The Payout Initiative: 1% More for Democracy
By Julio Rosa, NNG Campaign Coordinator

Since mid-1998, the National Network of Grantmakers (NNG) has explored various options for raising the foundation payout rate above the minimum of five percent.  NNG has recently launched its membership-based initiative “1% More for Democracy.” In addition, NNG is calling upon the philanthropic community to increase payout and support social and economic change. Below is NNG’s Statement of Principles – the thesis and the sign-on for the initiative.

We believe that a fully functioning democracy depends upon an involved and empowered citizenry sharing equally in the responsibilities and benefits of society. Philanthropy has a vital role to play in building democracy as a means of solving community problems, improving the quality of life, and making civil society work to its fullest capacity.

We have come together as philanthropists deeply concerned by growing hunger, poverty, homelessness, environmental degradation and other economic and social ills in the United States and around the world. Despite the historic increase in our nation’s wealth, for example, the U.S. now has the widest gap between rich and poor of any industrialized country - a gap that continues to grow daily. This is untenable.

We believe that the philanthropic community can, and should, provide a more vigorous response to these crises. It is vital to do more to empower and support people and organizations whose voices have been traditionally unheard in the democratic process.

We believe too many private foundations have adopted the legally-mandated minimum “Payout” rate of 5% of assets as a de facto maximum, even during times of significant asset growth, and that this funding strategy fails both the constituencies we serve and democracy in general.

Recent data confirms that only 2.4 percent of the total $13.8-billion given away by private foundations goes to social and economic causes which address the underlying roots of poverty and other wide-scale, enduring social problems. To rectify this imbalance we are committed to increasing this percentage and to giving more to those communities working to strengthen our democracy.

• We commit to increase our payout rate by at least 1%, over the legally mandated 5%.
• If the institution’s payout in grants only is not currently at least 5%, we commit to increasing our grant specific amount by at least 1%. If the foundation we represent already pays out more than 5% in grants, we pledge to continue that practice to the maximum capacity of our organization.
• We call upon our colleagues in the philanthropic community to join this effort by increasing their Payout rate to include “1% More for Democracy” to support social and economic change.

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