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"This conspiracy needs more people"


We didn't write Modern Grantmaking just for the fame and big bucks (haha), we wrote it because we knew that so many grantmakers out there want to see overdue change in their organisations, and in the grantmaking profession more widely.

But how can we as individuals create change to grantmaking as a wider occupation? How might we nudge or influence others to get on board with the reform bandwagon? What steps can we actually take to influence what's considered acceptable, or unacceptable?

That's the question we'll be tackling with your help, this September 13th, On that day, we'll be holding a free-form online session on the question "What specific actions can we take to encourage a reform movement in the grantmaking profession?" So we're not talking about a Zoom lecture or similar: this is going to be a proper open session and no idea will be considered too 'out there' for an airing.

So please register and join us for a 100% constructive, no-hand-wringing discussion where every idea will be respectfully given space. But of course, once you leave our smoked filled conspirators room - well - you'll have to deny everything...

Interesting articles about attempts to change US grantmaking laws

In the UK, changing the laws that regulate grantmaking foundations isn't currently a hot topic, but in the US there's a constant flow of people trying to get congress and the courts to modify the rules that regulate these organisations. We thought it'd be interesting to share some links and commentary on who is trying to change what, and why.

Issue 1. Increasing mandatory payout rates for foundations. Federal law currently dictates that any philanthropic foundation must pay out 5% of its value every year. This number, and the loopholes associated with it, have been an issue for campaigners for a long time, especially because the US stock market grows at an average of about 7% a year, meaning foundations can simply expand forever. Here, for example, is a Chicago Tribune article from 2003 about a (failed) attempt to change the law through a congressional bill. 

Last year, during the early days of the COVID-19 pandemic, there was another attempt, this time to double the minimum payout to 10%. Here's Inside Philanthropy's take. This one is going to run and run.

Issue 2. Donor Advised Funds (DAFs). These legal vehicles allow US donors to donate money to a sort of holding-pot called a DAF. Providing such gifts can make donors eligible to reduce their personal tax bills, in turn making DAFs very popular. But so far, so normal - tax breaks for giving aren't that surprising.

The issue that gets people get hot under the collar is that once money is  put into a DAF, there's no obligation to give it out again. It can literally sit there forever, if you choose, earning fees for your fund manager. So it is possible to pocket the tax saving whilst actually doing nothing for nonprofits or society.

Here's a nice clear article on Inside Philanthropy from someone lobbying for there to be a legal requirement to pay out a proportion of DAF money every year (to prevent hoarding). And here's a counter argument to that proposal.

Earlier this year the issue hit congress itself, with a bill from two US senators focused on forcing money out of DAFs, by law. Here's Philanthropy News Digest's view on how it was splitting opinions within  American philanthropy. You can see how strongly people feel about this issue by how hilariously unfair this headline is. 

Issue 3. Donor Transparency. The state of California has imposed a rule for the last few years that says that nonprofits that receive donations in the state need to report the names of their donors to the attorney general's office. This is supposedly as an anti charity fraud mechanism.

However, in a recent case, the Supreme Court just struck down this position as unconstitutional, and forced California to abandon its practice, meaning donors can continue to giving without there ever being a public record of the fact they did so. Here's Ciara Torres-Spelliscy on what this ruling means. 

Question for you. Are there other live legislative debates about the regulation of foundations going on in other countries? If you know of any, please share so we can do a future issue on this topic.

Star guest alert! Join us as we talk Modern Grantmaking with the amazing Fozia Irfan

On 15th September 2021, we are being hosted by the Directory of Social Change for an event where we will have the great pleasure of discussing Modern Grantmaking with Fozia Irfan OBE FRSA.

Fozia is a leader in UK grantmaking, having founded the groundbreaking Diversity, Equity and Inclusion Coalition of foundations, while running and growing a leading community foundation at the same time. Now she is Director of Children and Young People at BBC Children in Need, and we’re incredibly lucky to have her joining us - there will not be a dull moment. 

To join us, please register here.


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