Family Foundations & Private Philanthropy: Why Spend-Down Foundations Are Different

Is spending the money on nonprofits our best bet? Should we be spending it on political figures instead and like funding a movement or spending it on nonprofits is kind of where we're at? What do you think?

There's a huge question right now about whether foundations will be an ongoing primary instrument of wealthy people for giving.

There are many that say they're not, and that donors, as they get wealthier and wealthier, they're not going to be as interested in using foundations or DAFs for tax benefit.

That means they're going to be able to do things in the political and social system without having to get the tax benefit.

That opens up C4, and political donations...

It allows them to build buildings and buy companies and offer social good if they want to.

But we just have to keep in mind that foundations are not created and donor advised funds aren't created to benefit the recipient.

They're there to benefit the donor.

That's it.

if it really were to benefit communities and really to benefit donors, I wouldn't have had to write my book.

We wouldn't be talking about this.

The money would be in the hands of communities and beneficiaries.

So all that is to say, I'm a big fan of Ludovic Blaine, who has an organization in California called the California Donor Table.

And he talks about developing strategy that blends C3 foundation funding with C4 activity.

I mean, use your C3 money to raise the interest or awareness of a problem.

And then use your C4 money to put people in power who will act on the thing that you've raised the volume on.

And then use C3 money to train people to come in and work for these new leaders.

It's a great theory of change, and it requires going across multiple tax status to do it.

It'll benefit the community.

It may not benefit the donor.

But as donors lose the benefit of foundations and DAFs, I think we're going to see more of the kind of funding you're talking about.