The Threat to Endowed Philanthropy

The Time to Engage is Right Now

The fundamental purpose of philanthropy is to connect and leverage resources for addressing a wide range of issues and supporting the needs of people and communities across our nation.

If public policy does not account for this work, however, and public policy that threatens or weakens philanthropic efforts are implemented, it would be detrimental to the tremendous work that is enabled through philanthropy.

Policymakers have become increasingly skeptical of endowed philanthropy in recent times.

“As chairmen of [the Senate Finance Committee and House Committee on Ways and Means] and the Ways and Means Oversight Subcommittee, we are conducting an inquiry into the activities of colleges and universities related to the numerous tax preferences they enjoy under the Internal Revenue Code... The Committees are conducting additional oversight of how colleges and universities are using endowment assets to fulfill their charitable and educational purposes.”
~ Senate Finance Committee Chairman Orrin Hatch,
Ways and Means Committee Chairman Kevin Brady,
Ways and Means Oversight Subcommittee Chairman Peter Roskam,
Letter to University Presidents Requesting Information, 2/8/2016

“[W]hen I looked at the endowments of our largest universities and colleges... each having a billion dollars or more of funds in endowments; then I realize that those endowments are being held in a tax-free status; then I realize that donors get a tax deduction for giving these gifts to these institutions...I would propose [that] in order to keep that tax-free qualification... maybe we mandate that the endowments take their earnings...and mandate [that] it goes to tuition relief to the students...”
~ Congressman Tom Reed,
Ways and Means Oversight Subcommittee Hearing, 10/7/2015

“The study is disappointing and unresponsive. It doesn’t advance the ball in closing any abusive loopholes... The Treasury Department seems to be forgetting that for years... donor-advised funds were on the IRS’ annual ‘Dirty Dozen’ list of tax scams... Yet the Treasury discusses the status quo and pay-out rates as if there’s no cause for worry.”
~ Senator Chuck Grassley,
Press Release, 12/6/2011

Fueled by commentary from the media and academics, this skepticism has begun to take root—manifesting in policy discussions and proposals that pose a threat to our sector. Whether it be university endowments or donor advised funds—endowed philanthropy is endowed philanthropy, and the skepticism is not limited to these specific items.

The threat to philanthropy includes: skepticism about charity - both the current definition and hierarchy of causes; skepticism about the institution - specifically endowed philanthropy; skepticism about the individual charitable incentives.

It is up to us to create an environment in which philanthropy can grow and thrive, and to promote policies that allow the philanthropic sector to remain vibrant, inclusive, innovative, and effective.To achieve this, we need to shift the narrative we convey to policymakers and other influencers to more effectively articulate the value and impact of philanthropy in civil society.