Senators Klobuchar and Warren have introduced two seemingly unrelated bills, but they could be, in part, two sides of the same coin (an appropriate cliché here because we’re talking about money).
Senator Amy Klobuchar has introduced a bill that provides $50 billion to help restore the nearly one million jobs that have been lost in the nonprofit sector due to the pandemic(!), as well as build nonprofit capacity to respond to an increased demand for services. Given the dire circumstances the nonprofit community faces, the Senator can be forgiven for endorsing this approach to addressing the ongoing crises.
Sen. Klobuchar proposes government expenditures that will likely be paid for as much by the middle class and not-so-rich as the wealthy. While she recognizes the problem nonprofits and those needing their care face, there are better ways of funding the solution.
Contrast her proposal to the Crisis Charitable Commitment (CCC), a voluntary solution to the nonprofit crisis. If foundations were persuaded to increase their payouts to 10% of their assets, it alone would provide the needed $50 billion. If billionaires (on average, since too many billionaires couldn’t care less) were persuaded to increase their charitable giving from the usual 1% up to 2%, that would increase money going to nonprofits by $40 billion! If on average all ultra-high net worth individuals (UHNWI) increased their giving by 1%, it would generate $120 billion to address issues like hunger, job loss, childcare, domestic violence, climate, racial justice, the arts and performing arts, democracy and more.
So here’s the thing: Foundations and donor-advised funds have already gotten their tax breaks–they could and should meet their responsibility and respond to the crisis at hand now.
The CCC continues to encourage the donor class to do the reasonable and responsible thing– we have an amazing list of people and foundations who have met the Charitable Standard, but it is only a tiny percentage of foundations and wealthy people who should give more–while others have taken the legislative approach. The Emergency Charitable Stimulus proposal, which calls for a 3-year 10% payout requirement for private foundations and donor-advised funds, could generate close to $200 billion over those three years.
And what about the UHNWIs? One could argue that they, too, have already gotten their tax breaks, ever since 1980, as taxes on the wealthy have dropped dramatically. Senator Warren’s wealth tax begins to address the massive wealth inequality, but only with kid gloves: 2% on assets over $50 million (people with less than $50 million pay nothing), 3% on assets over $1 billion. Why do I say kid gloves? Compare Warren’s wealth tax rates to the Charitable Standard (for which rates were influenced by Sanders’ wealth tax proposal during the Presidential campaign): 1% up to $50 million, 2% on the next $100 million, 3% above $150 million, 4% above $1 billion, and 5% above $25 billion. With Warren’s wealth tax, Bezos would pay about $6 billion in taxes, compared to the Charitable Standard which suggests charitable giving of close to $10 billion each year.
Does Senator Warren make us, the CCC, look good or bad? Is our number too high, or is her number too low (putting aside political realities)? It depends on whether you think someone with $200 billion can afford to give away $10 billion.
Wait! Didn’t Bezos commit $10 billion to fight climate change? He sure did, but that money is to be spent over 10 years. I suppose he thinks a) there’s no hurry in fighting climate change, and/or b) he can’t afford to (or should) give away $10 billion this and every year. (Remember, his net worth increased by $90 billion since the pandemic began, and with “normal” investment returns he can expect to earn $15 billion per year!)
A billion here, a billion there….If you are not already numbed by the numbers, let me put all of this in perspective. The total amount of money that foundations and individuals (including bequests) give to nonprofits is $260 billion per year. America’s billionaires made four times that amount just since the pandemic began! We don’t need the government rescuing nonprofits with $50 billion in taxpayer money, unless it is the billionaires who are the taxpayers. What we do need is for foundations, donor-advised funds, and the rich to step up to the plate.