!CO$AUTHORS:!
Chuck!Collins!directs!the!Program!on!Inequality!and!the!Common!Good!at!
the!Institute!for!Policy!Studies,!where!he!co;edits!Inequality.org.!His!most!
recent!book!is!Born%on%Third%Base:%A%One%Percenter%Makes%the%Case%for%Tackling%
Inequality,%Bringing%Wealth%Home,%and%Committing%to%the%Common%Good%(Chelsea!
Green,!2016).!He!is!co;author,!with!Bill!Gates!Sr.,!of!Wealth%and%Our%
Commonwealth:%Why%America%Should%Tax%Accumulated%Fortunes!(Beacon!Press,!
2003).!He!is!co;author!with!Mary!Wright!of!The%Moral%Measure%of%the%Economy%(Orbis,!2008),!a!book!about!Christian!ethics!and!economic!life.!He!also!wrote!
99%to%1:%How%Wealth%Inequality%is%Wrecking%the%World%and%What%We%Can%Do%About%
It!(Berrett;Koehler,!2012).!!
!
Helen!Flannery!is!an!Associate!Fellow!at!the!Institute!for!Policy!Studies.!She!
is!a!longtime!researcher!and!data!analysis!professional!working!in!the!
nonprofit!sector!and!has!written!extensively!on!nonprofit!industry!trends,!
including!trends!in!direct!marketing!fundraising,!online!giving,!sustainer!
giving,!and!the!macroeconomic!factors!affecting!donor!behavior.!
!
!
!
!

Josh!Hoxie!heads!up!the!IPS!Project!on!Opportunity!and!Taxation!at!the!
Institute!for!Policy!Studies!and!co;edits!Inequality.org.!He!has!written!widely!
on!income!and!wealth!maldistribution!for!a!variety!of!media!outlets!and!is!
the!co;author!of!“The!Ever;Growing!Gap:!Without!Change,!African;
American!and!Latino!Families!WonXt!Match!White!Wealth!for!Centuries”!and!
“Billionaire!Bonanza:!The!Forbes!400!and!the!Rest!of!Us.”!!
!
!
!
Graphic!Design:!Kenneth!Worles!!
Acknowledgments:!We!received!significant!assistance!in!the!production!of!this!report.!We!would!
like!to!thank!Angelique!Been,!David!Callahan,!John!Cavanagh,!Aaron!Dorfman,!Ray!Madoff,!
Brendan!McGuire,!Trevor!Price,!Carl!Quesnel,!and!Carol!Rhine.!
!
The!Institute!for!Policy!Studies!(www.IPS;dc.org)!is!a!multi;issue!research!center!that!has!
conducted!ground;breaking!research!on!inequality!for!more!than!20!years.!
!
The!IPS!Inequality.org!website!(Inequality.org)!is!the!premiere!
portal!for!data,!commentary,!and!analysis!on!income!and!
wealth!inequalities!in!the!U.S.!and!the!world.!
Twitter:!@inequalityorg!
!
Institute!for!Policy!Studies!
1301!Connecticut!Ave.!NW,!Suite!600!
Washington,!DC!20036!
1

Contents
Key$Findings$

3!

Introduction$

5!

Record4Breaking$Philanthropic$Growth$

5!

Wealth$Concentration$and$Charity$
Top$Heavy*Mega$Giving!
Bottom$Light*Small*Donations!
Possible*Explanations*for*Donor*Declines!

8!
11!
17!
19!

Implications$Risks*for*Fundraising*and*the*Independent*Sector!
Risks*for*Civil*Society!

22!
22!
25!

Recommendations$
Changes*in*Internal*Practices*for*Charities!
Changes*in*Incentives*for*Individual*Giving!
Reforms*in*Foundation*Governance!
Changes*in*National*Public*Policy!

29!
30!
30!
31!
33!

Conclusion$

35!

End$Notes$

36!

!
!
!

!

2

Key Findings
Charitable!donations!in!the!United!States!have!surged!in!recent!years,!but!these!
unprecedented!levels!of!giving!may!mask!a!troubling!trend:!charities!are!increasingly!
relying!on!larger!and!larger!donations!from!smaller!numbers!of!high;income,!high;wealth!
donors,!while!receiving!shrinking!amounts!of!revenue!from!the!vast!population!of!donors!at!
lower!and!middle!income!levels.!
!

Growing!inequity!in!charitable!giving!may!hold!risks!not!only!for!nonprofits!themselves,!
but!also!for!the!nation!as!a!whole.!This!report!tracks!significant!changes!in!philanthropic!
giving!in!recent!years,!puts!forward!a!number!of!possible!implications!of!these!changes,!and!
suggests!some!solutions.!
!

Findings!

● Charitable!contributions!from!donors!at!the!top!of!the!income!and!wealth!ladder!
have!increased!significantly!over!the!past!decade.!From!2003!to!2013,!itemized!
charitable!contributions!from!people!making!$500,000!or!more—roughly!the!top!one!
percent!of!income!earners!in!the!United!States—increased!by!57!percent.!And!
itemized!contributions!from!people!making!$10!million!or!more!increased!by!almost!
double!that!rate—104!percent—over!the!same!period.1!
● The!number!of!private!grant$making!foundations!and!the!revenue!they!hold!have!
shown!similarly!dramatic!growth.!The!number!of!grant;making!foundations!
chartered!in!the!United!States!grew!from!67,736!in!2004!to!86,726!in!2014—an!increase!
of!28!percent!over!ten!years.!The!amount!of!assets!held!in!those!foundations!
increased!35!percent!over!that!same!period.2!
● Over!the!past!decade,!charitable!giving!deductions!from!lower!income!donors!have!
declined!significantly,!at!close!to!the!same!rate!that!contributions!from!higher!
income!donors!have!increased.!From!2003!to!2013,!while!itemized!charitable!
deductions!from!donors!making!$100,000!or!more!increased!by!40!percent,!itemized!
charitable!deductions!from!donors!making!less!than!$100,000!declined!by!34!percent.3!
● The!number!of!donors!giving!at!typical!donation!levels!has!been!declining!
steadily.!According!to!one!estimate,!low;dollar!and!midrange!donors!to!national!
public!charities!have!declined!by!as!much!as!25!percent!over!the!ten!years!from!2005!
to!2015.4!These!are!the!people!who!traditionally!have!made!up!the!vast!majority!of!
donor!files!and!solicitation!lists!for!most!national!nonprofits!since!their!inception.!
● The!rate!of!decline!in!low$dollar!donors!correlates!strongly!with!indicators!of!
overall!economic!security!in!the!United!States,!such!as!wages,!employment,!and!
3

homeownership!rates.5!This!indicates!that!donor!declines!are!likely!closely!related!to!
changing!economic!conditions.!
!

Implications!

If!these!trends!continue,!we!will!witness!the!rise!of!“top;heavy”!philanthropy!dominated!by!
a!small!number!of!very!wealthy!donors.!This!has!significant!implications!for!the!practice!of!
fundraising,!the!role!of!the!independent!nonprofit!sector,!and!the!health!of!our!larger!
democratic!civil!society.!
•

Risks!to!charitable!sector!organizations!include!increased!volatility!and!
unpredictability!in!funding,!making!it!more!difficult!to!budget!and!forecast!income!
into!the!future;!an!increased!need!to!shift!toward!major!donor!cultivation;!and!an!
increased!bias!toward!funding!larger!or!heavily!major;donor;directed!boutique!
organizations!and!projects.!The!increasing!power!of!a!small!number!of!donors!also!
increases!the!potential!for!mission!distortion.!

•

Risks!to!the!public!include!the!rise!of!tax!avoidance!philanthropy,!the!warehousing!of!
wealth!in!the!face!of!urgent!needs,!self;dealing!philanthropy,!and!the!increasing!use!
of!philanthropy!as!an!extension!of!power!and!privilege!protection.!

Recommendations!
!

This!report!calls!for!an!urgent!reform!of!the!philanthropic!sector!to!encourage!broader!
giving,!protect!the!health!of!the!independent!sector,!discourage!the!warehousing!of!wealth!
in!private!foundations!and!donor;advised!funds,!and!increase!accountability!to!protect!the!
public!interest!and!the!integrity!of!our!tax!system.!Changes!in!the!rules!governing!
philanthropy!should!include!increasing!the!minimum!annual!distribution!payout!for!
foundations,!excluding!foundation!overhead!from!the!payout!percentage,!linking!the!excise!
tax!on!foundations!to!payout!distribution!amounts,!and!establishing!a!two;tier!tax!benefit!
structure!for!charitable!gifts,!with!incentives!that!encourage!direct!donations!to!public!
charities!focused!on!urgent!social!and!community!needs.!We!also!recommend!exploring!a!
lifetime!cap!on!tax;deductible!charitable!giving!to!ensure!that!those!who!possess!some!of!the!
largest!fortunes!in!the!United!States!cannot!use!such!deductions!to!entirely!circumvent!tax!
obligations.!
!!
To!fully!address!the!risks!of!top;heavy!philanthropy,!however,!policymakers!will!need!to!
not!only!reform!the!rules!of!charitable!giving,!but!also!establish!policies!to!reduce,!over!
time,!concentrations!of!wealth!and!power!in!our!society!at!large.!This!would!include!
restoring!steeply!progressive!income!and!wealth!taxation!and!closing!loopholes.!
4Introduction
Philanthropy!is!a!noble!pursuit:!an!expression!of!our!collective!generosity!and!human!
solidarity.!And!the!charitable!nonprofits!we!support!as!a!nation!are!both!the!lifeblood!of!a!
vibrant!civil!society!and!laboratories!for!experimentation!into!ways!to!solve!our!most!
pressing!problems.!Without!our!vibrant!independent!charitable!sector,!the!quality!of!life!in!
our!communities!would!be!greatly!diminished.!
!
For!over!a!decade,!the!Program!on!Inequality!and!the!Common!Good,!based!at!the!Institute!
for!Policy!Studies,!has!examined!the!impact!of!income!and!wealth!inequality!on!civic!life,!
opportunity,!social!mobility,!democracy,!and!other!aspects!of!U.S.!society.!Recent!reports!
have!analyzed!the!concentration!of!wealth!at!the!top!of!U.S.!society!and!the!racial!wealth!
divide.!This!report,!Gilded%Giving,!focuses!attention!on!the!impact!of!increasing!financial!
inequality!on!the!philanthropic!sector.!
!
As!inequalities!of!income,!wealth,!and!opportunity!grow!in!the!United!States,!nonprofit!
organizations!are!being!called!on!to!address!and!ameliorate!the!challenges!that!result.!But,!
at!the!same!time,!the!management!and!effectiveness!of!the!charitable!sector!are!being!deeply!
affected!by!these!trends!themselves.!
!
While!we!celebrate!the!generous!impulse!behind!so!much!of!the!philanthropic!activity!in!the!
United!States,!we!also!recognize!that!growing!inequity!in!charitable!giving!may!hold!
potential!peril!not!only!for!the!independent!nonprofit!sector,!but!for!the!nation!as!a!whole.!
Our!report!tracks!significant!changes!we!have!seen!in!philanthropic!giving!in!recent!years,!
puts!forward!a!number!of!possible!implications!of!these!changes,!and!suggests!some!
solutions.!

Record-Breaking Philanthropic Growth
This!past!June,!the!Giving!USA!Foundation™!published!Giving%USA%2016:%The%Annual%Report%
on%Philanthropy%for%the%Year%2015,!its!industry!gold;standard!report!on!2015!charitable!giving!
in!the!United!States.!The!news!was!good:!national!charitable!donations!surged!in!2015,!
reaching!a!record!high!for!the!second!year!in!a!row.!According!to!the!report,!the!total!
amount!given!to!charity!in!2015!was!an!estimated!$373.25!billion,!which!was!4.0!percent!
inflation;adjusted!growth!from!2014!and!10.1!percent!inflation;adjusted!growth!from!2013.6!!
!!

5

Giving!USA!Foundation!Chair!W.!Keith!Curtis!applauded!this!surge!in!giving,!describing!it!
as!“a!symbol!of!the!American!spirit”!and!“a!sign!that!Americans!are!embracing!
philanthropy!at!a!higher!level!than!ever!before.”7!!
!!
On!the!surface,!this!historic!level!of!charitable!giving!appears!to!be!a!welcome!turnaround,!
an!impressive!unleashing!of!generosity!after!a!contraction!of!the!nonprofit!sector!during!the!
recession!of!2007–2009.!
!
This!unprecedented!level!of!giving!may,!however,!mask!potentially!destructive!trends.!
There!are!indications!in!giving!data!that!charities!are!increasingly!relying!on!larger!and!
larger!donations!from!a!smaller!number!of!high;income,!high;wealth!donors,!while!
receiving!shrinking!amounts!of!revenue!from!the!vast!population!of!donors!at!lower!and!
middle!income!levels.!This!shift!from!broad;based!public!support!to!narrowly!focused!
giving!by!a!wealthy!few!is!a!trend!that!reflects!the!escalating!wealth!and!income!inequality!
in!our!society!as!a!whole.!
!
PHILANTHROPY THROUGH THE AGES!!
Humans!have!survived!and!flourished!in!large!part!thanks!to!vibrant!gift!economies!that!
have!existed!throughout!recorded!history.!There!are!documented!examples!of!organized!
giving!as!early!as!the!classical!era,!including!an!endowment!fund!for!Plato’s!Academy!in!
Greece!and!early!foundation;like!organizations,!such!as!the!waqf!in!Islamic!societies.!
!!
In!the!United!States,!by!1835,!the!French!writer!Alexis!de!Tocqueville!described!the!
tendency!of!Americans!to!form!associations!for!“the!smallest!undertakings”!as!a!unique!trait!
and!an!extension!of!the!democratic!spirit!in!the!country.!He!saw!Americans!forming!
associations!“to!give!entertainments,!to!found!seminaries,!to!build!inns,!to!construct!
churches,!to!diffuse!books,!to!send!missionaries!to!the!antipodes;!in!this!manner!they!found!
hospitals,!prisons,!and!schools.”8!
!
The!rise!of!large;scale!U.S.!philanthropy!accompanied!the!growth!in!great!fortunes!during!
America’s!first!Gilded!Age,!between!1890!and!1920.!In!his!1889!essay!“Wealth,”!industrialist!
Andrew!Carnegie!argued!that!the!wealthy!had!a!social!obligation!to!distribute!wealth!in!
their!lifetime!to!promote!the!betterment!of!society.!In!1907,!the!first!foundation,!the!Russell!
Sage!Foundation,!was!established!with!the!mission!of!improving!“social!and!living!
conditions!in!the!United!States.”!In!1907,!the!Cleveland!Foundation!became!the!nation’s!first!
community!foundation,!pooling!donations!as!a!form!of!“community!trust.”!
6

The!federal!government!formalized!the!charitable!sector!by!including!a!provision!in!the!
Revenue!Act!of!1917!that!exempted!charities!from!paying!federal!income!tax.!But!the!
modern!era!of!tax;incentive;based!giving!did!not!begin!until!1921,!when!Congress!allowed!
individual!donations!to!charities!to!be!tax!deductible.!Itemized!donations!that!year!were!
estimated!to!be!$1.7!billion!in!1921!dollars.!In!1935,!lawmakers!expanded!this!provision!to!
allow!corporate!donations!to!be!deductible!from!corporate!income!taxes!as!well.9!!
!
One!of!the!earliest!formalized!institutions!to!use!mass!national;scale!philanthropy!was!the!
March!of!Dimes,!founded!on!the!eve!of!World!War!II!as!the!National!Foundation!for!
Infantile!Paralysis!to!assist!those!living!with!polio!and!to!fund!research!into!its!cure.!The!
idea!of!having!legions!of!citizens!donating!dimes!to!the!effort!came!from!President!Franklin!
D.!Roosevelt,!who!lived!most!of!his!life!with!polio.!In!the!years!following!a!1949!polio!
epidemic,!the!charity!had!more!than!3,100!chapters!of!volunteers!collecting!millions!of!
dollars,!mostly!from!small!donations.!A!March!of!Dimes!grant!recipient,!Dr.!Jonas!Salk,!
created!and!tested!a!polio!vaccine!that!dramatically!reduced!occurrence!of!the!disease!
starting!in!1955,!and!the!March!of!Dimes,!successful!in!its!original!mission,!shifted!its!focus!
to!birth!defects,!premature!birth,!and!healthy!pregnancy.10!
!!
Charitable!giving!expanded!rapidly!after!World!War!II,!including!the!creation!of!local!
giving!networks,!such!as!the!United!Way,!community!foundations,!and!matching!employee!
gift!programs.!The!civil!rights!movement!of!the!1950s!and!the!social!movements!of!the!1960s!
and!1970s!altered!the!philanthropic!environment!yet!again,!as!foundations!were!created!to!
support!movements!as!catalysts!for!change.11!Conservative!advocates!responded!by!creating!
family!foundations!that!used!activist!giving!to!build!political!organizations.!
!!
Charitable!tax!and!donation!laws!were!overhauled!significantly!by!the!Tax!Reform!Act!of!
1969,!which!made!a!statutory!distinction!between!public!charities!and!private!foundations.!
This!act!allowed!the!government!to!subject!foundations!to!a!minimum!payout!rate!and!to!
charge!them!an!excise!tax.!It!also!allowed!donors!to!deduct!up!to!50!percent!of!their!
adjusted!gross!income!and!created!provisions!for!noncash!gifts,!charitable!remainder!trusts,!
and!charitable!lead!trusts—mechanisms!used!primarily!by!the!wealthy!to!structure!their!
giving.!
!!
While!donor;advised!funds!had!long!been!available!through!community!foundations!and!
giving!federations,!Fidelity!Investment’s!creation!of!its!Charitable!Gift!Fund!in!1991!
accelerated!the!use!of!the!mechanism.!Other!investment!funds!soon!followed!suit.!
!

!
7

In!recent!decades,!philanthropic!giving!has!surged.!Millions!of!Americans!donate!when!
disasters!strike,!such!as!Hurricane!Katrina,!the!Indian!Ocean!tsunami,!and!the!earthquake!in!
Haiti.!Millions!more!are!inspired!to!give!by!popular!social!media!campaigns,!such!as!the!
ALS!Association’s!Ice!Bucket!Challenge.!Major!donors!are!contributing!at!a!greater!clip!than!
ever!before,!giving!multimillion;dollar!mega;donations!to!universities,!arts!organizations,!
and!private!foundations.!And!the!philanthropic!sector!itself!has!grown!into!a!complex,!
highly!expert!industry,!with!research!and!advocacy!groups,!donor!affinity!groups,!and!
professional!associations.!

Wealth Concentration and Charity
Over!the!last!three!decades,!private!wealth!in!the!United!States!has!become!concentrated!in!
fewer!and!fewer!hands.!Most!of!the!gains!in!assets!and!income!have!flowed!
disproportionately!to!the!top!0.1!percent!of!households!in!the!United!States.!This!top!one;tenth!of!one!percent—an!estimated!115,000!households!with!net!worth!that!starts!at!$20!
million—now!own!more!than!20!percent!of!all!U.S.!household!wealth,!up!from!7!percent!in!
the!1970s.!This!elite!subgroup,!University!of!California–Berkeley!economist!Emmanuel!Saez!
points!out,!now!owns!as!much!wealth!as!the!bottom!90!percent!of!Americans!combined.12!!
!
The!members!of!the!Forbes!400!alone!now!own!about!as!much!as!the!bottom!62!percent!of!
the!population.!Their!holdings!are!equal!to!the!wealth!of!the!nation’s!entire!African;
American!population!combined!with!that!of!more!than!a!third!of!the!Latino!population.!
And!America’s!20!richest!people—a!group!that!could!fit!comfortably!in!a!single!Gulfstream!
G650!luxury!jet—now!own!more!wealth!than!the!bottom!half!of!the!American!population,!a!
total!of!152!million!people!in!57!million!households.13!
!
These!statistics!also!likely!greatly!underestimate!current!U.S.!levels!of!wealth!concentration,!
since!the!growing!use!of!offshore!tax!havens!and!legal!trusts!has!made!the!concealing!of!
assets!much!more!widespread!than!ever!before.14!
!!
A!significant!portion!of!this!wealth!has!made!its!way!into!the!charitable!sector,!as!evidenced!
by!an!explosion!of!mega;donations,!private!foundations,!and!donor;advised!funds.!
!
The!growth!of!mega;donations—private!gifts!over!$100!million—has!been!getting!
tremendous!attention!in!recent!years.!These!include!gifts!such!as!hedge!fund!manager!John!
A.!Paulson’s!$400!million!gift!to!Harvard!University!and!Nike!founder!Phil!Knight’s!$400!
million!gift!to!Stanford!University.15!
8!
Less!attention!has!been!given!to!the!growth!of!private!foundations,!but!they!have!grown!
substantially!as!well.!The!number!of!private!foundations!chartered!in!the!United!States!
increased!by!28!percent!over!the!ten!years!from!2004!to!2014.!The!amount!of!assets!held!in!
those!private!foundations!increased!35!percent!over!that!same!period!(adjusted!for!
inflation),!for!an!effective!4!percent!increase!in!assets!each!year.16!!
!
Figure 1: Number of Foundations vs. Share of Wealth Owned by Top 1%
All revenue is adjusted for inflation (2012 = 100%)
90,00045%
86,19242%

Number of Foundatoins

80,00041%
39%

Number of Foundationsin the U.S.

75,00070,000

33%

37%
35%

Share of Wealth
Owned by the Top 1%

65,00033%
31%60,00061,81729%

55,000Share of Wealth Owned by Top 1%

43%

85,000

27%

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

25%

2001

50,000Source for Number of Foundations: Aggregate Fiscal Data of Foundations in the United States, The Foundation Center,
http://data.foundationcenter.org/#/foundations/all/nationwide/total/trends:num_foundations/2014.
Source for Share of Wealth: Saez, Emmanuel and Gabriel Zucman, "Wealth Inequality in the United States since 1913:
Evidence from Capitalized Income Tax Data," Quarterly Journal of Economics, 131 (2016), Supplementary Data Files, Table B1,
http://qje.oxfordjournals.org/content/131/2/519/suppl/DC1.

!
The!number!of!sponsoring!organizations!for!donor;advised!funds!in!the!United!States!has!
grown!at!an!even!faster!rate,!increasing!by!19!percent!over!the!six!years!from!2006!to!2012.!
Their!assets!increased!by!62!percent!over!the!same!time!period,!for!an!effective!13!percent!
increase!in!assets!each!year.17!Giving!to!donor;advised!funds!has!seen!such!growth!that!the!
second!largest!recipient!of!charitable!donations!in!2015,!after!the!United!Way,!was!Fidelity!
Charitable,!one!of!the!nation’s!largest!donor;advised!fund!managers.18!
!
At!the!same!time,!there!is!evidence!of!a!slow!but!inexorable!decline!in!the!participation!of!
low;dollar!and!midlevel!donors!in!nonprofit!giving—a!likely!indication!of!growing!
economic!inequality!and!insecurity!among!the!wide!pool!of!donors!at!the!lower!end!of!the!
giving!scale.!
!
9Over!the!past!decade,!charitable!deductions!have!increased!substantially!for!the!top!ten!
percent!of!income!earners.!For!the!bottom!90!percent,!however,!charitable!deductions!have!
been!declining—in!some!cases!significantly.!
!
According!to!IRS!data,!inflation;adjusted!itemized!charitable!deductions!increased!for!
households!at!every!income!level!over!$100,000!from!2003!to!2013!(the!most!recent!year!for!
which!data!is!publicly!available).!In!general,!the!higher!the!income!level,!the!greater!the!
increase!in!charitable!deductions.!Altogether,!charitable!deductions!for!households!making!
$100,000!or!more!increased!by!40!percent!over!those!ten!years.19!!
Figure 2: Ten-Year Change in Charitable Deductions by Income Level (2003-2013)

35%

32%

$2,000,000 under $5,000,000$5,000,000 under $10,000,000

35%$1,000,000 under $1,500,000

26%

30%
$500,000 under $1,000,000

44%$10,000,000 or more

$1,500,000 under $2,000,000$200,000 under $500,000$100,000 under $200,000-17%$75,000 under $100,000-34%$60,000 under $75,000-36%$45,000 under $50,000

-42%

-37%
$40,000 under $45,000$55,000 under $60,000-41%$35,000 under $40,000

-44%

-46%
$30,000 under $35,000$50,000 under $55,000

-42%

-47%
$15,000 under $20,000$25,000 under $30,000-44%$10,000 under $15,000

-57%

-47%
$5,000 under $10,000$20,000 under $25,000-42%Under $5,000

20%

104%

All revenue is adjusted for inflation (2013 = 100%)

Source: Internal Revenue Service, Statistics of Income Division, Table 2.1 from 2003 to 2013, https://www.irs.gov/uac/soi-tax-stats-historic-table-2.

!
Over!the!same!ten!years,!however,!inflation;adjusted!itemized!charitable!deductions!
declined!for!households!at!every!income!level!below!$100,000.!It!is!worth!noting!that!the!
higher!a!household’s!income!level,!the!more!likely!they!are!to!itemize!deductions!on!their!
tax!return.!While!four;fifths!of!taxpayers!making!more!than!$100,000!itemize!deductions,!
only!one;fifth!of!taxpayers!making!less!than!$100,000!itemize!their!deductions.20*!Altogether,!
however,!for!those!who!did!itemize,!charitable!deductions!for!households!making!less!than!
$100,000!declined!by!34!percent!from!2003!to!2013.21*!

10

Findings
As!income!and!wealth!in!the!United!States!have!become!increasingly!concentrated!into!the!
wealthiest!households,!there!has!been!a!corresponding!expansion!in!philanthropic!activity!
by!wealthy!individuals!and!in!the!giving!vehicles!available!to!them.!As!noted,!itemized!
charitable!deductions!from!the!wealthiest!households!have!risen!dramatically!over!the!past!
ten!years—and!the!wealthier!the!household,!the!greater!the!rate!of!increase!has!been.!!

Top-Heavy Mega-Giving
Charitable!contributions!from!donors!at!the!top!of!the!income!and!wealth!ladder!have!
increased!significantly!over!the!past!decade.!!
!
According!to!the!Internal!Revenue!Service,!inflation;adjusted!itemized!charitable!
contributions!from!households!making!$200,000!or!more—roughly!the!top!ten!percent!of!
income!earners!in!the!United!States—increased!by!52!percent!over!the!ten!years!from!2003!to!
2013!(the!most!recent!year!for!which!data!is!publicly!available).!
!
Itemized!contributions!from!households!making!$500,000!or!more!(roughly!the!top!one!
percent!of!income!earners)!increased!slightly!more—57!percent—over!the!same!time!period.!
And!itemized!contributions!from!households!making!$10!million!or!more!(less!than!the!top!
one;tenth!of!one!percent!of!income!earners)!increased!by!104!percent—double!the!rate!of!
increase!of!the!top!ten!percent.22!
!
The!number!of!private!grant$making!foundations!and!donor$advised!funds!has!shown!
similarly!dramatic!growth.!
!
In!recent!years,!the!wealthy!have!been!creating!foundations!at!a!rapid!pace!and!giving!
increasingly!large!donations!to!them.!This,!in!turn,!drives!increased!grant;making!capacity.!
!
● According!to!the!Foundation!Center,!the!number!of!private!foundations!chartered!in!the!
United!States!grew!from!67,736!in!2004!to!almost!86,726!in!2014—an!increase!of!28!
percent!over!ten!years.!The!amount!of!assets!held!in!those!private!foundations!increased!
35!percent!over!that!same!period!(adjusted!for!inflation).23!The!number!of!foundations!
has!almost!doubled!since!1993,!when!there!were!43,956.24!
!!!

!

● According!to!Giving%USA%2016,!in!2015!the!greatest!one;year!increase!in!philanthropic!
giving!from!any!source!of!funding!came!from!foundations.!(Giving%USA%2016!includes!
11

donor;advised!funds!in!its!foundation!giving!reporting.)!Independent,!community,!and!
operating!foundations!gave!a!total!of!$58.46!billion!to!charity!in!2015,!an!inflation;
adjusted!increase!of!6.3!percent!over!2014.!In!contrast,!individual!giving!and!corporate!
giving!increased!3.7!percent!and!3.8!percent,!respectively,!over!the!same!time!period!
(when!adjusted!for!inflation).25!!
!
● When!viewed!over!a!longer!time!period,!the!rise!of!foundation!giving!has!been!meteoric.!
Again,!according!to!Giving%USA%2016,!giving!by!foundations!in!the!United!States!grew!by!
49!percent!from!2005!to!2015!(from!$39.33!billion!to!$58.46!billion!in!inflation;adjusted!
dollars).!And!it!more!than!quintupled!from!1985!to!2015,!growing!by!more!than!441!
percent!(from!$10.80!billion!to!$58.46!billion).!In!comparison,!giving!by!individuals!grew!
only!109!percent!from!1985!to!2015!(from!$126.47!billion!to!$264.58!billion).26!The!end!
result!is!that!while!foundations!made!up!only!7%!of!all!giving!in!1985,!they!make!up!16%!
of!all!giving!today.!
Figure 3: Total U.S. Charitable Contributions
by Source (By percentage of the total)

Giving to
Individuals
2%

Environment/
Animals3%

Bequests
5%

Unallocated1%

Religion
32%

International
Affairs
4%

Corporations
9%Foundations
16%

Figure 4: Total U.S. Charitable Contributions
by Recipient Category (By percentage of the total)

Arts, Culture,and Humanities
5%

Individuals
71%

PublicSociety
Benefit7%

Gifts toFoundations
11%

Source: Giving USA: The Annual Report on Philanthropy for theYear 2015 (2016).Chicago: Giving USA Foundation™

Education
15%

Health8%
HumanServices
12%

Source: Giving USA: The Annual Report on Philanthropy for theYear 2015 (2016). Chicago: Giving USA Foundation™

!!
Depending!on!the!year,!one$half!to!two$thirds!of!all!charitable!contributions!from!
individuals!come!from!households!in!the!top!ten!percent.!
!!
The!Indiana!University!Lilly!Family!School!of!Philanthropy!estimates!that!typically!“about!
50!percent!of!total!annual!giving!by!individuals/households!comes!from!households!with!an!
annual!income!greater!than!$200,000!or!assets!greater!than!$1.0!million.!In!some!years,!this!
figure!could!be!as!much!as!two;thirds.”27!
12!
In!2013,!for!example,!Giving%USA%2016%reported!that!“46.7!percent!of!total!itemized!giving!by!
individuals/households!was!made!by!households!earning!greater!than!$200,000!that!year.”28!
!!
Extremely!large!“mega$gifts”!now!make!up!a!significant!portion!of!individual!giving.!
!!
Because!of!the!immense!size!of!the!gifts!and!the!small!number!of!donors!involved,!mega;gift!
giving!is!highly!variable!and!can!fluctuate!a!great!deal!from!year!to!year.!But,!overall,!mega;
gift!donations!have!made!an!increasing!impact!over!the!past!decade.!
!
Total!revenue!from!individual!charitable!donations!of!$1!million!or!more!has!increased!
significantly!in!recent!years.!According!to!the!2015!Coutts%Million%Dollar%Donors%Report,!over!
the!five!years!from!2009!to!2014,!the!number!of!publicly!announced!gifts!of!$1!million!or!
more!declined!by!31!percent,!but!the!total!value!of!those!gifts!rose!by!20!percent.!In!2009,!
U.S.!donors!gave!1,563!gifts!of!$1!million!or!more,!worth!a!total!of!$12.83!billion;!five!years!
later,!in!2014,!they!gave!1,064!gifts!of!$1!million!or!more,!worth!a!total!of!$14.11!billion.29!
!
Over!the!five!years!from!2009!to!2014,!the!average!million;dollar;plus!gift!rose!from!$8.13!
million!to!$14.06!million.30!The!Giving!USA!Foundation!reports!that!“very!large!charitable!
donations—categorized!here!as!gifts!of!$100!million!or!more—have!garnered!an!increasing!
amount!of!attention!over!the!past!10!to!15!years.!In!2015,!the!very!large!contributions!that!
were!publicly!announced!totaled!at!least!$3.3!billion.”!This!means!that!in!2015,!mega;gifts!of!
$100!million!or!more!accounted!for!roughly!one!percent!of!all!individual!giving!in!the!
United!States!that!year.31!!
!
This!comes!on!top!of!similar!mega;gift!giving!in!2014.!That!year!included!several!gifts!of!
more!than!$500!million,!including!one!that!was!almost!$2!billion.32!!
!
A!disproportionate!amount!of!the!growth!in!2015!individual!giving!went!to!sectors!
favored!by!the!wealthy.!
!!
Nonprofit!giving!as!a!whole!grew!substantially!from!2014!to!2015,!but!two!of!the!three!
sectors!that!grew!the!most—education!and!the!arts—are!those!that!are!disproportionately!
supported!by!donors!of!high!net!worth.!As!the!Giving!Institute’s!director!of!research,!Una!
Osili,!said,!the!education!and!arts!sectors!“traditionally!include!organizations!and!
institutions!that!wealthy!donors!are!most!likely!to!support.!In!addition,!the!increase!in!
education!giving!was!fueled!by!a!number!of!very!large!gifts!to!colleges!and!universities.”33!!
13!!
● The!education!sector,!which!accounted!for!$57.48!billion!in!2015!(or!about!22!percent!of!
all!individual!giving),!had!an!8.8!percent!inflation;adjusted!increase!in!giving!from!2014.!
A!significant!portion!of!this!increase!came!from!donors!at!the!top!of!the!income!and!
wealth!scales.!According!to!the!Chronicle%of%Philanthropy,!“of!the!$7.0!billion!from!
America’s!top!50!donors,!colleges!and!foundations!received!the!lion’s!share!of!funding,!
at!nearly!60!percent!of!the!total.”34!!
!!
● The!arts,!culture,!and!humanities!sector,!which!accounted!for!$17.07!billion!in!2015!(or!
about!6!percent!of!all!individual!giving),!had!a!6.8!percent!inflation;adjusted!increase!in!
giving!from!2014.!This!sector!was!arguably!one!that!benefited!the!most!from!gifts!of!
appreciated!noncash!assets!from!wealthy!donors,!as!we!will!see!in!the!discussion!of!
appreciated!stock!and!artwork!below.!
!!
● The!only!other!sector!to!see!a!higher!increase!in!giving,!from!all!groups!of!donors,!was!
the!international!relief!sector,!which!accounted!for!$15.75!billion!in!2015!and!had!a!17.4!
percent!inflation;adjusted!increase!in!giving!from!2014.!This!sector!is!one!that!still!
receives!a!great!deal!of!giving!from!lower!and!middle!income!donors.!But!it!is!also!
traditionally!quite!volatile!and!can!be!greatly!affected!by!fundraising!around!high;profile!disaster!events,!which!was!certainly!the!case!in!2015.!Several!natural!and!
manmade!disasters!occurred!in!2015,!including!the!ongoing!Syrian!refugee!crisis!and!a!
well;publicized!earthquake!in!Nepal,!which!likely!contributed!to!this!sector’s!strong!
performance.!
!!
No!other!sector!had!as!high!an!increase!in!giving!in!2015!as!any!of!these!three!sectors.!And!
the!charitable!sectors!that!are!traditionally!supported!disproportionately!by!lower!dollar!
donors!sat!toward!the!bottom!end!of!the!growth!scale:!human!services!charities!had!4.1!
percent!inflation;adjusted!growth,!religious!organizations!had!2.6!percent!inflation;adjusted!
growth,!and!health;related!charities!saw!only!a!1.2!percent!inflation;adjusted!increase!in!
giving!from!2014!to!2015.!
!
Donations!by!America’s!50!wealthiest!donors,!including!both!living!donors!and!estates,!
totaled!$6.9!billion!in!2015.!Slightly!less!than!one;third!of!these!gifts!($2!billion)!funded!
foundations,!according!to!The!Chronicle!of!Philanthropy’s!2016!Philanthropy%50!list.35!Eight!
gifts!of!$100!million!or!more!were!made!to!educational!institutions!in!2015;!Northwestern!
University!alone!received!three!gifts!of!$100!million.36!Stefan!Edlis!and!Gael!Neeson!donated!
their!private!art!collection,!valued!at!over!$400!million,!to!the!Art!Institute!of!Chicago.37!
14Other!major!gifts!went!to!endow!family!foundations:!Melinda!and!Bill!Gates!gave!$272!
million!to!the!endowment!of!the!Bill!&!Melinda!Gates!Foundation,!and!Alice,!Jim,!and!
Robson!Walton!gave!$243!million!to!the!Walton!Family!Foundation.38!
According!to!the!Bridgespan!Group,!between!2000!and!2012,!the!sum!total!of!gifts!over!$10!
million!averaged!about!$8!billion!per!year!(excluding!those!from!the!Bill!and!Melinda!Gates!
Foundation).39!Of!these!mega;gifts,!just!20!percent!went!to!social!change!giving:!nonprofits!
and!initiatives!focused!on!human!services,!the!environment,!and!international!development.!
The!other!80!percent!went!to!institutional!giving—including!many!already!richly!funded!
universities!and!hospitals—despite!the!fact!that!nearly!80!percent!of!Forbes’s 50!Top!Givers!
cite!social!change!as!one!of!their!top!two!or!three!priorities.40!
!!
A!notable!portion!of!gifts!in!2015!were!of!asset!types!primarily!available!to!the!very!
wealthy,!such!as!appreciated!stock!and!artwork.!
!!
Wealthy!donors!are!disproportionately!able!to!give!gifts!of!high;value!assets,!such!as!stock,!
artwork,!and!manuscripts.!Giving%USA%2016!reported!that!many!“valuable!gifts!of!artwork,!
books!and!manuscripts,!along!with!other!types!of!‘appreciated!assets,’!were!donated!to!
charitable!organizations!in!2015,”!at!a!time!when!“art!markets!both!domestic!and!global!
were!“at!or!near!peak!highs.”41!
!!
“As!has!been!the!trend!in!recent!years,”!Giving%USA%2016%reported,!“the!giving!of!very!large!
‘mega;gifts’!by!individuals!was!prominent!in!2015.!In;kind!gifts!of!artwork!to!support!
institutions!of!higher!education!were!particularly!prominent.”42!As!we!will!discuss!later,!
donations!of!appreciated!property!and!art!are!particularly!problematic,!as!they!are!types!of!
donations!that!can!be!subject!to!abuse!through!the!appraisal!process.!
!!

!

Charitable!giving!by!donors!who!itemize!charitable!donations!is!growing!at!rates!
significantly!higher!than!giving!by!those!who!do!not!itemize.!
!!
Giving%USA%2016!estimated!that!giving!by!nonitemizing!individual!donors!grew!by!2.5!
percent!from!2014!to!2015,!while!giving!by!itemizing!individual!donors!grew!by!4.1!
percent.43!
!
In!general,!donors!in!higher!tax!brackets!are!more!likely!to!itemize!charitable!deductions!on!
their!tax!returns,!because!they!stand!to!benefit!more!from!those!deductions.!And!it!stands!to!
reason!that!high;income!and!high;net;worth!individuals!would!tend!to!increase!their!giving!
15

to!charity!as!their!assets!increase!in!value—particularly!when!tax!policy!makes!it!fiscally!
prudent!for!them!to!do!so.!Research!by!the!Giving!Institute!has!found!that!the!deductibility!
of!charitable!gifts!is!one!of!the!greatest!driving!factors!in!the!amount!given!to!charity!each!
year.44!
!
Giving!to!donor$advised!funds!has!grown!significantly!in!recent!years.!
!
Donor;advised!funds,!which!require!somewhat!less!of!a!financial!investment!to!establish!
than!private!foundations,!have!seen!a!particularly!meteoric!rise!in!the!past!few!years.!
Among!the!nation’s!400!biggest!charities,!giving!to!donor;advised!funds!increased!steadily!
from!two!percent!of!total!giving!in!1991!to!18!percent!in!2015.45!!
!
● From!just!2010!to!2014,!the!amount!of!assets!held!in!donor;advised!funds!more!than!
doubled,!from!$33.6!billion!to!$70.7!billion.46!The!second!largest!recipient!of!donations!
in!2015,!after!the!United!Way,!was!Fidelity!Charitable,!one!of!the!nation’s!largest!
donor;advised!fund!managers.!Five!of!the!top!11!charities!in!2015!were!donor;
advised!funds.47!
!
● A!study!by!the!Internal!Revenue!Service!found!that!the!number!of!sponsoring!
organizations!offering!donor;advised!funds!(such!as!Fidelity!Charitable!or!the!Tides!
Foundation)!grew!from!1,779!in!2006!to!2,121!in!2012,!an!increase!of!19!percent!over!
six!years.!The!total!value!of!all!donor;advised!funds!increased!from!$32.6!billion!to!
$52.9!billion!over!the!same!six!years—an!increase!of!62!percent!(all!revenue!numbers!
adjusted!for!inflation).48!
!
● A!recent!survey!by!the!Foundation!Center!found!that!the!274!community!foundations!
participating!in!the!survey!had!a!total!of!ten!percent!growth!in!donor;advised!fund!
assets!from!2013!to!2014.!The!revenue!in!their!donor;advised!funds!increased!from!
$20.3!billion!to!$22.2!billion!over!that!one!year.49!
!
● The!assets!of!commercial!donor;advised!funds,!such!as!those!managed!by!Fidelity!
Charitable,!Schwab!Charitable,!and!Vanguard!Charitable,!are!growing!at!even!faster!
rates!than!those!managed!by!community!foundations.!In!2014,!for!the!first!time,!the!
value!of!assets!held!within!commercial!donor;advised!funds!exceeded!the!value!of!
assets!held!within!community!foundation!donor;advised!funds.50!

16Bottom-Light Small Donations
As!top;heavy!philanthropy!has!exploded!over!the!past!decade,!charitable!giving!from!
donors!at!lower!and!middle!income!levels!has!declined!precipitously.!And!the!number!of!
donors!at!more!typical!donation!dollar!levels—the!donors!that!make!up!the!vast!majority!of!
donor!files!for!most!national!nonprofits—appears!to!have!been!declining!steadily!for!years.!
!
Over!the!past!ten!years,!charitable!deductions!from!lower$income!donors!have!declined!
significantly.!
!
We!saw!earlier!that!itemized!charitable!contributions!from!donors!in!the!top!ten!percent!of!
income;earning!households!in!the!U.S.!have!increased!dramatically!over!the!past!ten!years.!
At!the!same!time,!charitable!contributions!have!been!declining!for!the!bottom!90!percent.!
!
According!to!data!from!the!Internal!Revenue!Service,!inflation;adjusted!itemized!charitable!
deductions!increased!for!households!at!every!income!level!over!$100,000!from!2003!to!2013!
(the!most!recent!year!for!which!data!is!publicly!available).!Altogether,!charitable!deductions!
for!households!making!$100,000!or!more!increased!by!40!percent!over!those!ten!years.51!In!
general,!the!higher!the!income!level,!the!greater!the!increase!in!charitable!deductions.!
!
Over!the!same!ten!years,!inflation;adjusted!itemized!charitable!deductions!declined!for!
households!at!every!income!level!below!$100,000.!It!is!true!that!the!higher!a!household’s!
income!level,!the!more!likely!they!are!to!itemize!deductions!on!their!tax!return;!four;fifths!of!
taxpayers!making!more!than!$100,000!itemize,!while!only!one;fifth!of!taxpayers!making!less!
than!$100,000!itemize.52!For!those!who!do!itemize,!however,!charitable!deductions!from!
donors!making!less!than!$100,000!declined!by!34!percent!from!2003!to!2013.53!
!
The!number!of!donors!giving!at!typical!donation!dollar!levels!has!been!declining!steadily!
for!at!least!a!decade.!!
!
The!donorCentrics!Index!of!Direct!Marketing!Fundraising,!a!quarterly!index!produced!by!
Target!Analytics,!reports!on!giving!trends!for!small!and!midrange!donors!giving!gifts!of!less!
than!$10,000!in!response!to!direct!marketing.!These!are!the!people!who!have!traditionally!
made!up!the!vast!majority!of!donor!files!for!most!national!nonprofits!since!their!inception.!
According!to!Target!Analytics’!report!for!the!full!year!of!2015,!which!included!data!from!79!
national;scale!nonprofits!with!large!direct;response!fundraising!programs,!the!number!of!
donors!to!these!organizations!has!been!declining!for!more!than!a!decade.!!
17

!
In!fact,!donor!populations!declined!in!12!of!the!14!years!since!the!index!was!created!in!2002.!
“The!only!index;wide!annual!increase!during!that!time!came!in!2005,”!Target!Analytics!
reported,!“a!year!which!included!unusually!large!disaster;related!fundraising!following!the!
Indian!Ocean!tsunami!in!January!and!U.S.!Gulf!Coast!hurricanes!Katrina,!Wilma,!and!Rita!
in!the!fall.”54!
Figure 5: Median Change in Donors from Previous Year (2002-2015)
Target Analytics donorCentrics Index
1.6%

-0.5%
-1.0%

-1.1%

2011

2010

2015

-2.7%

-2.8%

2009

2008

2007

2006

2005

2004

-2.0%

-2.1%

-3.0%

2003

2002

-2.0%

2014

-2.3%

2013

-1.9%
-2.7%

2012

-0.7%

Source: Median Donor Change from Previous Year, Target Analytics donorCentrics Index of Direct Marketing Performance,
2015 Fourth Calendar Quarter Results, April 2016.

!
Target!Analytics!has!also!been!able!to!evaluate!the!cumulative!effect!of!these!declines,!
quarter!by!quarter,!over!the!long!term,!using!a!rolling!twelve;month!analysis!to!control!for!
seasonal!differences.!Their!index’s!donors!declined!a!median!25.1!percent!over!the!most!
recent!ten!years!from!2005!to!2015,!an!effective!decline!of!2.8!percent!annually.!
Figure 6: Target Analytics donorCentrics Index Donor and Revenue Trends (2005-2015)
Cumulative rolling 12-month median change from Q4 2005
10%
5%
0%

-5%

Ten-Year
Change in
Revenue
-7.1%

-10%
-15%
-20%

Ten-Year
Change inDonors-25.1%-25%

Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015-30%

Source: Cumulative Rolling 12-Month Median Donor Change from Q4 2005, Target Analytics donorCentrics Index of Direct Marketing Performance,
2015 Fourth Calendar Quarter Results, April 2016.

18!

Organizations!participating!in!the!index!have!not!lost!revenue!at!nearly!the!same!rate!as!
they!have!lost!donors,!primarily!because!they!have!been!able!to!get!more!and!more!revenue!
per!person!out!of!the!donors!that!remain.!However,!as!Target!Analytics!reports,!“this!
relative!revenue!stability!may!be!masking!the!significance!of!the!underlying!trend:!
nonprofits!are!receiving!roughly!the!same!amount!of!money!from!fewer!and!fewer!donors!
each!year.!This!is!a!strategy!that!may!allow!organizations!to!meet!their!revenue!goals!in!the!
short!term,!but!may!not!be!sustainable!over!the!long!term.”55!

Possible Explanations for Donor Declines
Of!course,!the!donor!declines!that!Target!Analytics!is!seeing!in!their!index!have!several!
possible!noneconomic!causes,!which!they!explored!in!their!analysis.!Among!the!causes!they!
considered!were:!
!
● Demographic!change.!In!general,!most!people!do!not!become!regular!donors!to!
charity!until!they!reach!middle!age.!With!the!Baby!Boomers!now!all!past!50,!and!
with!a!smaller!population!of!baby;bust;era!Generation!Xers!entering!their!50s!
now,!the!pool!of!potential!donors!may!not!be!as!large!as!it!was!even!ten!years!ago.!
!
● Generational!differences!in!giving!culture.!There!is!an!argument!to!be!made!that!
the!older!generations!that!are!now!dying!off—particularly!the!G.I.!Generation—
were!more!supportive!of!nonprofit!institutions!as!a!group,!and!more!reliable!
donors!in!general.!The!donors!that!are!replacing!them—Baby!Boomers!and!
Generation!Xers—may!well!be!culturally!less!committed!and!less!consistent!in!
their!giving.!They!also!appear!to!be!interested!in!different!giving!vehicles,!such!as!
for;profit!entities!and!impact!investing,!outside!of!the!traditional!charitable!sector!
that!give!them!more!return!on!investment.!
!!
● Deliberate!shifts!in!organizational!strategy.!Target!Analytics!conducts!dozens!of!
collaborative!benchmarking!meetings!with!hundreds!of!nonprofit!professionals!
each!year.!They!report!in!their!index!analysis!that!not!only!have!many!national!
nonprofits!deliberately!reduced!their!direct!marketing!acquisition!programs!over!
the!past!several!years,!but!fundraisers!are!also!consciously!focusing!more!on!
cultivating!higher!dollar!donors,!thus!“maximizing!net!revenue!by!bringing!in!
more!revenue!from!fewer!donors.”56!
!!
19

The!intensity!of!the!donor!declines,!however,!combined!with!gradually!increasing!lifespans!
in!the!United!States,!makes!it!doubtful!that!population!change!alone!is!enough!to!explain!
the!decline!of!donor!populations!over!the!past!decade.!It!is!also!difficult!to!separate!cultural!
differences!from!the!economic!differences!that!affect!different!generations.!Shifts!in!
organizational!strategy!are!similarly!difficult!to!quantify!and!are!not!universally!applied!
from!year!to!year,!even!within!a!single!organization.!And!it!is!also!difficult!to!separate!
strategic!changes!from!the!increases!in!revenue!per!donor!that!would!naturally!result!from!
normal!inflationary!pressure.!
!!
The!rate!of!decline!in!the!number!of!low$dollar!donors!has!an!extremely!strong!
correlation!with!indicators!of!economic!inequality!and!insecurity!in!the!United!States.!
!!
In!contrast!to!the!relatively!unquantifiable!demographic,!cultural,!and!strategic!factors!
above,!Target!Analytics!did!find!a!strong,!measurable!correlation!between!index!donor!
declines!and!declines!in!employment.!When!Target!Analytics!plotted!their!donor!trends!
against!the!U.S.!labor!force!participation!rate,!they!found!that!the!two!matched!very!closely,!
with!a!+0.97!degree!of!correlation.!This!is!a!strong!indication!that!the!decline!in!low;dollar!
donors!is!closely!related!to!economic!factors.!
!
Figure 7: donorCentrics Index Donor Trends vs. Labor Force Participation Rate (2005-2015)
Donor change is the cumulative rolling 12-month median change from Q4 2005
0%

67%

65%

Index Donors-10%
Labor Force
Participation Rate
62.6%

-15%

-20%
Index Donors-25.1%-25%
Correlation (r) = +0.97

63%
62%
61%
60%

Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015-30%

64%

Labor Force Participation Rate

66%

-5%

Source for Donors: Cumulative Rolling 12-Month Median Donor Change from Q4 2005, Target Analytics donorCentrics Index of Direct Marketing
Performance, 2015 Fourth Calendar Quarter Results, April 2016.
Source for Labor Force Participation Rate: Seasonally adjusted quarter end Labor Force Participation Rate, U.S. Department of Labor Bureau ofLabor Statistics, http://data.bls.gov/timeseries/LNS11300000.

!

20

As!Target!Analytics!concluded,!“While!we!do!not!have!enough!data!to!say!that!this!is!
causative,!these!trends!make!intuitive!sense;!when!people!are!not!employed,!they!are!likely!
to!have!less!disposable!income,!and!will!not!be!as!disposed!to!give!to!charity.”57!
!!
In!our!own!analysis,!we!found!that!Target!Analytics’!donor!declines!also!correspond!
extremely!closely!to!other!indicators!of!economic!security—such!as!rate!of!home!ownership,!
which!has!a!close;to;perfect!0.99!degree!of!correlation!from!2005!to!2015.!This!is!further!
evidence!that!current!economic!conditions!are!undermining!lower!and!middle!income!
donors’!sense!of!financial!security—and!thereby!their!capacity!and!willingness!to!donate!to!
charity.!
!
Figure 8: donorCentrics Index Donor Trends vs. U.S. Home Ownership Rate (2005-2015)
Donor change is the cumulative rolling 12-month median change from Q4 2005
0%

70%
69%

-5%

67%

Index Donors

-10%

66%
U.S.Home
Ownership Rate
63.7%

-15%

-20%
Index Donors-25.1%-25%
Correlation (r) = +0.99

64%
63%
62%
61%
60%

Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015-30%

65%Home Ownership Rate

68%

Source for Donors: Cumulative Rolling 12-Month Median Donor Change from Q4 2005, Target Analytics donorCentrics Index of Direct Marketing
Performance, 2015 Fourth Calendar Quarter Results, April 2016.
Source for Home Ownership Rate: Seasonally adjusted quarter end Home Ownership Rate, U.S. Census Bureau,
http://www.census.gov/housing/hvs/files/currenthvspress.pdf.

!!

21

Implications
This!shift!in!nonprofit!fundraising!from!traditional,!broad;based!popular!support!to!
narrowly!focused!giving!by!a!wealthy!few!mirrors!the!escalating!wealth!and!income!
inequality!in!our!society!as!a!whole.!An!increasing!reliance!on!a!small!group!of!very!wealthy!
donors!has!significant!implications!for!the!practice!of!fundraising,!the!role!of!the!
independent!nonprofit!sector,!and!the!health!of!our!larger!civil!society.!
!!
Many!current!fundraising!professionals!came!of!age!with!an!“80/20!rule”!assumption:!the!
notion!that!80!percent!of!an!organization’s!revenue!comes!from!roughly!20!percent!of!its!
donors.!But!what!will!the!consequences!be!if!we!are!drifting!toward!a!98/2!rule,!where!98!
percent!of!an!organization’s!revenue!comes!from!only!two!percent!of!its!donors?!And!what!
if!the!giving!priorities!of!that!two!percent!are!different!from!the!interests!of!the!other!98!
percent—or!the!mission!of!the!organization!itself?!Would!this!create!potential!vulnerability!
and!volatility?!What!implications!would!this!have!for!nonprofits—and!for!society!at!large?!

Risks for Fundraising and the Independent Sector
The!potential!risks!for!the!philanthropic!sector!itself!include!hazards!such!as!a!more!volatile!
and!unpredictable!revenue!stream;!a!bias!toward!larger!organizations,!foundations,!and!
organizations!better!structured!to!absorb!the!greater!gifts!from!the!wealthy;!and!a!shift!in!
funding!from!general!operating!support!to!restricted!project!support.!
!!
Increased!volatility!and!unpredictability!
!
An!increased!reliance!on!very!large!gifts!from!smaller!numbers!of!donors!means!that!
organizations!may!see!widely!fluctuating!revenue!streams!from!year!to!year.!A!major!donor!
may!give!an!atypically!large!gift!in!one!year—for!example,!to!contribute!to!a!capital!
campaign,!to!set!up!an!endowment!fund,!or!to!release!exceptionally!appreciated!stock—and!
then!not!make!a!similar;sized!gift!for!years!to!come.!
!!
Periodic!lump;sum!gifts!such!as!these!are!much!harder!to!predict!than!a!broad;based!stream!
of!regular!gifts!from!a!large!pool!of!donors!and!are!much!more!subject!to!the!year;to;year!
whims!of!a!small!number!of!people.!Instead!of!“walking!on!many!legs,”!with!diverse!
support!from!small!donors,!major!donors,!foundations,!corporate!donations,!and!program!
revenue,!organizations!will!be!dependent!on!a!smaller!and!potentially!more!volatile!number!
of!wealthy!donors!and!family!foundations.!
!!
22

While!major!gifts!are!a!desired!and!valuable!part!of!any!nonprofit’s!portfolio!of!giving,!a!
disproportionately!increased!reliance!on!them!may!nevertheless!make!it!more!difficult!for!
organizations!to!budget!and!to!forecast!their!overall!income!streams!into!the!future.!
!!
Increased!shift!toward!major!donor!cultivation!
!
As!we!saw!above,!Target!Analytics!has!reported!anecdotally!that!many!of!its!national!
nonprofit!clients!are!actively!shifting!away!from!large;scale!direct;response!fundraising!and!
toward!more!targeted!solicitation!of!midlevel!and!high;dollar!donors.58!As!fundraisers!find!
they!have!fewer!resources!to!spend!on!the!acquisition!and!renewal!of!donors!at!the!lower!
end!of!the!economic!scale,!they!may!need!to!refocus!their!expertise!toward!major!donor!
prospecting!and!cultivation.!They!may!also!find!that!they!are!in!increasing!competition!with!
peer!organizations!for!donations!from!a!relatively!finite!pool!of!potential!major!donors.!
!!!!!!!!! !
Increased!bias!toward!larger!or!heavily!major$donor$directed!boutique!organizations!
!
Large;scale!giving!favors!bigger!charities!and!foundations!that!already!have!the!capacity!to!
manage!gifts!of!enormous!size,!as!well!as!the!infrastructure!to!accommodate!gifts!of!
appreciated!stock!and!high;value!noncash!assets.!While!larger!national!nonprofits!can!do!
excellent!work,!this!may!nevertheless!put!smaller,!more!independent,!and!potentially!more!
innovative!and!mobile!organizations!at!a!revenue!disadvantage.!
!!
In!fact,!this!shift!may!already!be!occurring.!According!to!a!recent!survey!by!the!Fundraising!
Effectiveness!Project,!large!nonprofits!experienced!significant!revenue!growth!from!2014!to!
2015,!while!midrange!nonprofits!remained!flat,!and!small!nonprofits!lost!revenue,!over!the!
same!time!period.!The!survey!reported!that!organizations!raising!$500,000!or!more!grew!by!
a!median!10.7!percent;!organizations!raising!between!$100,000!and!$500,000!grew!by!an!
essentially!flat!median!0.6!percent;!and!organizations!raising!less!than!$100,000!had!a!
median!loss!of!11.8!percent.59!
!
Reduced!foundation!payout!
!
U.S.!law!mandates!that!foundations!distribute!a!minimum!of!five!percent!of!their!assets!on!
an!annual!basis.!According!to!research!by!the!Foundation!Center,!larger!foundations!tend!to!
pay!out!significantly!less!each!year—much!closer!to!the!five!percent!minimum—than!do!
smaller!foundations.!As!more!mega;donations!go!disproportionately!into!large!foundations,!
23

rather!than!into!small!foundations!or!to!traditional!nonprofits,!the!relative!payout!going!
directly!to!charities!is!likely!to!shrink.!
!!
According!to!the!Foundation!Center!study,!from!2007!to!2009,!the!median!annual!
distribution!rate!among!a!large!sample!of!foundations!was!5.8!percent.!Distributions!varied!
dramatically,!however,!depending!on!the!size!of!the!foundation.!For!example,!mid;size!
foundations,!with!assets!from!$10!million!to!$50!million,!distributed!11.0!percent!of!their!
assets,!while!the!largest!foundations,!with!assets!over!$500!million,!distributed!only!5.4!
percent!of!their!assets!each!year.!And!the!minimum!amount!distributed!during!that!time!by!
the!mid;size!foundations!was!4.8!percent,!while!the!minimum!distributed!by!the!largest!
foundations!was!just!1.7!percent.60!!
!
Donor;advised!funds!do!not!have!a!payout!requirement,!since!the!donation!to!the!fund!is!
itself!considered!a!charitable!gift.!But,!as!pools!of!capital,!their!distribution!percentages!are!
no!more!impressive.!A!study!by!Paul!Arnsberger,!a!statistician!at!the!Internal!Revenue!
Service,!found!that!the!median!payout!rate!of!donor;advised!funds!for!tax!year!2012!was!
just!7.2!percent,!smaller!than!that!of!mid;range!foundations.!In!addition,!he!found!that!
“nearly!22!percent!of!the!sponsoring!organizations!reported!no!grants!made!from!their!DAF!
accounts.”!In!other!words,!their!payout!was!zero.61!
!!
Shift!from!general!support!to!project!support!
!
Large!foundations!are!more!likely!than!small!foundations!to!give!to!specific!purposes!than!
for!general!operating!support.!So!as!donations!shift!increasingly!toward!larger!foundations,!
and!as!foundations!themselves!grow!larger,!the!proportion!of!donations!going!toward!the!
support!of!specific!restricted!projects,!as!opposed!to!general!operating!support,!is!likely!to!
shift!as!well.!
!
According!to!Foundation!Source,!in!2014,!private!foundations!with!assets!greater!than!$10!
million!provided!more!than!twice!the!amount!of!funding!for!special!purpose!grants!($66.3!
million)!than!they!gave!for!general!operations!($28.7!million).!In!contrast,!private!
foundations!with!assets!less!than!$1!million!gave!almost!half!of!their!grant!dollars!to!
support!general!operations.62!
!!
Evidence!indicates!that!a!shift!toward!even!more!restricted!funding!may!be!occurring.!
According!to!the!same!Foundation!Source!analysis,!foundation!support!for!general!
purposes—funds!that!are!used!to!sustain!a!nonprofit’s!day;to;day!operations—declined!
24

between!2013!and!2014,!from!42!percent!to!37!percent.!Foundation!support!for!specifically!
designated!purposes!increased!from!58!percent!to!63!percent!in!the!same!period.63!!

Risks for Civil Society
Among!the!potential!risks!for!civil!society!as!a!whole!are!the!distortion!of!organizational!
missions!and!a!shift!toward!using!charity!not!as!a!vehicle!for!the!benefit!of!society!as!a!
whole,!but!as!a!means!to!protect!and!preserve!individual!wealth.!!
!
These!risks!likely!apply!to!a!relatively!small!segment!of!givers!and!do!not!reflect!the!
motivations!of!most!mega;donors!and!foundations.!However,!when!abused,!philanthropy!
can!become!a!tool!for!the!self;interested!defense!of!private!privilege—and!can!be!used!to!
exacerbate!poverty!and!inequality!rather!than!alleviating!it.!And!such!abuses!are!likely!to!
grow!in!an!increasingly!top;heavy!philanthropic!environment.!
!
Mission!distortion!
!
There!is!a!distinct!risk!that!an!increased!reliance!on!funding!from!a!small!group!of!people,!
foundations,!and!corporations!could!divert!organizations!away!from!their!original!missions.!
Whether!it!means!acquiring!a!particular!piece!of!art!for!a!museum,!conserving!a!particular!
piece!of!land,!or!funding!a!particular!pet!research!project,!it!is!easy!to!imagine!nonprofits!
tweaking!or!adjusting!the!work!they!do,!either!consciously!or!unconsciously,!to!meet!the!
wishes!of!a!very!large!benefactor!to!secure!essential!funding.!
!!
On!a!large!scale,!this!trend!could!shift!the!work!of!individual!charities,!or!even!that!of!the!
nonprofit!sector!as!a!whole,!away!from!popular!priorities!and!toward!a!more!elite!agenda.!
Most!activities!in!the!philanthropic!and!independent!sector!follow!strong!ethical!guidelines.!
But!as!“top;heavy!philanthropy”!grows,!the!lack!of!oversight!and!accountability!in!this!area!
may!contribute!to!distortions!of!philanthropic!intent.!
!!
Increasing!shift!toward!tax$avoidance!philanthropy!
!
While!the!increased!giving!to!private!foundations!in!recent!years!can!be!seen!as!an!
outpouring!of!generosity,!it!can!also!be!seen,!at!least!in!part,!as!a!protection!of!wealth!
through!the!use!of!strategic!tax;avoidance!measures.!Over!the!last!two!decades,!wealthy!
donors!have!been!steadily!expanding!their!use!of!many!kinds!of!tax;avoidance!vehicles,!
such!as!offshore!tax!havens!and!trusts.!!
25

!
Strategic!tax;deductible!giving!is!also!increasingly!appearing!in!the!form!of!donations!of!
appreciated!high;value!property!primarily!available!to!the!wealthy,!such!as!land!and!
artwork.!This!not!only!removes!a!sizeable!liability!from!a!donor’s!tax!burden,!but!gives!
them!a!deduction!for!it!as!well.!And!this!can!be!an!area!of!concern,!since!such!appreciated!
property!may!have!a!significantly—and!perhaps!artificially—inflated!value,!allowing!
donors!to!claim!a!large!deduction!for!something!that!may!have!cost!them!much!less,!or!for!
which!the!actual!sale!value!may!have!been!much!lower.64!
!
Increased!tax;avoidance!philanthropy!will!also!likely!mean!a!shift!away!from!nonprofit!
sectors!focused!on!ameliorating!both!immediate!and!long;term!needs!for!the!many—such!as!
social!service!and!social!change!organizations—and!toward!the!sectors!favored!by!the!
wealthy!few.!
!
Warehousing!of!wealth!in!the!face!of!urgent!needs!!
!
When!tax!avoidance!is!a!significant!driver!of!philanthropic!giving,!the!urgency!of!moving!
funds!directly!to!charities!on!the!ground!becomes!a!secondary!consideration.!By!giving!to!
private!foundations,!donors!receive!immediate!tax!deductions!for!the!full!amount!of!their!
donations,!but!the!recipients!are!not!required!to!distribute!any!more!than!five!percent!of!the!
principal!each!year!to!destination!organizations.!Similarly,!with!donations!to!donor;advised!
funds,!there!is!no!timetable!for!donating!those!assets!to!public!charity!once!they!have!been!
given!to!the!fund.!
!!!!!!!!! !
The!result!is!that!these!charitable!assets!can!be!warehoused,!sitting!for!years!or!decades!after!
the!charitable!deduction!has!been!taken,!before!any!significant!payout!is!made!from!them.!
CharityWatch!estimates!that!the!growth!of!donor;advised!funds!has!delayed!an!estimated!
$15!billion!in!donations!to!public!charities.65!!
!
Large!portions!of!the!five!percent!minimum!payout!also!can!be!eaten!up!by!management!
costs,!legal!fees,!and!other!foundation!overhead!expenses,!reducing!the!overall!payout!and!
potential!impact!still!further.!!
!!
!

!

26

Self$dealing!within!foundations!
!
While!most!foundations!adhere!to!voluntary!governance!guidelines!and!are!prudent!
stewards!of!resources,!there!are!unfortunate!abuses!of!the!philanthropic!system.!!
!
The!trustees!of!private!foundations!are!legally!able!to!use!foundation!principal!and!income!
to!reimburse!themselves,!family!members,!and!other!associates!for!their!work!managing!the!
foundation’s!assets!and!distributions.!And!these!overhead!expenses!are!included!in!the!five!
percent!of!the!principal!amount!that!foundations!are!required!to!pay!out!each!year!to!
charitable!causes.!
!
In!this!way,!private!foundations!can!be!used!as!strategic!vehicles!for!the!defense!of!wealth.!
They!allow!wealthy!families!to!receive!both!tax!advantages!and!a!form!of!income!from!their!
donations!while!still!retaining!a!significant!amount!of!control!over,!and!benefit!from,!
donated!assets—and!spending!only!a!small!portion!of!them!on!direct!donations!to!public!
charities.!A!lack!of!accountability!in!the!philanthropic!sector!allows!for!both!greater!abuses!
of!the!charitable!entities!themselves!and!the!use!of!their!funds!for!tax!avoidance.!
!!!!!!!!! !
Philanthropy!as!an!extension!of!power!and!privilege!protection!
!
In!a!troubling!number!of!cases,!private!foundations!and!high;profile!charitable!gifts!have!
become!tools!for!the!defense!of!personal!power!and!privilege.!Through!strategic!use!of!
charitable!giving,!wealthy!families!of!all!political!persuasions!have!been!able!to!deploy!
private!assets!to!advance!a!narrow!set!of!interests!under!the!guise!of!philanthropy.!For!
example:!
!!
● Legacy!admissions.!Donors!can!use!large!donations!to!universities!to!secure!
legacy!admissions!for!their!relatives.!Daniel!Golden,!a!Wall%Street%Journal!reporter!
and!author!of!The%Price%of%Admission:%How%America’s%Ruling%Class%Buys%Its%Way%into%
Elite%Colleges—and%Who%Gets%Left%Outside%the%Gates,!chronicles!the!“wealth!effect”!on!
college!admissions!and!how!charitable!donations!open!doors!for!affluent!family!
members!to!gain!admission.66!
!
● Affluent!public!school!districts.!Foundations!in!affluent!public!school!districts!
allow!parents!to!make!tax!deductible!contributions!to!support!their!children’s!
schools,!compounding!inequalities!between!school!districts.67!!
!!
27

● Promoting!personal!policy!agendas.!Wealthy!donors!can!fund!nonprofit!think!
tanks!that!themselves!further!a!wealth;protection!agenda!in!the!political!arena.!As!
journalist!Jane!Mayer!has!documented!in!her!book,!Dark%Money:%The%Hidden%
History%of%the%Billionaires%Behind%the%Rise%of%the%Radical%Right,!a!segment!of!multi;
millionaire!donors!have!“weaponized!philanthropy”!to!advance!a!narrow!self;interested!public!policy!agenda.68!

28

Recommendations
Nonprofits!can!take!some!steps,!detailed!below,!to!protect!themselves!from!the!increasing!
influence!of!large;scale!mega;donations.!It!is!important!to!note,!however,!that!while!these!
internal!changes!may!help!charities!to!reduce!the!risks!of!volatility!and!mission!distortion,!
they!are!not!a!substitute!for!national!policy!reform.!!
!
Congress!has!not!substantively!changed!the!rules!governing!philanthropy!since!the!Tax!
Reform!Act!of!1969.!The!charitable!sector!has!changed!dramatically!in!the!past!half!century,!
and!the!rules!governing!it!need!to!catch!up.!Reforms!in!philanthropic!governance!should!be!
aimed!at!discouraging!the!warehousing!of!wealth,!increasing!transparency!and!
accountability,!and!providing!incentives!for!contributions!that!directly!further!the!public!
good.!And!we!need!a!clear!articulation!of!who!has!control!over!how!philanthropic!funds!are!
managed!and!utilized:!private!donors!or!public!charities.!!
!
Philanthropy!is!shaped!by!public!rules!and,!through!tax!deductions!for!charitable!gifts,!
effectively!subsidized!by!taxpayers.!According!to!U.S.!Treasury!estimates,!the!charitable!
deduction!will!cost!the!U.S.!government!$750!billion!in!lost!revenue!over!the!next!ten!years.!
And!any!annual!expenditure!of!$75!billion—which!is!about!three!times!more!than!the!entire!
combined!federal!budget!for!the!Environmental!Protection!Agency;!Head!Start;!and!the!
Women,!Infant,!and!Child!nutrition!program—should!expect!to!have!oversight!to!ensure!
the!public!interest!is!being!upheld.69!!
!!
In!addition,!the!transition!to!top;heavy!philanthropy!is!a!reflection!of!larger!economic!
changes!and,!as!such,!cannot!be!addressed!entirely!within!the!nonprofit!sector!or!by!changes!
in!philanthropic!governance.!Philanthropic!giving!can!never!be!a!complete!substitute!for!
adequate!taxation!and!public!investment.!Over!the!last!three!decades,!government!policies!
and!practices!have!enhanced!asset!expansion!and!worsened!wage!stagnation!for!the!bottom!
80!percent!of!the!population—which!has!had!a!significant!impact!on!giving!by!small!donors.!!
!
To!fully!address!the!risks!of!top;heavy!philanthropy,!policymakers!will!need!to!not!only!
reform!the!rules!of!charitable!giving,!but!also!establish!policies!to!reduce,!over!time,!
concentrations!of!wealth!and!power!in!our!society!at!large.!From!a!charitable!giving!
perspective,!the!goal!of!these!public!policy!changes!should!be!to!broaden!wealth!ownership!
and!opportunity,!provide!incentives!for!broad;based!charitable!giving,!maintain!the!level!of!
public!investment!that!charitable!giving!cannot!(nor!should!not)!replace,!and!increase!the!
capacity!of!every!person!to!contribute!to!charity.!
29

!!
With!all!of!this!in!mind,!we!offer!recommendations!for!changes!in!internal!practices!for!
charity!self;protection;!for!reforms!in!nonprofit!governance;!and!for!reforms!in!national!
public!policy.!

Changes in Internal Practices for Charities
Don’t!abandon!small!donor!acquisition!and!retention!programs.!It!may!seem!like!a!good!
idea!in!the!short!term!to!save!money!by!cutting!out!new!donor!acquisition!programs!and!
scaling!back!on!low;dollar!and!midlevel!donor!retention,!but!these!are!strategies!with!long;term!negative!consequences.!Cutting!these!efforts!will!result!in!significantly!less!revenue!
over!the!long!run!from!a!large!number!of!low;dollar!but!very!loyal!donors!who!give!
consistently!year!after!year.!Allowing!donor!counts!to!decrease!will!put!fundraising!at!risk!
of!increased!volatility!and!unpredictability.!And!it!will,!in!later!years,!result!in!smaller!pools!
from!which!to!cultivate!major!and!planned!giving!donors.!
!!
Set!up!systems!to!manage!large,!episodic!windfall!gifts.!With!prudent!investment!and!
increased!staff!expertise,!the!benefits!of!these!gifts!can!be!spread!wisely!over!several!leaner!
years;!they!also!may!be!used!to!endow!the!organization,!to!reduce!risk!in!the!future.!
!!
Educate!the!board!and!other!stakeholders!about!the!organization’s!core!mission.!
Emphasize!the!importance!of!adhering!to!programmatic!activities!that!further!the!
organization’s!mission,!along!with!ensuring!governance!and!fundraising!practices!that!
further!it!as!well.!Educate!the!board!and!your!major!donors!about!the!dangers!of!being!
sidetracked!by!pet!projects.!!
!
Give!courageous!direction!to!your!major!donors.!Decline!gifts!that!would!inappropriately!
shift!the!organization’s!work—or!propose!creative!alternate!uses!for!those!gifts!that!better!fit!
the!purpose!of!the!organization.!

Changes in Incentives for Individual Giving
Expand!incentives!for!broader!giving!and!nonitemizers.!Several!current!policy!proposals!
are!aimed!at!providing!incentives!for!low!and!middle!income!people!to!give!more,!
including!replacing!the!current!deduction!with!a!nonrefundable!tax!credit!available!to!all!
taxpayers!who!make!charitable!contributions.!In!2011,!the!Congressional!Budget!Office!
analyzed!eleven!different!reforms!and!their!potential!impact!in!both!giving!and!lost!
revenue.70!!!
30!
Capping!the!annual!charitable!deduction.!Under!our!current!system,!donors!in!top!tax!
brackets!are!able!to!deduct!a!higher!percentage!of!their!donation!than!donors!in!lower!tax!
brackets.!In!essence,!this!means!that!we!subsidize!the!charitable!choices!of!wealthy!people!at!
higher!levels!than!the!charitable!choices!of!low!and!middle!income!people.!One!proposal!to!
reduce!this!inequity!would!be!to!cap!the!charitable!deduction!at!a!lower!percentage!than!the!
top!tax!rate.!In!President!Obama’s!2016!budget!proposal,!the!administration!suggested!a!28!
percent!cap,!which!would!only!impact!donors!with!incomes!over!$250,000.!This!was!
vigorously!opposed!by!the!Council!on!Foundations,!but!some!in!the!independent!sector!
suggested!that!the!impact!would!be!negligible.71!
!
Consider!a!$1!billion!lifetime!cap!on!charitable!tax!deductions.!The!changes!to!the!tax!
system!that!we!suggest!below!may!provide!additional!incentives!for!the!creation!of!
foundations!and!charitable!entities!as!a!way!to!reduce!or!avoid!tax!obligations.!!It!is!
therefore!important!that!we!begin!a!national!discussion!as!to!whether!we!should!institute!a!
lifetime!cap!on!the!amount!of!wealth!that!can!be!given!to!charity!without!being!subject!to!
any!taxation.!Without!such!a!policy,!the!wealthy!are!increasingly!likely!to!try!to!take!
advantage!of!the!charitable!sector!as!part!of!their!tax!avoidance!strategies.

Reforms in Foundation Governance
Increase!the!minimum!annual!distribution!payout!percentage!for!foundations.!
Foundation!assets!have!grown!substantially!over!the!last!30!years,!paralleling!the!expansion!
at!the!top!of!the!wealth!ladder.!Foundations!have!resisted!policy!proposals!aimed!at!raising!
the!minimum!payout!rate,!saying!that!this!would!lead!to!an!erosion!of!capital!and!the!ability!
of!foundations!to!exist!in!perpetuity.!But!a!number!of!studies!have!shown!that!foundation!
assets!would!not!decline!even!with!a!payout!of!7!percent!or!8!percent!per!year.72!
!!
Grant!foundations!and!donor$advised!funds!charters!with!limited!lifespans.!As!Pablo!
Eisenberg!observed,!“there!is!nothing!sacred!about!perpetuity.”!There!is!a!strong!argument!
that!foundations,!charitable!trusts,!and!donor;advised!funds!should!not!live!forever,!and!
that!the!charters!for!these!entities!should!be!changed!to!require!a!spend;down!within!a!
designated!period.!Donor;advised!funds,!for!example,!could!require!distribution!within!five!
years,!while!foundation!charters!could!require!complete!payout!in!20!years.!Requiring!a!
payout!in!a!specific!time!frame!would!put!enormous!sums!of!foundation!assets!to!work!
solving!problems!in!the!immediate!term,!rather!than!encouraging!them!to!exist!only!for!
long;term!self;preservation.!
31!!
Link!the!excise!tax!on!foundations!to!payout!distribution.!In!a!New%York%Times!piece,!
Boston!College!Law!School!Professor!Ray!Madoff!wrote,!“The!5!percent!rule!was!enacted!to!
provide!a!floor!for!charitable!giving,!but!most!private!foundations!use!it!as!a!ceiling!as!
well.”73!To!avoid!penalties,!foundations!only!need!to!meet!the!five!percent!annual!payout!
requirement!and!to!pay!a!standard!two!percent!federal!excise!tax!on!any!income!their!
investments!earn!in!a!given!year.!We!propose!restructuring!the!excise!tax!to!encourage!
larger!annual!disbursements!as!follows:!increasing!it!to!three!percent!for!foundations!that!
pay!out!below!six!percent!in!grants!in!a!given!year;!keeping!it!at!two!percent!for!
foundations!that!pay!out!six!to!eight!percent;!and!lowering!it!to!one!percent!for!those!that!
pay!out!more!than!eight!percent.!!
!!
Exclude!foundation!overhead!from!the!payout!percentage.!Any!spending!on!foundation!
overhead!expenses!should!not!be!deducted!from!the!foundation!payout!minimum.!This!
would!reduce!the!incentive!for!lavish!internal!spending!on!salaries,!accommodations,!and!
other!administrative!costs.74!
!
Eliminate!compensation!for!foundation!board!members!and!trustees.!There!is!no!research!
indicating!that!public!performance!of!foundations!improves!with!paid!trustees.!As!Amy!
Markham!and!Susan!Wolf!Ditkoff!observed,!in!fact,!“compensation!turns!board!members!
into!‘insiders,’!a!status!that!weakens!their!ability!to!act!on!behalf!of!the!public!and,!when!
necessary,!to!dissent.”75!Charities!can!always!hire!outside!experts!to!advise!them,!but!those!
hired!experts!should!not!be!in!a!position!to!vote!on!organizational!matters.!
!!
Require!independent!boards.!If!a!charity!is!truly!a!public!interest!organization,!it!should!
not!have!a!board!composed!entirely!of!family!members!and!paid!staff.!Many!states!
currently!require!51!percent!of!corporation!board!members!to!be!independent;76!this!rule!
should!be!extended!to!the!nation!as!a!whole.!
!!!
Establish!a!two$tier!tax!benefit!structure!for!charitable!gifts,!with!incentives!that!
encourage!direct!donations!to!public!charities!focused!on!urgent!social!and!community!
needs.!Currently,!all!charitable!gifts!receive!the!same!level!of!tax!deductibility,!regardless!of!
their!purpose!and!of!how!quickly!they!are!put!to!work!on!the!ground.!Gifts!going!to!public!
organizations!actively!alleviating!poverty,!for!example,!have!the!same!tax!status!as!gifts!
going!into!the!coffers!of!foundations,!where!that!revenue!may!sit!unused!for!decades—and!
the!same!tax!status!as!gifts!going!to!think!tanks!that!promote!policy!initiatives!designed!to!
reinforce!the!economic!status!quo.!
32

!
Under!a!two;tier!structure,!donations!to!qualified!public!charities!that!address!urgent!
community!problems!such!as!poverty,!inequality,!and!environmental!degradation!should!
continue!to!receive!the!full!deductibility!under!existing!charitable!tax!laws.!Donations!to!
other!types!of!nonprofits!and!to!warehousing!entities!such!as!foundations!and!donor;
advised!funds!should!have!reduced!tax!benefits.!

Changes in National Public Policy
Restore!steeply!progressive!income!tax!rates.!In!1954,!under!President!Dwight!Eisenhower,!
the!top!tax!rate!paid!by!the!wealthiest!taxpayers!was!over!91!percent.!Since!1960,!Congress!
has!steadily!chipped!away!at!the!top!tax!rate!for!the!highest!income!earners.!By!2013,!the!top!
tax!rate!on!the!wealthiest!group!of!taxpayers—those!with!annual!incomes!averaging!more!
than!$250,000—was!down!to!39.6!percent,!less!than!half!of!its!1954!level.!And!the!amount!
those!taxpayers!actually!paid,!their!effective!tax!rate,!was!just!23!percent.!Remarkably,!the!
wealthiest!0.01!percent!of!earners!at!the!very!tippity;top!had!an!effective!tax!rate!of!just!17.6!
percent,!in!large!part!because!of!aggressive!use!of!shelters!and!other!tax;avoidance!vehicles.!
Restoring!the!progressivity!of!the!federal!income!tax!would!greatly!reduce!income!
inequality.77!
!
Tax!wage!and!capital!income!at!similar!rates.!Over!the!last!two!decades,!lawmakers!have!
passed!policies!steeply!reducing!taxes!on!wealth,!such!as!the!capital!gains!tax,!and!leaving!
payroll!taxes!comparatively!untouched.!This!has!resulted!in!an!enormous!tax!savings!for!the!
wealthy,!who!pay!the!lion’s!share!of!capital!gains,!while!forcing!governments!to!cut!services!
disproportionately!needed!by!lower!and!middle!income!taxpayers.!Bringing!taxes!on!capital!
and!wealth!back!to!levels!commensurate!with!taxes!on!earnings!would!not!only!reduce!
societal!inequality!but!also!provide!much!needed!revenue.!
!
Reinstate!robust!estate!and!inheritance!taxation.!An!estimated!$24!billion!a!year!is!given!in!
charitable!bequests,!thanks,!in!large!part,!to!the!estate!tax.!Most!studies,!according!to!the!
Congressional!Budget!Office,!have!found!that!the!estate!tax!not!only!increases!charitable!
bequests!but!also!increases!charitable!donations!over!a!lifetime.78!Over!the!last!decade,!the!
federal!estate!tax!has!been!weakened!through!sunsetting!provisions!and!the!increased!use!of!
loopholes,!such!as!the!Granter!Retained!Annuity!Trust!(GRAT).!As!a!result,!more!wealth!is!
passing!to!family!members!and!less!to!charitable!entities.!Closing!these!loopholes!and!
instituting!a!graduated!rate!structure!would!generate!additional!revenue!and!reduce!the!
distorting!impact!of!concentrated!wealth.!Reform!proposals!such!as!the!Sensible!Estate!Tax!
33

Act!and!the!Responsible!Estate!Tax!Act!would!generate!between!$161!billion!and!$200!
billion!in!estimated!additional!revenue!over!the!next!ten!years.79!
!!!!!!!!! !
Reinstitute!estate!taxes!at!the!state!level.!In!2001,!Congress!phased!out!the!linkage!between!
state!and!federal!estate!taxes,!leading!to!the!expiration!of!estate!taxes!in!30!states.!Eighteen!
states!and!the!District!of!Columbia!proactively!retained!their!estate!taxes,!however,!
preserving!an!enormous!source!of!revenue!for!public!programs.!In!the!state!of!Washington,!
for!example,!estate!tax!revenue!capitalizes!the!Education!Legacy!Trust!Fund!that!funds!K–12!
and!higher!education!in!the!state.!If!the!states!currently!without!estate!taxes!reinstituted!
them,!they!could!combined!generate!$3!billion!to!$6!billion!a!year!that!could!be!invested!in!
expanded!opportunities!for!all!residents.80!!
!!
Implement!a!net!worth!tax!on!fortunes.!Lawmakers!should!explore!the!creation!of!an!
annual!net!worth!tax!on!wealth!over!$50!million,!or!a!similarly!high!threshold,!at!a!low!rate!
of!one!percent!to!two!percent.!Annual!net!worth!taxes!have!existed!in!other!OECD!countries!
and!are!part!of!a!constellation!of!policies!that!reduce!concentrated!wealth!and!generate!
revenue!for!opportunity!investments.!

34

Conclusion!
If!current!trends!are!any!indication,!income!and!wealth!disparities!will!continue!to!grow!
over!the!coming!decades.!As!they!do,!the!number!and!size!of!private!foundations!and!mega;
donations!from!very!wealthy!households!will!grow!accordingly,!and!the!relative!amount!of!
charitable!giving!coming!from!households!in!the!bottom!90!percent!of!income!will!shrink!
further.!Philanthropy!will!become!more!and!more!top;heavy,!with!increasingly!large!
proportions!of!charitable!revenue!coming!from!an!ever!smaller!number!of!wealthy!donors.!
!!
Charities!are!already!struggling!to!fill!gaps!left!by!cuts!in!government!services!and!to!
address!such!dauntingly!large!social!concerns!as!poverty,!inequality,!injustice,!and!
environmental!destruction—so!more!revenue!will!naturally!be!welcomed.!
!!
But!if!we!do!not!demand!more!transparency,!accountability,!and!public;interest!action!from!
donors,!the!philanthropic!sector!will!become!even!more!of!an!extension!of!the!influence,!
power,!and!privilege!of!the!few.!!
!
These!trends!are!alarming!for!the!health!of!a!self;governing!republic!that!aspires!to!widely!
held!prosperity!and!opportunity.!Although!it!is!beyond!the!scope!of!this!report,!we!believe!
the!long;term!trajectory!of!these!trends!will!result!in!a!shift!from!adequate!taxation!of!high!
income!and!wealth!to!the!expansion!of!mega;philanthropy!as!a!method!to!protect!private!
assets!and!interests.!Government!budget!cuts!and!austerity!measures!will!grow!along!with!
multibillion;dollar!foundations.!Such!warehousing!of!private!fortunes!will!threaten!
fundamental!values!of!equality!of!opportunity!and!basic!standards!of!environmental!
protection,!human!dignity,!and!human!rights.!!
!
Without!intervention,!we!will!drift!further!toward!an!oligarchy!of!wealth!and!power,!with!
some!charitable!entities!becoming!an!extension!of!this!power.!We!have!an!opportunity!now!
to!address!the!more!negative!aspects!of!top;heavy!philanthropy!while!rewarding!the!natural!
positive!impulse!of!individuals!and!families!to!share!the!wealth.!

35

End Notes
1!Internal!Revenue!Service,!Table!2.1:!Individual!Income!Tax!Returns!with!Itemized!Deductions:!Sources!of!Income,!

Adjustments,!Itemized!Deductions!by!Type,!Exemptions,!and!Tax!Items,!by!Size!of!Adjusted!Gross!Income,!for!tax!years!
2003!and!2013.!Accessed!August!13,!2016.!https://www.irs.gov/uac/soiCtaxCstatsCindividualCstatisticalCtablesCbyC
sizeCofCadjustedCgrossCincome.!
!
2 Foundation!Center,!Foundation!Stats.!Accessed!August!25,!2016.!http://data.foundationcenter.org/.!
3!Internal!Revenue!Service,!Table!2.1.!

!

4!Helen!Flannery,!et!al.,!donorCentrics!Index!of!Direct!Marketing!Fundraising:!2015!Fourth!Calendar!Quarter!Results,!

Target!Analytics,!April!2016,!p.!22.!Accessed!July!17,!2016. https://www.blackbaud.com/files/resources/targetC
indexCresultsCsummaryCq4C2015.pdf.!
!
5!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!!p.!25.!!
!
!
6!“Giving!USA:!2015!Was!America’s!MostCGenerous!Year!Ever,“!Giving!USA!Foundation,!last!modified!June!13,!2016,!
accessed!July!20,!2016,!https://givingusa.org/givingCusaC2016/.!!
!
7!Ibid.!
!
8!Alexis!de!Tocqueville,!“Of!the!Use!Which!the!Americans!Make!of!Public!Associations!in!Civil!Life,”!in!Democracy!in!
America,!chapter!V.!Accessed!August!26,!2016.!http://xroads.virginia.edu/~hyper/detoc/ch2_05.htm.!
!
9!Charity!Navigator,!“Milestones!in!Philanthropy,”!last!modified!July!1,!2015.!Accessed!August!26,!2016.!
http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=737&print=1.!
!
!
!
10!David!Rose,!“A!history!of!the!March!of!Dimes,”!March!of!Dimes!archives,!last!modified!August!26,!2010.!Accessed!
September!2,!2016.!http://www.marchofdimes.org/mission/aChistoryCofCtheCmarchCofCdimes.aspx.!
!
11!For!some!of!this!history,!see!Chuck!Collins,!Pam!Rogers,!and!Joan!Garner,!Robin!Hood!Was!Right:!A!Guide!to!Giving!
Your!Money!for!Social!Change!(W.W.!Norton,!2000).!
!
12!Emanuel!Saez!and!Gabriel!Zucman,!“Wealth!Inequality!in!the!United!States!since!1913:!Evidence!from!Capitalized!
Income!Tax!Data,”!Quarterly!Journal!of!Economics,!October!2015.!Accessed!September!2,!2016.!http://gabrielC
zucman.eu/uswealth/.!
!
13!Chuck!Collins!and!Josh!Hoxie,!“Billionaire!Bonanza:!The!Forbes!400!and!the!Rest!of!Us,”!Institute!for!Policy!
Studies,!December!5,!2015.!Accessed!September!2,!2016.!http://www.ipsCdc.org/billionaireCbonanza/.!!
!
14!See:!Chuck!Collins,!“The!Panama!Papers!Expose!the!Hidden!Wealth!of!the!World’s!SuperCRich,”!The!Nation,!April!
5,!2016.!!
!
Also!see:!
!
Robert!S.!McIntyre,!Richard!Phillips,!and!Phineas!Baxandall,!“Offshore!Shell!Games!2015:!The!Use!of!Offshore!Tax!
Havens!by!Fortune!500!Companies,”!October!5,!2015,!Citizens!for!Tax!Justice.!Accessed!September!2,!2016.!
http://ctj.org/ctjreports/2015/10/offshore_shell_games_2015.php#.VpEOgBFl3kE.!
!
Gabriel!Zucman,!The!Hidden!Wealth!of!Nations:!The!Scourge!of!Tax!Havens!(Chicago!and!London:!University!of!
Chicago!Press,!2015).!
!
15!Alessandra!Stanley,!“Philip!Knight!of!Nike!to!Give!$400!Million!to!Stanford!Scholars,”!The!New!York!Times.!
February!24,!2016.!Accessed!September!3,!2016.!http://www.nytimes.com/2016/02/24/business/philipCknightCofCnikeCtoCgiveC400CmillionCtoCstanfordCscholars.html.!

36

!
16!Foundation!Center,!Foundation!Stats.!Accessed!August!25,!2016.!http://data.foundationcenter.org/.!

!

17!Paul!Arnsberger,!“DonorCAdvised!Funds:!An!Overview!Using!IRS!Data,”!Boston!College!Law!School!Forum!on!

Philanthropy!and!the!Public!Good,!October!2015.!Accessed!August!23,!2016.!
https://www.bc.edu/content/dam/files/schools/law/pdf/academics/forum_philanthropy/05_Arnsberger.pdf.!!
!
!
18!Ana!Swanson,!“Wall!Street!is!sitting!on!billions!meant!for!American!charities,”!The!Washington!Post,!June!21,!
2016.!Accessed!September!3,!2016. https://www.washingtonpost.com/news/wonk/wp/2016/06/21/theCquestionableCnewCwayCwealthyCpeopleCareCgivingCtoCcharity/.!
!
19!Internal!Revenue!Service,!Table!2.1.!
!
20!Internal!Revenue!Service,!Table!1.2:!All!Returns:!Adjusted!Gross!Income,!Exemptions,!Deductions,!and!Tax!Items,!by!
Size!of!Adjusted!Gross!Income!and!by!Marital!Status,!for!tax!years!2003!and!2013.!Accessed!October!22,!2016.!
https://www.irs.gov/uac/soiCtaxCstatsCindividualCstatisticalCtablesCbyCsizeCofCadjustedCgrossCincome.!
!
See!also:!
!
!
Andrew!Lundeen!and!Scott!A.!Hodge,!“Higher!Income!Taxpayers!Are!Most!Likely!to!Claim!Itemized!Deductions,”!
Tax!Foundation,!November!7,!2013.!Accessed!September!3,!2016.!http://taxfoundation.org/blog/higherCincomeC
taxpayersCareCmostClikelyCclaimCitemizedCdeductions.!
!
!
*In!theory,!the!standard!deduction!utilized!by!nonCitemizers!factors!in!a!certain!amount!of!charitable!giving.!
!
21!Internal!Revenue!Service,!Table!2.1.!
!
*Some!recent!articles!have!suggested!that!giving!by!middle!class!families!may!actually!be!on!the!rise.!In!particular,!
a!recent!Chronicle!of!Philanthropy!study!of!IRS!tax!data!stated!that!the!proportion!of!households!with!income!under!
$100,000!that!gave!to!charity!rose!by!4.5%!from!2006!to!2012,!while!the!proportion!of!households!earning!
$100,000!or!more!giving!to!charity!dropped!during!that!time.!The!exact!source!of!this!data!was!unclear;!when!we!
looked!at!IRS!data!from!the!table!above,!however,!we!found!that!the!proportion!of!households!earning!less!than!
$100,000!giving!to!charity!increased!from!3.6!percent!in!2006!to!3.7!percent!in!2012.!We!believe!this!one!
percentage!point!increase!is!not!statistically!significant,!and!also!belies!the!fact!that!overall!revenue!from!this!
group!actually!declined!over!the!six!years!analyzed.!For!these!reasons,!we!feel!that!more!study!in!this!area!would!
be!helpful.!To!see!the!Chronicle!article,!see:!Alex!Daniels,!“As!Wealthy!Give!Smaller!Share!of!Income!to!Charity,!
Middle!Class!Digs!Deeper,”!Chronicle!of!Philanthropy,!October!05,!2014.!Accessed!November!1,!2016.!
https://www.philanthropy.com/article/AsCWealthyCGiveCSmallerCShare/152481.!
!
22!Internal!Revenue!Service,!Table!2.1.!!
!!
23!Foundation!Center,!Foundation!Stats.!Accessed!August!25,!2016.!http://data.foundationcenter.org/.!
!
!
24 Melissa!Ludlum, “Domestic!Private!Foundations,!Tax!Years!1993C2002,”!Internal!Revenue!Service.!Accessed!
November!3,!2016.!http://www.irs.gov/pub/irsCsoi/02eopf.pdf.
!
25!“Giving!USA:!2015!Was!America’s!MostCGenerous!Year!Ever,”!Giving!USA!Foundation,!last!modified!June!13,!
2016,!accessed!July!20,!2016,!https://givingusa.org/givingCusaC2016/.!
!
26!Giving!USA:!The!Annual!Report!on!Philanthropy!for!the!year!2015!(2016).!Chicago:!Giving!USA!Foundation,!p.!321.!
This!is!a!data!table!showing!giving!by!source,!1975C2015,!in!billions!of!inflationCadjusted!dollars.!
!
27!Giving!USA:!The!Annual!Report!on!Philanthropy!for!the!year!2015!(2016).!Chicago:!Giving!USA!Foundation,!p.!74.!
!
28!Ibid.!
!
!

37

29!Couts!Institute,!“2015!Million!Dollar!Giving!Report.”!Accessed!September!2,!2016.!!

http://philanthropy.coutts.com/en/reports/2015/unitedCstates/findings.html.!
!
!
30!Ibid.!
!
31!!“Giving!USA:!2015!Was!America’s!MostCGenerous!Year!Ever,”!Giving!USA!Foundation,!last!modified!June!13,!
2016,!accessed!July!20,!2016,!https://givingusa.org/givingCusaC2016/.!
!
32!“Giving!USA!2015!Press!Release,”!Giving!USA!Foundation,!last!modified!June!16,!2015,!accessed!July!20,!2016.!
http://www.givinginstitute.org/?page=GUSA2015Release.!
!
!
33!!“Giving!USA:!2015!Was!America’s!MostCGenerous!Year!Ever,”!Giving!USA!Foundation,!last!modified!June!13,!
2016,!accessed!July!20,!2016,!https://givingusa.org/givingCusaC2016/.!
!
34!Maria!Di!Mento,!Kathleen!Kelly,!and!Nichole!Lewis,!“The!2016!Philanthropy!50,”!The!Chronicle!of!Philanthropy,!
February!9,!2016.!http://www.philanthropy.com.!
!
!
35 Maria!Di!Mento,!Kathleen!Kelly,!Nichole!Lewis,!“Bequests!Put!Conservative!Billionaire!Richard!Scaife!Atop!List!of!
America’s!50!Biggest!Donors,”!The!Chronicle!of!Philanthropy,!February!9,!2016.!Accessed!September!2,!2016.!
https://www.philanthropy.com/article/conservativeCbillionaire/235234.!
36!“The!$100!million!gifts!that!fueled!a!record!year!for!universities,”!Crains!Chicago!Business,!January!27,!2016.!

Accessed!September!2,!2016.!http://www.chicagobusiness.com/article/20160127/NEWS13/160129849/theC
100CmillionCgiftsCthatCfueledCaCrecordCyearCforCuniversities.!
!
37!Steve!Johnson,!“Art!Institute!of!Chicago!gets!its!largest!gift!ever,!including!9!Warhols,”!Chicago!Tribune,!April!22,!
2015.!Accessed!September!2,!2016.!http://www.chicagotribune.com/entertainment/museums/chiCartCinstituteC
donationCandyCwarholC20150421C20150421Ccolumn.html.!
!
38!Maria!Di!Mento,!Kathleen!Kelly,!and!Nichole!Lewis,!“The!2016!Philanthropy!50,”!The!Chronicle!of!Philanthropy,!
February!9,!2016.!http://www.philanthropy.com.!
!
39!William!Foster,!Gail!Perreault,!Alison!Powell,!and!Chris!Addy.!“Making!Big!Bets!for!Social!Change,”!Stanford!Social!
Innovation!Review,!Winter!2016.!Accessed!September!2,!2016.!
https://www.bridgespan.org/bridgespan/images/articles/makingCbigCbetsCforCsocialCchange/MakingCBigCBetsC
forCSocialCChangeCPdf.pdf?ext=.pdf.!
!
40!Ibid.!!
!
41!“Giving!USA:!2015!Was!America’s!MostCGenerous!Year!Ever,”!Giving!USA!Foundation,!last!modified!June!13,!
2016,!accessed!July!20,!2016,!https://givingusa.org/givingCusaC2016/.!
!
!
!
42!Giving!USA:!The!Annual!Report!on!Philanthropy!for!the!year!2015!(2016).!Chicago:!Giving!USA!Foundation,!p.!39.!
!
43!Giving!USA:!The!Annual!Report!on!Philanthropy!for!the!year!2015!(2016).!Chicago:!Giving!USA!Foundation,!p.!39.!
!
44!Partha!Deb,!et!al.,!“Estimating!Charitable!Deductions!in!Giving!USA,”!Nonprofit!and!Voluntary!Sector!Quarterly,!32!
(2003),!p.!553.!http://nvs.sagepub.com/content/32/4/548.refs.html.!
!
45!Swanson,!“Wall!Street!is!sitting!on!billions!meant!for!American!charities.”!!
!
46
Ray!Madoff!and!Lewis!Cullman,!“The!Undermining!of!American!Charity,”!The!New!York!Review!of!Books,!July!14,!
2016.!Accessed!September!19,!2016.!http://www.nybooks.com/articles/2016/07/14/theCunderminingCofC
americanCcharity/.!

38

47

“A!Gold!Mine!of!Data!on!a!Quarter!Century!of!Giving,”!The!Chronicle!of!Philanthropy.!Accessed!September!19,!
2016. https://www.philanthropy.com/interactives/philanthropyC400#id=table_2015.!
48!Arnsberger,!“DonorCAdvised!Funds:!An!Overview!Using!IRS!Data.”!!

!
49!Aaron!Schill,!et!al.,!“Sustained!Growth!in!an!Expanding!Field:!2014!Columbus!Survey!Findings,”!Foundation!

Center,!June!2015.!Accessed!September!2,!2016.!
http://cfinsights.org/Portals/0/Uploads/Documents/Columbus%20Survey/Columbus_Survey_FY2014_FINAL.pdf.!
!
50!!Ibid.!
!
51!Internal!Revenue!Service,!Table!2.1.!
!
52 Internal!Revenue!Service,!Table!1.2.
53!Internal!Revenue!Service,!Table!2.1.

!
54!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!p.!21.!!

!
55!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!p.!23.!

!
56!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!p.!25.!

!
57!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!p.!23.!!

!
58!Flannery,!et!al.,!2015!Fourth!Calendar!Quarter!Results,!p.!26.!

!
59!Bill!Levis,!Ben!Miller,!and!Cathy!Williams,!2016!Fundraising!Effectiveness!Survey!Report,!Association!of!

Fundraising!Professionals,!Urban!Institute,!March!19,!2016.!Accessed!August!25,!2016.!
http://www.afpnet.org/files/ContentDocuments/FEP2016FinalReport.pdf.!
!
!
60!Loren!Renz,!Understanding!and!Benchmarking!Foundation!Payout,!The!Foundation!Center!Issue!Lab,!September!
28,!2012.!Accessed!October!22,!2016.
http://foundationcenter.issuelab.org/resource/understanding_and_benchmarking_foundation_payout.!
!
!
61!Arnsberger,!“DonorCAdvised!Funds:!An!Overview!Using!IRS!Data.”!
!
!
62!Foundation!Source,!2015!Annual!Report!on!Private!Foundations,!August!2015.!Accessed!August!25,!2016.!
https://www.foundationsource.com/resources/library/2015CannualCreport/.!
!
63!Ibid.!!
!
64 For!examples!of!these!abuses,!see!Chuck!Collins,!Born!on!Third!Base:!A!One!Percenter!Makes!the!Case!for!Tackling!
Inequality,!Bringing!Wealth!Home,!and!Committing!to!the!Common!Good!(White!River!Junction,!VT:!Chelsea!Green,!
2016),!Chapters!10!and!11.!
65!Swanson,!“Wall!Street!is!sitting!on!billions!meant!for!American!charities.”!!

!

66!Daniel!Golden,!The!Price!of!Admission:!How!America’s!Ruling!Class!Buys!Its!Way!into!Elite!Colleges—and!Who!Gets!

Left!Outside!the!Gates!(New!York:!Broadway!Books,!2007).!
!
67!Rob!Reich,!“A!Failure!of!Philanthropy:!American!charity!shortchanges!the!poor,!and!public!policy!is!partly!to!
blame,”!Stanford!Social!Innovation!Review,!Winter!2005.!http://ssir.org/articles/entry/a_failure_of_philanthropy.!
Also!see!Reich,!“Not!Very!Giving,”!The!New!York!Times,!September!4,!2013.!
http://www.nytimes.com/2013/09/05/opinion/notCveryCgiving.html?_r=0.!
!

39

68!Jane!Mayer,!Dark!Money:!The!Hidden!History!of!the!Billionaires!Behind!the!Rise!of!the!Radical!Right!(New!York:!

Doubleday,!2016).!
!
69!United!States!Environmental!Protection!Agency,!“EPA's!Budget!and!Spending.”!Accessed!September!2,!2016.!
https://www.epa.gov/planandbudget/budget.!
!
United!States!Department!of!Agriculture!Food!and!Nutrition!Service,!“WIC!Funding!and!Program!Data.”!Accessed!
September!2,!2016.!http://www.fns.usda.gov/wic/wicCfundingCandCprogramCdata.!
!
!
Colleen!Rathgeb,!“President’s!FY!2016!Budget!for!Head!Start,”!United!States!Department!of!Health!and!Human!
Services!Administration!for!Children!and!Families,!February!10,!2015.!Accessed!September!2,!2016.!
http://www.acf.hhs.gov/blog/2015/02/presidentsCfyC2016CbudgetCforCheadCstartC0.!
!
70!Congressional!Budget!Office,!“Options!for!Changing!the!Tax!Treatment!of!Charitable!Giving,”!May!2011.!Accessed!
November!1,!2016.!https://www.cbo.gov/sites/default/files/112thCcongressC2011C
2012/reports/charitablecontributions.pdf.!
!
The!Independent!Sector!did!a!summary!analysis:!“Overview!of!May!2011!CBO!Report.”!Accessed!November!1,!
2016.!https://www.independentsector.org/uploads/Policy_PDFs/HighlightsofCBOReport_IS.pdf.!

!

71!Council!on!Foundations,!“President’s!Proposed!Cap!on!the!Charitable!Deduction!Will!Hurt!Communities,”!

February!2,!2015.!Accessed!November!1,!2016.!http://www.cof.org/content/presidentsCproposedCcapCcharitableC
deductionCwillChurtCcommunities.!!
!
See!also!Aaron!Dorfman,!“Why!Nonprofits!Should!Support!the!American!Jobs!Act,”!Huffington!Post,!September!28,!
2011.!http://www.huffingtonpost.com/aaronCdorfman/whyCnonprofitsCshouldCsup_b_983804.html.!
!
72
Perry!Mehrling,!“Spending!Policies!for!Foundations:!The!Case!for!Increased!Grants!Payout,”!National!Network!of!
Grantmakers,!1999.!Accessed!November!3,!2016.!
https://economics.barnard.edu/sites/default/files/inline/spending_policies.pdf.!
Also!see!Heidi!Waleson,!“Beyond!Five!Percent:!The!New!Foundation!Payout!Menu,”!jointly!published!by!the!
Northern!California!Grantmakers,!New!York!Regional!Association!of!Grantmakers,!and!the!French!American!
Charitable!Trust,!2007.!Accessed!November!3,!2016.!http://www.beldon.org/beyond5_report.pdf.!
73!Ray!Madoff,!“A!Better!Way!to!Encourage!Charity,”!The!New!York!Times,!October!5,!2014.!Accessed!November!3,!

2016.!http://www.nytimes.com/2014/10/06/opinion/aCbetterCwayCtoCencourageCcharity.html?_r=1.!
!
74!National!Committee!on!Responsive!Philanthropy,!“Closing!the!Loophole:!Removing!Foundation!Overhead!Costs!
from!Payout,”!September!3,!2003.!Accessed!November!3,!2016.!http://ncrp.org/files/Closing_The_Loophole.pdf.!
!
!
75!Jane!Mosaoka!and!Jeanne!Bell!Peters,!“What!We!Really!Need:!Eight!reforms!to!make!nonprofits!more!
accountable!and!effective,”!Stanford!Innovation!Review,!Summer!2005.!Accessed!April!5,!2016.!!
http://ssir.org/articles/entry/what_we_really_need.!
!
!
76!Jeffrey!Gordon,!“The!Rise!of!Independent!Directors!in!the!United!States,!1950C2005,”!ECGICLaw!Working!Paper!
No.!74/2006.!Accessed!November!3,!2016.!http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928100.!
!
!
77!!Noam!Scheiber!and!Patricia!Cohen,!“For!the!Wealthiest,!a!Private!Tax!System!That!Saves!Them!Billions,”!New!
York!Times,!December!30,!2015.!Accessed!September!6,!2016.!
http://www.nytimes.com/2015/12/30/business/economy/forCtheCwealthiestCprivateCtaxCsystemCsavesCthemC
billions.html?_r=0.!
!!
78!Congressional!Budget!Office,!“Federal!Estate!and!Gift!Taxes,”!Economic!and!Budget!Issue!Brief,!December!18,!
2009.!Accessed!September!6,!2016.!
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/108xx/doc10841/12C18Cestate_gifttax_brief.pdf.!

40

!
See!also:!
“Estate!Tax,”!Independent!Sector.!Accessed!September!6,!2016.!https://www.independentsector.org/estate_tax.!
!
!
79!Chuck!Collins,!“Estate!Tax!To!the!Rescue,”!US!News!&!World!Report,!April!28,!2016.!
http://www.usnews.com/opinion/articles/2016C04C28/weCneedCtoCrevampCtheCestateCtaxCtoCaddressCstaggeringC
wealthCinequality.!
!
80!Elizabeth!McNichol,!“State!Estate!Taxes:!A!Key!Tool!for!Broad!Prosperity,”!Center!on!Budget!and!Policy!Priorities,!
May!11,!2016.!Accessed!September!6,!2016.!http://www.cbpp.org/sites/default/files/atoms/files/5C11C16sfp.pdf.!
!
!

41