Add $200 billion to the next stimulus package — at zero cost to taxpayers
It’s very encouraging news that a bipartisan group of senators is fed up with the months-long gridlock over a coronavirus stimulus package. As Sen. Mark Warner (D-Va.) said, it would be “stupidity on steroids” not to act soon, given the incalculable human suffering that will be inflicted if relief programs like unemployment insurance and moratoriums on evictions and student loan bills are allowed to expire at the end of the year.
The most glaring trait among this bipartisan group might be called “trillions fatigue.” They want to touch all the bases, but lightly: modest aid to state and local governments, federal unemployment benefits at half the previous rate and temporary corporate immunity against virus-related lawsuits. Above all, keep the price tag under a trillion dollars. That’s way below the House-passed HEROES Act, but considerably more than most Senate Republicans will accept.
If there was a way to inject 20 percent more stimulus into the economy at absolutely no cost to taxpayers, surely it would be a no-brainer for this bipartisan group. I’m talking about $200 billion. Not a dime from federal coffers. All gain, no pain.
Congress should mandate private foundations donate more to nonprofit organizations. Federal law already requires foundations to donate 5 percent of their assets each year. Congress could easily double that to 10 percent. Do it temporarily, for three years, to reflect today’s unprecedented health and economic crisis and allow time for deployment of a vaccine and full economic recovery. Making it temporary would allow fiscally conservative foundations who want to live and grow forever to drop right back down to 5 percent afterward — a minor blip over the long term. Three years at 10 percent, followed by a return to 5 percent, works out to an increase of only 0.75 percent over 20 years. That’s a drop in the bucket compared to what foundations make on the stock market, where annual returns have averaged about 10 percent over the entire 90-year history of the S&P 500.
The urgency is immense. The nonprofit sector constitutes over 10 percent of the private workforce, but since the pandemic began, has lost 1.6 million jobs, one-third of them in health care. Up to 120,000 nonprofits will have to shut down completely.
But philanthropic resources are immense, too. Foundations are sitting on more than a trillion dollars in assets. Another $120 billion sits in smaller philanthropic organizations called Donor Advised Funds, or DAFs, which, through some legislative anomaly have no minimum payout requirement at all, ever. The wealthy dynasties that set up these philanthropies received huge tax deductions — that is, subsidies from every other taxpayer. Now, in America’s hour of crisis, it’s payback time.
The good news is that many foundations and DAFs are voluntarily stepping up. Dozens of foundations and DAFs have organized a Crisis Charitable Commitment to spend at least 10 percent. Huge foundations like Gates, Ford and MacArthur are doing it on their own. My foundation, the Wallace Global Fund, is spending 20 percent.
The bad news is that most foundations aren’t stepping up. They prefer to spend no more than the legal requirement, and treat the 5 percent federal floor as a ceiling. Just last week, a group of major funders asked Congress for a gentler set of reforms, incentivizing but not mandating increased spending — to 7 percent, not 10 percent.
It’s time to be bold. America is in the crisis of our lifetimes — not just due to the pandemic, economic devastation and food lines, but also to crises of climate change, racial justice and faith in democracy, all of which require urgent, unprecedented attention by under-resourced nonprofits. Earnest pleas and gentle incentives aren’t enough. Too many wealthy funders just won’t get off the sidelines unless they are legally mandated to.
That mandate can only come from Congress, and it should come immediately. This is the plea of more than a thousand philanthropic leaders, with names like Getty, Pritzker, Disney, Gund and Lin Manuel Miranda. The next coronavirus relief package should include their Emergency Charity Stimulus.
A $200 billion economic stimulus, not a dime of it from taxpayers. What budget-conscious bipartisan group of lawmakers could resist?
Henry Scott Wallace is an attorney, is cochair of the Wallace Global Fund and grandson of U.S. Vice President Henry A. Wallace. He was the 2018 Democratic nominee for Congress in Pennsylvania’s first congressional district.
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