A growing number of philanthropists and organizations are raising awareness about the need to address excessive wealth in philanthropy. Earlier this year, for instance, the Donor Revolt for Charity Reform campaign officially launched with the release of a letter signed by more than 160 prominent philanthropists demanding charitable giving reform measures to address inequality in philanthropy. 

Spearheaded by groups like the Excessive Wealth Disorder Institute, Inequality.org, and the Institute for Policy Studies, the campaign draws attention to the fact that much of the money philanthropists donate to charitable causes never reaches the people it is supposed to serve. Instead, the donations are often hoarded in donor-advised funds (DAFs), which don’t have payout requirements.

According to the Excessive Wealth Disorder Initiative (EWDI), this type of wealth and the wealth hoarding it often enables are a “societal sickness” resulting in the insatiable need to acquire more. Founded in 2022, the California-based organization seeks to tackle this sickness through research, education, organizing, and building a broad-based movement that dismantles the social, economic, and environmental dangers of excessive wealth.

“For us, a critical aspect of inequality in philanthropy has to do specifically with wealth hoarding. The key vehicle that is propping up the ability for excessively wealthy folks to hoard their wealth is the tax system, and the tax system is also what underlies the system of philanthropy,” said Gabriela Sandoval, EWDI’s executive director, in an interview with NPQ. 

Sandoval said that while there are people who genuinely want to do good with their wealth, like the Donor Revolt letter’s signers, the way the tax system is currently set up creates a vehicle for hoarding wealth, evading taxes, decreasing tax burdens, and having wealth stay in place and grow—as opposed to being used to solve some of the world’s most pressing problems.

As Sandoval mentioned, one of the biggest ways she sees inequality show up is through DAFs, which are giving accounts managed by tax-exempt nonprofits. Donors get substantial tax deductions when they place funds into DAFs, but they have no obligation to distribute the funds to qualified charities. Often, the donations sit in the fund for years without being used.

“There’s a lack of transparency,” Sandoval said. “We don’t actually know how much money is there and how much is being actively spent. It really exacerbates the problem that philanthropy already had by creating a kind of shell game.”