Wealth hoarding, tax avoidance, and how nonprofits are complicit

[Image description: A squirrel, looking alert, standing among green blades of some type of plant. I think they’re a squirrel, but I can’t see their tail so can’t really be sure. Either way, this image has nothing to do with the content of this post. It is there to help calm you down while we discuss a serious topic. Image by JoeBreuer of Pixabay.com]

Happy September, everyone. Holy hummus, it’s September! Fellow parents with school-age children, I hope you are doing ok. Hang in there. We’ll make it through this together. When things get tough with virtual schooling, just remember the old adage: “The days are long, but the years are—You better not be playing Minecraft again! Get back to your Zoom class this instant or no media the rest of the day! And you! Those loose fruit snacks you found under the couch are covered with dust! Throw them away, or at least rinse with water before eating!”

I know we all have a lot on our minds, and unfortunately I must add one more thing for us to think about. Three months ago, I wrote “Have nonprofit and philanthropy become and white moderate that Dr. King warned us about?” Since then, I have been grappling with the question of how effective our work is as a sector. Are we actually doing good in the world, or have we tricked ourselves into believing that we are while in reality we’re allowing inequity and injustice to proliferate? The reality is that we’re doing both, and it’s important for us to untangle these dynamics.

Recently, I read the Gilded Giving report by the Institute for Policy Studies. It examines the trends in giving in our sector and what it means. It paints a picture that is not pretty. Here are several points we should pay attention to:

  • Starting in 2010, a bunch of billionaires signed a pledge to give away half their wealth. Since then, their combined wealth has actually doubled. From $376 billion in 2010 to $734 billion as of July 18, 2020.
  • Over the first four months of the pandemic, when everyone has been struggling, the 100 living Pledgers who were billionaires in March actually INCREASED their wealth by $213.6 billion, or 28%, from 758B in March to 972B in July.
  • Small individual giving has been in decline over the past two decades. Between 2000 and 2016, the percentage of households giving to charity has dropped from 66 percent to 53 percent.
  • Large gifts, however, have been increasing. Households making over $1M claimed 33% of all charitable deductions in 2017, up from 12% in 1995.
  • The number of foundations in existence increased by 68% between 2005 and 2019, from 71, 097 to 119,791. During this period, their assets more than doubled, from $551 billion to $1.2 trillion
  • Donor-Advised Funds (DAFs) have grown even more rapidly in number and assets. DAFs have no legal mandate to pay out anything each year. Donors take tax breaks immediately when they transfer their wealth to DAFs, but they are not legally required to actually distribute those funds to nonprofits.
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A sample annual appeal letter, if nonprofits were brutally honest with donors

[ Hi everyone, this is the last post of this calendar year. NAF will take a short break and will return with a feisty article on January 6th, 2020. Happy holidays! ]

[Image description: A blank white sheet of paper on some untreated wood planks, with various round gold ornaments and green pine branches surrounding it. The top right corner of the paper is covered with a smiling cartoony angel ornament, while the bottom left corner has a gold bow and a red bow, the kind one puts on presents. Pixabay.com]

Dear John,

As the year winds down, I know you are getting inundated with appeal letters from dozens of nonprofits. This letter is one of them. Just like other missions, we are writing to ask you to give money so we can keep vital programs and services running. And don’t worry, despite all those memes floating around about nonprofits spending 94 cents of every dollar on luxury cars and unicorn steaks or whatever, the money you donate is being put to good use. By being spent on staff, who do all of the work, along with critical things like office rent, utilities, etc. Your support makes it all possible.

Let me insert a story designed to affect you emotionally. Our program director Katie had terrible dental pains caused by her wisdom teeth, but we could not afford to give staff health insurance AND dental insurance. For months, she just carried on, but it really affected the program. The kids we serve could not understand what she was saying due to all the agonized mumbling. It made consoling them when ICE raided their parents’ workplaces a little more challenging. But thanks to donors like you last year, we were able to upgrade our healthcare from Copper to Copper Plus, which includes dental! Katie was finally able to get her wisdom teeth removed (with a $1200 deductible that she can pay off gradually with interest)! The afterschool program is stronger than ever!

Continue reading “A sample annual appeal letter, if nonprofits were brutally honest with donors”

OMG, can we please stop saying “there’s only so much funding to go around”?!

Hi everyone. I just finished reading Edgar Villanueva’s important and illuminating book, Decolonizing Wealth. It highlights something we actively avoid talking about: the history of philanthropic dollars, which is rooted in the colonization of Native land, slavery, and other abuse of and extraction from communities of color. The book also presents a hopeful path forward. I highly recommend it, and will be discussing it more in depth in one or more future posts, so please check it out.

[Image description: An adorable little brown weasel with a white underbelly. It’s crawling out from under what looks like a wooden porch. This weasel has nothing to do with this post. And jokes about its resemblance to the author are not appreciated. I probably should have used a squirrel. Pixabay.com]
I’m slightly grumpy right now due to the news, and also my two beautiful small children who threw tantrums this evening over something ridiculous. The five-year-old because he had to trace all of four words for his kindergarten homework, something he literally could have done in 30 seconds if he hadn’t spent 30 minutes crying about how much work it was; the two-year-old because his banana had a single bruise spot on it. So keep this in mind as you read. The ornery tone of this post, it’s not you. It’s me. But it’s also possibly you.

A few weeks ago, I gave a keynote, and during the Q&A, someone got up to ask a question:

“I really appreciate how you are trying to move us away from scarcity and martyrdom, but…”—I knew what was coming next— “how do we do that when there’s only so much funding to go around?”

Well slather me in hummus and call me Randall, there’s only so much funding to go around?! Continue reading “OMG, can we please stop saying “there’s only so much funding to go around”?!”

Philanthropy: Whose money is it anyway?

[Image description: A pink piggy bank, staring directly at the camera with its small, dark, mysterious eyes. Beige background. Image by quincemedia.com, obtained from Pixabay.com]
Hi everyone. This post may be a little serious, due to one more mass shooting. As a parent, I think of death a lot, but mainly in the context of who would take care of my kids if my partner and I unexpectedly died. It should not be the opposite; no parent should ever have to contemplate whether their kids may survive the school day, much less endure the agony of losing their child. I am thankful for those of you who are working to advance responsible gun laws and other relevant policies and programs. Our sector needs to flex its advocacy muscles more. While we’re doing that, though, there are other challenges we need to take care of. Continue reading “Philanthropy: Whose money is it anyway?”

Someone wants to start a nonprofit? Quick, grab the torches and pitchforks!

[Image description: Two hands holding up an orange square with an angry face on it. The background is of a brick wall. Image by Andre Hunter of unsplash.com]
OK, everyone, sit down, we need to have a talk. Every once a while, someone—usually from outside the sector—mentions their goal of forming their own nonprofit. “It has been my life-long dream to quit the rat race and start a possum therapy organization. It’s kind of like one of those equine therapy programs, but with possums instead of horses.”

From the online discussions I’ve seen, the response from us is often, “Hiss! How dare they want to start a nonprofit! Let’s burn their barn down! Let’s pour salt in their field so it shall remain fallow for seven generations! Let’s mix up the labels on their spinning spice rack so that nothing they make will taste good again!” Continue reading “Someone wants to start a nonprofit? Quick, grab the torches and pitchforks!”