Philanthropy Deep Dive

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The balance of power in the philanthropic world is moving — slowly but surely — away from the people with the money and toward the people they're trying to help.

What they're saying: "People who have experience with inequities are the ones best equipped to design solutions," wrote MacKenzie Scott, the ex-wife of Jeff Bezos, when she announced $1.7 billion in charitable grants this summer.

Flashback: Hedge fund billionaire George Soros once famously declared, during a debate about focus areas at the Open Society Institute, that "at the end of the day, it's my money, and we're going to do it my way."

Similarly, Bill and Melinda Gates employ people with deep subject-matter expertise at the Gates Foundation, and exercise full control over how every one of the foundation's dollars is spent.

How it works: The golden rule ("he who has the gold, makes the rules") is beginning to be supplanted by the other Golden Rule, where the rich give unto others as those others would like to be given to.

The increased visibility of the racial equality movement this year has refocused attention on how privilege can act as a set of blinders.

One young philanthropist, Margi Dashevsky, told the N.Y. Times that “the happenstance of me being born into this wealth doesn’t mean I’m somehow omniscient about how it should be used. It actually gives me a lot of blind spots.”

The bottom line: Paternalism is giving way to humility, and the idea that n0-strings checks can be much more useful than micromanaged projects and a cycle of endless grant applications and donor reports. That's one reason for the rise in popularity of simple cash transfers.

1. The end of philanthropic micromanagement

It's shifting to the people they're trying to help

Illustration of a hand with scissors cutting a ribbon in the shape of a dollar sign

Business

Deep Dive - Philanthropy 2020

The balance of power in the philanthropic world is moving — slowly but surely — away from the people with the money and toward the people they&#x27;re trying to help.

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Whats Next

Axios What's Next

It's been a remarkable year of philanthropic payouts for donor-advised funds (DAFs), which let people take an immediate tax deduction by putting money into an account earmarked for future charitable donations.

Why it matters:  DAFs often take heat because people can park money there indefinitely, reaping the initial tax benefit without donating to good causes. More than $1 trillion sits in private foundations and $120 billion in donor-advised funds rather than being distributed to charities.

In 2020, both contributions to DAFs and distributions from them rose.

What's happening: The dramatic events of 2020 — both the pandemic and the movement for racial equality — inspired people who had set up DAFs to add money to them and to pay out grants to related charities.

Contributions to National Philanthropic Trust DAFs in 2020 are up about 4% from 2019, while both the dollar amounts and number of grants funded is up about 50%, according to Eileen Heisman, president and CEO of the organization, a major sponsor of DAFs.

At Vanguard Charitable, another big sponsor, the trends were similar, with $1.3 billion in grants made by DAF holders in 2020 — about 25% higher than last year, said Rebecca Moffett, chief strategic planning officer.

"We have seen an absolutely overwhelming response from our donors" to the societal needs that have emerged this year, Moffett tells Axios. 

"There has been research that has shown that DAFs are especially resilient during economic down times."

What's new: This year both Fidelity Charitable and Schwab Charitable dropped the minimum amounts they had required people to invest in order to set up a DAF.

And sponsors introduced new tools to help people select charities they'd like to support. 

The one at Vanguard Charitable is called NAVi, or the Nonprofit Aid Visualizer, an interactive tool that lets anyone (not just fund holders) search for charities where they might like to direct their disaster relief dollars.

What they're saying: When the pandemic started, DAF holders started making grants "directly related to COVID and charities that they loved that they were afraid were going to go out of business," Heisman said. "And then when Black Lives Matter came out, there was a lot of focus on social justice organizations."

Lately, she said, she's seeing donations to groups that are  struggling for survival —  like arts and environmental organizations — as well as to health care-related causes. 

"People are branching out to help charities that otherwise literally might have to close their doors,"  Heisman said.

The bottom line: Most people don't give money to DAFs strictly for tax reasons. "I have never seen that to be true," said Heisman, who has worked in the field since 1987. " There are very few dormant accounts."

"People use these because they really want to be actively engaged in their grant-making," she said. "People give the money out, and they restock it when they get a bonus or an inheritance."

2. COVID-19 spurs generosity among holders of donor-advised funds

The dramatic events of 2020 sparked the change.

Illustration of Benjamin Franklin and hearts wrapping paper with large bow

It&#x27;s been a remarkable year of philanthropic payouts for donor-advised funds (DAFs), which let people take an immediate tax deduction by putting money into an account earmarked for future charitable donations.Why it matters: DAFs often take heat because people can park money there indefinitely, reaping the initial tax benefit without donating to good causes. More than $1 trillion sits in private foundations and $120 billion in donor-advised funds rather than being distributed to charities.<ul><li>In 2020, both contributions to DAFs and distributions from them rose.</li></ul>

3. How COVID changed giving

Private equity billionaire Robert Smith — the richest Black person in America — spent 15 years evading taxes on more than $200 million of income, by parking it in secret offshore accounts.

When he was caught, he agreed to pay a fine of $140 million, thereby avoiding criminal prosecution. By that point, he'd donated all of the money to charity.

Why it matters: After Smith found out that the IRS was investigating his offshore accounts, he embarked on a high-profile series of philanthropic gestures.

How it works: According to the statement of facts in the case, signed by Smith, the billionaire found out that he was being investigated in April 2014. In December of that year, he donated all of the holdings of the offshore account to his Fund II Foundation, while "knowingly and falsely" saying that the transfer was required as part of an agreement with his first investor, Robert Brockman.

Smith's philanthropy picked up after that date. In 2019, for instance, he announced he would pay off the student loans of all graduating seniors in the class of 2019 at Morehouse College.

The bottom line: Thanks to his philanthropy, Smith is now considered a thought leader to be lauded during plum spots at conferences, rather than a private-equity speculator caught up in tax and politics scandals.

4. When philanthropy is intertwined with tax evasion

Charitable donations can erase legacies of wrongdoing.

Illustration of gift wrapping paper with a hundred dollar bill pattern being torn away to reveal wrapping paper with a penny pattern. 

Private equity billionaire <a class="gtmContentClick" data-vars-link-text="Robert Smith" data-vars-click-url="https://link.axios.com/click/22303207.30/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3JvYmVydC1zbWl0aC12aXN0YS1lcXVpdHktdGF4LWZyYXVkLThkYzViMzI1LTczZWYtNDA0MS05YzM3LWU5ZDVjZGUxZTRjYi5odG1sP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1zZW5kdG9fbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/5849752d3c8aa983568b458bB8c494b1c" data-vars-content-id="16e08503-a05f-44f6-b0d4-ef1dd3539d39" data-vars-headline="When philanthropy is intertwined with tax evasion" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/22303207.30/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3JvYmVydC1zbWl0aC12aXN0YS1lcXVpdHktdGF4LWZyYXVkLThkYzViMzI1LTczZWYtNDA0MS05YzM3LWU5ZDVjZGUxZTRjYi5odG1sP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1zZW5kdG9fbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/5849752d3c8aa983568b458bB8c494b1c" target="_blank">Robert Smith</a> — the richest Black person in America — spent 15 years evading taxes on more than $200 million of income, by parking it in secret offshore accounts.<ul><li>When he was caught, he agreed to pay a fine of $140 million, thereby avoiding criminal prosecution. By that point, he&#x27;d donated all of the money to charity.</li></ul>

Data: OECD iLibrary; Chart: Naema Ahmed/Axios

Nowhere in the world do nonprofit organizations get most of their money from donations.

The U.S. has more of a culture of donations than most countries — but they still account for only 13% of total revenues. Government, by contrast, provides 31%, and fee income (payment for services rendered, at places like hospitals and universities) is larger still.

5. Where nonprofits get their money

Less comes from donations than you'd expect.

Nowhere in the world do nonprofit organizations get most of their money from donations.<ul><li>The U.S. has more of a culture of donations than most countries — but they still account for only 13% of total revenues. Government, by contrast, provides 31%, and fee income (payment for services rendered, at places like hospitals and universities) is larger still.</li></ul>

President-elect Biden and incoming first lady Dr. Jill Biden's philanthropy largely mirrors their politics, walking a moderate line and throwing a few dollars toward progressive causes as time goes on, an Axios review of the couple's 2012-2019 tax returns shows. 

The big picture: The most frequent recipients of Biden donations include Westminster Presbyterian Church, the Catholic Diocese of Wilmington, St. Joseph on the Brandywine, and Northern Virginia Community College.

United Service Organizations, which provides entertainment to American service members, is a frequent recipient. The group received $15,300 from the Bidens in 2013 alone.

Delaware Boots on the Ground, a service member support group, received $10,000 in 2017. 

The Delaware Association of Police received $350 between 2017 and 2018. 

The United Jewish Federation of Chicago received $180,000 in 2017.

The International Association of Firefighters received $25,000 in 2018. The Cranston Heights Fire Company in Delaware received $25,000 between 2017 and 2018. 

The Delaware Center for Justice has received multiple donations, including a $120,000 donation in 2017.

But some outright progressive causes have popped up in the Bidens' giving, including: 

Congressional Black Caucus Foundation ($250, 2015)

Of note: A review of Vice President-elect Kamala Harris and incoming second gentleman Doug Emhoff's 2018 and 2019 tax returns showed they repeatedly donated to the California State University, Northridge Foundation; the Maple Counseling Center; the University of Southern California; the Parsons School of Design and Howard University. 

6. Biden's charitable giving is politically moderate, too

Some outright progressive causes are trickled throughout.

Illustration of a partially unwrapped gift with a donkey greeting card attached

Politics

Joe Biden

President-elect Biden and incoming first lady Dr. Jill Biden&#x27;s philanthropy largely mirrors their politics, walking a moderate line and throwing a few dollars toward progressive causes as time goes on, an Axios review of the couple&#x27;s 2012-2019 tax returns shows. The big picture: The most frequent recipients of Biden donations include Westminster Presbyterian Church, the Catholic Diocese of Wilmington, St. Joseph on the Brandywine, and Northern Virginia Community College.

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Dolly Parton is known around the world for her musical and acting talents, but the legendary performer recently made headlines for her contribution to science when she helped fund Moderna's COVID-19 vaccine.

Driving the news: Parton donated $1 million to Vanderbilt University for research toward a cure for the coronavirus. Her donation helped fund the university's research that contributed to the development of Moderna's vaccine, which has a reported efficacy of 94.5%

She did not realize she'd helped the Moderna effort until she saw a preliminary report that listed her name among the other vaccine sponsors.

The bottom line: This is not the first time Parton has worked "9 to 5" on philanthropic endeavors.  

She established the Dollywood Foundation in 1988 to inspire children in her home county, Sevier, Tennessee, to achieve educational success.

She helped reduce dropout rates from 35% to 6% for 7th and 8th graders in the late 1990s by promising to give each student $500 if they finished high school.

Parton launched the Imagination Library in 1995 to inspire preschool children to read more by mailing them free books from birth until they start school.

In March 2018, Imagination Library mailed its 100 millionth book.

She founded the library as a tribute to her father, who was unable to read. 

She established a My People Fund in 2016, pledging to donate $1,000 per month to families who lost their homes to the wildfires in the Great Smoky Mountains. 

Parton also hosted telethons to raise funds for fire victims.

Parton previously donated to Vanderbilt University in 2018, when she gave $1 million to the Monroe Carell Jr. Children's Hospital in honor of her niece Hannah Dennison, who was successfully treated for leukemia there when she was 4 years old.

Flashback: Parton, the fourth of 12 children, was born in a one-room cabin in Tennessee. She described her family growing up as "dirt poor" in a 2002 CNN interview, where she said her experience inspired her philanthropic efforts.

"It's really a wonderful thing because many of my people weren't able to read and write and have the opportunity to get an education," she said, speaking about her Imagination Library. "When you get in a position to be able to help, you should do whatever you can."

Former President Barack Obama regrets overlooking this generosity and said not giving Parton the Presidential Medal of Freedom was "a screwup."

"That's a mistake. I'm shocked," Obama said during an interview with CBS’s The Late Show when asked why Parton had not received the award. "She deserves one. I'll call Biden."

7. Dolly Parton's string of philanthropic hits

Dolly Parton donated $1 million to Vanderbilt University for research toward a cure for the coronavirus.

Photo illustration of Dolly Parton wrapping paper on a gift with a notecard attached

Photo illustration: Sarah Grillo/Axios. Photos:  Bruce Glikas (FilmMagic), Jason Kempin/Getty Images

Media

U.S. News

Health Care

Coronavirus

Dolly Parton is known around the world for her musical and acting talents, but the legendary performer recently made headlines for her contribution to science when she helped fund Moderna&#x27;s COVID-19 vaccine.Driving the news: Parton <a class="gtmContentClick" data-vars-link-text="donated $1 million" data-vars-click-url="https://twitter.com/DollyParton/status/1245386918281596929?s=20" data-vars-content-id="c0ce4a94-025f-409d-bea0-89e7d99d69b1" data-vars-headline="Dolly Parton&#x27;s string of philanthropic hits" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://twitter.com/DollyParton/status/1245386918281596929?s=20" target="_blank">donated $1 million</a> to Vanderbilt University for research toward a cure for the coronavirus. Her donation helped fund the university&#x27;s research that contributed to the development of Moderna&#x27;s vaccine, which has a reported efficacy of 94.5%

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

A look at how philanthropy is evolving (and why Dolly Parton deserves a Medal of Freedom).

(And why Dolly Parton deserves a Medal of Freedom)

Illustration of hands tying a bow on a gift