Member Insights: Whose Future Are We Saving For?

Whose Future Are We Saving For?

By Jennifer Thuy Vi Nguyen, Director of Postsecondary Success at Stupski Foundation

In the past five years alone, there have been several “unprecedented moments” in education—a global pandemic, mass virtual learning, COVID-19-era historic funding highs, and subsequent fiscal cliffs, to name a few. Now, the new federal administration has ushered in another “unprecedented era”—a time of fear and confusion via the blunt tool of significant funding cuts. For education funders, we are left to question our role in the future of education. Should we double down? Should we stay the course? Should we save for the future? 

In 2019, a year before the “unprecedented times” began, I started my role as director of postsecondary success at Stupski Foundation, a spend-down foundation headquartered in San Francisco. What preceded my shiny role was a decade of working in the college success field and an adolescence of navigating complex educational systems as the daughter of two Vietnamese refugees, as a working-class kid in Houston public schools, and as a first-generation college student. Because I survived all of that, walking into the foundation, I thought, “How hard can this job of giving money away be?”

I soon found out that this job can be hard—and often for befuddling self-imposed reasons. At Stupski, we call these self-imposed barriers “fake rules.” After years of making mistakes and witnessing our peers in philanthropy perpetuate similarly counterproductive practices, we have vowed to “break fake rules” until we have given away our last dollar and close our doors for good.

I could go on and on about the various practices I have witnessed that often make me pause and silently seethe, “Your board is making your grantee do what?” In fact, I’ll be writing a column on this soon. Today, I’ll focus on what I believe to be the most urgent and foundational fake rule that we must break:

Philanthropy must reframe the 5% payout not as a ceiling but as a floor. In other words, giving away 5% of foundation assets should be a minimum, not a maximum.

Let’s back up for a moment here to when the song “Sugar, Sugar” was the top hit on the Billboard Charts and Congress passed the Tax Reform Act of 1969, which established the requirement that foundations must pay out at least 5% of their assets annually. Why 5%? Because supposedly anything more would have put foundations’ future operations in peril.

Let me repeat that: The concern was not for the United States’ collective future but for the future of foundations.

Now, let’s come back to 2025, where the future of federal funding in education is questioned on a regular basis and the philanthropic field is steeped in a “perpetuity mentality.” Even in Stupski’s spend down context, the standard philanthropic overanalysis about making the “best decisions” for the future still creeps up, delaying our ability to move forward. For the field at large, there’s a consistent concern about our self-preservation for the future. We see it every time the market dips and a foundation pulls back its giving accordingly. We see it most damning in our field’s collective giving: According to The Nonprofit Times, the total amount of 2024 foundation assets in the U.S. reached $1.6 trillion, with only 6.6%—or $105 billion—disbursed annually. The remaining $1.5 trillion is locked away amid staggering conditions.

Why? As we say at Stupski Foundation: fake rules.

We must break the fake rule of believing that the 5% payout is the standard. Even a single percentage point increase above the payout average results in an additional $16 billion of funding for our communities. Most importantly, staying in the 5% mindset prevents us from deeply dreaming and investing in what the future could be—especially in “unprecedented times” when the notion of publicly funded public education is at risk. The data show that in this volatile federal climate, there is a risk to present infrastructure, which affords our students resources for a positive future. Here are a few striking numbers:

• According to the Urban Institute, the financial risk of nonprofit organizations that provide key services—including in education—losing government grants is $300 billion, which greatly exceeds philanthropy’s measly annual disbursement.
• According to the National Education Association, if funding from the Department of Education continues to be in peril, it could mean as much as $15 billion in support for students with disabilities is at risk.
• According to the Center on Budget and Policy Priorities, the proposed budget resolution in the House would cut SNAP benefits—an essential basic needs and retention tool—by an estimated $230 billion over the next few years, making it difficult for young people to participate in school and workforce development programs.

In reframing the 5% payout in these urgent times, I also ask us to reframe whom we are most concerned about and what future we are saving for. When nearly 3 in 5 teen girls feel persistently sad or hopeless, what are we saving for? When 1 in 4 students is chronically absent from school, what are we saving for? When an estimated 70% of fourth graders of low income cannot read at a basic level, what are we saving for?

I ask again, whose future are we concerned about: philanthropy or that of the young people we purport to serve? In this political climate, with so much at stake, we must take the so-called risk to go above and beyond 5%. When the collective future of education is called into question, we must unlock our coffers.

The future is now.

You can reach Jennifer on LinkedIn.

About Member Insights

This article represents the opinion of the author; it is not intended to represent the views of Grantmakers for Education or its employees.

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