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As Nonprofit Sector Suffers, Coalition Calls on Congress to Force Wealthy Foundations to Ramp Up Charitable Giving

"Increased funding could be immediately absorbed by food banks, healthcare providers, educational institutions, and organizations addressing issues like poverty alleviation, economic development, safe and secure voting, and social justice."

Volunteers distribute food during the distribution for the Annual Alvernia University Turkey Drive on November 23, 2020 at their new downtown College Towne Location on Penn Street in Reading, Pennsylvania. (Photo: Ben Hasty/MediaNews Group/Reading Eagle via Getty Images)

Nearly 800 social justice-minded philanthropists and charitable foundations have joined thousands of nonprofit leaders and workers in calling on the U.S. Congress to include $200 billion for charities in the next coronavirus relief package and mandate greater contributions to the nonprofit sector by wealthy donors, in light of the pandemic.

In a letter initially spearheaded in May by the Patriotic Millionaires, the Charity Reform Initiative of the Institute for Policy Studies, and the Wallace Global Fund, hundreds of signatories have joined the effort as of Wednesday, demanding emergency relief for a sector which has lost millions of jobs since the crisis began in March, including one-third of nonprofit healthcare jobs.  

The groups are demanding that the U.S. Senate unlock $200 billion in charitable funds to assist nonprofits, all without spending taxpayer money, and update laws governing private foundations—which are currently required to spend just 5% of their considerable assets each year in grants—and donor-advised funds (DAFs), which are not required to spend anything to support nonprofits.

"While some foundations and donors are stepping up at this moment, others continue to treat the 5% payout as a ceiling, not a floor," said Chuck Collins, director of the Charity Reform Initiative, in a statement. "Donors have already taken the tax break for these contributions. Congress needs to raise the bar for those donors who haven't figured out this is no time to sit on your treasure."

Under the groups' proposal, donors including DAFs would be required to increase their distributions annually to 10% for three years.

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"Increased funding could be immediately absorbed by food banks, healthcare providers, educational institutions, and organizations addressing issues like poverty alleviation, economic development, safe and secure voting, and social justice," wrote the signatories, who include Patriotic Millionaires member Abigail Disney, filmmaker Rory Kennedy, and Aileen Getty of the Aileen Getty Foundation. 

"We urge Congress to enact an Emergency Charity Stimulus to force philanthropies to increase their support for nonprofit organizations—immediately, urgently, and temporarily, to allow time for deployment of a vaccine and economic recovery." 
—Patriotic Millionaires, the Charity Reform Initiative of the Institute for Policy Studies, and the Wallace Global Fund

A poll taken in June by Ipsos and Sector 3 Insights found that 72% of Americans support an Emergency Charity Stimulus as part of the next coronavirus relief package, and that 93% of respondents "found it unacceptable that DAFs are under no obligation to disburse any funds to active charities."

Since the pandemic began, 120,000 nonprofit organizations working in these and other fields have shut down. About 12 million workers in the U.S. are employed by nonprofits—more than 10% of the private workforce.

"We urge Congress to enact an Emergency Charity Stimulus to force philanthropies to increase their support for nonprofit organizations—immediately, urgently, and temporarily, to allow time for deployment of a vaccine and economic recovery," said Scott Wallace, co-chair of the Wallace Global Fund, which has committed to spending 20% of its own endowment in 2020.

"There has clearly not been a moment in the past 50 years in which the full deployment of our charitable sector was more necessary," the groups wrote in their letter. 

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