firms and nonprofit organizations have spent a combined $11 million in lobbying efforts that included attempts to influence policy around DAFs. These include DAF sponsors affiliated with investment firms Fidelity, Schwab, and Vanguard, and an association of community foundations.
• Of this amount, an estimated $3 million was spent on defeating the ACE Act, a modest charity reform proposal introduced in 2021. Much of the funding against the ACE Act came from large commercially-affiliated DAF sponsors
  such as Fidelity Charitable, Schwab, and Vanguard Charitable.
• The organizations spending the most on lobbying include not only DAF sponsors but also umbrella groups that advocate for the DAF industry. The Community Foundation Awareness Initiative, or CFAI, a network representing community foundations around the country, spent an estimated $4 million between 2018 and 2023 on lobbying, including an estimated $900,000 spent on the ACE Act. The Council on Foundations and Philanthropy Roundtable, both of which are philanthropy advocacy groups, spent a combined $795,000 lobbying around charity reform, with an estimated $450,000 aimed at the ACE Act.

Many donors with private foundations and donor-advised funds (DAFs) will be surprised to learn how their national associations are lobbying and spending money to oppose common sense charity reform. The Donor Revolt campaign aims to ask those national associations and DAF sponsoring organizations why they’re opposing basic reforms supported by their members and by broad public opinion across the political divide.

Not a donor or DAF holder? You can still advocate for charity reform.

Beyond the Donor Revolt, charity reform advocates are also launching a new portal for non-donors and nonprofit organizations to have the opportunity to add their individual voices in support of key charitable giving reform measures.

“Our entire nation is suffering from decades of disinvestment in basic civic infrastructure.  It’s time to build a collective voice to tell the story of what’s really needed – more and bigger investments on the ground in local communities,” said Gerry Roll, Founder in Residence, Foundation for Appalachian Kentucky. “We’ve created a system where donor advised funds are simply another transactional part of wealth management.  Let’s stop pretending everything is working just fine and figure out how to make it right.”