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What Social Science Tells Us About Forced Donor Disclosure

March 15, 2024

In recent years, there have been numerous state and federal efforts to change or create disclosure rules to force the public disclosure of donors to nonprofit organizations, with particular focus on 501(c)(4) social welfare organizations (with some attention also paid to 501(c)(3) charitable organizations). And, as the states and Congress consider, and sometimes enact, changes to disclosure laws, the jurisprudence around disclosure is evolving. This is seen most notably in the major U.S. Supreme Court decision Americans for Prosperity Foundation v. Bonta (AFPF), which struck down a California rule mandating that charities reveal many of their donors to the government. The AFPF decision has spurred subsequent litigation to address questions left unanswered by the decision. The rhetoric around forced donor disclosure is heated. For instance, Senator Sheldon Whitehouse, in advocating for broadened disclosure requirements, refers to the "toxic flood of dark money" that has allowed the wealthy and interest groups to "rig the system secretly in their favor." But, given the legislative and legal activity surrounding disclosure, it is important to move beyond such rhetoric and assess donor disclosure from a social scientific perspective, using the lens of cost-benefit analysis. This paper will show the benefits of forced donor disclosure fall far short of what its proponents claim.The next section lays out the legal rationale for disclosure, with a focus on campaign finance disclosure (which is closely related to nonprofit disclosure). From there, it shows empirical research raises questions about the legal rationale for disclosure, focusing primarily on the purported informational benefits of disclosure. Then, it addresses the more limited empirical research on disclosure costs. Finally, it covers how one can understand disclosure laws through the lens of an economic theory known as public choice.

When Private Foundations Give Through DAFs: Exploring the How and Why of This Practice

March 6, 2024

Donor-advised funds (DAFs) are charitable giving accounts used by many Americans as a flexible, accessible way to give to charities. Popular with individual donors, DAFs are also sometimes used by private foundations to facilitate their donations. With unique features that encourage giving, DAFs have been used by some foundations to pool resources, streamline administrative tasks, and set aside seed capital for a group that is pursuing IRS determination as a charity.This primer will explore the valuable ways private foundation use DAFs, consider criticisms of this practice, and examine the potential consequences that could arise from imposing new restrictive regulations on private foundation use of DAFs.

Transparency in Philanthropy: An Analysis of Accountability, Fallacy, and Volunteerism

March 1, 2013

This monograph is an attempt to bring a new lens to conversations on transparency in the philanthropic world. The monograph asserts that itis appropriate for the government to require certain degrees and types of transparency to achieve specified legitimate objectives. It also advocates that foundations should do more to voluntarily pursue openness in ways that exceed current legal mandates and that are consistent with and of benefit to each foundation's particular mission and operations.This monograph also critically scrutinizes calls for increased transparency more generally, including the common (and sometimes intentional) lack of clarity about whether the pleas are merely encouraging voluntary private decision-making or are demanding government-imposed standards. The monograph challenges those latter calls for government intervention, including those that seem to presume the legitimacy of transparency as a fundamental principle in itself instead of a dependent value in service to other objectives that must themselves be legitimate.Along the same lines, the monograph dissects the most frequently asserted objectives for government mandates and reveals deeply rooted, potentially insurmountable problems with the practical pursuit of those objectives. As such, this monograph is an effort to encourage advocates of greater transparency in philanthropy to be more disciplined and clear in their assertions.

Giving It All Away: Strategies From The Spend-Down Experts

January 1, 2011

2011 Annual Meeting session"Perpetuity" is often the default setting for private foundations. But many donors believe their charitable purposes are best served by "spending down" their foundations' assets by a fixed date. For those who are considering the latter, this session will feature a how-to guide -- from investment strategies and endowment guidance to how to keep talented staff and ensure that the final grants are used wisely -- from two philanthropic leaders who have successfully spent down large foundations. James Piereson presided over the spending down of the John M. Olin Foundation, and Gara LaMarche spent four years at the helm of the Atlantic Philanthropies, which is in the process of paying out its remaining $4 billion by 2017 in keeping with the wishes of Atlantic founder Chuck Feeney.

Saving America's Urban Catholic Schools: A Guide for Donors

December 31, 2009

Examines the challenges inner-city Catholic schools face and provides guidance on supporting scholarships, performance-driven schools, new models, better governance, teacher recruitment and development, and parental choice policy. Includes case summaries.

A Stimulus That Works: Philanthropic Strategies for Boosting Entrepreneurship

May 14, 2009

A report on the Philanthropy Roundtable conference held on May 14, 2009, at the Ewing Marion Kauffman Foundation. The conference focused on the role of philanthropy in promoting entrepreneurship.

Investing in Charter Schools: A Guide for Donors

January 1, 2009

Guidebook on how philanthropists can best support the charter school sector.

Achieving Teacher and Principal Excellence: A Guidebook for Donors

September 8, 2008

Discusses the need to invest in high-quality teachers and principals and the best opportunities for donors to help improve human capital. Profiles current initiatives, proposes strategic priorities, and lists promising ideas requiring financial support.

Reviving Marriage in America: Strategies for Donors

May 15, 2007

In 1997 a group of Tennessee businessmen began to talk about the direction of their city. "We wanted to know how we could really make a difference in Chattanooga," says Hugh O. Maclellan Jr., president of the Maclellan Foundation. "We realized that the city's biggest problem was the breakdown of families, and that every part of Chattanooga was being affected by it."Maclellan and his colleagues confronted grim statistics that showed Chattanooga families were suffering from unusually high rates of divorce, absentee fathers and teen pregnancies, which were hurting not only the individuals immediately involved, but the community as a whole. The numbers told the story:The divorce rate in Chattanooga was 50 percent higher than the national average. (The state of Tennessee as a whole ranked fourth worst in the nation for divorce.) Chattanooga had the fifth-worst out-of-wedlock birth rate of 128 leading cities in the United States. A 1994 study showed 50 percent of births in the city and 39 percent of births in the county were to unwed mothers. One in three Tennessee families were headed by a single parent, compared to one in four nationwide; in 2000, the state ranked eighth worst in the nation.

Strategic Investment in Ideas: How Two Foundations Reshaped America

January 1, 2003

A historical view of the John M. Olin Foundation and the Lynde and Harry Bradley Foundation, noting their longtime support of conservative ideas.

Starting a Private Foundation: Carrying Out the Donor's Intent

January 1, 1999

A beginners guide to setting up a private foundation, this report is designed to provide the reader with a general insight into the world of philanthropy and specific observations about private foundations. Topics covered include: charitable giving in general, defining and carrying out your mission, determining the structure of your foundation and how to begin the foundation. Full content listing is provided.