The College Donor Digest

FAR in the Field

May 16, 2022

Rebecca Richards, FAR’s program manager, recently attended Democracy and Philanthropy in America, a conference in Winter Park, Florida, hosted by American Philanthropic’s Center for Civil Society (C4CS). Donors, philanthropic advisors, and nonprofit leaders convened to discuss how charitable giving can build healthy social institutions and the potential ramifications of proposed legislative changes to charitable giving rules. Here are two big ideas from the day’s events.

Creating cultural institutions that incorporate the best of what technology can offer while rebuilding social bonds is a difficult task, but one which savvy philanthropists must face head on.

Since Robert Putnam published Bowling Alone in 2000, sociologists have noted the dramatic decline of involvement in traditional institutions such as religious groups, volunteer associations, and fraternal organizations. Historically, these institutions served as a way for people to build social bonds and practice civic skills, such as solving problems and working across ideological lines. Because technology advanced while venues for interpersonal connection diminished, the former is often held responsible for the latter.

In his opening remarks at the conference, U.S. Senator Ben Sasse argued that we cannot simply rebuild old institutions but must develop new ways to strengthen civic skills that incorporate the benefits of technology. During the pandemic, mutual aid and “buy nothing” groups used social media to connect the needs of friends or locals with others who could provide support. Philanthropists could fund experimental organizations that harness technology to build social connections, support local media reporting reliable news, and increase access to voting and civic information.

Proposed charitable reforms in Congress are unlikely to pass this session. However, potential legislation highlights cultural criticisms and concerns with philanthropy.

Throughout the day, the Accelerating Charitable Efforts (ACE) Act was a common topic of discussion. Among other changes, the ACE Act would institute a 15-year payout requirement on donor-advised funds (DAFs) or delay the income-tax deduction. The ACE Act would also preclude family foundations from counting family members’ travel and salary toward the 5% payout requirement.

Leslie Lenkowsky, professor emeritus in public affairs and philanthropic studies at the Lilly Family School of Philanthropy at Indiana University, noted that the ACE Act lacks significant support in Congress. He acknowledged, however, that the legislation is worth discussing as its contents reflect common concerns about a lack of transparency in the charitable sector, including the “warehousing” of philanthropic funds in DAFs and growing distrust of philanthropists’ true motivations. While this specific legislation may not pass, similar proposals very well might in the future.

In just one day, the Democracy and Philanthropy in America conference managed to address many of the most urgent challenges facing the charitable sector in 2022. The hybridization of society and technology is seemingly here to stay, as is public skepticism about the charitable sector. The willingness to wrestle with these issues is promising for the future, not only for philanthropy, but also for a country that desperately needs to rebuild strong civic institutions and social cohesion.

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The Fund for Academic Renewal is a program of the American Council of Trustees and Alumni, a not-for-profit, tax-exempt organization as defined by Section 501(c)(3) of the Internal Revenue Code. All contributions to FAR are fully tax-deductible to the maximum extent provided by law.