Institute For Policy Studies Says Increasing DAF and PF Payouts Would Unearth $340 Billion For Charity

The Institute for Policy Studies argues in a new report that DAFs and Private Foundations have buried massive amounts of tax subsidized treasure that "could flow toward housing and food security, health research, education, advocacy, and other crucial nonprofit efforts aimed at uplifting the common good."  Here is the introduction to the report:

Our philanthropic sector has seen better days. Ultra-wealthy donors have gained ever greater tax benefits and influence from their giving while our working charities have been hard hit by a decline in dependable funding. Currently, an estimated $1.7 trillion sits in private foundations and donor-advised funds (DAFs). Those donations, ostensibly earmarked for philanthropy, can languish in go-between funds and keep our working charities dangerously under-resourced.  Things don’t have to be this way. Public opinion, nonprofit leaders, and even a critical mass of fed-up donors have coalesced behind good-faith, common sense charity reform proposals that would dramatically recalibrate the fairness and efficiency of America’s vital third sector.

As legislators get ready to overhaul the tax code in 2025, we’re hopeful that this can be a watershed moment for charity reform. It’s high time to refresh the rules governing philanthropy to move money off the sidelines. 

In this policy brief, we attempt to quantify the transformative effects of certain reforms, hoping that our estimates inspire Congress to act upon this opportunity. Politicians who claim to care about the health of our democracy should take notice: Passing these broadly popular reforms would unlock $339 billion in charitable contributions that have already been tax exempted over the next three years.

darryll k. jones