Donors urge charities to use donations quickly, not hide money

Political partisanship is a powerful dividing line, but a new investigation shows a broad consensus on the need to change the speed with which charitable foundations and donor-advised funds (DAFs) put donations to work.

Current law now gives foundation donors and CFOs tax relief for donations that cannot be passed on to charity for years, if ever. Conservatives and Liberals want to stop ‘subsidizing the rich’ by reducing the time funds can be parked.

“Survey respondents from all political backgrounds expressed intense support for moving the money as soon as possible,” according to the survey conducted by research firm Ipsos for the Institute for Policy Studies, which argues for change through his Charity Reform Initiative. “Americans want a relatively quick return, with a relatively short timeframe for granting grants.”

Respondents supported the important role that charitable foundations play (82%). The Institute for Policy Studies is a progressive think tank founded in 1963 by two members of the Kennedy administration, but it has found widespread support for charitable reform in the political landscape.

The survey found that 90% of Conservatives/Republicans and 80% of Liberals/Democrats “believe it is not fair for taxpayers to subsidize the wealthy to set up permanent foundations and donate as they wish. wish”.

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“Respondents from all political backgrounds expressed strong unease with taxpayer grants allowing donors to establish perpetual foundations, with conservatives even more strongly opposed to such grants than liberals.”

The survey of over 1,000 adults found that 82% of respondents ‘support the important role that charitable foundations play’, but many were unaware that ‘a third of all charitable giving goes to foundations private companies and the ADF”. After being told that “more than $1.2 trillion in charitable contributions (are) currently on the sidelines,” respondents voiced their disapproval and supported the reforms.

“A large bipartisan majority wants donors who receive preferential tax treatment for their charitable contributions to quickly transfer funds to active charities on the ground,” the survey said.

The survey found that people want foundations and DAFs to move more funds faster to charities that can put them to use:

  • 69% said Congress should pass legislation requiring a 10% payment requirement for foundations (down from 5% currently) and for DAFs – the current tax code does not require DAF donors to make payments at any time moment – even if it reduces the amount of money in foundations and DAFs in the future.

  • 73% say CFOs make grants within 2-5 years of receiving donations, while 25% say no timeframe should apply. Half want DAFs to give money to charities within two years, while 22% favor two years and 25% said DAFs should “take as long as they wish” to distribute funds to charities.

A majority of respondents (64%) expressed concern that operating charities face challenges, such as increased pressure on limited resources and increased costs due to inflation.

Ministry Watch reported on the growing popularity of foundations and DAFs and legislative efforts to change the rules. In June 2021, the Charitable Efforts Acceleration Act was introduced by Senators Angus King and Chuck Grassley. The bill seeks to speed up the process of DAFs awarding funds to charities and would require DAFs to pay taxes on funds that are not distributed as they should. The bill has been referred to the Senate Finance Committee, which has not yet moved it forward.

This article originally appeared on MinistryWatch.

Steve Rabey is a seasoned author and journalist who has published over 50 books and 2,000 articles on religion, spirituality and culture. He was an instructor at Fuller and Denver seminaries and at the US Air Force Academy.

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