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Rise of wealthy donors worry philanthropic sector; IPS

By Fredrick Obura | July 29th 2020

A new report from the Institute for Policy Studies (IPS) documents a troubling trend of small-donor declines with a parallel rise in wealthy mega-donors within the nation’s philanthropic sector.

The report, “Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy,” finds that the top-heavy philanthropy poses considerable risks to the independence of the nonprofit sector, the integrity of the tax system, and to democracy itself.

“Philanthropy should not become an extension of private wealth and power for the richest 0.1 per cent,” said Chuck Collins, Co-author of the report and Director of the Program on Inequality and the Common Good at IPS.

“The US Congress needs to update the rules governing philanthropy to prevent abuses to the tax code and protect democracy and the nonprofit sector.”

“The Giving Pledgers set out in 2010 to give away half their wealth and instead their assets have doubled,” said Collins, citing one of the report’s findings. “By giving $1.7 billion directly to 116 charities, MacKenzie Scott (Bezos) has modeled what Giving Pledge billionaires should be doing with their wealth. They should give it directly to working nonprofit charities and not to their perpetual family foundations or donor-advised funds.”

While overall giving to charity has grown over the last several decades, the report says that trend masks the growing inequality in charitable giving.

According to the report findings, small-donor giving has been steadily declining for two decades. Between 2000 and 2016 (most recent data), the percentage of households giving to charity has dropped from 66 per cent to 53 per cent.

Wage stagnation, unemployment, declining homeownership all contribute to economic insecurity and declines in giving.

The increase in charitable giving has been driven by donations by wealthy donors and mega gifts over $300 million.  

In the early 2000s, households earning $200,000 or more made up only 30 per cent of all charitable deductions. By 2017, the most recent year available, this group accounted for 52 per cent.

The per cent of total charitable deductions claimed by households making over 1 million dollars grew from 12 per cent in 1995 to 33 per cent in 2017. The richest 1 per cent of wage earners claimed one-eight of all charitable deductions, today, they claim one-third.

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