Hi everyone, I hope you’re doing OK during this time of Fascist Extremist Assholes Reign (FEAR). If you’re free this week, March 4 to 6, please join me at the virtual Nonprofit Marketing Summit: Evolve, which is FREE. My session will be on March 5th at 11am Pacific Time, and is called “Nonprofits, Bans, and Burnout: Surviving in 2025 Without Losing Our Collective Minds (or Tax-Exempt Status).” Please register here, attend, and say comforting things in the chat in case I break down weeping into a stuffed unicorn.
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Last week, the MacArthur Foundation received a lot of praise for committing to increase its payout rate for at least the next two years from the legal minimum of 5% to 6%, which will add to the foundation’s total giving by about $150M. Here’s an article on it (Content warning, the article immediately displays a picture of Agent Orange, Russia’s most valuable puppet, in case you are trying to regulate your stress level). Here’s a piece from MacArthur’s president, John Palfrey, encouraging other foundations to do the same:
“We are inviting other philanthropies to join us: set it at six. We hope others in a position to do so will consider voluntarily raising their baseline payout rate to 6 percent, from the 5 percent as mandated by law, for the coming two years, at a minimum […] Philanthropies are well positioned to respond during periods of crisis. Many stepped up during COVID-19 and put out more funds when the social sector needed it. Today is a time when severe budget shortages again call for an infusion of additional capital.”
Quick disclaimer: I like and appreciate the MacArthur Foundation, especially since it affirmed its commitment to racial justice work when there has been so much pressure to drop DEI. Also, the foundation brought me in to speak a couple of years ago, and I hung out with John and the team, and everyone I met was wonderful. MacArthur does important work. And it takes some guts to bring in someone who points out all the stuff you could be doing wrong, and who is known to steal dry erase markers and snacks from foundation offices (In my defense, the stealing is a result of decades of being conditioned by funders to keep overhead low).
In the spirit of collegial feedback, I have to say 6% is nowhere near enough for what the world is facing. As colleague Rahul Chandran says, “Mac had a return of 10.92% on its portfolio in 2023 and a compounded annual rate of return 2014-2023 of 8.52% […] Given that rate of growth, Mac could have given out about 10.11 percent of its assets annually = doubled its giving. Had it done so, it would have about 20% less in net assets (or…$6.4 billion!) today.”
And two years is also not enough. As I mentioned in a reel last week, conservative funders often fund for 20 years or 30 years or more.
Setting such low thresholds anchors these numbers in people’s minds, preventing them from thinking bigger and bolder. When everything is burning down all around us, foundations should be considering upping their payout rate significantly, and though I love alliteration as much as anyone, the call to “Set it at Six” is an incremental step that does not acknowledge the reality of the situation. Freedom Together Foundation goes further by deciding to double its payout rate from 5% to 10%. Its President, Deepak Bhargava, in a letter titled “Courage is Contagious” writes:
“We’re moving to provide rapid response grants to communities and organizations under attack. We’re backing groups that are defending democratic norms, as well as supporting safety and security initiatives for organizations under threat. And we’re doubling down on long-term strategies to get at the roots of the democracy crisis.”
10% is certainly a significant improvement from 6%. And if we’re going for alliterative mottos, “Take It To Ten” is a better rallying cry.
But even that is not enough. We’re debating whether foundations should stick to 5%, or increase to 6% or possibly 10%, but this discussion is symptomatic of a continued denial of reality. We’re treating this crisis as if it were like other crises we’ve dealt with before. People think if we can just weather the next two years, maybe Democrats will win back the house, and then we can stop the bleeding, and then in four years, maybe we’ll win back the presidency, and then we can start restoring Medicaid and trans rights and so on and everything will be back on track and all of us can finally have decent sleep without night terrors. And of course, we’re going to need money to get all of that done and address other societal problems, so funders need to save and shore up for the future.
That sort of thinking ignores history and reality. Those who study the fall of democracies or who have lived through similar times, perhaps in other countries, see deeply troubling signs and patterns.
One of the first things fascists do is diminish or destroy the right to vote from people who would vote against them. The SAVE Act, and Musk’s possession of voters’ information, will disenfranchise millions of people and prevent them from voting, or it may allow Musk and his team to tamper with their votes. Our voting system, already so precarious with literally hundreds of laws passed to suppress voting, complemented by MAGAs burning ballot boxes and using other intimidation tactics, will be rendered obsolete. The democratic process will be a farce, like when we see dictators having “elections” and getting “100% of the votes.”
Meanwhile, this administration has been weaponizing the Justice Department and executive orders to neutralize the nonprofit sector, as we are a threat. We saw that in HR9495, the attempt to give the government the power to declare any nonprofit it doesn’t like a “terrorist-supporting” organization and remove its tax status. It didn’t pass, but they will try again. We see it again in the attempts to freeze federal grants. We really think they’re going to stop coming for us?
Being declared a terrorist-supporting organization sounds scary enough, but that’s likely only the first step. The next logical step for a fascist regime is to seize its opponents’ assets, including the billions of dollars foundations may have stored in their endowments. With control of the Senate, House, Presidency, and Supreme Court, what is to stop them from doing that? Who is to stop them from committing any atrocities they want to commit and turning the US into a Christian theocracy?
Two of the things that are most effective against a dictatorship are courageous media and people protesting. They know that, that’s why the right-wing has been suing publications that dare to report accurately on its malicious actions, causing others to be fearful about saying anything critical of the government or the unelected oligarchs in power. And states are restricting protests and criminalizing protestors, including punishing not just people who are directly protesting, but also the people and organizations that support the protestors, such as those raising money for bail funds.
So no, this is not a crisis like others. It’s not like the AIDS epidemic. It’s not like COVID. This is a rapid dismantling of democracy to replace it with an authoritarian state. This is more akin to Hitler or Mussolini’s rise to power. And debating whether the payout rate should increase to 6% or 10% is entirely missing the discussion we should be having: What does it take to halt and reverse the US’ (and the world’s) rapid descent into fascism?
Funders should ask themselves “If we knew that in two years, there will be no more fair elections; any media that criticize the government get sued or disbanded and its journalists jailed; any organization accused of engaging in DEI is shuttered; protests are declared illegal and protestors and anyone who helps them get arrested; and we are branded a terrorism-funding foundation and our endowment gets seized, how would we act?”
I don’t think the answer would be to increase payout rate slightly and continue hoarding the rest for the future, as there may not be a future.
The answer is to do whatever it takes, which includes a hundredfold increase in funding for legal battles (including suing this administration as many times as needed); for a robust and free press; for organizations and movements advocating for trans rights and voting rights and other civil rights; for mass protests and organizing; for fellowships supporting individual progressive activists; for electing progressive political candidates; for establishing of progressive networks that would be the left’s equivalent of the Federalist Society, Heritage Foundation, Cato Institute, Koch Network, and other right-wing institutions; and for other strategies we should have implemented decades ago.
All of that, to do effectively for as long as it takes (again, 20 years and more, the way conservatives foundations operate) will require a significant shift in thinking, not just around payout rates, but around everything. Even if we manage somehow to save democracy, it is extremely precarious and needs to be reinforced after this brutal battering, and that will still require left-leaning foundations to behave differently.
I hope and pray all the experts on tyranny and fascism are wrong and that we’re worrying about all of this for nothing. I hope all the people rolling their eyes at me and at others sounding the alarm are right. But as the saying goes, “The road to fascism is lined with people telling you to stop overreacting.”
