A Practitioner’s Reflection on Jennifer Thuy Vi Nguyen’s Third Act of American Philanthropy
By Laurence A. Pagnoni, MA, MPA
Jennifer Thuy Vi Nguyen’s recent essay (Sept. 2026) focuses on the pattern of concentrated wealth, strained public systems, and the rescue work of nonprofits that we have lived with for ten plus generations over the 250 years of US history, a pattern that she calls us to challenge, and to envision its end.
The nonprofit world has lived this harmful societal pattern from close range. Wealth concentrates. Public systems strain. Philanthropy steps in, albeit precariously. Yet, the remedy never reaches the root solutions. The pernicious cycle continues.
Jennifer Thuy Vi Nguyen’s essay, The Third Act of American Philanthropy: What would it take for philanthropy to exit the stage?, asks whether we are ready to examine this pattern and work on a better future.
Readers who want to read her full essay can find it here: https://www.proximate.press/latest-stories/the-third-act-of-american-philanthropy
Overview
Nguyen begins with the excitement around new societal fortunes. Tech wealth. AI wealth. The sense that a fresh wave of billionaire charitable giving is about to arrive. She asks us to look past that excitement. The arrival of new fortunes does not change the structure that produced them. It only renews the destructive cycle.
She writes from her experience in education grantmaking. She has seen how private dollars shape public schools. Charter expansion. Voucher programs. Tax benefits that move public revenue into private hands. Foundations that influence policy void of public accountability. Her point is grounded in the daily reality of classrooms and school districts that must navigate private agendas.
Nguyen turns to tax policy next. She reminds us that the power of philanthropy does not come from generosity alone, but from the tax code. The 1969 Tax Reform Act specifically created the modern foundation. It also created the conditions for sheltering wealth inside charitable vehicles. She notes that foundations can lobby in their own defense –- that means they can use their influence to shape the rules that govern them. They can protect their structure. They have done so for decades. The institutions with the most resources are also the ones most able to defend the status quo.
She points to public sentiment. A recent Ipsos poll shows that most Americans do not want taxpayer subsidies for legacy foundations. The public sees the pattern. The public feels the strain on schools, hospitals, and local governments. The public is asking questions that philanthropy industry often dodges or avoids.
Nguyen offers an abolitionist framework. She draws from movements that seek structural change rather than surface reform. She calls these “nonreformist reforms.” They are steps that reduce the power of philanthropic institutions rather than polish their image. She gives several examples: higher payout requirements on foundations, ending the practice of counting internal expenses as charitable payout, and having only grants that move money into public‑serving nonprofits qualify, aligning payout rules with actual public benefit, delaying tax deductions until money reaches working charities, and regulating private donor-advised funds with the same rules that apply to private foundations.
She shows how billionaire influence operates across many channels. Foundations. Corporate arms. Political action committees. Lobbying. Social welfare organizations. The point is simple: philanthropy is one part of a larger system of influence. Any meaningful system reform must also reform the whole capital structure.
Her final move is the most important. She asks us to imagine a future where tax-based public institutions are strong enough to meet public needs. In that future, philanthropy is smaller. It is temporary. It invests in public systems and then steps aside. She calls this the “third act.” It is not a tweak. It is a seismic shift in the relationship between private wealth and public life.
Nguyen’s essay opens a door the nonprofit and foundation field has needed for a long time. Once that door is open, a second set of questions appears. These questions belong to nonprofit practitioners who have watched the structure of American life from close range. We have seen how wealth moves, and how public systems strain and overlook the needs of the most vulnerable. We have seen how philanthropy steps in, again and again, to relieve conditions that the larger economy continues to produce.
So What?
In the US we have lived with this inadequate pattern for two and a half centuries. It is no longer a theory. It is a record. Wealth concentrates. Public institutions carry the weight. Philanthropy arrives as a remedy, but that remedy never reaches the root cause. The cycle continues.
The question now is whether the nonprofit sector will help this country imagine a different stage in its democratic experiment. That stage would require stronger public institutions, clearer tax policy, and a willingness to ask how the structure of wealth creation shapes the work we do.
Adam Smith, the eighteenth‑century seminal thinker whose ideas shaped modern capitalism, saw this clearly in his own time. His words still apply:
“No society can surely be flourishing and happy, of which by far the greater part of the members are poor and miserable.”
Even Adam Smith understood that markets require guardrails. He understood that public well‑being is not a side concern; it is the foundation of a stable society. His declaration implores us to ask whether our current structure meets that standard. If it does not, what essential role should nonprofits play in shaping the next stage of American life?
Practical Action
One place to start is advocacy. Many nonprofits stepped away from advocacy and policy work over the past generation. Some feared losing funding. Some misunderstood the rules. Some felt pressure to focus on service delivery. Some were scared off by lawyers who remind us over and over again there were limits on what we can spend on advocacy. Nonprofits often misunderstand our lobbying rights. Many believe they can only spend a tiny percentage on advocacy, when in fact the law allows far more — especially for organizations that file the IRS 501(h) election. This misunderstanding has weakened the sector’s voice in tax policy debates. The result is a sector that often treats tax policy as someone else’s responsibility. This retreat has had negative consequences. When nonprofits leave, debates about charitable regulation fall to actors with less scrupulous interests. The fate of the ACE Act is a case in point.
The ACE Act was a bipartisan proposal in Congress that aimed to bring basic accountability to DAF's--donor-advised funds--by delaying tax benefits until money reached working charities and by tightening payout rules for private foundations. Some nonprofits spoke in support of the bill, and prominent organizations such as the Council on Nonprofits added their supportive voice. Even with that support, the bill stalled in committee. It failed to become law because the nonprofit sector did not show up in sufficient force. The absence of a broad, coordinated advocacy effort was noticeable and it gave us a poor outcome.
The resistance to reform also shows more cracks in our unity. The Philanthropy Roundtable argued that the ACE Act would reduce donor flexibility and slow charitable giving. DonorsTrust argued that it would interfere with donor autonomy and threaten donor privacy. Their positions share a common thread: they defend donor control rather than charitable impact. They defend the right to hold charitable dollars indefinitely. They defend a system where tax benefits are guaranteed even when charitable payout is not. This raises a question for the field: is charitable status a public commitment or a private asset class?
Reform, though, is not the destination. It is, instead, a step toward a future where public institutions carry more of the weight and private wealth carries less.
Donor-advised funds have grown at a destabilizing pace that concerns those of us who care about working charities. They allow donors to take tax benefits immediately, even when the money sits untouched for years depriving nonprofits in need. Ray Madoff, one of the most respected voices in charitable law, describes the problem with clarity:
“We have created a system that allows the wealthy to take tax breaks for charitable giving without any assurance that the money will ever reach a working charity.”
Wright Patman, who led the congressional investigation into foundations in the 1960s, saw the same pattern in his time:
“The foundation has become a convenient haven for the idle rich.”
These warnings come from different eras. Yet, they describe the same problematic structure. Private capital can shelter itself inside charitable vehicles without any guarantee that public needs will be met. The growth of DAFs makes this structure more visible. It also makes Nguyen’s call for reform and reshaping more urgent.
There are impressive thinkers in our field’s recent past who have mapped this structure with care. Peter Dobkin Hall traced how the nonprofit sector emerged from public administration and adopted corporate habits. Lester Salamon showed how nonprofits became instruments of government, carrying out public functions without public authority. Rob Reich examined how philanthropic power fits inside a democratic society and asked whether private wealth should have such influence over public life. Their work should be revisited and be better known because it gives depth and context to Nguyen’s argument and helps the field see how today’s conditions took shape.
Further, there are already existing public alternatives. Community Chests, community foundations, and other pooled funds offer a different model. They are community-governed. They are public. They are designed to move money into working charities rather than hold it in private accounts. These vehicles deserve stronger public presence. They are largely unknown because they have never had anything close to the massive promotional machinery their competitors command — including Fidelity Charitable, the largest DAF sponsor in the country, which manages more than $50 billion in assets, acquires tens of thousands of new donor‑advised fund accounts each year, and operates a national digital marketing ecosystem spanning paid search, SEO, donor‑education content, webinars, partnerships, and financial‑advisor channels. Analysts estimate that Fidelity’s marketing spend is likely in the tens of millions annually, though the organization does not disclose its actual budget.
By contrast, Community Chests and community foundations offer a path toward democratic resource allocation that aligns with Nguyen’s vision. The Johnson Center for Philanthropy offers a clear history of how community foundations emerged from early pooled‑fund experiments and grew into vehicles for community leadership. These are public instruments designed for public purpose — transparent, accountable, and rooted in community governance.
In conversation with Jennifer Thuy Vi Nguyen she rightly notes that some contemporary community foundations have drifted from their community‑governed purpose and now operate largely at the whims of donor‑advised fund holders — a departure from their original intention, but not a negation of the model itself.
Given the scale of today’s charitable dollars, and given what we know about how private DAF sponsors shape the landscape, the question becomes unavoidable: why aren’t more nonprofits asking their donors to use these public vehicles instead of private donor‑advised funds?
Spend‑down of large philanthropic foundations is another path. Atlantic Philanthropies is the most dramatic example in modern history. Chuck Feeney, who founded Atlantic Philanthropies and insisted that it spend down all its assets, built his fortune as the co‑founder of Duty Free Shoppers, and believed that wealth should be used to strengthen public institutions now rather than preserved in perpetuity. His decision to give away more than eight billion dollars and close the foundation stands as the most consequential spend‑down in modern philanthropic history. His spend‑down model aligns directly with Nguyen’s abolitionist frame: invest in public institutions, strengthen them, and then step aside. His decision shows that perpetuity is not a requirement. It is a choice. It also shows that large‑scale spend‑down can strengthen public systems rather than weaken them.
The fact is, though, that Feeney’s model depended on a founder with a transformational mindset, and most billionaire donors do not share that instinct. That is why his example matters: it shows what is possible when spend‑down is a choice, and it raises the question of how such choices might be encouraged, systematized, or required in a free‑market system.
Yes, a free‑market system can support this. Tax benefits can be tied to payout rather than contribution. Charitable vehicles can have time limits. Donors can be offered incentives for spend‑down. None of these measures restrict wealth creation. They simply align charitable status with public purpose.
Nguyen’s abolitionist framework aligns with this idea. A foundation can invest in public institutions, strengthen them, and then step aside. It can choose a sunset. It can choose impact over permanence. Atlantic Philanthropies shows that this is possible at scale.
These examples lead to practical steps. Nonprofits can reclaim advocacy. Foundations can support structural reforms. Community‑controlled capital can be strengthened. Flexible general operating support can become a norm rather than an exception. Foundation Boards can consider sunset commitments. Each step moves the field toward a future where public institutions carry more of the weight and private philanthropy carries less.
Nguyen’s essay speaks plainly about the constrained pattern we have lived with for ten+ generations. It invites us to consider the next stage of the American democratic experiment. It asks whether we nonprofits will help lead that stage. It asks whether the philanthropy industry will actually invest in public institutions and then step aside. It asks whether we are ready to imagine a future where the cycle of wealth, strain, and rescue is no longer the structure we must accept as part of this American life.
Before publishing my thoughts, I shared this essay with Jennifer Thuy Vi Nguyen, and I welcome her response after. I am grateful for her leadership. She has opened a door for discussion that the field has needed for a long time. If she chooses to continue this conversation, I will gladly make space for it on my blog and within my LinkedIn community. Dialogue is an essential tool for all of us to use to move our field forward.
The Change Is Afoot
Across the world, students are showing us what change looks like when ordinary people act together in sustained ways. In India, students at Jawaharlal Nehru University in 2025-2026 have faced arrests, surveillance, and violent reprisals for demanding academic freedom and protections for minority communities. In France, the Nanterre and Sorbonne mobilizations have endured police crackdowns while calling for economic justice and an end to discriminatory policing. In Albania, the 2018–2019 Student Protest Movement forced the government to confront tuition hikes and corruption, even as students risked expulsion and retaliation. In Chile, the Penguin Revolution and its successor movements have pressed for free, equitable public education, often meeting riot police, tear gas, and mass detentions. In the United States, the Parkland High School students led the March for Our Lives protests in 2018 which mobilized students nationwide to eliminate gun violence, even as young organizers have faced harassment, doxxing, and political retaliation. In the years since, many of these students have gone on to become transformational political candidates, and dozens more have become civic leaders and organizers whose work now influences political life across the country.
These movements have sought fair tuition, accountable governance, democratic participation, public systems that serve the many rather than the few, and safety in their schools and communities. They show what happens when people stay connected, clear, and persistent.
Research on grassroots movements points in the same direction. Political scientist Erica Chenoweth, studying hundreds of movements, found that change depends less on force and more on participation — on ordinary people acting together in sustained ways. In some cases, movements involving as little as 3.5 percent of a population have been enough to bring about significant political change. Her analysis is summarized in a widely cited brief from the Harvard Kennedy School: Questions, Answers, and Some Cautionary Updates Regarding the 3.5% Rule.
This research shows that change begins in relationship before it becomes visible as democratic movement. Such is a documented pattern, and it stands beside the other pattern Jennifer showed us — the long, 250-year arc of economic inequality that has shaped who has voice and who does not.
One pattern keeps people apart; the other shows how ordinary people, acting together, can change what is possible.
Many of the clients served by our nonprofit organizations understand these dynamics more viscerally than we the professionals of our field do. The unhoused, who navigate systems that rarely meet them with dignity. The underemployed, who know what economic precarity feels like day after day. Families burdened by medical debt, who understand how policy shapes the most intimate parts of their lives. Immigrants and refugees, who know what solidarity requires. Young people living with climate anxiety, who understand urgency in a way institutions often do not. These communities know what strain feels like. They know what change demands. They know how movements grow — through relationship, persistence, and clarity of purpose.
And here is where the screw turns: we have been treating them (those "clients" we serve) as beneficiaries when they can be, in fact, our teachers. They have been underrepresented in our work for far too long, and the truth is simple: we need their help now more than they need ours. They intuit the dynamics of change because they live the conditions that make change necessary. If the nonprofit sector is serious about structural transformation, it will have to turn to them and learn from the very people it has spent decades trying to serve.
Nguyen has asked us to imagine that level of change. The work now is to decide how far we are willing to go.
Laurence A. Pagnoni, MA, MPA, is a nonprofit strategist, fundraising expert, blogger, and author of The Nonprofit Fundraising Solution and Fundraising 401: Masterclasses in nonprofit fundraising that would make Peter Drucker proud. His writing focuses on the structure of American philanthropy, the future of nonprofit advocacy, and the leadership practices that strengthen public institutions.
More of his work can be found at www.laurencepagnoni.com where comments are also welcomed.
