The Progressive


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New Report from the Institute for Policy Studies Reveals the True Cost of Billionaire Philanthropy

The new analysis details how the ultra-wealthy use charitable giving to avoid taxes and exert influence, while ordinary taxpayers foot the bill.

On November 15, the Institute for Policy Studies released a crucial new report revealing the true cost of billionaire philanthropy to taxpayers, the nonprofit sector, and our society.

The report comprehensively details how the ultra-wealthy use charitable giving to avoid taxes and exert influence, while ordinary taxpayers foot the bill.

As communities prepare to enter the season of giving and highlight charitable donations as a critical way to support communities’ urgent needs, this report reveals how the wealthiest donors in our society give differently than ordinary donors.

  • The ultra-wealthy claim the lion’s share of the hundreds of billions in annual tax subsidies to incentivize charitable giving.
  • Yet most donations by the ultra-wealthy flow to private foundations and donor-advised funds (DAFs), intermediaries controlled by these donors (As our report shows, 41 cents of every dollar of individual giving in 2022 went to one of these intermediaries). At best, this delays the flow of funds to working nonprofit charities on the ground. At worst, it leads to a warehousing of charitable funds. Private foundations are only required to payout 5 percent of assets annually to charities and donor-advised funds (DAFs) have no payout requirement. To make matters worse, some wealthy donors are playing shell-games to fulfill these minimal obligations.
  • The most charitably-orientated billionaires in the U.S., those who have signed the Giving Pledge to donate half their wealth during their lifetime, are not immune from these trends. At their current pace, most funds will end up in perpetual family foundations, not in the hands of active charities.

As wealth concentrates in fewer hands, the imbalance is having a corrosive impact on our nonprofit sector. U.S. nonprofit charities are currently experiencing a transition from broad-based support across a wide range of donors to an increasing reliance on a small number of ultra-wealthy people, a trend IPS has named “top-heavy philanthropy.”

The report sounds the alarm over the way that wealthy donors are using taxpayer-subsidized giving systems to create perpetual foundations that extend their private power and influence.

Key findings include:


Millions of U.S. donors give directly to local charities without any reduction in their taxes. Less than ten percent of households use the charitable deduction. Wealthy donors, in turn, receive most of the taxpayer subsidies for charitable giving. The taxpayer subsidy for charity is hundreds of billions of dollars –and the wealthier the donor, the greater the taxpayer subsidy.

  • The direct taxpayer subsidy for charitable giving was $73.24 billion in 2022 due to personal and corporate charitable deductions and is $111 billion including other known reductions in taxes. But the subsidy is several hundreds of billions a year if estate and capital gains tax reductions are included.
  • The wealthier the donor, the greater the taxpayer subsidy for their donation. For every dollar a billionaire donates to charity, taxpayers chip in 74 cents in lost revenue. This is because wealthy donors not only reduce their income tax obligations, but also capital gains, estate and gift taxes.


Low and middle income givers are more likely to give directly to local nonprofit charities in their community including youth centers, food banks, and organizations addressing poverty, social needs, arts, and environmental issues.

In contrast, the report finds that wealthy donors are more likely to contribute to their own private foundations and donor-advised funds (DAF), intermediaries that they continue to control. These donors receive immediate tax reductions in the year of their donation, but as this report shows, the funds may take decades to reach working charities, if ever.

An estimated 41 cents of every 2022 individual donation going to charity went to either a private foundation or DAF, up from 37 percent in 2021. In 2022, 27 percent of individual donations went to DAFs, up from 22 percent in 2021. In 2022, 14 percent of individual donations went to private foundations.

“One of the main drivers of DAF growth is the financial industry’s aggressive marketing of DAFs for their considerable tax benefits, secrecy, and non-existent payout rate,” observed Chuck Collins, author of the report.

Over the past five years, the median payout rate for private foundations has hovered between 5.2 and 5.6 percent. And this payout includes compensation to trustees, overhead, and donations to donor-advised funds (DAFs) which have no payout.

Donations to DAFs are now more than a quarter of all U.S. individual charitable giving. The $85.5 billion donated to DAFs in 2022 made up a full 27 percent of the $319 billion in individual giving that year, up from $73.34 billion and 22 percent in 2021.

The largest DAF sponsors now take in more money each year than our largest public charities. By 2021, seven of the top ten recipients of charitable revenue in the country were DAF sponsors, including the four largest affiliated with Fidelity, Schwab, Vanguard and the National Philanthropic Trust.

A significant amount of DAF grants go to other DAFs. We found $2.5 billion in grants going from national donor-advised funds to other national donor-advised funds in 2021 alone.


The report analyzes the progress of the Giving Pledge, founded in 2010 by Bill Gates and Warren Buffett, that has inspired over 220 billionaires to pledge to donate half of their wealth during their lifetime. The report found that while a handful of donors are moving funds in a timely manner, most have seen their wealth dramatically increase over the fourteen years since the start of the Giving Pledge and need to pick up the pace of giving.

The report suggests that most of these pledges will be fulfilled by donations to private family foundations and donor-advised funds, delaying the public benefit of the taxpayer subsidized donations. In the worst case, some Pledgers have used their philanthropy for self-serving purposes, such as taking out loans from their foundations or paying themselves hefty trustee salaries.

The 73 living U.S. Giving Pledgers who were billionaires in 2010 saw their wealth grow by 138 percent, or 224 percent when adjusted for inflation, through 2022. Their combined assets increased from $348 billion in 2010 to $828 billion over those twelve years.

Of these 73 people, 30 of them have seen their wealth increase more than 200 percent when adjusted for inflation. Those with the greatest growth include Mark Zuckerberg and Priscilla Chan (1,382 percent), Dustin Moskovitz and Cari Tuna (1,166 percent), Elaine and Ken Langone (755 percent), Arthur M. Blank (739 percent), and Bernie and Billi Marcus (714 percent).

Of the $12 billion in identifiable gifts of over $1 million that the Giving Pledge signers donated to charity in 2022, 68 percent — more than $8 billion — went either to foundations or to DAFs.

The action of some billionaire donors raise concerns that what began as a civic-minded initiative to spur generosity is instead serving to concentrate private wealth and power at taxpayer expense.

“The missing voice in the philanthropy discussion is the U.S. taxpayer, who subsidizes the private giving of billionaires to the tune of several hundred billion a year,” explains Chuck Collins, co-author of the report and the director of the Program on Inequality and the Common Good at the Institute for Policy Studies. “We should be alarmed at the ways billionaires use philanthropy as a taxpayer-subsidized extension of their private power and influence.”

“We need to update the laws governing philanthropy to keep the financial industry from capturing it and turning it into another tax dodge for the wealthiest people in our society,” Collins adds.

Key recommendations to reform charitable giving and ensure more money ends up in the hands of actual active charities, where it’s needed most:

  • Implement a payout requirement for donor-advised funds
  • Raise the minimum payout rate requirement for private foundations
  • Prevent grants to DAFs from counting towards foundation payout
  • Require sponsors to report on DAFs on an account-by-account basis
  • Implement a universal charitable tax credit for non-itemizers

“We have to make sure that the tax breaks we underwrite are actually funding charities actively working for the public good,” warns Helen Flannery, co-author of the report and a researcher at the Institute for Policy Studies who is an expert on philanthropy and charitable giving.

“We hope this report will encourage policymakers, the media, and the public to look at the charitable pronouncements of billionaires with more scrutiny,” she adds. “Sometimes their giving is a genuine attempt to give back, but other times it is more about enhancing their political voice, their reputation, or their wallet.”

Full report:

Institute for Policy Studies turns Ideas into Action for Peace, Justice and the Environment. We strengthen social movements with independent research, visionary thinking, and links to the grassroots, scholars and elected officials. I.F. Stone once called IPS "the think tank for the rest of us." Since 1963, we have empowered people to build healthy and democratic societies in communities, the US, and the world. Click here to learn more, or read the latest below.