Philanthropy Isn’t a Luxury – It’s a Lifeline

The importance of charitable giving to American society can be seen in every community. Each of us has our own story about the charitable sector’s impact on our lives, whether it is a foundation’s support making a community program possible or the causes we choose to support with our charitable gifts. The variety of ways organizations and individuals can choose to participate is part of the sector’s strength.  

That strength becomes even more apparent in times of crisis. At a time when the government is pulling back from services it has long provided, private foundations are stepping up to support their nonprofit partners and grantees. As the needs of our communities continue to grow, we should not be removing incentives to give.

Yet, instead of finding new ways to unlock that vital philanthropic support, a new proposal threatens to create a new tax on foundation endowments to pay for a universal deduction. Let me be clear: We reject this premise.

As private foundations work to support the communities that rely on them, endowments help cushion against the nation’s financial ups and downs. These endowments allow foundation giving to remain steady in times of economic uncertainty and even allow some foundations to propose increases.

And this story isn’t new. In the face of global uncertainty in 2020 during the COVID-19 pandemic, philanthropy rose to the occasion, giving $20.2 billion — more than double the amount given to the previous top 10 disasters combined. And during the Great Recession of 2007-2009, while their endowments lost up to 20% of their assets, many foundations increased their payout to meet the needs of their communities and partners. That’s not an accident: that’s philanthropy, powered by endowments. Adding new taxes on endowments or creating other restrictions will only reduce the amount of grants flowing to communities at a time when more is needed, not less.

And yes, we should also encourage more Americans to give what they can to the organizations and causes that matter most to them. The Council has long supported a universal charitable deduction that recognizes all taxpayers for their giving. But charitable giving is not a zero-sum game.

Recognizing donors’ generosity to meet today’s challenges does not need to come at the expense of ensuring foundations can give today and plan for an uncertain future. Individuals and foundations value different causes, operate on different timetables, elevate different types of organizations, and choose different strategies for their giving. This broad tapestry of charitable giving best serves our communities —and continues to do so despite economic downturns. Together, individual and institutional giving create richer, healthier, more vibrant communities.

Philanthropy can do what no other industry can: invest in innovation, support bold ideas across generations, maintain access to core services, and respond quickly to unpredictable, dire challenges. Often, we’re doing all of that at the same time. Endowments help make that possible. Prioritizing individual giving at the expense of private foundations will only leave us less able to respond when the next crisis emerges.

The Council will continue to stand up for a charitable sector where individuals and organizations can give in ways that align with their values today and into the future.