Millionaire foundation head says many wealthy Americans falling short in responding to needs of nation’s most vulnerable

The Crisis Charitable Commitment is encouraging foundations to up their legally required 5% giving to 10%. Shutterstock

By Jerry Mitchell
Mississippi Center for Investigative Reporting

The real Grinch this pandemic Christmas? Some wealthy foundations, a foundation president says.

“I’ve been in philanthropy over 40 years, and things have never been worse,” said Alan S. Davis, who runs the $150 million Leonard & Sophie Davis Fund. “I think we’re at the brink.”

That’s why he is championing the Crisis Charitable Commitment, which encourages foundations (legally bound to give 5%) to boost their giving to 10%. So far, 22 foundations, including his own, have signed on to do just that. So have 35 wealthy Americans.

The Ford Foundation is promising to give more than 10% in 2020 and 2021. Ford officials say they are joining forces with Doris Duke Charitable Foundation, MacArthur Foundation, W.K. Kellogg Foundation and Andrew W. Mellon Foundation to provide $1.7 billion in higher funding through 2021.

Executive Director Lloyd Gray said the Phil Hardin Foundation, doesn’t always stick to 5%. “In fact, for the last few years the Hardin payout has ranged between 5% and 6%,” he said. “And we have done our best to be flexible and available during this period for grants related to COVID-19 and equity needs, and have made several large grants that were unplanned before the pandemic occurred, along with the existing equity issues it exposed and exacerbated.”

He said he has followed efforts to get foundations to raise payout to 10%.

“While I understand the rationale for essentially doubling giving during a crisis, I don’t think it’s the best course for smaller foundations like we have in Mississippi,” he said. “A principal source of our value to our communities and state is the knowledge that we will exist in perpetuity, that we are here for the long haul and can be counted on in good times and bad.”

The Phil Hardin Foundation doesn’t solicit funds, he said. “The only way we have to ensure long-term viability is through growth in our assets. A 10% payout, even for just a few years, would set us back and actually risk reducing the amount of money available for grants several years down the road. That’s not in the best interest of the communities we serve.”

Scott Wallace, who co-chairs Washington, D.C.-based Wallace Global Fund, said he supports the Crisis Charitable Commitment. “I wish every foundation in America would commit to doubling their spending at this time of unprecedented economic, health and climate crisis,” he said.

Since most foundations aren’t stepping up, he said, Congress should step in and get them to temporarily double their giving and produce “a whopping $200 billion stimulus to the struggling nonprofit sector, at zero cost to taxpayers.”

Davis said lifelines for struggling Americans are disappearing. One third of nonprofits may shut their doors this year.

“Nonprofit service providers play an outsized role in supporting our most vulnerable neighbors, particularly during crises such as the current health, economic and racial turmoil,” said Bill Bynum, CEO of HOPE, who serves on several nonprofit boards. “With so many people falling through the cracks of a federal response that is focused more on businesses than people, the need for bold philanthropy is greater now than ever. Nowhere is this more evident than in areas of persistent poverty and in communities of color.”

Since the pandemic began, the combined wealth of U.S. billionaires has increased by more than $1 trillion to nearly $4 trillion, according to an analysis of Forbes data by the Institute for Policy Studies.

Alan S. Davis, who heads the $150-million Leonard & Sophie Davis Fund, is calling on wealthy foundations and individuals to increase their giving from 5% to 10% as part of the Crisis Charitable Commitment. Photo courtesy of Alan S. Davis

Davis said billionaires donate less percentagewise. In 2018, the 20 richest Americans gave about $8.7 billion to charity — 0.8% of their net worth. If Bill Gates and Warren Buffett (the top givers) are excluded, that percentage falls to 0.3%.

Through their foundation, Gates and his wife, Melinda, have contributed $45.5 billion to charitable causes since 1994. Gates created The Giving Pledge with Buffett, inviting billionaires to donate most of their money to charity. Facebook’s Mark Zuckerberg, Quicken Loans’ Dan Gilbert and Tesla’s Elon Musk have also signed that pledge.

According to Forbes, Amazon’s Jeff Bezos scored a “1,” which means he has donated less than 1% of his fortune.

In contrast, his ex-wife, MacKenzie Scott, has signed The Giving Pledge. In 2020 alone, she gave away more than 10% of her fortune: $6 billion.

“This pandemic has been a wrecking ball in the lives of Americans already struggling,” she wrote. “Economic losses and health outcomes alike have been worse for women, for people of color, and for people living in poverty. Meanwhile, it has substantially increased the wealth of billionaires.”

Many of her donations went to historical Black universities and colleges. “My approach to philanthropy will continue to be thoughtful,” she wrote. “It will take time and effort and care. But I won’t wait. And I will keep at it until the safe is empty.”

The average person in Utah gives 3.18% of his or her income to charity, and the average Mississippian, living in the nation’s poorest state, gives 1.67%.

Before 2010, the middle class owned more wealth than the top 1%. Not anymore.

The “trickle-down” economic theory isn’t working for the average American, Davis said. “I’m shocked at how bad it is. It’s really much worse than I would have imagined, and COVID has just highlighted it.”

The current pandemic has highlighted how certain companies and industries have concentrated their earning potential, he said. “We used to have Main Street with lots of stores. Now one store gets the whole pie.”

Monopolies are back and bigger than ever, controlling Main Street “in an obscene way,” he said.

In May, he joined a call for funders to raise money for safe elections. “The two organizers of the call were foundations whose founders each had $15 billion, and they were seeking to raise $170 million,” he said. “I asked, ‘How much are you putting up? Each was putting in $10 million. I went ballistic. We had just put in an extra $4 million, and I have 1% of what they have. It got me angry and motivated.”

Leonard & Sophie Davis Foundation donates about $12 million a year to organizations associated with health, education and Jewish philanthropy. Davis said his foundation has given out more than $19 million this year.

“It’s beyond my ability to understand how foundations and the wealthy are not responding to a situation,” he said. “As many as 40% of nonprofits could be out of business by next year. We’re talking about food banks, private schools, research, school supplies. This is absolutely insane.”

This is why he keeps pushing for the Crisis Charitable Commitment, he said. “The nonprofit sector has already lost 1 million jobs. This is the moment. This is the rainy day.”

Jerry Mitchell is an investigative reporter for the Mississippi Center for Investigative Reporting, a nonprofit news organization that is exposing wrongdoing, educating and empowering Mississippians, and raising up the next generation of investigative reporters. Sign up for MCIR’s newsletters here.

Email him at Jerry.Mitchell@MississippiCIR.org and follow him on Facebook, Twitter or Instagram.