Foundations belonging to the US super rich, including Tesla and Google founders Elon Musk and Sergey Brin, collectively hoard billions at donor-advised funds by exploiting a loophole allowing them to keep the tax benefits of philanthropy while delaying payments to those in need, Bloomberg reported on Monday
WASHINGTON (Pakistan Point News / Sputnik - 03rd October, 2022) Foundations belonging to the US super rich, including Tesla and Google founders Elon Musk and Sergey Brin, collectively hoard billions at donor-advised funds by exploiting a loophole allowing them to keep the tax benefits of philanthropy while delaying payments to those in need, Bloomberg reported on Monday.
Wealthy philanthropists in the United States have been using the flexibility of donor-advised funds (DAFs) for years to simultaneously meet the requirement to pay out at least 5% of their assets annually, and hide millions of Dollars on DAFs' accounts, which can remain there indefinitely without any consequences, the report said.
Private foundations, which are set up by wealthy Americans to manage their philanthropic donations, can easily satisfy the 5% legal requirement by moving their assets to DAFs that are legally considered charities, while actually postponing giving away this money to those in need, according to the report.
Since 2016, at least $4 billion flowed from private foundations to DAFs, including those established by Charles Schwab, Fidelity, and Vanguard, the report added citing more than 360,000 filings submitted to the Internal Revenue Service (IRS).
Moreover, in 2020 DAFs alone held almost $160 billion, an 85% increase in four years, the report said.
Some American lawmakers, nonprofits, and even some billionaire philanthropists are calling for these rules to be changed to provide access to nearly $1.5 trillion in private foundations and DAFs, according to the report.
