Opinion Page: What Was the Philanthropic Pluralism Manifesto Really About?

From the Chronicle of Philanthropy, May 4, 2023: (prior coverage of what the author is responding to is  here and here)

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Spending, Transparency, and Politics

Three areas of criticism have been lodged against philanthropy and the way it currently does business. The first centers on the amount of money that donors are required to give to charities. Many critics believe the 5 percent distribution requirement created by the 1969 Tax Reform Act is no longer appropriate given the enormous growth in foundation assets in the last 50 years. Adding fuel to these concerns, some foundations have largely avoided the 5 percent distribution by putting most of their required grant making in donor-advised funds.

In response, critics on the left and right have proposed a substantial increase in the distribution requirement and an end to the DAF loophole. This seems entirely appropriate. Laws, after all, are adjusted over time as weaknesses are discovered. Are the authors of the pluralism statement rejecting these concerns and efforts to fix the problem?

The second area of criticism involves transparency. The Tax Reform Act required foundations to provide information on the recipients of their largess, but DAFs allow philanthropists to store their money until they want to give it away and then avoid any reporting on how the funds are used. Foundations have discovered that they can give money to controversial or politically charged groups through these vehicles with complete secrecy — all while meeting their distribution requirement.

Many have called for regulations that would force DAFs to be more transparent and prohibit foundations from using the funds to avoid public disclosure. At minimum, one hopes that the distinguished cadre behind the pluralism statement agrees that openness and disclosure are essential to maintaining the legitimacy of DAFs.

Finally, observers largely on the conservative side of the political spectrum are increasingly worried about the politicization of philanthropy. In recent years, restrictions on the ability of foundations to engage in election-adjacent activities, especially those with a partisan tilt, have been undermined by a significant minority of foundations that give millions to support voter registration, education, and mobilization activities that are almost certainly designed to influence the outcomes of elections.

Surely the conservative authors of this statement must have some concern about the seemingly brazen way that many donors use charitable giving to pursue political aims. Should they refrain, in the spirit of civility, from forcefully arguing against such practices?

An Opening Salvo

All of this leads to what I believe is the real intent of the manifesto: an attempt by the sector to defend itself against congressional hearings and legislation. The statement may well be an opening salvo against critics on the left and right who want to strengthen the legal framework that governs the field.

This sort of virtue signaling is unlikely to alleviate growing skepticism about the philanthropic world and wealthy donors. And while high-minded language may make the signers of this statement feel good, it won’t prevent them from undergoing congressional scrutiny.

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darryll jones