The Donor Revolt for Charity Reform is a campaign powered by a unique collection of progressive philanthropists and advocacy groups. Their goal: putting more donations to work by reforming the laws that govern how those donations are spent. 

According to last year’s report from the National Philanthropic Trust, more than $1.5 trillion dollars in assets are held by private foundations and donor advised funds (DAFs) in the United States – and a comparatively small percentage of those funds make it out the door in grants each year to the organizations doing critical work on the ground. 

Proximate spoke with Bella DeVaan, associate director of the Charity Reform Initiative and a co-editor of inequality.org, about where DAFs do (and don’t) work best, what today’s moment has in common with the Gilded Age, and how regular donors can make DAFs work for them. 

How do you think DAFs should be used? Should they exist at all?

DAFs are at their best when they facilitate faster and more generous giving, which their streamlined structure can be well suited for. But the numbers show that many givers treat federal rules as ceilings, not floors, which is why we can't leave good practices up to individual actors.

We've seen plenty of crisis moments like Covid which should have produced a more sustained increase in funding. Instead, we've seen the estimated wealth held in foundations and DAFs continue to grow, while funding for working charities stagnates. We pay close attention to and really appreciate DAF sponsors and users who take it upon themselves to pre-figure what the funding landscape should look like and don't wait to be forced to spend more by regulations.

What do you think is a realistic goal for federal DAF reform in the next five years? Is this an issue where any progress is meaningful, or are there some bare minimums we really need to hit?

Our team has gauged public opinion on DAF reform, and the results are overwhelming: across the political spectrum, there's voracious appetite for creating rules that don't permanently subsidize charitable intermediaries, and to specifically impose a time horizon of spending donations within 5 years and a fair payout requirement on DAFs. We think there's a huge opportunity to harness legislative history and put it to work, especially since an overhaul of the tax code seems to be on the table for 2025, and that's where charity reform laws live. 

So in the short term, we think it's urgent and feasible that the most egregious loopholes get closed – like DAF-to-DAF and foundation-to-DAF giving, which ping pongs wealth back and forth without putting it to work. We're feeling optimistic about how public opinion and growing outrage about plutocratic philanthropy will converge to deliver meaningful change. Even bare-minimum changes will result in unlocking billions of dollars in donations for working charities.

We’ve historically seen reforms around philanthropy during bigger movements for change – the idea of family foundations came out of post-Gilded Age labor and tax reforms, and we saw additional incentives for giving – as well as early experiments with participatory grantmaking – put in place during the social change movements of the 1960s and 1970s. What’s unique about this moment for DAF reform?

A healthy society has a healthy calibration of private and public power and a fair relationship between philanthropy and taxpaying. The prevailing laws governing how philanthropy operates were passed during a historically low period of wealth inequality in the US.

We're now at an inflection point where public awareness of and exasperation with the havoc wrought by extreme wealth inequality is going to have to drive policy change. How do we know that? Politicians on the right and left are recognizing and responding to this reality to varying degrees of honesty and efficacy, as are both grantmakers and recipients – or “donors and donees,” as was phrased back in the 1960s!

Our Donor Revolt campaign is based on this assessment of the moment, aligned with other efforts led by people with wealth to give who recognize that our current system is unhealthy, even if it confers short-term benefits for them. Plus, in an election year that has displayed the devastating effects of court influence networks, it's really visible how people can take advantage of philanthropic laws and the lack of transparency to distort our democracy.

We typically associate DAFs with the wealthy, but that’s not always the case – the minimum account size is low enough that a lot of middle-income folks could open one. What would you want those people to know if that’s something they’re considering?

DAFs are at their best when they streamline the giving process and facilitate fast and bold giving. We need more everyday givers participating in philanthropy to reshape how the sector reflects more popular, common interests. 

In an ideal world, I'd hope that all DAF users would approach their DAFs as conscientious shareholders: DAF users, no matter how much money they are able to give, should be aware of how their sponsors participate in lobbying against common-sense charity reform ($11 million was spent around issues of charity reform since 2018 by DAF sponsors), how they advertise low-disbursement or endowed accounts which tend to keep money sidelined, or if their sponsors house any coordinated giving to hate groups. As a participant in a DAF, you can have a say over how business gets done.