There's a problem with foundations and donor-advised funds

I remember talking with an African American woman who had -- over 20 years -- scrapped and scrapped and had by now achieved having 80 housing units for women recently released from prison. Without a permanent address, women in such circumstances can't get their children back. And what greater priority is there for them once they are out?

She noted that within 50 miles of her, there are foundations with many billions of dollars. So picture this little, heroic shelter and next door these mega-foundations with billions. Is there something wrong with this picture?

Despite increased giving during COVID, both private foundations and donor-advised funds hold more assets now than they did before the pandemic. And increasingly, as the wealthy donate money (and get tax deductions) the money doesn't go to active working nonprofits. It goes into their private foundations and donor-advised funds (DAFs). And much of it gets stuck there -- for decades or even more.

There is a bill now in Congress called the ACE Act -- Accelerating Charitable Efforts. It is one strand in a growing movement for philanthropic reform. Denounced by the Council on Foundations, the bill is supported by us at the California Association of Nonprofits (CalNonprofits) and by the Minnesota Council of Nonprofits.

Nonprofits and foundations: the issues of philanthropic reform are squarely at the intersection of inequality and philanthropy. The ACE Act isn't perfect, but we all need to pay attention both to its virtues and to its appearance as a sign of the growing calls for reform.

Here's what we wrote about the ACE Act. And here's a background article on the philanthropic reform movement. I hope all of us will be discussing the issues and joining -- and influencing -- the reform movement.