[Linked article might be behind a paywall. Sorry.]
I just read a New York Times article titled How Long Should It Take to Give Away Millions? Subtitle:
The promise of philanthropy was that the wealthy could enjoy tax breaks for their charitable contributions. The pandemic laid bare how accumulation can trump getting money to those in need. A Senate bill aims to change that.
[Boldface emphases in quotes will be mine throughout this post.]
It seems that a coalition of stakeholders including policymakers, advocacy groups, and some billionaires essentially has for a while objected to the idea of 'giving later'. For instance, they want to increase per-year spending requirements for foundations, regulate donor-advised funds (DAFs), and close what they perceive to be various loopholes.
The participants wanted, among other reforms, to ensure that money stashed in donor-advised funds, which had already earned those donors significant tax savings, ended up in the hands of working charities more quickly.
Last summer, Patriotic Millionaires — a group of about 200 wealthy individuals including the Disney heiress Abigail Disney — joined the left-leaning Institute for Policy Studies in asking Congress to double for the next three years the amount of their assets private foundations are required to pay out, to 10 percent.
Mr. Arnold, Ms. Madoff and others began recruiting support for proposals to regulate donor-advised funds and to curb practices by private foundations like counting salaries and benefits to family members toward their legal payout requirements. In December, the Initiative to Accelerate Charitable Giving was announced, with the support of big names in the field like the Ford Foundation, the Hewlett Foundation and the Kellogg Foundation.
This June, bipartisan legislation along these lines was introduced to Congress, sponsored by senators Angus King (I. - Maine) and Charles E. Grassley (R. - Iowa).
The bill would close a loophole in order to speed giving to working charities: Foundations would no longer be able to meet the 5 percent annual payout requirement by giving to a donor-advised fund where there currently is no payout requirement. The bill also would prohibit foundations from counting the salaries or travel expenses of a donor’s family members toward the 5 percent minimum.
For donor-advised funds, the proposed legislation would require a donor who wanted the full tax benefit right away to ensure that the funds were dispensed within 15 years.
If that is too fast a pace, or if donors are focused on giving over a longer time span, they could take 50 years to pay out. But they would need to wait until then to claim the full tax deduction.
(I don't know the status of this bill.)
I know almost nothing about US tax and nonprofit law. I don't have a good sense of the overall impact it would have on the philanthropy landscape, or on the feasibility of patient philanthropy. In any case it seems clear that the vast majority of giving that might be pushed from later to earlier times was not motivated by EA-style 'giving later' reasons anyway, and that EA-inspired patient philanthropy would at most be a freak casualty.
To be very clear, this means that I don't have a considered view on whether or not this bill would be net good, and what share of the reasoning behind it might be sound.
I found this article interesting primarily from a political communications, issue framing, and agenda setting perspective. In particular, I thought it was interesting that the discussion (at least as represented by this article) is an arguably muddled mix of empirical concerns about unintended tax loopholes, a perceived linkage to the more general issue of wealth inequality, and vaguely moral undertones that amount to brute shorttermist bias, starting with the subtitle lamenting that "accumulation can trump getting money to those in need" (rather than, e.g., asking whether it's worse to get money to those in need in the future as opposed to those in need right now). It doesn't help that the discussion generally blurs "giving later" and "giving never".
a way of ensuring that money promised to charity more quickly gets to the people who need it.
The pandemic laid bare how, with a few exceptions, accumulation trumped distribution.
“There’s an awful lot of charitable money sitting in warehouses that people have taken deductions for but the money has never reached working charities,” said Mr. King. “That’s the fundamental problem that we’re trying to remedy.”
“Some of these funds have accumulated and paid very little out,” Mr. Grassley said, and in those cases “the purpose of the charitable giving deduction is abused.” [!]
“The gap between social need and private philanthropic resources was always big,” said Stanley N. Katz, a philanthropy expert at Princeton, “but it’s huge now.”
But proponents of changing the way DAFs operate say the pandemic revealed how urgent the need for reform is: While the most vulnerable Americans were forced to line up outside food banks, the share prices of publicly traded companies climbed ever higher. Yet the charities and nonprofits that helped care for the children of frontline medical workers and brought clean diapers to the poor were forced to lay off staff.
“Philanthropy is where wealth inequality is playing out in the public realm,” said Ray Madoff, a law professor at Boston College and one of a group of people backing a push to rein in donor-advised funds.
[William A. Schambra, a senior fellow at the Hudson Institute:] “DAFs are an enormous whirlpool sucking that money away from charities into accounts that are institutionally inclined to be reluctant to disburse money.”
Taking a step back, I think this is also interesting as an opportunity for longtermists to contribute to a broader, public conversation. We can imagine a world in which a longtermist public intellectual pens a sharp letter to the editor in response to that article, acknowledging problematic tax loopholes but boldly calling out the implicit discrimination against future people, perhaps even analogizing it to past instances of a, by todays light, too narrow moral circle. Less confrontationally, one could try to drive home the point that it arguably is much more important how - e.g., to what cause - philanthropists give as opposed to when they do so.
It seems that we are usually deliberately foregoing such opportunities, due to strategic uncertainty about the value of different types and speeds of movement growth. (As well as some painful lessons from the early days of EA about the costs of public controversy and advocating for half-baked ideas.) I don't mean to take a stance on these strategic questions here, but I think it's useful to have access to concrete examples of what we could do when considering them.