Unlocking Billions For America’s Charities On The Frontlines

With just under a decade until 2030, it’s important we ask the right questions: are we doing enough to address extreme poverty globally? 

If the answer is no, as it likely is, the next logical question is what else can we do to help strive towards attaining the Sustainable Development Goals laid out by the U.N. in 2015? Since introduction in 2015, the 2030 Agenda has been a set of guidelines to work towards to end extreme poverty, but progress isn’t happening fast enough. Additionally, according to the World Bank, COVID-19 pushed between 119 and 124 million into extreme poverty in 2020, with the total rising to as many as 144 to 166 million by the end of 2021

Government action is critical, but much of the focus has been on getting governments to do more for the world, and we don’t have time to waste in making a more equitable world.  The world’s wealthiest can make a huge impact on those suffering in extreme poverty by utilizing their wealth effectively. The International Monetary Fund predicted that the world would need only 50 billion to end the COVID-19 pandemic globally, which would allow for the economy to return to normal more quickly, benefitting all. For this reason and many others, the world’s wealthiest need to step up and do their part to address extreme poverty around the world. Here in the U.S. over the first 11 months of the COVID-19 pandemic, the U.S. produced 56 new billionaires and total US billionaire wealth increased $1.3 trillion, for a total of $4.6 trillion. This is a jaw dropping figure & philanthropists can and should do more to help to address extreme poverty around the world.

Simultaneously, America’s charities are in a state of crisis. While communities continue to wrestle with the devastating impacts of the COVID-19 pandemic and seek to address issues of food insecurity, healthcare, or racial justice, demands for services from charities are greater than ever. 

According to Feeding America, in 2020, food banks nationwide distributed 6 billion meals to our neighbors facing hunger in the United States, and food banks across the country are serving 55 percent more people now than before the pandemic. At various points during the pandemic, nearly 30 million Americans were at risk of evictions, and when they did, our homeless shelters and social work organizations picked up the slack.  Our charities deserve our support and desperately need more funding to carry out their important work.

Charities need our help. Charities have stepped in to help bridge the critical divide, to meet the stop gap, but charities are feeling the challenge as well, and charities deserve desperately needed reforms to charitable giving incentives to help them meet this critical demand. And as we come out of the pandemic, we have to remember the role charities played in our lives these past many months, and keep in mind the need for reform.

Recently, two members of the U.S. Senate took up this call to action, Senator King of Maine & Senator Grassley of Iowa, when they chose to introduce legislation to make sure that our charities are well funded in their work.  This legislation proposes common sense changes to charitable giving deductions to encourage more money to flow to America’s charities and out of wealth warehouses called Donor Advised Funds.

“America’s philanthropic sector is an unquestioned force for good across the globe, investing critically-needed resources in charities working to improve life for those in need,” said Senator King. 

“Working charities do so much good in our country and abroad, and they operate on the goodwill and donations of those who can give. That’s why our tax code encourages giving to charity,” said Senator Grassley.

Right now, more than $1 trillion is sitting in private foundations and donor-advised funds (DAFs). Existing laws deliver significant tax breaks upon initial funding, but do not provide sufficient incentives or requirements to ensure that these funds will ever be distributed to working charities. The legislation  proposed by Senator’s King & Grassley seeks to fix this problem, by closing loopholes to better ensure that distributions qualifying for the payout requirement are available for use by working charities; and incentivize greater payout through reforms to the excise tax, adopting measures to make sure that DAF accounts are distributed to working charities within a reasonable period of time, and incentivizing greater giving by expanding and extending the new non-itemizer charitable deduction in a cost-effective way. 

Charities deserve our help in addressing the critical funding gaps as they continue to deliver critical services, and to meet the Sustainable Development Goals, we have to look past just what governments can do.  A good starting point is making sure that money earmarked for charitable causes by the wealthiest Americans actually reaches working charities. Together, we can end extreme poverty.

Global Citizen is a US-based nonprofit and a coalition member of the Initiative to Accelerate Charitable Giving.