Quite simply, charitable giving alone will NEVER be enough to solve social problems while the majority of our wealth is invested in companies whose primary objective is shareholder profit.  

 

Consider this. In 2017, we gave away $410 BILLION dollars in the US. 

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Billions.  Wow. Sounds like a lot of money… Or is it? 

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Comparatively, there are about $196 TRILLION dollars EVERY DAY circulating in the global economy.  

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This means what we gave in a YEAR is only 0.21% of the money in global circulation EVERY DAY. ​​​

 

 

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According to the Chronicle of Philanthropy, the vast majority of charitable giving goes to colleges. 

 

In 2018, the Harvard Endowment fund had $39.2 billion in assets. In 2017 they received another $9.6 Billion in donations. 

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Can you tell me what social problems another $9.6 Billion in donations to Harvard solved? 

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In 2017, $6.8 BILLION dollars were deposited into donor advised funds. That’s more than double the $3.3 Billion received by the United Way. (The top in cash donations according to the Chronicle of Philanthropy)

 

This is important to understand because Donor Advised Funds do not support a charitable cause. They simply hold the dollars until they are distributed to a charitable cause. 

 

To be clear, I am not opposed to donor advised funds. I have clients who utilize donor advised funds. However, currently there is no mandated minimum distribution from a donor advised fund similar to the 5% minimum donation from a foundation. 

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This means that a large amount of these "charitable" dollars are never getting in the hands of the non profits who need the money. 

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Countless foundations have been setup and funded as a way for the wealthy to avoid taxes and to pass on a charitable legacy. Often times, what actually passes on is a bureaucracy of board meetings and a foundation that makes the minimum 5% donation required by law.  

 

What this all really means is that:

 

Philanthropy alone does not solve social problems.

 

Philanthropy can result in billions of “charitable” dollars laying dormant in donor advised funds or foundations.

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According to Grantspace.org, there are roughly 1.5 Million non profits in the USA. 

 

NPTrust.org shows that there are roughly $872 Billion in Foundation dollars and $121 Billion in Donor Advised Fund Assets in 2018.

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Divide the total foundation and donor advised fund assets by the number of charities ($993 Billion by 1.5 Million non profits) and each non profit could receive over $600,000! 

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To be clear, I'm not advocating that we liquidate every foundation and donor advised fund. But, I do think it's worth looking at the math to prove that there is more than enough money available to fund our existing non profits adequately. 

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Funding is not the problem

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Distribution is the problem 

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To illustrate this...

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The first private family foundation in the U.S., the Russel Sage Foundation was founded in 1907. 

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It wasn't until 2007 that foundations were mandated to distribution a minimum of 5% per year. 

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That's 100 years with no requirements for "charitable" dollars to be distributed to charity!