“A Flag in the Wilderness”: Inside the Philanthropy Project’s Push for Reform

Over the past decade, philanthropy reform has been a conversation led by academics and policy experts, and industry insiders. The Philanthropy Project, launched in December 2024 by longtime nonprofit leaders Jan Masaoka and Jon Pratt, was created to change the conversation – and who gets to participate in it.

Jan Masaoka, former CEO of the California Association of Nonprofits, co-founded the initiative with the goal of making space for nonprofit practitioners – not just policy experts – to voice frustrations and engage more directly in shaping the future of charitable giving. With a fast-growing subscriber base and an open call for contributions from the field, the Philanthropy Project has already struck a nerve. 

In this Q&A, Masaoka shares the response the Philanthropy Project has garnered in its first six months. She also offers a frank assessment of how the political moment is impacting nonprofit workers’ willingness to speak publicly on reforming the system upon which their livelihoods depend.

What inspired the Philanthropy Project, and what role do you hope to play in the philanthropy landscape?

My co-chair, Jon Pratt, and I have long histories in nonprofit advocacy: I was the CEO of CalNonprofits for 12 years, John recently retired as the CEO of the Minnesota Council of Nonprofits after more than over 30 years.

Reforming philanthropy, especially donor advised funds (DAFs) was one of the most important issues for our members that also evoked a lot of emotions. Few issues made our members feel as anguished and angry.

Typically, dialogue around philanthropy reform has been held in avenues or language that aren’t very accessible to or engaged with nonprofit professionals, like development directors and executive directors. We didn’t want people to have to navigate academic language or be inundated with emails to participate in the conversation. 

The Philanthropy Project is our way of waving a small flag in the wilderness to show the world that the nonprofit sector isn’t a monolithic united front supporting big philanthropy. 

How did your Working Group come together?

We noticed the places we get our information on this topic are few and not always accessible. For example, not everybody reads the Nonprofit Law Professor's Blog.

We didn’t want people to have to read a book or receive an overwhelming amount of emails for people to participate in the conversation. The Working Group has become a space of early-stage collaboration—people sharing what they’re working on, connecting dots, brainstorming. And I think that's the best we could ever hope for.

How’s the response been in the first six months? Has anything surprised you?

Very strong. Our newsletter’s grown to over 1,000 subscribers with a nearly 40% open rate. We publish quality articles that are well researched and intentionally use more plain language. In our most recent issue, we featured a CPA’s perspective and an interview with Pete Manzo talking about why his chapter of the United Way supports philanthropic reform. 

We've gotten many messages from nonprofit staff expressing relief that they weren’t alone in their frustrations with the state of DAFs and philanthropy reform. It’s illuminated how those leading this conversation from within philanthropy, academia, or think tanks are disconnected from the opinions of typical nonprofit staff.

What philanthropic reforms are at the top of your list?

If DAF donors are going to lock away their money for fifty-plus years before distributing it, we simply argue you shouldn’t be able to take the tax deduction upfront. We also oppose private foundations getting to count transfers to DAFs as part of their 5% annual payout requirement. Tax policy is an extremely complicated and confusing way to influence behavior, but it’s already lost a lot of its use as an incentive for giving because only the top 10% benefit from charitable deductions.

Another area is transparency in foundations and DAFs. We’re now seeing DAFs open fiscal sponsorship services, and vice versa. FinTech is entering the field and combining these functions that are both designed to obscure financial flows. It’s causing a double-black-box effect in which it’s increasingly opaque. DAFs are also now being marketed to smaller donors as essentially a savings account. That’s where we’re seeing the field get worse. 

Let’s get into some hot topics. What do you make about Gates Foundation’s announcement that they are sunsetting early? Would you agree that it seems foundations have been more willing to question operating in perpetuity?

I’m skeptical. I think there’s a gigantic gap between what people are saying and what they do. There have been a number of foundations, like the Goldman Fund, that announced they were spending down, but then used those assets towards other family foundations and funds. I don't consider that spending down. The Giving Pledge received a lot of attention, but only a small fraction of those pledges have been realized. So I’ll believe it when I see it. 

I’m also disturbed by how quickly and zealously the Gates Foundation has stripped equity and racial justice language from its programs. I think it shows how the ultra-wealthy use philanthropy for their own aims, not for legacy or redistribution.

The United States is pretty unique in how we use federal tax policy as the main mechanism for incentivizing and regulating charitable activity. Do you think that’s the right vehicle to do so? 

Theoretically, there might be better options. But in practice, we’re better off with the IRS regulating nonprofits than elected officials. That would be a disaster. The IRS is not a perfectly impartial, apolitical body, but it is somewhat shielded from the whims of politicians. 

Given that only the top 10% get tax benefits from charitable deductions, tax policy has already lost a lot of its use as an incentive for giving. And tax policy is an extremely complicated and confusing way to influence behavior. If DAF donors are going to lock away their money for fifty-plus years before distributing it, we simply argue you shouldn’t be able to take the tax deduction upfront. 

Do you see an organizing possibility in this moment? How do you think the crises the nonprofit sector is facing on multiple fronts are impacting its organizing capacity?

I think capacity of all sorts is diminished significantly. The nonprofit sector is very preoccupied: many of their clients are in crisis, and a lot of organizations are experiencing deep funding cuts.

I’m certainly sympathetic to people’s fear of speaking out. But philanthropy reform is a long-term project that requires base building. It's important for people to see there's a place where they can head out to (our “flag in the wilderness”) to connect and organize around these issues. We’ve received a lot of messages of support and appreciation for cultivating this kind of space.

How do you see the Philanthropy Project evolving in the coming months or years?

We aim to be a hub for nonprofit workers who care about philanthropy reform, beyond just DAFs. We hope that more nonprofits want to speak out more about these issues, whether individually or collectively, through coalitions and associations. We really welcome and encourage nonprofit staff to write about their perspective for us or be profiled by us.

There have been a couple of efforts for legislation in Congress, and we expect to see more of those in the future. A bill is a very good organizing mechanism and stimulus. We can be more effective as a sector if we unite our efforts.

One of our board members at CalNonprofits, Sarah Pillsbury, used to say, “If we're trying to accomplish something that we can do in our lifetimes, we're thinking too small.” That often serves as an inspiration for me.

The nonprofit sector is very preoccupied: many of their clients are in crisis, and a lot of organizations are experiencing deep funding cuts.

I’m certainly sympathetic to people’s fear of speaking out. Still, there may not be a more important time to unlock the trillions of dollars in DAFs and endowments to be used for the public good. Early in COVID, many foundations really stepped up to increase funding towards vulnerable populations. We haven't really seen that during this particular crisis, and that’s disappointing.

Do you see an organizing possibility in this moment? How do you think the crises the nonprofit sector is facing on multiple fronts is impacting its organizing capacity?

I think capacity of all sorts is diminished significantly. The nonprofit sector is very preoccupied: many of their clients are in crisis, and a lot of organizations are experiencing deep funding cuts.

But philanthropy reform is a long-term project that requires base building. It’s important for people to see there's a place where they can head out to (our “flag in the wilderness”) to connect and organize around these issues. We’ve received a lot of messages of support and appreciation for cultivating this kind of space.