The payout requirement that the Tax Reform Act of 1969 imposed on foundations has come up for debate again over the past few years and a tightening of the requirement was proposed in Congress in 2003. Hypothetically applying corresponding German rules to Ford Foundation data, this article suggests that U.S. regulation of foundation spending policies is already stricter than elsewhere and that much of the current policy debate has little to do with the original intentions of the requirement. Reevaluating the underlying rationale of the policy, the article concludes with a proposal to introduce time limits to the payout requirement
Bradley Center. (2003). A cost of giving adjustment? Should administrative expenses be excluded from a foundation’s qualifying distributions? (Edited transcript). Washington, DC: Hudson Institute.
2.
Cambridge Associates. (2000). Sustainable payout for foundations. Grand Haven: Council of Michigan Foundations.
3.
Deep, A., & Frumkin, P. (2001). The foundation payout puzzle (Hauser Center for Nonprofit Organizations Working Paper No. 9). Cambridge, MA: Harvard University, Kennedy School of Government.
4.
DeMarche Associates. (1999). Spending policies and investment planning for foundations: A structure for determining a foundation’s asset mix. Washington, DC: Council on Foundations.
5.
Doppstadt, J., Koss, C., & Toepler, S. (2002). Vermögen von Stiftungen: Bewertung in Deutschland and den USA [Valuation of foundation assets in Germany and the USA.]Gütersloh, Germany: Bertelsmann Foundation.
6.
Frumkin, P. (1998). The long recoil from regulation: Private philanthropic foundations and the Tax Reform Act of 1969. American Review of Public Administration, 28(3), 266-286.
7.
Klausner, M. (2003). When time isn’t money: Foundation payouts and the time value of money. Stanford Social Innovation Review, 1(1), 51-59.
8.
Kollmann, A. (Ed.). (2000). Gesetz zur weiteren steuerlichen Förderung von Stiftungen [Law on a further fiscal promotion of foundations] (Opusculum #13). Berlin, Germany: Maecenata Institute. Retrieved from http://www.maecenata.de/dokumente/1500_publikationen/Opuscula/2000_Opusculum3.pdf
9.
Lipman, H., & Wilhelm, I. (2003, May 29). Pressing foundations to give more: Controversial proposal could produce millions for charity. Chronicle of Philanthropy. Retrieved May 28, 2003, from http://philanthropy.com/free/articles/v15/i16/16000701.htm
10.
Mehrling, P. (1999). Spending policies for foundations: The case for increased grants payout. San Diego, CA: National Network of Grantmakers.
11.
National Committee for Responsive Philanthropy. (2003). Closing the loophole: Removing foundation overhead costs from payout. Washington, DC: Author.
12.
Patman, W. (1970). The free-wheeling foundations. In T. Reeves (Ed.), Foundations under fire (pp. 195-209). Ithaca, NY: Cornell University Press.
13.
Pfeiffer, S., & Rezendes, M. (2004, March 1). Legislation eyed to fight abuses at foundations. Boston Globe, p. A1.
14.
Sansing, R., & Yetman, R. (2002). Prudent stewards or pyramid builders? Distribution policies of private foundations. Retrieved from http://mba.tuck.dartmouth.edu/pages/faculty/Richard.sansing/payout.doc
15.
Schlüter, A., Then, V., & Walkenhorst, P. (Eds.). (2001). Foundations in Europe: Society, management, and law. London: Directory of Social Change.
16.
Simon, J. (1987). The tax treatment of nonprofit organizations: A review of federal and state policies. In W. W. Powell (Ed.), The nonprofit sector: A research handbook (pp. 67-98). New Haven, CT: Yale University Press.
17.
Simon, J. (1995). The regulation of American foundations: Looking backward at the Tax Reform Act of 1969. Voluntas, 6(3), 243-254.
18.
Toepler, S. (1998). Foundations and their institutional context: Cross-evaluating evidence from Germany and the United States. Voluntas, 9(2), 153-170.
19.
Treasury Department. (1965). Treasury Department report on private foundations. Washington, DC: Government Printing Office.
