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Speaker 1: It's the big take from Bloomberg News and I Heart Radio.

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Speaker 1: I'm West Gasova today. Why are billionaires parking piles of

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Speaker 1: money intended for charity instead of giving it to charity?

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Speaker 1: You know that old f Scott Fitzgerald expression, The rich

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Speaker 1: are different from you and me. That might as well

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Speaker 1: be the title of today's show. For several years, prominent

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Speaker 1: billionaires have been joining the Giving pledge. That's where they

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Speaker 1: publicly promised to give away. Some are all over their fortunes.

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Speaker 1: But unlike the rest of us, we drop a dollar

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Speaker 1: in the jar right at check for charities we care about.

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Speaker 1: The super rich do it differently. One way is by

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Speaker 1: using a thing called a donor advised fund that lets

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Speaker 1: them set aside money to give away without saying when

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Speaker 1: they'll give it away or who's going to get it.

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Speaker 1: You might ask why would they want to do this?

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Speaker 1: Bloomberger reporters Noah Boo Hire, Sophie Alexander and Ben Steveman

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Speaker 1: delve deep into the world of donor advised funds, and

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Speaker 1: they are here with answers. No, let's start with you.

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Speaker 1: How exactly is using a donor advised fund different from

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Speaker 1: giving an annual contribution to a charity at the end

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Speaker 1: of the year. Yeah, it is, it is, and it isn't.

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Speaker 1: One of the things that's so interesting is that you

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Speaker 1: get the tax break up front, so when you're going

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Speaker 1: to file your tax return, it's effectively the same thing.

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Speaker 1: But the money is sitting there. It's it's there for

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Speaker 1: charitable purposes. You can't pull it back, but it actually

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Speaker 1: hasn't made its way to a working charity yet. They

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Speaker 1: can sit there indefinitely. And there's a variety of reasons

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Speaker 1: why you might want to do that. There's tax reasons,

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Speaker 1: of course, and that's the big one. There's also, you know,

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Speaker 1: like family purposes, similar reasons to why people set up

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Speaker 1: a private foundation. Is that you you want to get

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Speaker 1: the family together and say, Okay, we're gonna start focusing

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Speaker 1: on these charitable causes. Let's talk about it. We have

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Speaker 1: this money that's dedicated, but there is, like we've said,

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Speaker 1: no deadline for one, that money actually has to go

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Speaker 1: out to working charities like food banks, home letch shelters, etcetera.

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Speaker 1: All right, so let's take this apart just a bit.

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Speaker 1: So then we've heard private foundations, and we've heard donor

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Speaker 1: advised funds. What are the difference between those two things.

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Speaker 1: A private foundation is a charity that's set up basically

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Speaker 1: by one person, by one family to give their money away.

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Speaker 1: In practice, they're both pools of money yourmark for charity,

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Speaker 1: but the private foundation, because of some controversies in the

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Speaker 1: nineties sixties, basically there are much stricter rules on what

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Speaker 1: a wealthy family can do with their private foundation, like

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Speaker 1: what well they have to disclose what they do every year,

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Speaker 1: where the money goes, and where's the money is coming from,

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Speaker 1: and also what they're invested in, and they have very

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Speaker 1: strict rules on where that money can go in terms

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Speaker 1: of can it be invested in a family business generally

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Speaker 1: know and and also the key thing is they have

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Speaker 1: to pay out basically five percent of their assets every year.

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Speaker 1: So you can't just set these things up and let

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Speaker 1: them sit The money that you've got the tax aduction

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Speaker 1: for that money needs to go out to charity every

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Speaker 1: year on a regular basis. What we're talking about in

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Speaker 1: this story and what we've been doing a lot of

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Speaker 1: reporting on is not just donor advised funds, but specifically

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Speaker 1: private foundations which have all these rules around them. Giving

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Speaker 1: to donor advised funds, which don't have very many rules

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Speaker 1: around them, and so what we're seeing is that it's

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Speaker 1: not just the accumulation of money and donor advised funds,

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Speaker 1: but the money that coming from private foundations going into

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Speaker 1: donnor advised funds also seems to be rising. A big

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Speaker 1: part of this reporting was going out and scraping hundreds

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Speaker 1: of thousands of files that the i r S has

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Speaker 1: released publicly on the activities of private foundations. And every year,

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Speaker 1: private foundations are required to put out a filing that

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Speaker 1: lists the grants that they made. So what we did was,

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Speaker 1: through the magic of computers, assemble a database of more

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Speaker 1: than four million grants that private foundations have made in

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Speaker 1: the past several years, and then we sifted through them

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Speaker 1: to look for grants that were made specifically to the

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Speaker 1: major sponsors of donor advised funds. And then we added

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Speaker 1: all of that up and found that more than four

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Speaker 1: billion dollars has moved through this pipeline, which is a

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Speaker 1: staggering amount of money. It's you know, private foundations by

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Speaker 1: and large are giving to other things. This is a

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Speaker 1: small niche activity for private foundations. But when you drilled

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Speaker 1: down into the trull filings. You see that some private

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Speaker 1: foundations are employing this as their main strategy for giving

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Speaker 1: away money or the only way that they're giving away money. Literally,

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Speaker 1: a hundred of the dollars that is leaving the private

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Speaker 1: foundation is ending up with a death. And that that

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Speaker 1: four billion dollars is a conservative estimate because we're only

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Speaker 1: looking at digital filings, and no, it could speak better

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Speaker 1: to that. But for example, who was it Larry Page,

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Speaker 1: one of the co founders of Google. Right, he filed

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Speaker 1: on paper, and so that's not included in this analysis,

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Speaker 1: and if it had been, that would be what another

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Speaker 1: half a billion dollars something like that, right, yeah, correct,

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Speaker 1: This is just the tip of the iceberg. And the

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Speaker 1: fact of the matter is when these transfers happened, the

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Speaker 1: paper trail and the transparency about where the money is

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Speaker 1: going really dries up, and it requires the work of

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Speaker 1: journalists and others to really dig into what's going on,

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Speaker 1: which defies the intent of a law that Congress paths

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Speaker 1: more than fifty years ago to provide some accountability around

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Speaker 1: how philanthropic dollars are spent. I would add that one

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Speaker 1: of the concerns here is that this is going to

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Speaker 1: become standard operating procedure for more and more wealthy families

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Speaker 1: that have these foundations. They're busy, they don't have time.

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Speaker 1: Let's just put the money in a daff and let

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Speaker 1: it sit there. And this used to be something that

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Speaker 1: was definitely frowned upon. Now it's become something that your

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Speaker 1: advisor might tell you to do at the end of

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Speaker 1: the year so that you make sure you follow the rules,

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Speaker 1: and you might not think about it. So it deserves

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Speaker 1: some attention as something that really does bypass the spirit

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Speaker 1: of the rules that we put in place when we

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Speaker 1: give people text advantages for charitable giving. I suppose it's

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Speaker 1: important to note that when we're talking about viotling the spirit.

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Speaker 1: None of this is illegal. It doesn't violate any laws.

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Speaker 1: Are actually doing what these things were set up to do,

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Speaker 1: and all of it is legal. It's all legal. It's

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Speaker 1: all above board. No one is us seeing anything other

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Speaker 1: than that. Yeah, So so he who's giving money into

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Speaker 1: these funds, because it sounds like they're being used for

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Speaker 1: our purpose. Sometimes that's not really about charity. Yeah, A

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Speaker 1: variety of people use these funds. You know, Fidelity is

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Speaker 1: the biggest provider of donor advised funds in the US,

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Speaker 1: and they really market themselves as for the everyman. So

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Speaker 1: you know, their median account size is under twenty five

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Speaker 1: thousand dollars, So you could just be an average Joe

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Speaker 1: who is, you know, retired and looking to give away

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Speaker 1: some money. But we also have a lot of billionaires

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Speaker 1: who use these things. In our reporting, we came across

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Speaker 1: a lot of hedge fund billionaires because what we were

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Speaker 1: looking at was specifically people sending money to donnor advised

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Speaker 1: funds from private foundations, and so a lot of hedge

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Speaker 1: fund managers set up private foundations and then they're able

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Speaker 1: to invest in their own funds, and then to meet

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Speaker 1: the five percent minimum, they send the money to a

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Speaker 1: donor advice fund where they don't have any deadline, but

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Speaker 1: they meet the five percent requirement. So it's really just

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Speaker 1: for people who are looking to get tax benefits. It's

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Speaker 1: also for people who are looking to use technology to

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Speaker 1: give away money more easily. And so if you have

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Speaker 1: your own private foundation, it has to pay out five

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Speaker 1: percent of a year, but you can then take that

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Speaker 1: money instead and put it into a donor advised fund

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Speaker 1: and tell them not to spend it. And therefore you

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Speaker 1: just kind of keep your money exactly. You know, this

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Speaker 1: is unintentional. Really, the idea of them dates back decades

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Speaker 1: and decades, but they really became popular when financial companies

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Speaker 1: embraced the idea of offering these accounts and they became

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Speaker 1: a marketing thing. Basically, financial companies started marketing them to

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Speaker 1: wealthy people, people with money, and that really started a

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Speaker 1: flow of billions of dollars into them starting in the

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Speaker 1: nineties and early two thousand's why were donor advised funds

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Speaker 1: created in the first place, what was there original purpose.

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Speaker 1: One of the advantages of donor advised funds is that

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Speaker 1: you can take a private investment that you own and

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Speaker 1: you can put it in a donor advice fund, and

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Speaker 1: then the donor advice fund will sell it and then

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Speaker 1: that money can go to charity. You might not be

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Speaker 1: able to give a stock or a piece of a

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Speaker 1: private business or a piece of real estate to your

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Speaker 1: local food bank, for example. They're not going to know

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Speaker 1: what to do with that asset. So there are some

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Speaker 1: things like that about donor advice funds that just make

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Speaker 1: it more convenient to give money away. So that's sort

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Speaker 1: of like the positive argument I guess for donor advice

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Speaker 1: funds and why they should exist. But again, there's these

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Speaker 1: other issues with donor advised funds that have really created

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Speaker 1: a lot of controversy. So now we have a pretty

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Speaker 1: good understanding of what donor advice fund is. In your story,

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Speaker 1: you write about how some of the best known investors

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Speaker 1: from some prominent names are using these. No, what are

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Speaker 1: some of the examples of the big names who are

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Speaker 1: taking advantage of this investment vehicle. We documented that people

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Speaker 1: like Elon Musk, the founders of Google, hedge fund, billionaires,

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Speaker 1: people like Robert Mercer have employed daffs as a way

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Speaker 1: of meeting their required giving from their private foundations, but

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Speaker 1: also on some level of securing what they're doing with

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Speaker 1: their these philanthropic dollars. Well, let's use Elon Musk as

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Speaker 1: an example. He's in the news everywhere, so might as

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Speaker 1: well talk about him. Amore, How has he used these

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Speaker 1: donor advised funds? Yeah, So what you see when you

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Speaker 1: look at the tax filings for the Musk Foundation, which

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Speaker 1: you can get from the I R S or from

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Speaker 1: his his folks, is he has something. Sophie correct me

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Speaker 1: if I'm wrong, but about three billion dollars amassed in

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Speaker 1: the Musk Foundation. It's probably down quite a bit because

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Speaker 1: of Tesla, but yes, and if you look over the

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Speaker 1: past several years, about three quarters of the money that

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Speaker 1: the foundation has given out has ended up at two

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Speaker 1: sponsors of donor advised fund the one that was set

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Speaker 1: up by Vanguard and the one that was set up

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Speaker 1: by Fidelity and one the money makes it to those dats,

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Speaker 1: we really have very very little idea whether it's even

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Speaker 1: going onto a working charity and what it's doing from there.

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Speaker 1: It's it's sort of a black box. That's what I

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Speaker 1: think critics of daff's would point out as one of

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Speaker 1: the big issues with these funds. And you know, the

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Speaker 1: little that we do know about Musk's giving has come

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Speaker 1: up in really weird forums. We know from the defamation

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Speaker 1: trial between Amber Heard and Johnny Depp that at least

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Speaker 1: some of the money that Musk put into his Vanguard

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Speaker 1: DAFF had made its way to the a c l

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Speaker 1: U but that was only because Musk had been dating

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Speaker 1: Amber Heard and during the trial the representative for the

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Speaker 1: a c l U was on the stand and they

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Speaker 1: were trying to figure out whether a pledged donation had

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Speaker 1: actually made its way from Amber Heard to the a

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Speaker 1: C l U, and it came out that some of

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Speaker 1: that money came from Musk's Vanguard DAFF. I mean, that's

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Speaker 1: a very conval did story to try and figure out

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Speaker 1: where one of the world's richest people is spreading his

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Speaker 1: charitable dollars, and and that's a consequence of this black

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Speaker 1: box structure that he's employing to give away money. I

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Speaker 1: just really quickly want to add on Elon Musk. You know,

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Speaker 1: we can't guess what his intentions are with setting up

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Speaker 1: a private foundation that gives most of its money to

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Speaker 1: a donor advised fund, but in talking to you know,

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Speaker 1: people who do research in this space, it seems like

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Speaker 1: one of the reasons that we see this happening over

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Speaker 1: and over again is that someone like Elon Musk sets

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Speaker 1: up a foundation twenty years ago, he you know, may

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Speaker 1: have some philanthropic intentions, doesn't really know exactly what he

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Speaker 1: wants to do yet, and then he becomes really busy

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Speaker 1: running several companies and he doesn't have the time to

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Speaker 1: actually commit himself to philanthropy. So in the meantime, that

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Speaker 1: money can make its way to a DAFF and then

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Speaker 1: something that we've also talked about in the story is

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Speaker 1: that as that money piles up in a daff people

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Speaker 1: sort of become paralyzed and it might just sit there

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Speaker 1: longer and longer the more you have in it, because

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Speaker 1: it's like, oh my God, look at all this money

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Speaker 1: that I have to spend down. My conversation with Sophie,

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Speaker 1: Ben and Noah continues after the break. So there's Ellen Musk.

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Speaker 1: Who's another person who uses these funds. Yeah. Another one

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Speaker 1: we looked at was Robert Mercer, the former co CEO

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Speaker 1: of Renaissance Technologies and prolific donor to Republican causes. He

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Speaker 1: and his family attracted a lot of scrutiny after Donald

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Speaker 1: Trump was elected for where their charitable dollars were going

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Speaker 1: from the Mercer Family Foundation, and what you see in

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Speaker 1: the tax filings is that, I believe it was two

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Speaker 1: thousand and eighteen they started giving the lion share of

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Speaker 1: their money to a daft sponsor called Donors Trust. They

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Speaker 1: called themselves the Community Foundation for Liberty. They've attracted some

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Speaker 1: people with moreservative ideas, and you basically ended up in

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Speaker 1: a situation where the Mercer Family Foundation, which had been

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Speaker 1: getting all this scrutiny for these donations they were making

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Speaker 1: out of their private foundation. Suddenly, you know, we just

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Speaker 1: don't know where the money is going because the bulk

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Speaker 1: of it ends up at donor's trust, and then it's

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Speaker 1: hard to tell once it ends up at donor's trust

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Speaker 1: where or whether the mercers are giving out that money.

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Speaker 1: So it's not just that you don't know necessarily when

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Speaker 1: they're giving it out, just trying to find out where

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Speaker 1: it ultimately goes and whether it's really going to charity,

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Speaker 1: if they ever found instances where money was dispersed to

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Speaker 1: places where it shouldn't have been the problem is that

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Speaker 1: when you give to a Fidelity staff, your money is

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Speaker 1: for public reporting purposes, is commingled with all the other donors.

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Speaker 1: It's like a giant pool of fifty billion dollars at

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Speaker 1: this point, you just can't tell. So you had mentioned

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Speaker 1: earlier that Fidelity other financial institutions has set up these

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Speaker 1: funds have an incentive to keep it there. How do

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Speaker 1: they make money off of the money that's sitting in

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Speaker 1: these funds. They're basically two sources of revenue coming in

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Speaker 1: the door. You've got investment fees. So a lot of

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Speaker 1: times the donor advice funds sponsor the Fidelity or Vanguard

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Speaker 1: or Schwab, they will help you allocate the money and

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Speaker 1: your DAFF to mutual funds or various other investment products

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Speaker 1: that they earn investment fees on the big sponsors. They

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Speaker 1: tend to be pretty low cost things. But you know,

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Speaker 1: we're talking about hundreds of billions and dollars of assets

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Speaker 1: spread across daffs at this point, so it's real money.

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Speaker 1: The other source of revenue for the daft sponsors are

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Speaker 1: administrative fees, and this is basically the cost of running

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Speaker 1: the entity, the charitable entity that that houses all the daffs.

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Speaker 1: So they charged essentially management fee the way they would

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Speaker 1: for other kinds of funds. Correct and again for the

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Speaker 1: big national sponsors like Fidelity and Vanguard and Schwab, these

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Speaker 1: tend to be relatively low. It's part of the reason

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Speaker 1: that daffs are so popular because these financial services firms

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Speaker 1: have really made it cost effective for people to set

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Speaker 1: these things up. The benefit for the financial services firms

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Speaker 1: as they've aggregated so many dollars at this point that

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Speaker 1: it's real money. Now. If you talk with the big sponsors,

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Speaker 1: they'll say that they're offering these services at cost, or

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Speaker 1: at least what you would have to pay to get

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Speaker 1: these services in the private market. And I will just

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Speaker 1: add here like for some people, you know, if you

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Speaker 1: had a smaller amount of money to give away, setting

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Speaker 1: up and administering a private foundation is not free. So

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Speaker 1: for certain size wealth, if you use a DAFT as intended,

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Speaker 1: and you're distributing your money regularly, a dat can actually

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Speaker 1: be a more cost effective way to give I was

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Speaker 1: just gonna add it on top of the fees that

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Speaker 1: they're actually collecting. It's also a really good relationship building tool.

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Speaker 1: When you're setting up a donor advise fund with a

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Speaker 1: place for like Fidelity, you now have a relationship with

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Speaker 1: that financial institution and they can leverage that. Like financial

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Speaker 1: advisors are obsessed with the next generation because often they're

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Speaker 1: working with the patriarch and matriarch of a family who

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Speaker 1: are aging, and they want to make sure that they

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Speaker 1: have a good relationship with the next generation and the

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Speaker 1: grandkids as well. And philanthropy becomes part of that strategy,

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Speaker 1: and there's a lot of discussion about that among the advisors.

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Speaker 1: So if I'm a billionaire and I want to meet

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Speaker 1: the requirements of giving away the money from my foundation.

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Speaker 1: Is there anything I'm gaining other than meeting that requirement

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Speaker 1: and not having to give that money away immediately? Are

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Speaker 1: their tax benefits for giving it to a donor advice

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Speaker 1: fund as opposed to just dispersing it. Basically, the main

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Speaker 1: motives are either you don't want to disclose what you're doing,

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Speaker 1: or you don't have a plan for what you're doing.

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Speaker 1: So once you put your money in the donor advice fund,

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Speaker 1: can you ever pull it out? Or is it in

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Speaker 1: there for good? No, it's in there for good. You

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Speaker 1: can't take it back. Ben, Are we seeing any movement

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Speaker 1: at all in Congress by the I R S other

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Speaker 1: agencies that oversee financial institutions to maybe get a little

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Speaker 1: more transparency about how this money is being spent or

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Speaker 1: not spent. A couple of years ago, a coalition kind

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Speaker 1: of an odd coalition of billionaires and academics came together

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Speaker 1: and proposed a law that would end this practice. Their

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Speaker 1: idea was, let's accelerate charitable giving by putting some new

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Speaker 1: rules on the on these things. And that was actually

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Speaker 1: taken up by Charles Grassley, the Iowa Republican Senator and

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Speaker 1: Angus King, a senator from Maine who is an independent

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Speaker 1: but caucuses with Democrats, and they proposed the law that

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Speaker 1: was introduced in the House as well, and it would

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Speaker 1: basically mean that if you put money in a DAFF

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Speaker 1: and got an upfront tax break, you would have fifteen

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Speaker 1: years to distribute that money. And that law has sort

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Speaker 1: of been sitting in the past Congress, uh and not

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Speaker 1: going very far. It did spark a lot of pushback

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Speaker 1: from the daft industry, from community foundations that offer these

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Speaker 1: dafts as well, And we'll see what happens next. The

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Speaker 1: Biden administration has also proposed a rule change that would

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Speaker 1: prevent foundations from using daffs in the way that we've

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Speaker 1: been talking about. Ultimately, the comprehensive solution is a law,

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Speaker 1: but the I R s could maybe tweak the rules

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Speaker 1: a little bit and change disclosure rules a little bit. No,

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Speaker 1: when you look down the road, where do you see

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Speaker 1: this going? Do you think that just billions and billions

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Speaker 1: more dollars that can keep piling up in these funds

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Speaker 1: or at some point the damn is going to bust

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Speaker 1: and that money is going to be called upon to

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Speaker 1: be released. Well, I mean, if you look at the

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Speaker 1: data The trend is definitely for more and more money

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Speaker 1: to pile up. When we published our first story on this,

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Speaker 1: it was I think it was a hundred and sixty

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Speaker 1: billion dollars across all dafts in the US, and that

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Speaker 1: climbed at two and thirty rebellion. For a lot of donors,

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Speaker 1: it's just a very very convenient structure to organize their giving.

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Speaker 1: But yeah, overall, I think the trend very much is

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Speaker 1: that we're going to see ever greater sums go into daffs.

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Speaker 1: Noah bu Hire, Sophia Alexander, Ben, Steve Berman, thanks so

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Speaker 1: much for talking to me, Thanks for having us, Thanks,

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Speaker 1: thank you when we come back. What does all this

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Speaker 1: stockpiled cash mean for the charities who are waiting for it?

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Speaker 1: A lot of charities and nonprofits of all kinds depend

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Speaker 1: to one degree or another on contributions, So what does

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Speaker 1: the rise of donor advised funds mean for the people

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Speaker 1: on the receiving end. One person who definitely knows is

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Speaker 1: jan massa Oka. She's the CEO of the California Association

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Speaker 1: of Nonprofits and she joins me now from San Francisco.

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Speaker 1: Jan massa Oka, thanks so much for talking to me today.

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Speaker 1: Thank you, Jim. Can you tell me first, what does

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Speaker 1: the California Association of Nonprofits do well? Count nonprofits? We say,

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Speaker 1: for short, is a chamber of commerce for nonprofit organizations

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Speaker 1: in California. There are ninety two thousand registered nonprofit organizations,

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Speaker 1: but two thirds of them are all volunteer organizations, so

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Speaker 1: there are twenty two thousand with staff. But we have

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Speaker 1: just under ten thousand members, including both all volunteer and

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Speaker 1: staffed organizations. So we take on regulatory, economic issues, the

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Speaker 1: kinds of things that affect all nonprofits, just not one

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Speaker 1: segment of them. And what kind of nonprofits does your

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Speaker 1: organization represent well? We like to say we represent as

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Speaker 1: many as can or as many kinds. I would say

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Speaker 1: that kind of the best part of our membership our

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Speaker 1: health and human service organizations that are community based, in

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Speaker 1: community oriented. We certainly have a large number of foundations, schools, universities, etcetera,

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Speaker 1: arts organizations, theaters, but I would say kind of the

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Speaker 1: heart of our member ship with the community based health

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Speaker 1: and human services. And so I imagine a lot of

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Speaker 1: your members depend to one degree or another on philanthropic contributions. Well,

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Speaker 1: you know, it's interesting if you look at the total

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Speaker 1: income of California's nonprofit community, less than five percent of

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Speaker 1: it comes from foundations and individuals, so they get a

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Speaker 1: lot of attention, but it's not where most of our

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Speaker 1: money comes from. Actually, we're talking today a lot about

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Speaker 1: donor advised funds and the effect that these funds have

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Speaker 1: had on how much money is actually going from different philanthropies,

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Speaker 1: different organizations into charitable organizations and nonprofits. Have you seen

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Speaker 1: an effect from the rise in the use of these

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Speaker 1: donor advised funds in the amount of money that's just

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Speaker 1: flowing out. Well, let me tell you a story that

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Speaker 1: tells you a little bit about why this issue is

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Speaker 1: such an emotional important one to our First one of

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Speaker 1: our members is an African American woman who learned the

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Speaker 1: hard way that when you get released from prison, you

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Speaker 1: can't get your children back until you have a permanent address.

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Speaker 1: And of course, if you are such a woman, you

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Speaker 1: feel like you can't really do anything until you have

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Speaker 1: your children back. So, after she got her life back together,

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Speaker 1: she started a nonprofit to help women have a permanent

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Speaker 1: address so that they can be housed for a period

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Speaker 1: of time so that they can get their children back

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Speaker 1: as soon as possible, and over the last twenty years

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Speaker 1: she scraped and saved and worked hard so that she

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Speaker 1: now has two shelters that have women and children able

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Speaker 1: to stay there. She told me that within fifty miles

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Speaker 1: of her there are two organizations that have more than

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Speaker 1: one billion dollars in donor advice fund assets. But there's

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Speaker 1: no access to any of those donor advice funds, and

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Speaker 1: so there might as well be as well spargo. They're

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Speaker 1: held up in the checking accounts, and so she has

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Speaker 1: no access to them, and it's infuriating. Frankly, if you

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Speaker 1: were in that kind of situation and these big amounts

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Speaker 1: of foundation dollars for which people have gotten tax deductions

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Speaker 1: were three thousand miles away, you might not feel it

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Speaker 1: as keenly as you do when they're right next door

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Speaker 1: to you. We also know that the Attorney General of

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Speaker 1: California has released a very important report showing more about

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Speaker 1: donor advice funds, and one of the things that points

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Speaker 1: out is that giving overall is actually very flat. We're

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Speaker 1: not seeing increases in giving in the last several years,

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Speaker 1: but the amount of money that goes to donor advised

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Speaker 1: funds is now over ten percent of total giving, So

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Speaker 1: that means that there's actually less money that's going directly

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Speaker 1: to nonprofits that are operational, and how has that affected

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Speaker 1: the ability of nonprofits to function well? For some nonprofits

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Speaker 1: it's the majority of the even of their funding, but overall,

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Speaker 1: colanthropic dollars are under five of nonprofit income. I think

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Speaker 1: that one of the things that we've seen happen is

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Speaker 1: that for a long time, the way that individual well

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Speaker 1: giving has worked for nonprofits is that you have small

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Speaker 1: donors and you gradually work with them so that they

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Speaker 1: increase their giving over time. And what we're seeing right

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Speaker 1: now where I've heard from so many nonprofit fundraising directors,

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Speaker 1: is that they've lost their middle class of donors. Right

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00:25:15,600 --> 00:25:17,879
Speaker 1: They've got still got the small donors that are giving

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00:25:17,880 --> 00:25:20,879
Speaker 1: ten fifteen dollars, and they have mega donors now that

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Speaker 1: might be giving a million dollars or two million dollars,

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00:25:23,520 --> 00:25:26,479
Speaker 1: but they've lost their middle set of donors. I believe

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Speaker 1: that part of this is kind of the shrinking of

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Speaker 1: the American middle class in general, but it's also really

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Speaker 1: an indication I think of how it's turning nonprofit attention

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Speaker 1: in general to seeking donations from mega donors. And not

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Speaker 1: from the main streams of the communities in which they're embedded.

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Speaker 1: What kind of nonprofits are most affected by fewer dollars

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00:25:48,000 --> 00:25:51,000
Speaker 1: coming out of the donor advice funds that once may

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00:25:51,080 --> 00:25:55,480
Speaker 1: have flowed into their coffers. They depends on what you

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00:25:55,520 --> 00:25:58,199
Speaker 1: mean by affected. I think that you know because foundations

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Speaker 1: are the majority of funding, for example, and think tanks.

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Speaker 1: Think tanks are less likely to get some of that money.

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Speaker 1: But I think that where people feel it the most

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Speaker 1: is people that are working with vulnerable communities. When you're

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00:26:09,880 --> 00:26:13,280
Speaker 1: working with children with disabilities, you know, elder people that

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00:26:13,320 --> 00:26:16,639
Speaker 1: are in crisis. These kinds of people really feel it

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Speaker 1: in their guts and their hearts when they don't have

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Speaker 1: as much money as they need to to be able

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Speaker 1: to serve those kinds of people. Do you see any

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Speaker 1: upside to donor advice funds? There's anything good about them

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Speaker 1: from your perspective? Well, we yes, we support the idea

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Speaker 1: of donor advice funds. The core idea of a donor

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Speaker 1: advice fund is that I could put let's say ten

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Speaker 1: million dollars into a donor advice fund today and I

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00:26:39,480 --> 00:26:42,400
Speaker 1: could get a tax break immediately, but I will only

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Speaker 1: have to give away that money to an active nonprofit

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00:26:45,359 --> 00:26:48,480
Speaker 1: sometime between now and infinity. So we think if people

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00:26:48,520 --> 00:26:51,280
Speaker 1: are doing it relatively quickly, that's a good idea, but

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Speaker 1: we think there should be a legal limit that's a

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00:26:53,400 --> 00:26:57,399
Speaker 1: little bit closer than infinity. Our number one concern is

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00:26:57,440 --> 00:27:03,080
Speaker 1: about transparency, because we can't identify these problems given how secretive,

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00:27:03,359 --> 00:27:06,120
Speaker 1: it's just a wrap of secrecy around them. And that's

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Speaker 1: one of the reasons we have co sponsored legislation in

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Speaker 1: California to bring some transparency to these issues. We know

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Speaker 1: most owner advised funds people are great. They mean, well,

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00:27:16,160 --> 00:27:18,160
Speaker 1: they want to put off the giving till next year

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00:27:18,240 --> 00:27:19,840
Speaker 1: when they have a little bit more time to think

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00:27:19,840 --> 00:27:23,760
Speaker 1: about it, for example. But we also feel like, well,

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00:27:23,800 --> 00:27:27,040
Speaker 1: just because almost nobody murders anybody, it doesn't mean we

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00:27:27,040 --> 00:27:32,160
Speaker 1: shouldn't have laws against murder. You mentioned a bill that

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00:27:32,200 --> 00:27:35,080
Speaker 1: you are pressing to have passed. What exactly would it

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00:27:35,119 --> 00:27:39,160
Speaker 1: do well, right now, we're in between legislative sessions, so

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00:27:39,600 --> 00:27:41,720
Speaker 1: we don't have a bill right now, but we're expecting

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00:27:41,720 --> 00:27:44,880
Speaker 1: to in January. We're working with Assembly Member Buffy Wicks,

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00:27:44,920 --> 00:27:48,160
Speaker 1: who's very committed to this issue and very concerned about

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Speaker 1: seeing that people in her district are getting the funds

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Speaker 1: that they need. Jan Mos Okay, thanks so much for

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Speaker 1: taking the time to talk to me today. Thank you.

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Speaker 1: You can read the story no A Boo Hire, Sophie

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Speaker 1: Alexander and Ben Steve Berman wrote about Toner advice funds.

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Speaker 1: I'm Bloomberg dot com. Thanks for listening to us here

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00:28:06,760 --> 00:28:10,199
Speaker 1: at The Big Take. It's the daily podcast from Bloomberg

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00:28:26,920 --> 00:28:30,520
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00:28:35,119 --> 00:28:38,440
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00:28:43,360 --> 00:28:48,480
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