Big Philanthropy: If They Tax Us, the Food Bank Suffers

Just in case you missed it, my latest in The Giving Review dropped today—How Direct Mail Undid the Civic Imagination of Everyday Donors.

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Let’s just get this out of the way: if your endowment is big enough to trigger a tax hike, maybe don’t hide behind the local food bank. That was the gist of the hot take I shared when Trump’s “big, beautiful bill” hit the headlines; and, judging by the response, I’m not the only one thinking it. I get it: Big Philanthropy is scrambling to figure out how to defend itself against the return of the orange menace. But the question is whether borrowing the credibility of those on the frontlines is really the most ethical way to do it.

Included in that bill, House Republicans proposed raising the excise tax on net investment income for private foundations and university endowments. The provision doesn’t touch program budgets, charitable operations, or frontline nonprofits. It targets investment income—capital that sits apart from the work by design.

Currently, private foundations pay a flat 1.39% tax on that income—a levy on the billions they hold in perpetuity. The proposed change would make the rate progressive: 1.39% for foundations under $50 million in assets (no change), 2.78% for those with $50–250 million, 5% for $250 million to $5 billion, and 10% for foundations over $5 billion. According to Chronicle of Philanthropy data, more than 3,300 foundations hold over $50 million in assets—23 of them with more than $5 billion. This is a tax on accumulated capital, not generosity.

Big Philanthropy saw this coming. A full-blown defense campaign was already underway, launched well before any bill was introduced. And, from the outside, their message doesn’t sound like generosity under threat. It sounds like power circling the wagons.

I’m not the only one noticing. This week, The Wall Street Journal reported that some of America’s wealthiest and most powerful foundations—Ford, Gates, Koch—have been informally banding together to protect themselves from perceived threats. This isn’t about defending shared values. It’s about defending a shared structure. It’s not the right to give, but the right to hoard.

Understandably, Big Philanthropy saw what was coming and launched its defense before a bill was even introduced. But, in doing so, it leaned on the same logic it might otherwise critique. The legislation itself bundles legitimate reform with potential overreach. But the preemptive defense campaign has done the same, framing even modest critiques as existential threats to the entire sector. Together, they flood the zone generating confusion, not clarity. And, in that noise, overdue reforms begin to sound like dangerous assaults rather than necessary corrections.

The Public Isn’t Buying It

The defense campaign may be loud, but it’s not popular.

As David Callahan recently noted, the sector has a well-rehearsed story: $1.4 trillion in economic activity, 13 million jobs, and nearly every community touched by nonprofit work—all “catalyzed” by just $62 billion a year in tax breaks.

But, beneath that polished narrative, public sentiment is shifting. A poll highlighted by Inside Philanthropy found that 83% of Americans believe taxpayers shouldn’t have to subsidize wealthy individuals to create permanent legacy foundations. Another 71% support raising the minimum payout from 5% to 10%, even if it means shrinking endowments.

These aren’t fringe opinions. They reflect a growing fatigue with philanthropic delay, insulation, and self-congratulation—and rising skepticism toward the tax privileges that make it all possible.

So, while elite institutions are lining up to protect the system, the people they claim to serve aren’t asking them to. They’re asking why the money never moves.

Even many of my own colleagues—fundraisers, nonprofit leaders, and the consultancies that advise them—are defending the very system that keeps the frontlines dependent and under-resourced. These are people who’ve seen how the money moves and, more often, how it doesn’t. They should know better.

In response, Big Philanthropy has returned to a familiar playbook.

Major industry groups and leaders—Council on Foundations, Philanthropy Roundtable, CEP, and others—have lined up to warn that the real victims of this tax will be the frontlines: food banks, health clinics, and veterans’ organizations. The implication is clear: if you tax our endowments, you’re hurting the hungry.

This isn’t a new argument. But this moment has made the script louder, clearer, and harder to ignore. Big Philanthropy isn’t just defending itself; it’s enlisting frontline nonprofits as rhetorical shields. And that tells us everything we need to know about the state of trickle-down philanthropy.

Trickle-Down Philanthropy in Plain Sight

Trickle-down philanthropy isn’t an official doctrine, but you’d be forgiven for thinking otherwise. It’s the quiet operating system behind how institutional philanthropy protects itself: keep the capital at the top and trust that the public will benefit, eventually.

Like its economic cousin, trickle-down philanthropy asks us to believe that protecting private wealth is the best way to serve the public good. Let the endowments grow. Let the investment income sit. Keep payouts modest and predictable. Just don’t interfere because, eventually, someone in need will benefit.

This is the logic behind the 5% payout rule — behind the long-term investment strategies that favor perpetuity over urgency. It’s a worldview that treats generosity not as movement, but as management.

And, when that worldview gets challenged—when even a sliver of untaxed capital is on the table—it doesn’t answer with transparency or humility. It pivots to a moral diversion. Don’t look at the endowment; look at the food bank. Look at the shelter. Look at the story, not the structure.

Because the last thing this system wants is for anyone to notice where the money actually sits.

The Frontline as Human Shield

When Big Philanthropy comes under scrutiny, it rarely defends itself on the merits. Instead, it reaches for the most sympathetic faces of the nonprofit sector: the food bank, the homeless shelter, the legal clinic. These organizations get name-dropped in tax debates—not because they control the capital, but because they shield those who do.

Lately, philanthropic leaders have issued a steady stream of statements warning that higher taxes on foundations will mean fewer dollars for community services—citing food pantries, disaster relief efforts, veterans’ programs, and cultural institutions. Others claim that taxing endowments will drain resources and force government to fill the gap.

These messages don’t interrogate how philanthropic capital actually functions. They just center sympathetic beneficiaries. The stories aren’t chosen for what they reveal about power but for how they make the system appear virtuous.

That’s not moral clarity—it’s strategic storytelling.

The people and institutions being invoked aren’t hoarding wealth. They’re waiting on it. They’re already underfunded, overworked, and often left out of major decisions. But, when push comes to shove, they’re expected to lend moral credibility to institutions that can’t earn it on their own.

That’s not solidarity. It’s a tactic.

And it tells us something crucial: those closest to the need are often closest to the camera but furthest from the control.

The Playbook, Fully Written Out

We’ve seen the pattern. Here’s the playbook: Big Philanthropy isn’t just invoking frontline nonprofits; it’s actively coaching others to do it.

In a recent Nonprofit Quarterly op-ed, a group of prominent philanthropic leaders outlined a messaging strategy for fending off political critique. Their advice?

“When we tell our story, let’s do it in plain language—not philanthropy speak. Let’s talk about the food bank that stayed open during a hurricane because of a last-minute emergency grant. The immigrant rights organization that kept families together because a foundation had their back in court. The health clinic in a rural town that got its first dentist because of philanthropic economic investment.”

They go on to recommend showcasing groups from across regions and demographics and enlisting messengers like business leaders and educators to echo the talking points. The point isn’t to explain how philanthropic capital works. It’s to lead with stories that make philanthropy look essential, apolitical, and above reproach.

But this isn’t just storytelling. It’s moral theater— designed to protect concentrated capital by cloaking it in the imagery of frontline care.

And, in doing so, it reveals something deeper about the system’s fragility. Because if the only way to justify hoarded wealth is to wrap it in stories of suffering and resilience, then it’s not generosity being defended—it’s the illusion of it.

The Ethical Inversion

At the heart of this strategy lies a borrowed virtue used as cover.

When elite institutions invoke food banks to defend their financial structure, they’re outsourcing moral authority. They’re not making a case for why they deserve preferential tax treatment. They’re borrowing the credibility of those they fund—those closer to harm, scarcity, and public trust.

That’s what makes the tactic effective—and why it’s unethical.

The public trusts the food bank. It trusts the veterans organization. It trusts the free clinic. So, when those organizations are invoked, people are more likely to suspend their questions about where the money sits, how decisions are made, or why a multibillion-dollar foundation pays a lower tax rate than that placed on groceries. But that trust wasn’t earned by the foundation. It was earned by the frontline.

This is an ethical inversion. Responsibility should rise with power. But, here, it flows in the opposite direction. The people with the least power are expected to justify the privileges of those with the most. The institutions that ration access to capital are shielded by the ones still waiting on it. The groups most excluded from philanthropic decision-making are drafted into defending its status quo.

And all of this happens under the guise of solidarity. But solidarity isn’t someone else doing your moral labor. It’s not symbolic cover. It’s shared risk, shared voice, and shared power. Until Big Philanthropy is willing to offer those things, invoking the food bank isn’t an act of care; it’s an act of convenience.

The People Being Used Aren’t the Ones Being Protected

Let’s pause and ask: Who, exactly, is being defended?

It’s not the food bank, not the rural clinic, not the immigrant rights organization. These are the groups being named, but they’re not the ones being protected.

What’s actually under threat in these debates is philanthropic capital held in perpetuity—the vast investment portfolios managed by private foundations and university endowments. The proposed taxes don’t touch operating budgets. They don’t drain program funds. They target unspent investment income—the 95% that doesn’t move.

So, when frontline nonprofits are invoked to shield this wealth, they’re being used as moral camouflage, rhetorical cover, and emotional leverage. Their struggle becomes the justification for someone else’s insulation.

And here’s the deeper harm: these organizations are often conditioned to accept this role. They’ve been trained to tread lightly, stay grateful, and avoid criticizing the system that funds them. Speaking out feels risky. Silence feels safer.

But silence, in this case, is mistaken for consent. And consent becomes complicity. Because, in the end, the people asked to defend the system are the very ones most constrained by it.

If the System Were Defensible, It Wouldn’t Hide Behind the Food Bank

If Big Philanthropy truly believed its structure was fair, effective, and generous, it would defend it directly. It would welcome scrutiny. It would explain how retaining 95 percent of capital while distributing just 5 percent constitutes a just response to urgent social need. It would own the trade-offs, confront the limitations, and make the case on the merits.

But that’s not what’s happening.

Instead, we get stories—stories not of wealth, but of suffering; not of endowments, but of food pantries; not of capital accumulation, but of veterans receiving care. These stories don’t clarify the structure. They obscure it. We’re told to protect the system not because it’s just or accountable, but because someone good might benefit from it.

That’s not transparency. That’s narrative insurance.

And here’s the deeper truth: a system that requires emotional cover to survive cannot justify itself. If it has to point to disaster relief every time someone questions tax equity, then it’s not defending generosity; it’s defending wealth. And, when the preservation of that wealth depends on invoking someone else’s pain, we’re not witnessing moral defense. We’re witnessing moral deflection.

So let’s call it what it is. When elite philanthropy invokes food banks, health clinics, and immigrant rights organizations to defend tax privileges on billion-dollar endowments, it’s not engaging in honest dialogue—it’s staging a strategic diversion.

Because the people being named aren’t the ones benefiting from the status quo. They’re the ones forced to wait on it. And, when crisis hits, as it always does, they’re told to be grateful for the trickle — maybe five percent… maybe later.

If Big Philanthropy believes its structure is fair, it should say so plainly. But if it can’t make that case without hiding behind the frontline, then maybe the structure isn’t defensible at all.

Because when a system’s best defense is someone else’s case for support, it’s not the freedom to give that’s being protected—it’s the freedom to hoard.

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Jason Lewis

, Founder, Responsive Fundraising

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