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New Pledge Asks Donors to Step-up Giving Amid Pandemic
by Dan Parks
With nonprofits facing unprecedented financial pressure, a foundation leader Tuesday launched a new “Crisis Charitable Commitment” designed to pressure foundations, wealthy individuals, and donor-advised-fund account holders to boost their giving immediately, with a special focus on racial justice, getting voters to the polls this November, and making sure their ballots count.
The pledge is being led by Alan Davis, a businessman who is president of the Leonard and Sophie Davis Fund. Davis and others have called on Congress to require foundations and donor-advised funds to distribute at least 10 percent of their assets for the next three years.
The Crisis Charitable Commitment is a self-policing pledge that asks foundations to give this year at least 6 percent of the first $50 million of their assets and 10 percent of assets in excess of $50 million. That two-tiered approach is intended to recognize that a 10 percent payout rate may be much more difficult for smaller foundations.
The pledge also asks donor-advised-fund account holders to distribute at least 10 percent of the assets in those accounts to charity this year.
For wealthy individuals, the pledge commitment outlines a sliding scale from 1 percent of personal assets for those worth up to $25 million, 2 percent for up to $150 million, 3 percent for up to $1 billion, 4 percent for up to $35 billion, and 5 percent for more than $35 billion. The rates are marginal, like taxes. For example, for someone with a net worth of $125 million, the pledge stipulates 1 percent of giving on the first $25 million ($250,000) plus 2 percent of $100 million ($2 million).
The benchmarks are based on various proposals for the rich to help fund societal needs, including a “wealth tax” and an emergency charitable stimulus bill that some lawmakers are trying to advance through Congress that would require private foundations and donor-advised funds to distribute 10 percent of their assets annually for three years.
“The Crisis Charitable Commitment establishes a benchmark, one that suggests a reasonable minimum percentage of assets for America’s wealthiest individuals and philanthropies to contribute,” states a fact sheet on the effort.
The strategy behind the pledge is to boost the urgency for donors to give now and create benchmarks for wealthy people and foundations, Davis said.
The funds can be distributed to 501(c)(3) or 501(c)(4) organizations. The pledge urges but doesn’t require that at least 20 percent of donated funds go to “racial justice and voter engagement in a safe and secure election.”
Giving money to donor-advised-fund accounts or private foundations doesn’t count; the goal is to get the money out to charities that are meeting immediate needs.
Nobody has signed the pledge yet, but discussions are underway, and Davis expects some soon. “We’re pretty confident that we have the beginnings of an impressive list.” he said.
The idea for the pledge started with discussions among members of the Solidaire Network, a donor collaborative. There was a lot of discussion over whether to count 501(c)(4) giving toward the pledge, Davis said. They decided to do so because they felt that lobbying for more government help for charities, for example, would be a worthwhile thing to fund.
Davis said that people and nonprofits working for change in the streets are organizing and cooperating more effectively than ever, so donors should, too.
“The donor class is not collaborating. This is an effort to get people to stand up together,” he said.
The Giving Pledge is among the models for the effort, although Davis noted that the Giving Pledge has “a few big holes in it,” including that it only applies to billionaires and it doesn’t generate urgency to give now, when it’s needed most.
The crisis pledge focuses only on giving this year, but it could be extended depending on how the country is doing at the end of the year.
“The appeal to donors is the sense that they’re doing the right thing,” Davis said. “Anybody who signs on is only meeting their responsibility. We’re not heroes by any stretch of the imagination. This is what we should be doing.”
Davis said both he personally and his foundation will meet the requirements of the pledge this year. He declined to specify his net worth except to say that his personal giving this year will total nearly $500,000.
His foundation, with assets of $150 million, is increasing its payout this year from an original budget of $12 million to about $18 million.
It will be up to people who sign the pledge to decide whether their names will be made public. Beyond that, Davis said, there’s not much recognition for donors.
“We’re giving them a baseball cap,” he joked. “Since they’re stepping up to the plate, that seems appropriate.”Return to Insights & Events