Congress should mandate higher charity payouts for COVID-19, group says

A group of foundation trustees, donors and philanthropic leaders asked Congress on Tuesday to mandate increased annual payouts as an emergency charity stimulus response to the COVID-19 crisis.

In the open letter, 275 foundation trustees, donors and philanthropic leaders asked Congress to require foundations to double their required annual payout percentage and to create a mandated payout for donor-advised funds for three years.

Private foundations hold $1.2 trillion and are mandated to pay out a 5% annual minimum, while donor-advised charity funds, with $120 billion in assets, have no mandated payout but receive immediate tax deductions, the group said. The changes would unleash $200 billion in additional charity funds over three years at no taxpayer cost, it estimated.

The letter was organized by the Charity Reform Initiative of the Institute for Policy Studies, Patriotic Millionaires and the Wallace Global Fund. The 275 signers of the letter include officials with the Aileen Getty Foundation, George Gund Foundation, Mary Reynolds Babcock Foundation, Amalgamated Charitable, Compton Fund and Lodestar Foundation.

"While some foundations and donors are stepping up at this moment, others continue to treat the 5% payout as a ceiling, not a floor," Chuck Collins, director of the Charity Reform Initiative said in a group statement. "The independent non-profit sector is part of the front-line response to the pandemic, with everything from food banks, mental and physical health services, culture and educational institutions. The sector employs 12 million workers, over 10% of the private workforce."

Scott Wallace, co-chairman of the Wallace Global Fund, said in the statement that "the wealthy donors who created these foundations and DAFs have already reaped vast taxpayer subsidies for their future generosity. But in this moment of crisis, it's time we sped that generosity and paid more right now."

The Wallace Global Fund has committed to spending 20% of its $100 million endowment to support COVID-19 relief efforts in 2020.